capital project business plan

Capital project: How to plan and execute a successful capital project

1. understanding the importance of capital projects, 2. identifying project objectives and deliverables, 3. developing a comprehensive project plan, 4. allocating budget, time, and personnel, 5. mitigating potential risks and challenges, 6. putting the plan into action, 7. tracking progress and making adjustments, 8. engaging and updating key stakeholders, 9. assessing the success and lessons learned.

Capital projects are large-scale, long-term investments that aim to create, improve, or maintain physical assets such as buildings, infrastructure, equipment, or technology. They are often complex, costly, and risky, requiring careful planning and execution to ensure their success. Capital projects can have significant impacts on the economic, social, and environmental aspects of an organization and its stakeholders. Therefore, it is essential to understand the importance of capital projects and how to manage them effectively.

In this section, we will explore the following topics related to the importance of capital projects:

1. The benefits of capital projects . Capital projects can provide various benefits to an organization and its stakeholders, such as increasing productivity, efficiency, quality, safety, or customer satisfaction; enhancing competitiveness, innovation, or reputation; reducing costs, waste, or environmental footprint; or complying with regulations, standards, or contractual obligations. For example, a capital project to upgrade a manufacturing plant can improve the production capacity, quality, and reliability of the products, while reducing the energy consumption and emissions of the plant.

2. The challenges of capital projects. Capital projects can also pose various challenges to an organization and its stakeholders, such as requiring large amounts of capital , resources, time, or expertise; involving multiple parties, phases, or uncertainties; or facing technical, financial, legal, or social risks. For example, a capital project to build a new airport can encounter delays, cost overruns, design changes, or public opposition, affecting the feasibility, profitability, or sustainability of the project.

3. The best practices of capital projects. Capital projects can be managed more effectively by following some best practices, such as defining clear objectives, scope, and deliverables; conducting thorough feasibility, risk, and stakeholder analysis; establishing realistic budget, schedule, and quality standards; implementing effective governance, communication, and control mechanisms; or applying appropriate methodologies, tools, or techniques. For example, a capital project to develop a new software system can use agile, scrum, or waterfall methods, depending on the nature, complexity, and requirements of the project.

Understanding the Importance of Capital Projects - Capital project: How to plan and execute a successful capital project

One of the most crucial steps in any capital project is defining the scope. This means identifying what the project aims to achieve, what the expected outcomes and benefits are, and what the specific deliverables and milestones are. A clear and realistic scope can help to ensure that the project meets the needs and expectations of the stakeholders, stays within the budget and schedule, and avoids unnecessary changes and risks. In this section, we will discuss how to define the scope of a capital project from different perspectives, and provide some tips and examples to help you do it effectively.

To define the scope of a capital project, you need to consider the following aspects:

1. The business case: This is the justification for the project, based on the strategic goals, market opportunities, customer demands, or operational needs of the organization. The business case should outline the problem or opportunity that the project addresses, the benefits and costs of the project , the alternatives and risks, and the expected return on investment . The business case can help you to align the project scope with the organizational objectives and priorities, and to communicate the value of the project to the stakeholders. For example, if you are planning to build a new manufacturing plant, your business case might include the market demand for your products, the competitive advantage of the new location, the estimated revenue and profit, the capital and operational costs, the environmental and social impacts , and the payback period.

2. The project charter: This is the document that formally authorizes the project, defines the high-level scope, and assigns the roles and responsibilities of the project team and the sponsor. The project charter should include the project vision, mission, objectives, deliverables, scope boundaries, assumptions, constraints, risks, and stakeholders. The project charter can help you to establish the scope baseline, which is the approved version of the scope that serves as a reference point for the project execution and control. For example, if you are planning to renovate a hotel, your project charter might include the vision of creating a modern and comfortable guest experience, the mission of enhancing the hotel's brand and reputation , the objectives of increasing the occupancy rate and customer satisfaction, the deliverables of upgrading the rooms, lobby, and facilities, the scope boundaries of what is included and excluded in the project, the assumptions and constraints of the budget, schedule, and quality, the risks of delays, disruptions, and defects, and the stakeholders of the hotel owners, managers, staff, guests, and suppliers.

3. The scope statement: This is the document that describes the detailed scope of the project, including the product scope and the project scope . The product scope is the features and functions of the product , service, or result that the project delivers. The project scope is the work that needs to be done to deliver the product scope. The scope statement should include the scope description, the acceptance criteria, the deliverables, the work breakdown structure, and the scope management plan. The scope statement can help you to clarify the scope of the project, to define the criteria for measuring the project success , to break down the project into manageable components, and to plan how to manage the scope throughout the project life cycle. For example, if you are planning to develop a new software application, your scope statement might include the scope description of the functionality, performance, quality, and security of the application, the acceptance criteria of the user requirements, specifications, and standards, the deliverables of the software code, documentation, and testing, the work breakdown structure of the phases, tasks, and subtasks of the project, and the scope management plan of how to collect, verify, validate, control, and change the scope.

Identifying Project Objectives and Deliverables - Capital project: How to plan and execute a successful capital project

Project planning is a crucial phase in any capital project as it lays the foundation for successful execution. It involves defining project objectives, identifying key stakeholders, and establishing a clear roadmap for achieving project goals . By carefully planning each aspect of the project, you can minimize risks, optimize resource allocation , and ensure timely completion.

1. Defining Project Objectives: Start by clearly defining the objectives of your capital project. This involves identifying the desired outcomes, deliverables, and success criteria. By having well-defined objectives, you can align the project team and stakeholders towards a common goal.

2. Stakeholder Analysis: Conduct a thorough stakeholder analysis to identify all individuals or groups who may have an interest in or be affected by the project. This includes internal and external stakeholders such as investors, clients, employees, regulatory bodies, and local communities. Understanding their needs, expectations, and potential impact on the project is essential for effective planning.

3. Risk Assessment: Assess and identify potential risks and uncertainties associated with the project. This includes analyzing external factors such as market conditions , regulatory changes, and environmental impacts, as well as internal factors like resource availability , technology constraints, and project dependencies. By anticipating and addressing risks early on, you can mitigate their impact on project outcomes .

4. Work Breakdown Structure (WBS): Create a detailed work breakdown structure that breaks down the project into smaller, manageable tasks. This hierarchical structure helps in organizing and scheduling project activities, assigning responsibilities, and estimating resource requirements. It provides a clear overview of the project scope and facilitates effective project tracking and control.

5. Resource Allocation: Determine the resources required for each task in the project plan. This includes human resources, equipment, materials, and budgetary considerations. By accurately estimating resource needs and ensuring their availability, you can prevent delays and cost overruns during project execution.

6. Timeline and Milestones: Develop a realistic timeline for the project, including key milestones and deadlines. This helps in monitoring progress, identifying bottlenecks, and ensuring timely completion . Consider dependencies between tasks and allocate sufficient time for testing, quality assurance, and project handover.

7. Communication and Collaboration: Establish effective communication channels and collaboration mechanisms within the project team and with stakeholders. Regularly update all relevant parties on project progress, changes, and challenges. Encourage open dialogue, feedback, and knowledge sharing to foster a collaborative project environment.

8. Monitoring and Control: Implement a robust monitoring and control system to track project performance against the plan. This includes regular progress reviews, performance metrics, and deviation analysis. By closely monitoring project indicators, you can take timely corrective actions and ensure project success.

Remember, effective project planning is an iterative process that requires continuous evaluation and adaptation. By following these insights and incorporating best practices, you can develop a comprehensive project plan that sets the stage for a successful capital project.

Developing a Comprehensive Project Plan - Capital project: How to plan and execute a successful capital project

One of the most critical aspects of planning and executing a successful capital project is resource allocation. Resource allocation refers to the process of assigning and managing the available resources, such as budget, time, and personnel, in the most efficient and effective way possible. resource allocation is essential for ensuring that the project meets its objectives, scope, quality, and cost requirements, as well as minimizing risks and maximizing benefits . In this section, we will discuss some of the best practices and challenges of resource allocation in capital projects, and provide some tips and examples to help you optimize your resource allocation strategy .

Some of the best practices of resource allocation in capital projects are:

1. Define the project scope and objectives clearly. Before allocating any resources, you need to have a clear understanding of what the project aims to achieve, what the deliverables are, what the success criteria are, and what the constraints are. This will help you identify the required resources, prioritize them, and align them with the project goals.

2. Estimate the resource requirements accurately. You need to estimate the amount and type of resources that the project will need, such as money, time, materials, equipment, and human resources. You can use various methods and tools to estimate the resource requirements, such as historical data, expert judgment, analogy, parametric, bottom-up, or top-down estimation. You should also consider the availability, suitability, and reliability of the resources, and account for any uncertainties, contingencies, or changes that may occur during the project.

3. Create a realistic and flexible resource allocation plan. You need to create a plan that specifies how the resources will be allocated, distributed, and controlled throughout the project. You should use a resource breakdown structure (RBS) to categorize and organize the resources into hierarchical levels, and a resource calendar to show when and where the resources will be available and used. You should also use a resource management software or tool to help you track, monitor, and adjust the resource allocation plan as the project progresses.

4. Communicate and coordinate the resource allocation effectively. You need to communicate and coordinate the resource allocation with all the relevant stakeholders, such as the project sponsor, the project team, the contractors, the suppliers, and the customers. You should establish clear roles and responsibilities , expectations, and feedback mechanisms for each stakeholder, and ensure that they are aware of and agree with the resource allocation plan. You should also resolve any conflicts or issues that may arise due to resource allocation, such as resource scarcity, overallocation, underallocation, or misallocation.

