The value proposition of most organizations is at least partially linked to the physical and functional condition of the tangible assets — assets that deteriorate and wear out over time or become obsolete.
Either way, it is prudent for the organization to establish a capital reserve that is set aside annually to avoid disruption of earnings and working cash.
Cash flows like the chart below are NOT a good thing!
Help ensure that your physical assets conform to your value proposition.
Proper planning and the establishment of an adequate capital reserve to fund periodic replacements are key to that end.
Concise has your solution!
Define you locations and the major assets at each
Define the major components for each major asset — to your desired level of granularity
Estimate the replacement cost new of the defined components/items as of a point in time, the anticipated life, and the effective age as of a point in time.
Estimate the anticipated cost increases per year due to inflation or other factors.
Concise does the rest!
Calculates the annual reserve needed for each asset based upon the information you provided
Calculates the balance that should already be in the reserve fund
Projects capital replacements and then current costs for each of the next 50 years.
REDUCE THE NUMBER OF CAPITAL EXPENSE SURPRISES
Concise Planning facilitates your capital replacement planning and budgeting!!!