Capitalization is the smart and orderly way to meet facility needs. It is the facility manager’s job to actively participate in developing the requirements, prioritizing the competing needs, and managing the execution of a capital development plan. Capital costs are associated with long-term assets. These costs can often be met by capital expenses, which are used to expand or modernize a facility.
To measure the budget accurately, total space needs have to be assessed first. Then, it is up to the company to decide whether they want to lease, build, or renovate the building. Capital funds are used if the renovate or build options are chosen. Also, you need to determine what can and cannot be capitalized. Two factors exist when dealing with this: existing tax code, which will determine depreciation schedules, and company rules, which usually have restrictions on what can and cannot be capitalized. Renovation brings questions of proper allocation of costs.
When allocating resources for Capital Programs, Maintenance Management Software can assist in planning, tracking, labor utilization, budget management, and ensuring that regular services are performed as desired.