5. Evaluate and optimize the resource allocation regularly. You need to evaluate and optimize the resource allocation throughout the project lifecycle, and make sure that the resources are being used efficiently and effectively . You should measure and compare the actual resource usage and performance with the planned resource usage and performance, and identify any gaps, deviations, or variances. You should also analyze the causes and impacts of any resource allocation problems, and implement corrective or preventive actions to address them.

Some of the challenges of resource allocation in capital projects are:

- Resource constraints. Resource constraints refer to the limitations or restrictions on the availability or accessibility of the resources, such as budget, time, or personnel. Resource constraints can affect the feasibility, quality, or scope of the project, and force the project manager to make trade-offs or compromises among the competing project objectives.

- Resource uncertainty. Resource uncertainty refers to the unpredictability or variability of the resources, such as cost, duration, or quality. Resource uncertainty can affect the accuracy, reliability, or validity of the resource estimates, and increase the risk or complexity of the project, and require the project manager to make adjustments or changes to the resource allocation plan.

- Resource dependency. Resource dependency refers to the interrelationship or interdependence of the resources, such as the sequence, precedence, or synchronization of the resource activities. Resource dependency can affect the coordination, integration, or alignment of the resources, and create bottlenecks, delays, or conflicts in the resource allocation process .

- Resource optimization. Resource optimization refers to the challenge of finding the optimal or best possible combination of the resources, such as the minimum cost, maximum quality, or shortest time. Resource optimization can be difficult or impossible to achieve due to the complexity, diversity, or multiplicity of the resources, and the trade-offs or constraints involved in the resource allocation process.

Some of the tips and examples of resource allocation in capital projects are:

- Use a resource allocation matrix. A resource allocation matrix is a tool that helps you visualize and manage the resource allocation in a project. It shows the relationship between the project activities and the resources , and indicates how much and when each resource is allocated to each activity. You can use a resource allocation matrix to identify and avoid resource overallocation or underallocation, balance the resource workload, and allocate the resources according to the project priorities.

- Use a resource leveling technique. A resource leveling technique is a method that helps you optimize the resource allocation in a project. It involves adjusting the start and finish dates of the project activities to smooth out the resource demand and supply, and achieve a more consistent or uniform resource usage. You can use a resource leveling technique to reduce or eliminate resource fluctuations, conflicts, or shortages, and improve the resource efficiency and productivity.

- Use a resource allocation example. A resource allocation example is a case study or a model that illustrates how resource allocation is done in a similar or comparable project. You can use a resource allocation example to learn from the best practices, lessons learned, or mistakes made by others, and apply them to your own project. You can also use a resource allocation example to benchmark or compare your resource allocation performance with others, and identify areas of improvement or excellence.

risk management is a crucial aspect of any capital project, as it helps in identifying, assessing, and mitigating potential risks and challenges that may arise during the planning and execution phases. By effectively managing risks, project teams can minimize the negative impact on project timelines, budgets, and overall success.

From the perspective of project stakeholders, risk management involves a comprehensive analysis of potential risks and their potential consequences. This analysis helps in prioritizing risks based on their likelihood and impact , allowing project teams to allocate resources and develop appropriate mitigation strategies.

Here are some key insights on risk management in capital projects:

1. Risk Identification: The first step in risk management is to identify potential risks. This can be done through brainstorming sessions, historical data analysis , and expert opinions. By considering various factors such as project scope, stakeholders, external influences, and market conditions, project teams can identify a wide range of risks.

2. Risk Assessment: Once risks are identified, they need to be assessed in terms of their likelihood and impact. This assessment helps in prioritizing risks and determining the level of attention and resources required for each risk. Quantitative and qualitative analysis techniques can be used to assess risks effectively.

3. Risk Mitigation: After assessing risks, project teams develop mitigation strategies to reduce the likelihood or impact of identified risks . These strategies can include contingency plans, risk transfer mechanisms (such as insurance), process improvements, and stakeholder engagement. The goal is to proactively address risks and minimize their potential negative consequences.

4. Monitoring and Control: Risk management is an ongoing process throughout the project lifecycle. Project teams need to continuously monitor identified risks, assess their effectiveness, and make necessary adjustments. Regular risk reviews and reporting mechanisms help in keeping stakeholders informed and maintaining transparency.

5. Lessons Learned: Capital projects provide valuable opportunities for learning and improvement. By documenting and analyzing risks encountered during previous projects, project teams can identify patterns, trends, and best practices. This knowledge can be used to enhance future risk management strategies and improve overall project outcomes.

It's important to note that the examples provided above are for illustrative purposes only and may not reflect specific risks or challenges in your capital project. It's always recommended to tailor risk management approaches to the unique characteristics and requirements of your project.

Mitigating Potential Risks and Challenges - Capital project: How to plan and execute a successful capital project

When it comes to executing and implementing a plan, such as in a capital project, there are several key factors to consider. In this section, we will delve into the practical aspects of putting the plan into action.

To begin, it is important to approach the execution phase with a comprehensive understanding of the project's objectives and scope. This involves aligning the efforts of all stakeholders involved, including project managers, team members, and external partners. By fostering clear communication and collaboration, the execution process can proceed smoothly.

One crucial aspect to address is resource allocation. This entails identifying and allocating the necessary personnel, equipment, and materials required to carry out the project. By carefully assessing the project's requirements and considering potential constraints, such as budget limitations or time constraints , the execution phase can be effectively planned.

During the execution phase, it is essential to monitor progress and track milestones. This can be achieved through regular project status updates, progress reports, and meetings. By closely monitoring the project's progress, any deviations or issues can be identified and addressed promptly, ensuring that the project stays on track.

Additionally, it is beneficial to incorporate insights from different perspectives. This can involve seeking input from various stakeholders, including subject matter experts, end-users, and other relevant parties. By considering different viewpoints, the execution phase can benefit from a more holistic approach, leading to more informed decision-making and improved outcomes.

When presenting information in this section, a numbered list can be utilized to provide in-depth insights. This format allows for a structured and organized presentation of ideas, making it easier for readers to grasp the key points. Furthermore, incorporating examples throughout the section can help illustrate concepts and enhance understanding.

One of the most critical aspects of a successful capital project is monitoring and control. This involves tracking the progress of the project against the planned schedule, budget, scope, quality, and risks, and making adjustments as needed to ensure the project meets its objectives and delivers value to the stakeholders. Monitoring and control requires constant communication, coordination, and collaboration among the project team, sponsors, contractors, and other parties involved in the project . In this section, we will discuss some of the best practices and tools for effective monitoring and control of a capital project, as well as some of the common challenges and pitfalls to avoid .

Some of the key steps for monitoring and control of a capital project are:

1. Establish a baseline plan and performance indicators. Before the project execution begins, the project team should have a clear and detailed plan that defines the scope, schedule, budget, quality, and risks of the project. This plan serves as the baseline for measuring the project performance and progress throughout the project lifecycle. The project team should also identify and agree on the key performance indicators (KPIs) that will be used to track and evaluate the project outcomes and benefits. These KPIs should be aligned with the project objectives and stakeholder expectations , and should be SMART (specific, measurable, achievable, relevant, and time-bound).

2. collect and analyze project data. During the project execution, the project team should collect and analyze data on the project activities, deliverables, resources, costs, quality, and risks. The data should be accurate, timely, and consistent, and should be reported in a standardized format and frequency. The project team should use various tools and techniques to collect and analyze the data, such as work breakdown structure (WBS), Gantt charts, earned value management (EVM), critical path method (CPM), risk register, quality control charts , and dashboards. The project team should also compare the actual data with the baseline plan and the KPIs, and identify any variances, deviations, or issues that need attention.

3. Report and communicate project status. The project team should report and communicate the project status to the project sponsors, contractors, and other stakeholders on a regular basis. The project status report should include the summary of the project progress, performance, issues, and risks, as well as the forecast of the project completion date, cost, and quality. The project status report should also highlight any changes, decisions, or actions that have been made or are required to keep the project on track. The project team should use appropriate communication channels and methods, such as meetings, emails, newsletters, presentations, and webinars, to share the project status report and solicit feedback and input from the stakeholders.

4. Review and adjust the project plan. Based on the project data, status report, and stakeholder feedback, the project team should review and adjust the project plan as needed to address any changes, issues, or risks that may affect the project performance and outcomes . The project team should follow a formal change management process to evaluate, approve, and implement any changes to the project scope, schedule, budget, quality, or risks. The project team should also update the baseline plan and the KPIs accordingly, and communicate the changes and their impacts to the stakeholders. The project team should also conduct periodic reviews and audits of the project processes, deliverables, and results, and identify any opportunities for improvement or lessons learned.

Some of the benefits of effective monitoring and control of a capital project are:

- It ensures the project is delivered on time, within budget, and according to the scope and quality standards.

- It enhances the project visibility, transparency, and accountability.

- It enables the project team to identify and resolve any issues or risks early and proactively.

- It improves the project performance and efficiency.

- It increases the stakeholder satisfaction and trust.

- It maximizes the project value and benefits.

Some of the challenges and pitfalls of monitoring and control of a capital project are:

- It can be time-consuming, complex, and costly to collect, analyze, and report the project data.

- It can be difficult to measure and quantify some of the project outcomes and benefits, such as customer satisfaction, environmental impact, or social value.

