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First and last name:
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Title:
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Email address:
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Phone number:
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Company name:
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| Please describe in the box below how you decide to allocate your capital budget across the various divisions or departments within your organization. For example, it might be based on historical usage or based on strategic decisions to invest in some areas and not in others. |
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Capital rationing:
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| Please select from the list below the financial metrics that your organization uses to evaluate a project or initiative. (Check all that apply) |
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Net Present Value (NPV):
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Internal Rate of Return (IRR):
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Modified Internal Rate of Return (MIRR):
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Economic Value Added (EVA):
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Accounting Rate of Return (AROR):
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Payback:
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Discounted Payback:
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Simple ROI:
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Profitability Index:
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Please describe other metrics you use that are not listed above:
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| If you did not check NPV above, go to the next question. If you do use NPV, please describe below how you determine the discount rate. If you use different discount rates for different types of projects, or determine it uniquely for each project, please describe how you go about this. |
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Discount Rate determination:
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| If you did not check MIRR above, please go on to the next question. If you use MIRR, please describe how you determine the reinvestment rate to use. For example is it based upon your cost of capital? Discount rate? |
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Reinvestment Rate determinatio:
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| If you did not check both NPV and EVA above, please go onto the next question. How does the cost of capital used for the EVA calculation differ from the discount rate used for NPV. Please explain below how you determine the cost of capital to use for the EVA metric. |
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Cost of Captial vs Discount R:
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| Listed below are some commmonly used methods for quantifying the risk in a project or initiative. For each of the methods that are used in your organization, please describe how they are used. |
If your organization uses sensitivity analysis to assess project risk, please describe how it is performed. |
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Sensitivity Analysis:
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| If your organziation uses scenario analysis to assess project risk, please describe below how the scenarios are chosen and how you reduce them to financial risk. |
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Scenario Analysis:
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| If your organzation uses decision trees to evaluate project risk, please describe how you define the branches and the probability for each branch of the decision tree. |
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Decision Trees:
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| If your organization uses Monte Carlo simulation to asess roject risk, please describe how a probability distribution and standard deviation are chosen. Do you select a different distribution for each variable? |
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Monte Carlo Simulation:
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| Please describe how you take into account strategic criteria when deciding which projects will be funded. |
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Strategic Alignment:
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| If your organization calculates the risk of a portfolio of projects, please describe your procedure. Do you assume all projects are independent? If not, how do you estimate the covariance between one project and another. |
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Portfolio Risk:
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| If your organization uses linear programming or optimization algorithms to determine the best portfolio of projects to fund, please describe your methodology. Do you determine the efficient frontier? |
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Optimization:
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| Please describe the software tools that your organization uses to facilitate the capital budget planning process, e.g. collaboration tools, knowledge management tools, workflow tools, simulation, comparison, optimization tools, etc. No need to again describe tools that you may have already described in sufficient detail in answers to questions above. |
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Describe tools:
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| Describe in this box your biggest capital budget planning challenges. |
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Biggest challenges:
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| Describe in this box your capital budget planning practices that you consider as best-in-class. |
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Best practices:
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| Describe in this box any other comments you have regarding your organization's capital budget planning process. |
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Other comments:
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