Where corporate investing is concerned, there are basically four phases that include a planning phase, an evaluation of the project or capital, a way for status to be monitored, and a post completion report or review process.
To evaluate a capital investment project, each phase must be addressed. For example, an analysis must be done on the strategies being utilized or proposed for funding and financing. Capital expenditures are estimated according to whether they are major projects or minor projects, as well as future capital investment needs proposed.
Investment analysis must also include research and development, marketing, human resources, as well as many of the other costs of doing business. All areas of the organization must be accounted for, even the equipment replacement that will take place over the next year.
A project manager is typically assigned to implement the project and to make certain that it comes in near the projected budget. Then, lastly, a post completion review must be submitted. They are usually completed within a short time frame (1-5 years after investment). This review basically compares the before and after picture of the investment, including the cash flow, operating performance and other pertinent information. Then actual costs to project costs are compared.