- It can be challenging to balance the project constraints and trade-offs , such as scope, time, cost, and quality.

- It can be hard to manage the expectations and interests of multiple and diverse stakeholders.

- It can be risky to make changes to the project plan without proper justification, approval, and communication.

An example of a capital project that used effective monitoring and control is the London 2012 Olympic Games . The project involved the construction of new venues, infrastructure, and transport systems, as well as the delivery of the sporting and cultural events, for the largest and most complex sporting event in the world. The project was completed on time, within budget, and with high quality, and achieved its objectives of creating a lasting legacy for London and the UK. Some of the monitoring and control practices that contributed to the project success were:

- The project team established a clear and comprehensive plan and KPIs, and used a robust governance structure and reporting system to oversee the project progress and performance .

- The project team used various tools and techniques, such as EVM, CPM, risk management, and quality management, to track and manage the project activities, deliverables, resources, costs, quality, and risks.

- The project team reported and communicated the project status and achievements to the stakeholders and the public regularly and transparently, and engaged them in the project decision-making and delivery.

- The project team reviewed and adjusted the project plan as needed to accommodate any changes, issues, or risks, and followed a rigorous change management process and communication plan .

- The project team conducted frequent reviews and audits of the project processes, deliverables, and results, and identified and implemented any improvements or lessons learned.

Tracking Progress and Making Adjustments - Capital project: How to plan and execute a successful capital project

stakeholder communication is a vital aspect of any capital project, as it involves informing, consulting, and collaborating with the people who have an interest or influence in the project's outcome. Stakeholders can include internal and external parties, such as project sponsors, team members, customers, suppliers, contractors, regulators, and the public. effective stakeholder communication can help to build trust, manage expectations, resolve issues, and ensure alignment among the project's objectives, scope, schedule, budget, and quality. In this section, we will discuss some best practices and tips for engaging and updating key stakeholders throughout the project lifecycle.

Some of the best practices and tips for stakeholder communication are:

1. Identify and analyze your stakeholders. Before you start communicating with your stakeholders, you need to know who they are, what their interests and needs are, how they can affect or be affected by the project, and what their preferred communication channels and frequency are. You can use tools such as stakeholder mapping, power/interest matrix, or RACI matrix to categorize and prioritize your stakeholders based on their level of influence and interest in the project. This will help you to tailor your communication strategy and plan accordingly.

2. Define your communication objectives, methods, and metrics. Once you have identified and analyzed your stakeholders, you need to define what you want to achieve with your communication, how you will deliver your messages, and how you will measure the effectiveness of your communication. You can use tools such as communication matrix, communication plan, or communication dashboard to document and track your communication objectives, methods, and metrics. For example, your communication objective could be to inform your stakeholders about the project's progress, your communication method could be a monthly status report, and your communication metric could be the number of feedback or queries received from your stakeholders.

3. Engage your stakeholders early and often. One of the key principles of stakeholder communication is to involve your stakeholders as early as possible in the project and to maintain regular and consistent communication throughout the project. This will help you to establish rapport, gain buy-in, solicit input, and address concerns. You can use tools such as stakeholder engagement plan, stakeholder register, or stakeholder feedback form to plan and execute your stakeholder engagement activities. For example, you can invite your stakeholders to participate in project initiation meetings, requirements elicitation workshops, design reviews, testing sessions, or lessons learned sessions.

4. Update your stakeholders with relevant and timely information . Another key principle of stakeholder communication is to provide your stakeholders with accurate, complete, and up-to-date information about the project's status, issues, risks, changes, and achievements. This will help you to keep your stakeholders informed, satisfied, and supportive of the project. You can use tools such as status reports, issue logs, risk registers, change requests, or milestone reports to communicate your project information to your stakeholders. For example, you can send a weekly status report to your project sponsor, a monthly issue log to your project team, or a quarterly milestone report to your customer.

5. Use appropriate communication techniques and tools. Depending on the type, size, complexity, and location of your project and stakeholders, you may need to use different communication techniques and tools to effectively communicate with your stakeholders. You can use tools such as communication techniques matrix , communication tools matrix, or communication channels matrix to select and compare the most suitable communication techniques and tools for your project . For example, you can use face-to-face meetings , phone calls, or video conferences for interactive and personal communication, emails, memos, or newsletters for formal and written communication, or websites, blogs, or social media for informal and online communication.

6. seek feedback and improve your communication. The last but not the least best practice for stakeholder communication is to seek feedback and improve your communication based on the feedback. You can use tools such as feedback surveys, feedback forms, or feedback sessions to collect and analyze feedback from your stakeholders about your communication effectiveness, satisfaction, and improvement areas. This will help you to evaluate and enhance your communication performance and quality. For example, you can ask your stakeholders to rate your communication on a scale of 1 to 5, to provide comments or suggestions , or to share their expectations or concerns.

Project evaluation is a crucial step in any capital project, as it allows the project team and stakeholders to measure the outcomes and impacts of the project against the predefined objectives and criteria. It also provides an opportunity to identify the strengths and weaknesses of the project management process , and to learn from the challenges and best practices that emerged during the project lifecycle. In this section, we will discuss how to conduct a comprehensive and effective project evaluation, and what are the key aspects to consider when assessing the success and lessons learned of a capital project. We will also provide some examples of project evaluation methods and tools that can be used in different types of capital projects.

Some of the main points to consider when conducting a project evaluation are:

1. Define the purpose and scope of the evaluation. The project team and stakeholders should agree on the objectives and scope of the evaluation, and what questions they want to answer. For example, the evaluation may aim to assess the quality, efficiency, effectiveness, relevance, sustainability, or impact of the project, or a combination of these aspects. The scope of the evaluation may cover the entire project or specific components, phases, or deliverables. The purpose and scope of the evaluation should be clearly documented and communicated to all the relevant parties.

2. Select the evaluation criteria and indicators. The project team and stakeholders should select the criteria and indicators that will be used to measure the performance and outcomes of the project. The criteria should be aligned with the project objectives and the expectations of the beneficiaries and donors. The indicators should be SMART (specific, measurable, achievable, relevant, and time-bound), and should capture both quantitative and qualitative data . The criteria and indicators should be defined and agreed upon before the project starts, and should be reviewed and updated throughout the project lifecycle.

3. Choose the evaluation methods and tools. The project team and stakeholders should choose the methods and tools that will be used to collect, analyze, and report the evaluation data. The methods and tools should be appropriate for the type, size, and complexity of the project, and the availability of resources and data. The methods and tools may include surveys, interviews, focus groups, observations, document reviews, case studies, cost-benefit analysis , SWOT analysis, logic models, or balanced scorecards, among others. The methods and tools should be applied in a consistent, transparent, and ethical manner, and should ensure the validity, reliability, and credibility of the evaluation results.

4. Conduct the evaluation activities. The project team and stakeholders should conduct the evaluation activities according to the evaluation plan and schedule. The evaluation activities may involve data collection, data analysis, data validation, data presentation, and data dissemination. The evaluation activities should be conducted by qualified and impartial evaluators, who may be internal or external to the project. The evaluators should follow the evaluation standards and guidelines , and should respect the rights and interests of the project participants and beneficiaries. The evaluators should also document and report any challenges, limitations, or assumptions that may affect the evaluation findings and conclusions .

5. Prepare and share the evaluation report. The project team and stakeholders should prepare and share the evaluation report that summarizes the evaluation findings, conclusions, and recommendations. The evaluation report should be clear, concise, and comprehensive, and should highlight the main achievements and challenges of the project, as well as the lessons learned and best practices that can be applied to future projects. The evaluation report should also include an action plan that specifies the follow-up actions and responsibilities for implementing the evaluation recommendations. The evaluation report should be shared with all the relevant parties, and should be used as a basis for decision-making, learning, and improvement.

Some examples of project evaluation methods and tools that can be used in different types of capital projects are:

- Survey. A survey is a method of collecting data from a sample of respondents using a structured questionnaire. A survey can be used to measure the satisfaction , feedback, opinions, attitudes, or perceptions of the project beneficiaries, stakeholders, or staff. A survey can be conducted online, by phone, by mail, or in person, and can use closed-ended or open-ended questions , or a mix of both. A survey can provide quantitative and qualitative data, and can be analyzed using statistical or thematic techniques.

- Interview. An interview is a method of collecting data from one or more respondents using a semi-structured or unstructured guide. An interview can be used to explore the experiences, views, motivations, or challenges of the project beneficiaries, stakeholders, or staff. An interview can be conducted face-to-face, by phone, by video, or by email, and can use open-ended or probing questions, or a mix of both. An interview can provide qualitative data, and can be analyzed using content or discourse analysis.

- Focus group. A focus group is a method of collecting data from a small group of respondents using a moderated discussion. A focus group can be used to generate ideas, insights, or opinions about the project objectives, activities, outcomes, or impacts. A focus group can be conducted in a physical or virtual setting, and can use a topic guide or a stimulus material, such as a video, a document, or a prototype. A focus group can provide qualitative data, and can be analyzed using thematic or narrative analysis.

- Observation. An observation is a method of collecting data by watching and recording the behavior, actions, or interactions of the project participants or beneficiaries. An observation can be used to assess the implementation, delivery, or utilization of the project outputs, products, or services. An observation can be conducted in a natural or controlled setting, and can use a checklist, a rating scale, or a narrative record. An observation can provide quantitative and qualitative data, and can be analyzed using descriptive or inferential statistics.

