Ten Ways People Avoid the Capital Project Process
1. Flying under
the radar. Large projects are broken into smaller
projects to avoid hitting spending authorization limits.
2.
Strong-arm tactics. Claiming special
circumstances, the business area instructs fixed-asset
accounting to capitalize costs that are normally expensed.
3.
Claim victory and add phases. Projects are
broken up into phases after the project’s original completion
date has passed. Phase one is done, but phase two and three
will now take longer and cost more.
4.
Promises, promises. Projects
include fictitious benefits because no one ever checks them.
5.
The wine cellar. Project
development costs accumulate in a "construction-in-progress"
asset account that is rarely monitored by management.
Unfinished work can remain in these accounts.
6.
What are friends for? Project managers fail to
put large purchases out for bid because of a "special"
relationship with the vendor.
7.
Executive privilege.
An
executive claims huge benefits to justify a project but fails
to include those benefits for accountability in their
operating budget.
8.
"Keep the lights on" threat. Although the project
doesn’t have any benefits, it is viewed as a necessity thereby
allowing the project team to circumvent the standard approval
process.
9.
Gomer Pyle approach. "I had no idea what the
project approval process is, so I assumed there wasn’t any."
Surprise, surprise.
10.
Witness protection program.
The name of an existing, poorly-performing project is changed
and the scope is slightly modified to give the illusion that a
brand-new project is created.
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