Assessing the Success and Lessons Learned - Capital project: How to plan and execute a successful capital project

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• Capital Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on July 12, 2023

Are You Retirement Ready?

Table of contents, what is capital planning.

Capital planning is a critical process that businesses undertake to allocate financial resources to long-term investments and projects, such as acquiring new equipment, launching new products, or expanding operations.

The primary aim of capital planning is to ensure that a company's investments generate the highest possible return, contribute to its long-term growth and success, and minimize financial risks.

A well-designed capital plan can help a company identify the most beneficial investment opportunities, create a balanced portfolio of projects, and allocate resources strategically.

Effective capital planning is crucial for a business's long-term success and financial stability.

It allows organizations to make strategic decisions about where to invest resources to achieve their growth objectives, maximize shareholder value, and maintain a competitive edge in the marketplace.

By carefully evaluating potential investments, companies can ensure that they are putting their money into projects that align with their overall strategy and have the potential to deliver significant returns.

Furthermore, capital planning helps businesses minimize investment risks by identifying potential threats and developing strategies to mitigate them.

Capital Planning Process

Identifying capital needs.

This step involves assessing a company’s current assets , forecasting future growth, and analyzing industry trends.

It includes evaluating the organization's existing infrastructure, equipment, and technology to determine if they are adequate to meet its short and long-term objectives.

Additionally, companies should assess their growth potential by analyzing market trends, customer demand, and competition to identify areas where investment may be required.

Forecasting future growth is critical to identifying capital needs, as it provides valuable insights into the company's potential revenue streams and resource requirements.

Companies should utilize historical data, market research, and industry analysis to create accurate growth projections.

Understanding industry trends is essential for identifying opportunities for investment and potential challenges that may impact the organization's financial performance.

Evaluating Capital Projects

Evaluating a company’s potential capital projects is done to determine their financial feasibility, strategic alignment, and associated risks. Financial feasibility refers to the project's ability to generate a return on investment (ROI) that exceeds its cost of capital .

This can be assessed using various capital budgeting techniques , such as net present value (NPV) , internal rate of return (IRR) , and payback period.

Strategic alignment is essential in the evaluation process, as it ensures that the proposed project aligns with the company's overall business strategy and objectives.

This may involve analyzing the project's potential impact on market share , competitive positioning, and long-term growth potential.

Risk assessment is another critical aspect of project evaluation, as it involves identifying potential risks associated with the investment and developing strategies to mitigate them.

Prioritizing Capital Investments

This involves ranking projects according to their potential for financial return, considering factors such as projected cash flows, payback period, and NPV. Balancing risk and reward is also a critical aspect of prioritizing investments.

Companies should aim to create a balanced portfolio of projects that offers an optimal mix of potential returns and risk exposure.

Resource availability is another important factor to consider when prioritizing capital investments.

Companies must ensure they have the financial, human, and technological resources to support the successful implementation of their chosen projects. This may require reallocating resources from other business areas or seeking external financing to fund the investment.

Budgeting Techniques for Capital Planning

Payback period.

The payback period is a simple capital budgeting technique that calculates the amount of time it takes for an investment to recoup its initial cost through cash inflows.

It is calculated by dividing the initial investment cost by the annual cash inflow generated by the project.

The payback period is useful for comparing investment options with similar risk profiles , as it provides a straightforward measure of how quickly an investment will start generating positive returns.

However, the payback period must account for the time value of money or cash flows generated after the initial investment has been recouped, which may limit its usefulness in evaluating long-term projects.

Net Present Value

NPV is a more sophisticated capital budgeting technique that accounts for the time value of money by discounting future cash flows to their present value.

The NPV is calculated by subtracting the present value of cash outflows (initial investment) from the present value of cash inflows generated by the project over its life.

A positive NPV indicates that the project is expected to generate a return greater than the cost of capital, making it a potentially worthwhile investment.

In contrast, a negative NPV suggests that the project's returns are unlikely to cover its costs. NPV is widely used by businesses to compare investment opportunities and determine their financial viability.

Internal Rate of Return

The IRR calculates the discount rate at which the net present value of a project's cash flows becomes zero. In other words, the IRR represents the annualized rate of return at which the investment breaks even.

The IRR can be used to compare the profitability of different investment options, with higher IRRs generally indicating more attractive opportunities.

It is important to note that the IRR assumes that all future cash flows are reinvested at the same rate, which may only sometimes be the case in practice.

Profitability Index (PI)

The profitability index measures the relative profitability of an investment by dividing the present value of its future cash flows by the initial investment cost.

A PI greater than 1 indicates that the project is expected to generate a positive net present value. In contrast, a PI of less than 1 suggests that the investment may not be financially viable.

The PI is useful for comparing the relative profitability of different investment options, as it takes into account both the size of the investment and the potential returns.

Modified Internal Rate of Return (MIRR)

The modified internal rate of return (MIRR) is a variation of the IRR that addresses some of its limitations by considering the cost of capital and the reinvestment rate of cash flows separately.

The MIRR calculates the annualized rate of return at which the present value of a project's cash inflows, discounted at the reinvestment rate, equals the present value of its cash outflows, discounted at the cost of capital.

The MIRR provides a more realistic measure of a project's profitability, accounting for the actual reinvestment opportunities available to the company.

Risk Management in Capital Planning

Risk identification and assessment.

Risk management is a critical aspect of capital planning, as it helps businesses identify and assess potential risks associated with their investments.

This involves analyzing various factors, such as market conditions, economic trends, competitive dynamics, and regulatory developments, to determine the likelihood and potential impact of various risks on the company's financial performance.

Risk assessment should be an ongoing process, as new risks may emerge over time, or existing risks may change in magnitude or probability.

Risk Mitigation Strategies

Once risks have been identified and assessed, businesses should develop strategies to mitigate their potential impact on capital investments. This can involve a range of approaches, such as diversification, hedging , and insurance.

Diversification is spreading investments across a range of projects or asset classes to reduce the portfolio's overall risk exposure. Hedging involves using financial instruments, such as options or futures contracts , to offset potential losses from an investment.

Insurance can be used to transfer certain types of risk to a third party, such as property and casualty insurers or credit risk insurers, in exchange for a premium.

Contingency Planning

Contingency planning is an essential component of risk management. It involves developing alternative plans or strategies to address potential risks that may materialize during a capital investment.

This can include identifying backup suppliers or contractors, establishing alternative financing arrangements, or developing plans to scale back or modify the project if necessary.

Contingency planning helps businesses to be better prepared for unexpected events and to minimize the potential impact of risks on their capital investments.

Capital Planning Best Practices

Involving stakeholders.

One of the best practices in capital planning is involving all relevant stakeholders in the process. This includes the company's management and financial teams and employees, shareholders, customers, and suppliers.

By engaging stakeholders in the planning process, businesses can gain valuable insights, identify potential risks and opportunities, and build a shared understanding of the company's strategic objectives and investment priorities.

Aligning With Overall Business Strategy

Capital planning should be closely aligned with a company's overall business strategy, ensuring investments are directed toward projects supporting the organization's long-term goals and objectives.

To achieve this alignment, businesses should regularly review and update their strategic plans and ensure that capital planning is integral to their strategic decision-making process.

Regularly Reviewing and Updating the Plan

Capital planning is an ongoing process that requires regular review and updating to reflect changes in the company's financial position, market conditions, and strategic priorities.

By periodically revisiting their capital plan, businesses can ensure that their investment decisions remain aligned with their objectives, respond to new opportunities or risks, and adapt to changing circumstances.

Ensuring Transparency and Accountability

Transparency and accountability are essential for effective capital planning, as they help build trust among stakeholders and ensure that investment decisions are made in the company's best interests.

Businesses should establish clear processes for evaluating and prioritizing capital projects, involve stakeholders in decision-making, and regularly report on the progress and outcomes of their investments.

Capital planning is an essential process that drives a company's long-term growth and financial success.

It involves identifying capital needs by assessing current assets and forecasting future growth, evaluating potential investments using capital budgeting techniques like NPV and IRR, and prioritizing projects based on expected returns , risks, and resource availability.

Effective capital planning also incorporates risk management strategies, such as risk identification, mitigation, and contingency planning, to minimize potential investment threats.

Adhering to best practices, such as involving stakeholders, aligning capital planning with overall business strategy, regularly reviewing and updating plans, and ensuring transparency and accountability, further enhances the effectiveness of capital planning.

By adopting a comprehensive and strategic approach to capital planning, businesses can maximize shareholder value and secure long-term success in a competitive market.

Capital Planning FAQs

What is capital planning.

Capital planning is the process of determining how an organization will allocate and invest its financial resources to fund long-term projects, acquisitions, or expansions.

Why is capital planning important?

Capital planning is essential because it helps organizations prioritize and make informed decisions about allocating funds to projects that will generate the most significant returns or strategic advantages.

How does capital planning support financial stability?

Capital planning helps organizations maintain financial stability by ensuring that sufficient funds are available for strategic investments, managing debt and equity ratios, and minimizing the risk of financial distress.

What role does risk assessment play in capital planning?

Risk assessment is a crucial component of capital planning as it helps identify potential risks associated with investment projects. By evaluating risks, organizations can make informed decisions, develop mitigation strategies, and allocate resources more effectively.

How often should capital planning be reviewed and updated?

Capital planning should be reviewed and updated regularly to account for changes in market conditions, business priorities, and financial goals. Typically, organizations conduct annual or periodic reviews to ensure the relevance and accuracy of their capital plans.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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Ultimate Primer On Capital Project Management & How It Works

Based in Vancouver, BC, Mark leads the capital projects and infrastructure advisory practice with a major professional services firm. He brings 5+ years of experience in engineering and project management, and a passion for the natural and built environment. His work with projects has taken him all over the world.

Read all about capital projects and the capital project life cycle. Plus, why digital project managers should care.

This recent survey by the Project Management Institute showed capital projects have one of the highest rates of failure compared with other types of projects, with only 58% of projects meeting their original goals and business intent.  

There are high stakes and large investments involved in capital projects: it's essential to have a solid understanding of what’s involved. In the rest of this article, I'll get you introduced to the world of capital project management.

How can project managers can successfully navigate the complexities of capital projects and deliver successful outcomes? Whether you're a seasoned project manager or new to the field, this guide will help get you off to a great start in capital project management!

I spent the first 10 years of my career managing all sorts of engineering projects and now lead a national consulting practice within a major firm in Canada.

In my work, I advise organizations and communities on all aspects of capital infrastructure projects, from strategic portfolio planning, to helping them oversee the design and construction of particular projects. 

Past engagements have included community master planning, healthcare facilities, educational institutions, housing, civil infrastructure and special cultural projects, such as museums and Indigenous buildings.

Why you should read this. Maybe you're a project manager looking to take on capital projects, or even an experienced project manager from another field looking to pivot ( pivaaat! ). Either way, you're in the right place. 

The global construction industry (read: capital project industry) is set to grow 85% to reach a value of $15.5 trillion by 2030 . There’s a whole lot of opportunity out there and in this ultimate primer, I'll explore everything you need to know about capital project management, from planning to execution.

What Is Capital Project Management?

If you're new to the world of capital project management, don't worry—I'm here to help! This type of work generally involves overseeing large-scale projects that require significant investments of capital (money) over an extended period of time. 

Capital project managers must juggle multiple stakeholders, budgets, and risks , all while ensuring compliance with often significant legal and regulatory requirements.

The keys to effective capital project management are careful planning, risk management, stakeholder engagement, and ongoing monitoring and adjustment to ensure successful outcomes. By mastering these skills, you can become a confident and successful capital project manager .

What Is A Capital Project?

A capital project is not just an investment in physical infrastructure or assets, but a transformative journey towards realizing a grand vision. Capital projects have the power to reshape entire industries, communities, and even societies, fueling innovation, progress, and prosperity over multiple generations.

Such initiatives are enterprise or wider in scale, often span multiple years, and generally require a uniquely broad mix of contributors and stakeholders to execute.

Capital Projects Vs Non Capital Projects

Capital projects usually involve the acquisition, construction, or renovation of a physical asset—like a building or road—that will be used for a long period of time, typically more than one year.

These projects require significant capital investments, and the costs and expenditures are usually capitalized, meaning they are spread out over the useful life of the resulting product (referred to as an asset). 

Non-capital projects, like marketing campaigns or employee training, are all about products or services that do not involve creating a long-term capital asset. Other examples include software upgrades or mapping and streamlining a manufacturing process.

Understanding the difference between capital and non-capital projects is important because it can affect how the project is funded, accounted for, and reported on. Capital projects typically have more stringent approval processes and require more oversight, due to the significant investments involved. 

Non-capital projects may have a more flexible approval process and require less oversight, but still require effective project management to ensure successful outcomes.

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Examples Of Capital Projects

It’s all about the physical and built environment. Here are a few examples of capital projects :

• Developing a new residential community
• Installing a natural gas pipeline
• Constructing a new sports stadium
• Installing a new telecommunications network
• Building a water treatment facility
• Constructing a data center

Capital project management focuses on the natural environment too, for example:

• Restoring a wetland or marshland ecosystem
• Stabilizing a riverbank or shoreline to prevent erosion
• Installing a stormwater management system to reduce runoff and flooding
• Creating or improving a park

The Capital Project Management Life Cycle

The capital project lifecycle involves several phases, each of which plays an essential role in delivering a successful project.

The generic framework of project management still applies, and while specific creative workflow processes and timelines may vary depending on the project's complexity and scope , the capital project life cycle typically includes the following phases.

1. Planning

During this phase, project managers work with stakeholders to define the project's goals and objectives, identify resources and constraints, and develop a preliminary budget and timeline. These may be tracked manually or using construction project management software .

Because capital projects entail such a big commitment of funds, the project planning stage is really about making the business case stable (ie. being sure the project will be a net benefit) and distributing the project’s value fairly among stakeholders, so that everyone is committed to the processes and shares the ultimate goals.

In the project design phase, capital project managers, in conjunction with a design team (architects and engineers) develop detailed plans and specifications for the project, considering user customer needs, technical requirements, safety considerations, and environmental regulations. 

Usually an architect or engineer is required to be the principal designer, depending on the type of project. Residential and cultural buildings and other people-centric facilities are usually designed by architects, whereas bridges, roads, and utility infrastructure take an engineer’s lead.

As well as the principal designer (usually referred to as the prime consultant), it is expected a number of subconsultants, such as structural, civil, electrical, and mechanical engineers will also form part of the team. 

A good prime consultant will be able to make smart decisions as to who should be on the team, for the benefit of the client. 

3. Procurement

The procurement phase involves getting ahold of the necessary materials, equipment, and services for the project. Managing the bid process can be tricky and there are often a ton of legal considerations to ensure fair competition. 

Typically a Request for Proposals (RFP) process is undertaken, sometimes preceded by an Expression of Interest (EOI) to get a sense of the commercial market for contracting services (ie. who is out there and of those, who is interested in bidding).

Developing a bid response to an RFP is a significant investment of time and effort, so the process must be well managed.

4. Construction

The construction phase is where the actual physical work of building and installing the project takes place. This is where capital project managers, contractors, consultants, regulators, and other stakeholders must collaborate closely to ensure that the project is delivered on time and within budget.

5. Commissioning

The commissioning phase involves testing and verifying that the completed project meets all requirements and specifications.

As well as regular inspections throughout the project, to assure quality of work and integrity of the building, the mechanical and electrical systems also need testing and verification, to certify the finished product as fit for occupancy and use.

6. Operations and Maintenance

Once the project is commissioned, it enters the operations and maintenance phase, where ongoing maintenance and support ensure that the project continues to meet its intended purpose over time. 

Handling this transition is important, to make sure the right knowledge is passed along to the operators of the complete asset and that the process for rectifying warranty defects is well understood.

Capital Project Management Vs Digital Project Management

Capital project management and digital project management have a bunch of similarities, differences, and their own quirks. 

The former is concerned with physical projects, such as constructing buildings, bridges, and other infrastructure projects, while the latter involves managing projects that involve technology, software, and digital products.

Both types of projects require planning, organization, and management skills, but they differ in project scope, stakeholders, and delivery methodologies . 

Capital projects are all about building things in the physical world. We're talking about constructing buildings, bridges, and other infrastructure projects that make our cities what they are. These projects require some serious planning, organization, and mad management skills. 

Plus, they attract a bunch of external bodies like government regulators, investors, and communities: Everyone's got an opinion! And don't forget about the safety regulations and unexpected surprises that can pop up along the way. It's all worth it because these projects leave a lasting impact on our world.

Now, over to digital projects. These are all about technology, and making software and digital products. Instead of dealing with lots of external stakeholders (beyond a client, in some cases), digital projects focus more on the folks within the project team, like software developers and designers. 

They all work together to create some really mind-blowing solutions. The great thing about digital projects is their agility. They can move with shorter development cycles and plenty of opportunities for testing and refining.

No matter which field of project management you're in, you’re still the boss and ultimately accountable for the project. You have to know how to communicate, collaborate, and lead your crew to success. It's a mix of being a technical guru, people person, and a pro at adapting to changes.

Finally, capital projects tend to have more external stakeholders, such as government regulators, investors, and communities, while digital projects may have more internal stakeholders, such as software developers and designers. 

In addition, capital projects often have longer timelines, more stringent safety regulations, and a higher risk of unexpected delays and project cost overruns. Digital projects, on the other hand, can be more agile , with shorter development cycles and more opportunities for testing and iteration. 

Ultimately, the success of both types of projects depends on effective project management, with a focus on delivering the project on time, within budget, and meeting stakeholder expectations.

4 Attributes Of Good Capital Project Management

Here’s what I think are the key components of good capital project management.

Effective capital project managers need to have a strong understanding of financial management and budgeting, given that capital projects often involve lots of money and significant financial risks. 

As well as developing and managing project budgets, you’ll need to be able to make financially sound decisions to ensure the project stays viable. Larger projects require deep financial analysis, understanding of present value of future cash flows, and the impact of debt, which informs risk sensitivity analysis.

Secondly, excellent stakeholder management skills are key for capital project managers. They must be able to effectively liaise with a broad set of stakeholders, including investors, sponsors, government officials, community groups, and other project participants. Project success often depends on ensuring everyone is aligned and committed to agreed-upon outcomes.

Technical expertise in a relevant area of specialization is the third key attribute.

Capital projects often require specialized knowledge, such as engineering or architecture, to have an appreciation of the entire process, such that the project manager can make sound decisions around risk, finances and other critical determinants of success, within a strong contextual backdrop.

Finally, good capital project management requires a strong focus on risk management. Capital projects can be complex and often risky; the physical climate, site conditions, political context, availability of labor, financial stability of contributing stakeholders all carry uncertainty that may impact the project. 

Project managers need to be able to effectively assess risks and develop mitigation strategies that are continually refined and implemented through the project’s life.

The benefits of effective capital project management are significant. These include:

• Improved financial performance through better budgeting and financial management
• Reduced issues and greater benefits realization through effective risk management
• Better stakeholder engagement and alignment, leading to greater support and buy-in for the project
• Improved project outcomes through strong technical expertise
• Greater accountability and transparency, which can lead to increased trust and support from stakeholders.

What’s Next?

Capital project management is a complex and challenging field; it requires project management skills and unique expertise. By understanding the project life cycle, distinguishing it from digital and other forms of project management, and recognizing the attributes of good capital project management, you can successfully be part of managing capital projects. 

Remember the important stuff, like prioritizing stakeholder engagement, effective communication, and risk management throughout the project, and to be adaptable when changes inevitably arise. 

As capital project managers continue to navigate the ever-changing landscape of their field, it's a good idea to also consider the impact of emerging technologies, such as artificial intelligence and the Internet of Things.

As you delve deeper into the world of capital project management, consider how you can apply these principles and best practices to your own projects, even if you deal with digital, operational or other kinds of projects. 

What ways can you improve stakeholder engagement and communication? How can you effectively manage risks and navigate uncertainties? What emerging technologies are you most excited about, and could they be incorporated into your capital projects?

New here? Why don’t you subscribe to The Digital Project Manager newsletter . Want to get more acquainted with the subject, and also looove software? Read more about best construction project management software and capital project management software .

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Capital planning: A beginner’s guide to understanding the basics

Home » Insights » Capital planning: A beginner’s guide to understanding the basics

Just like yearly budgets, goal planning and employee reviews, planning and management of the capital plan should occur in a regular, annual cycle. But first, let’s talk about capital plan management basics. There are various tools, processes and team players to understand before beginning the capital planning process.

What is capital planning?

Capital planning is an annual process of budgeting for resources where an optimistic spend curve is defined, planned, socialized and approved by operations, stakeholders and finance.

Key terms for understanding capital planning

Capital request form.

The form used to standardize the necessary information for each project so that the planning group can vet the project.

Capital project drivers

Every company has different drivers, but the common drivers are typically growth, obsolescence, regulatory, strategic/alignment to goals and cost avoidance/reduction.

Capital planning group

Group responsible for management, including vetting the list of proposed capital projects, prioritizing and reprioritizing the capital, seeking capital management committee approval and managing the ongoing changes.

Capital management committee

The governance committee responsible for approving the group’s proposed funding and spending plan.

Capital project approval process

This process is typically company specific and includes all approval requirements, stage gates, etc. to ensure cost, schedule and budget control and conformance.

Minor versus major capital

Every company has its own unique delineation, but these usually entail different approval processes: Minor capital has fewer approvals, and major capital has more approvals.

Operating (routine) capital versus new capital

A company may choose to have a bulk approval process for operating capital (a bunch of smaller lower dollar projects) and not require these projects to be individually approved.

Has membership on both the capital planning group and the capital management committee and is the approver of capital funds.

Management programs

There are a handful of management programs, including Attainia, FINARIO and Accruent, that can provide the management platform for your needs.

Facility manager

Has the responsibility for capital plan management for the company or the company’s site.

Business unit leaders

The leaders of the operating groups who sit on the capital management committee.

Monthly variance report

Issued to gain actionable visibility of the plan and to keep management and stakeholders informed.

Monthly capital expenditures report

Issued by the finance to keep members, management and stakeholders in the loop.

The list can go on and on, but suffice it to say, there are quite a few tools and processes that are essential for keeping the process running throughout the year. Additionally, we’ve compiled a list with a complete breakdown of planning activities by season to help with your annual planning efforts.

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What Is a Capital Project?

Understanding capital projects, examples of capital projects, capital project funding, what are capital projects in government, what is a noncapital project, what makes a capital project successful.

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Capital Project: Definition, Examples, and How Funding Works

Yurle Villegas / Investopedia

A capital project is a long-term, capital-intensive investment to build upon, add to, or improve a capital asset . Capital projects are defined by their large scale and large cost relative to other investments that involve less planning and resources.

Key Takeaways

• A capital project is an often-pricey, long-term project to expand, maintain, or improve upon a significant piece of property.
• A capital project is distinct from other company projects as it is large in scale, high-cost, and requires considerable planning relative to other investments.
• Capital projects often refer to infrastructure, like roads or railways, or, in the case of a corporation, the development of a manufacturing plant or office.

A capital project is a large-scale project with a high cost that is capitalized or depreciated .

Regular capital investments, such as new facilities, structures, or systems, may be necessary to accelerate growth within a company or government—for example, if a company wants to build a new warehouse or purchase new manufacturing equipment to increase efficiency on the factory line.

Capital projects typically consist of the public sector building or maintaining infrastructure, such as roads, railways, and dams, and companies upgrading, expanding, or replacing their facilities and equipment.

Capital projects must be managed appropriately, for they require a significant commitment of company resources and time. The project assumes a calculated risk with the expectation that the capital asset pays off. Management of risk is a key driver of successful project development and delivery of a capital project.

The most common examples of capital projects are infrastructure projects such as railways, roads, and dams. In addition, these projects include  assets such as subways, pipelines, refineries, power plants, land, and buildings.

Capital projects are also common in corporations . Corporations allocate large amounts of resources ( financial and human capital ) to build or maintain capital assets, such as equipment or a new manufacturing project. In both cases, capital projects are typically planned and discussed at length to decide the most efficient and resourceful plan of execution.

Capital projects are big investments and, therefore, face a lot of scrutiny, especially when paid for with public funds or the money of a publicly traded company . The goal is for these investments to pay off, but sometimes they are poorly planned and executed and end up losing significant capital . 

These projects are big, take time to complete, and can cost a lot of money, meaning it is often necessary to obtain equity or debt financing to make them happen. To receive funding, capital projects are obligated to prove how the investment provides an improvement (additional capacity), new useful feature, or benefit (reduced costs). Analysts might use the return on new invested capital (RONIC) calculation to evaluate if the return on a project is worthy of the capital investment.

Additional funding sources for these projects include bonds , grants , bank loans , existing cash reserves , company operation budgets , and private funding. These projects may require debt financing to secure funding. Debt financing may also be required for infrastructure, such as bridges. However, the bridge cannot be seized if the builder defaults on the loan. Debt financing ensures that the financier can recover funds if the builder defaults on the loan.

Economic conditions and regulatory changes can affect the start or completion of capital projects, as in the case of  Brexit , which caused the cancellation or delays of some projects in Britain.

In the United States, Congress is responsible for funding public capital projects, such as roads, power lines, bridges, and dams.

Government capital projects are large-scale, costly projects to maintain or improve public assets, such as parks, roads, and schools.

Most public offices set thresholds for what qualifies as a capital project. For example, in the Commonwealth of Virginia, a capital project is defined as a project that creates at least 5,000 gross square feet of building space or exceeds $3 million in total project cost. Projects that fall under each jurisdiction’s thresholds, which can also include life expectancy, may instead be called noncapital projects.

Careful planning and realistic estimates do. Affordable funding needs to be secured, costs need to be managed well, and the project must have a very good chance of becoming profitable. One or two setbacks could turn a capital project into a financial disaster.

The Bottom Line

Capital assets are key revenue generators and the backbone of many companies. Those wishing to expand and become more profitable will need to invest in capital projects and do so in the most cost-effective way possible. Over time, it is smart, well-executed investments that separate the good stocks from the weak ones.

Marwan Mohamed, Erika Anneli Pärn, and David J. Edwards, via ResearchGate. “ Brexit: Measuring the Impact Upon Skilled Labour in the UK Construction Industry .” International Journal of Building Pathology and Adaptation , Vol. 35, No. 3, Pages 264–279.

Construction Products Association. “ Brexit—Impact on Construction Products .”

Industrial Engineering and Operations Management Society. “ BREXIT: Assessing the Impact on the UK Construction Industry & Mitigating Identified Risks .”

U.S. Capitol Visitor Center, via Internet Archive. “ What Congress Does .”

Virginia Tech, Division of Campus Planning, Infrastructure, and Facilities. “ Understanding Capital vs. Non-Capital Projects .”

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A Guide to Effective Capital Project Management

In the dynamic field of facilities management, capital projects are essential for growth and efficiency, and facilities managers play a crucial role in steering these projects from concept to completion. Identifying the most appropriate projects, securing funding and ensuring meticulous execution are fundamental elements in enhancing facility operations. If done properly, these projects can achieve substantial organizational savings. 

A practical walk-through of one approach to capital programming can support facilities managers through the various phases of a capital program. It can offer an approach to effectively identifying projects that align with organizational goals, making persuasive cases for funding and managing projects to deliver on time and within budget. 

This walk-through is not intended to discuss managing facilities projects. Managers understand the way their organizations manage the execution of capital projects. But it should provide a sense of the steps organizations can take to realize the long-term benefits of effective capital programming across facilities portfolios that range from single-building owners to managers of thousand-building portfolios. 

Needs and goals 

The first step in this approach to capital programming is identifying initiatives that will significantly help a facility and an organization. This process is ultimately an analytical approach to evaluating the impact of specific projects on the organization as a whole. In that sense, it does not require decades of facility knowledge to perform well. Of course, the organization benefits from deep facilities experience that can identify potential improvements during this process. 

It is difficult to overemphasize the importance of a complete and accurate data set to this process. Too often, organizations have identified projects from an incomplete asset inventory, or a facilities condition assessment does not relate to a work breakdown structure. While projects certainly can be identified this way, it prohibits an organization-wide view of need. This means organizations often take a squeaky wheel approach to funding, which is almost never the most effective or efficient way to run a capital program. 

Managers can begin by conducting a thorough assessment of a facility's operations and infrastructure. The process does not stop at the condition. Facilities have three areas of need: capital renewal, operations and programming. Areas in which projects could enhance efficiency, safety or productivity need to be identified in the same effort as understanding when to replace a roof. Engaging with staff at all levels can provide valuable insights into the daily challenges and opportunities within the facility. Managers should not shy away from stakeholder engagement. 

Related Content: Making a Case for Capital Projects

Assessing facility needs is likely to be the largest single effort in the capital program. It takes a large amount of time to do well. Working at the right level of detail is a prerequisite for success here. Data used to run a CMMS might not have the same level of detail needed to successfully articulate the need for a particular project. 

Managers must ensure each potential project aligns with the organization's broader strategic goals. Whether the goal is reducing operational costs, improving sustainability, enhancing capacity or a direct relationship to the ability to perform the organization’s mission, each project should have a clear link to these overarching objectives. 

Evaluate and prioritize 

Managers also need to consider the financial implications of potential capital projects. This process involves not only looking at the initial investment but analyzing the projected return on investment (ROI) if one exists. Projects with a clear path to financial benefits, such as cost savings or revenue generation, often stand out in the decision-making process. 

Surprisingly, many organizations in the public space also have revenue generative projects linked to leasing programs, parking garages and housing facilities. Managers should not assume there are no potentially revenue generative projects in their backlogs. 

When considering the ways that the best organizations perform financial evaluations of projects, it often involves a key facilities metric. A facilities condition index is often used. It is also important to consider the cost of ownership extending beyond construction, including system and component renewal along with corrective and preventive maintenance. 

Once a manager has compiled a list of potential projects, the next step is to prioritize them based on their alignment with organizational drivers, financial impact and urgency. This prioritization will help focus resources and efforts on projects that promise the most significant benefits. This can be accomplished through a formulaic approach where weights are ascribed to categories and ratings from the assessment. However, the process is likely to be iterative, depending on the funding stream. 

Making the case for funding 

Identifying the right capital projects is a strategic exercise that sets the foundation for successful project execution. The next step involves building compelling cases for these projects, which is a critical step in securing funding and support. 

Securing funding is crucial in capital project management and involves presenting a compelling narrative to stakeholders. Managers can start by crafting a comprehensive business case that outlines the project's objectives, alignment with organizational drivers, and the tangible benefits it will bring. This should include the results of the detailed financial analysis, showcasing the cost-benefit breakdown. 

Managers can support the case with clear visuals and charts to articulate the narrative effectively. The ability to display patterns that are immediately recognizable is much more successful with a visual element than with a table of figures. Humans more quickly recognize patterns with well-designed visuals than they do with tables of figures. So long as the backup information is available when requested, displaying the narrative this way will not be an issue. 

Related Content: Project Management: Strategies for Success

In addition to financial details, managers can stress the way the project aligns with the broader strategic objectives of the organization, reinforcing its relevance and importance. They should present a well-thought-out risk assessment, highlighting potential challenges, strategies for which risks are present, and tactics for avoidance, mitigation and response. This dual focus demonstrates the project's alignment with organizational goals and the proactive approach to managing potential obstacles. 

Finally, managers should prepare to engage dynamically with stakeholders. This step  involves not just presenting the business case but actively listening to feedback, addressing concerns and answering questions. Being responsive and adaptive to stakeholder input can significantly enhance the persuasiveness of your proposal, and it facilitates the buy-in process. 

Project and program management 

Once a specific project is underway, meticulous management is crucial. This involves adhering to the budget and ensuring the project timeline and quality standards are met. Regular monitoring and clear communication channels are essential, allowing for prompt identification and resolution of issues that might arise. Effective delegation of project oversight for large organizations is critical to success. There is a limit to the number of projects one project manager can oversee. 

Once a project is completed, the underlying data set should be updated. This stage is where organizations most often run into problems. It is also a huge opportunity for organizations to improve their capital programs. When the planning cycle begins, managers should consider the following areas: 

• Projects accomplished in the prior period 
• Projects scheduled for the prior period that were not accomplished 
• Projects scheduled for the current period that should be delayed 
• Projects scheduled for future periods that should be accomplished sooner. 

As these adjustments are made, they iteratively inform the next planning cycle. When projects come to fruition, the benefits extend beyond the immediate improvements to the facilities. They contribute significantly to the bottom line of the organization, optimizing operations, enhancing efficiency and paving the way for future growth and success. 

The role of directors and managers in this process is not just about overseeing projects but about driving change, fostering innovation and steering their organizations toward a desired future. 

Ryan Small, FMVA, FMP, is vice president with FEA . 

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What Is a Capital Improvement Plan & How to Create One

It’s not uncommon for organizations to have more plans than they have funds. That creates a dilemma: how to spend their budget. A capital improvement plan can guide an organization when it’s trying to figure out which large projects or purchases in it should invest.

But what exactly is a capital improvement plan? How do you go about creating a capital improvement plan document? Are there benefits to developing a capital improvement plan? Can project management software facilitate this work? Before we answer all those questions, let’s start with a capital improvement definition.

What Is Capital Improvement?

Capital improvement is the process of making capital investments to improve the infrastructure of an organization, such as purchasing land, property, capital assets or renovating a building. These actions are outlined in a document known as a capital improvement plan. Besides businesses and non-profit organizations, governments also make capital improvement plans to decide what infrastructure projects to pursue.

Creating a long-term, substantial capital improvement plan is aided by project management software. ProjectManager is work and project management software that organizes your project, tasks and resources. Our interactive Gantt chart helps you coordinate your budget and schedule to manage and track substantial projects in real time. You can link dependencies to avoid delays, filter for the critical path and set a baseline to monitor your planned effort against your actual effort to keep on schedule. Get started with ProjectManager today for free.

What Is a Capital Improvement Plan?

Organizations use a capital improvement plan (CIP) to make smart budgeting decisions on which large projects or purchases to pursue . These decisions are based on the goals of the organization and what resources they can acquire.

This is a tool used more often by public entities such as local governments for major public expenditures. This includes purchasing major equipment, such as playground equipment, snowplows or computers. Capital improvement plans can also be used for acquiring land for a public purpose, such as a park, landfill or industrial site. Construction expansion or a major renovation of a public facility, such as a library or sewage treatment plan, are also targets of capital improvement plans. It can be used for related planning, engineering, design, appraisal or feasibility study costs.

The capital improvement plan is used to coordinate between community planning and fiscal management to determine the location, timing and financing of the capital improvement. This is usually a multi-year project, often four to six years. These are major but non-recurring physical expenditures.

A supplement to the organization’s larger strategic plan, the capital improvement plan must align with that strategy. The plan doesn’t only outline the capital projects and purchases, but also the timeline and funding options that’s separate from the organization’s annual budget, so it won’t include operational expenses. However, the capital improvement plan is aligned with the annual budget.

What Is a Capital Improvement Project?

A capital improvement project can be defined as a structural change that enhances the capabilities of a property or asset. This can mean different things for a business, a non-profit organization or a government. Here are some examples of capital improvement projects in each of these three scenarios.

• Public Capital Improvement Project Examples: A city government might execute projects to improve its infrastructure, such as building a new highway, renovating its water treatment facility or expanding the capacity of its electrical grid.
• Private Capital Improvement Project Examples: A private organization might execute capital improvement projects such as building a new warehouse, acquiring a fleet of vehicles or purchasing capital assets to meet the goals set in their strategic plan.

What Is a Capital Improvement Program?

In project management , a program is a set of related projects geared towards reaching a set of common goals, which is also true in capital improvement.

Capital Improvement Program Example

For example, if a manufacturer intends to increase its production capacity , he’ll need to execute a capital improvement program consisting of multiple capital improvement projects such as building a new production facility and access routes, along with capital investments such as purchasing machinery and equipment.

Liquidity & Working Capital Improvement

The working capital of an organization is a ratio that’s used to measure the liquidity of an organization. It can be easily calculated by dividing your current assets by your current liabilities.

This ratio helps you gauge the ability a business has to meet its expenses and financial obligations which is helpful when assessing its financial health. Working capital improvement is a series of actions that can be taken to increase the working capital of an organization, such as getting additional funds from investors, cutting down operating expenses and production costs , using trade credit insurance or shortening the operating cycle.

Features of a Capital Improvement Plan Document

There’s no standard format for putting together a capital improvement plan, so they might vary from one organization to another such as if they’re being created by a governmental office or a private company. Also, there are often requirements that differ from city to city and state to state. For example, you might have to get citizen approval before you can move forward with your plan . It’s best to look into the specific details as they pertain to wherever you plan on doing the work.

However, despite differences, common elements are shared with nearly all capital improvement plans. For example, you’ll need a list of all the capital projects, equipment and major studies related to the projects. These projects will then have to be ranked in some order, prioritizing them to have some alignment with the city’s strategic plan in which you’re working. A financing plan will have to be created, estimating the overall cost of each project. Plus, you need a timetable for the construction and completion of the projects, including milestones and critical rollout components.

A project justification is required to explain the need for the projects. Then you’ll have to classify, itemize and explain the project expenditures. This includes the estimated operation and maintenance cost of each project and the revenues, if any, from the projects.

Related:  Free Estimate Template for Excel

Finally, you’ll have to outline the funding sources for the projects. This shows how the city will pay for the projects in your capital improvement plan. This outline should include debt management and whatever borrowing channels will be used, such as bank loans, bonds, taxes, appropriations, grants and so forth.

How to Create a Capital Improvement Plan

As noted, each jurisdiction has a different process and requirements for submitting a capital improvement plan. It’s critical to reach out to the city or state in which you’ll submit your capital improvement plan and get the details on how they do business.

There are, of course, relatively common steps to a capital improvement plan, which give you a basic idea of how to create one. They are as follows.

1. Submission

The first step is project submission. The local agencies and departments have to submit a list of the capital improvement projects that are collected in their capital improvement plan. This is why you want to rank the projects by priority.

You might be asked to provide a project description and justification (as detailed above). There will probably be a request for an estimate of the project costs , whatever ongoing operation and maintenance costs are associated with the project and the recommended funding sources.

2. Evaluation and Selection

Once the capital improvement plan is submitted, it will be chosen based on criteria that range from the desired service level standard to the demand for the project, depending on land, equipment and facility conditions.

Other factors at play include the number of residents the geographic area serves. Return on investment will also be looked at, as well as any cost savings or revenue generation. The sustainability of the project and how it rates in terms of energy efficiency improvements can also be looked at.

Economic, environmental, aesthetic or social impacts are taken into account. There are public health, safety and legal concerns to consider. The plan will be viewed as it aligns with community plans and policies, and the public or political support it has.

3. Financial Analysis

Historical data and projected local government revenues, expenditures and debt service will all be reviewed. This will allow the community to determine its ability to pay for the proposed projects. It will also lead to selecting the right financing tools for the project.

Related: Free Project Proposal Template

4. Plan Preparation

The capital improvement plan is drafted with a list of recommended projects by funding year. There will be scheduling details and financial sources included. Attachments, such as maps, photos, graphs, timelines and other illustrations, can be added to help flesh out the plan.

5. Review and Adoption

There will be a public review of the capital improvement plan which might lead to plan revisions. The governmental body will then vote on whether to adopt the capital improvement plan and budget . The capital improvement plan should be reviewed annually or at least every few years to ensure it’s updated for accuracy.

Benefits of Developing a Capital Improvement Plan

A capital improvement plan services the community in which the project will take place. For one, it ensures the timely repair and replacement of aging infrastructure. Residents, businesses and developers have a certain amount of certainty regarding the location and timing of these public investments.

The plan is also ideal for identifying the most economical means of financing improvement projects, which saves money. It also allows the public to participate in the budget and financing process and air any concerns or comments about it that they may harbor.

Having a capital improvement plan avoids poor planning which can be expensive and time-consuming. The plan is also helpful in avoiding a sharp increase in the tax rate, user fees and debt levels to cover unexpected capital improvements. It helps to match growth and development with the overall strategic plan of the area, balancing the need for public improvements with the community’s financial resources.

How ProjectManager Helps With Capital Improvement Plans

There are likely going to be multiple departments involved in the capital improvement plan process. It’s best if they’re all using the same system, which can act as a central hub for all the documentation. ProjectManager is project management software that helps you track workflows and budgets, set deadlines, monitor progress and report on the results. Our unlimited file storage provides a central hub for your documentation and our collaborative platform connects everyone no matter where or when they work.

Track and Share Data With Live Dashboards

Our live dashboard automatically calculates six project metrics, from cost to time and more. There’s no setup required as with inferior lightweight tools. It’s ready when you are, displaying results in easy-to-read graphs and charts that can be shared with stakeholders for a high-level view of progress and performance. This is also a great feature for keeping the public updated with project information. It builds trust through transparency and helps everyone live up to their responsibility.

Easy Reporting Features for Detailed Data

Reporting to stakeholders and having detailed records on the project helps keep everyone updated. With visibility into how the project is going, you can manage expectations and keep everyone happy. Our reports can be generated with one click and filtered to reflect information directly relevant to your project stakeholders. There are status and portfolio reports as well as reports on project health and more. They can all be easily printed or shared as PDF attachments.

As the project changes over the years, it’s easy to update the capital investment plan with our online tool, whether you’re in the office, at home or on the road. You’ll always be able to align your capital improvement plan with the larger strategic plan and annual budget . Automate workflows to keep teams focused on what matters and free them from busy work. Ensure quality with task approval settings that ensure no status is updated without the proper supervision. We have everything you need to make, manage and report on capital improvement plans.

Related Content

Making a capital improvement plan is very important, but is just one of many actions you should take when deciding how to allocate the financial resources of your organization. First, you should estimate your resource requirements, make a budget, get approval from stakeholders, among other things. We have created dozens of related blogs, templates and guides to help you master this process.

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• Capital Budgeting: Definitions, Steps & Techniques

ProjectManager is award-winning work and project management software that connects hybrid teams for better collaboration. With one source of truth, teams and stakeholders are always working on the most current data, which is updated in real time. Join teams at NASA, Siemens and Nestle who use our tool to deliver success. Get started with ProjectManager today for free.

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What is a capital project? Definition and examples

A Capital Project is a long-term project to build, improve, maintain, or develop a capital asset. This type of project involves a significant and consistent flow of investment. A capital project can be large-scale, needing constant management and resources for completion.

Put simply; a capital project is a huge project that costs a lot of money, lasts a long time, and is generally extremely complex.

Capital assets , in the world of business, include land, buildings, machinery, factories, vehicles, and computer equipment. In other words, for a company, a capital asset is something it needs to produce goods or services .

Due to their scale and complexity, capital projects require meticulous strategic planning, often involving feasibility studies and long-term financial projections to ensure their viability.

Rutgers’ Glossary of Budget and Finance Terms has this succinct definition of ‘capital project’: “A construction project to build, improve, or maintain a physical asset.”

Capital projects are typically projects that we can capitalize or depreciate.

The City of Portland , USA, has the following definition of the term, from the public sector’s point of view: “A Capital Project is a project that helps maintain or improve a City asset, often called infrastructure.”

Capital project – examples

Examples of this type of project include construction projects such as building a new factory, adding a new pipeline, or maintaining an old building. The construction of a new highway, railway, or subway might also be capital projects.

A business may start a capital project to increase growth or to maintain assets. The company may invest in new facilities, a manufacturing process, or internal systems.

In each case, it is important to plan the project thoroughly. The project leader must determine how best to use resources and time. It is also vital to keep down costs.

Unexpected problems

Every project has unexpected problems, even the most carefully planned ones. Therefore, it is important to have a team of professionals with excellent project management skills.

Typical issues include government permit requirements and problems with contractors. Scarcity of resources is also sometimes a problem.

We can fund a capital project through bank loans, bonds, or cash reserves. Public or private funding are also possible options.

Capital project – public funding

When there is public funding, the capital project is typically for the benefit of the community or country.

The renovation of a rehabilitation center or the construction of a new park are examples of publicly-funded projects.

When planning this type of project, we should consider several factors that can affect it in the future. Economic conditions and regulatory changes, for example, can affect a project’s future or outcome.

Infrastructure

When public funds are financing the project, they are often projects to improve a city’s or country’s infrastructure.

Infrastructure refers to the structures and systems without which a country could not function .

Bridges, railway lines, roads, tunnels, and telephone lines are infrastructure items. Underground water and sewage pipes, cell towers, and airports are also infrastructure items.

Successful capital projects often stimulate local economies by creating jobs and attracting businesses, which can lead to a broader economic revitalization.

Video – What is a Capital Project?

This interesting video presentation, from our sister channel on YouTube – Marketing Business Networ k, explains what a ‘Capital Project’ is using simple and easy-to-understand language and examples.

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How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.

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How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

Housing plan for homeless veterans could affect Greenbelt in Harrisburg

• Updated: Sep. 05, 2024, 5:44 p.m.
• | Published: Sep. 05, 2024, 6:00 a.m.

The Capital Area Greenbelt at South Front Street in Harrisburg. April 6, 2023. Dan Gleiter | [email protected]

• Daniel Urie | [email protected]

The members of the Harrisburg Planning Commission, the city’s planning department and the Capital Area Greenbelt Association seem to be in favor of a proposed project on South Front Street that would provide both transitional and permanent housing for veterans.

But, they are all concerned about the future of the Capitol Area Greenbelt in the area of the proposed project in Harrisburg.

The Stephen Siller Tunnel to Towers Foundation plans to build the Tunnel to Towers Veterans Village for homeless veterans at 1103 S. Front St., which would include a 64-unit mixed-use building and 20 “comfort homes” for residents. The proposed project sits on a 15-acre property. The nonprofit plans to purchase 8.5 acres of the property.

The project was back in front of the planning commission on Wednesday night as The Stephen Siller Tunnel to Towers Foundation submitted subdivision and preliminary land development plans for the project. In the end, the planning commission recommended the subdivision plan for the project by a 4-2 vote. The other part of the 15-acre property will be used by Eden Village, a separate project that will provide housing for the homeless.

The planning commission voted 6-0 to table the preliminary land development plan.

Well over two hours of the three-hour meeting were dedicated to the Tunnel to Towers Veterans Village project. And emotions ran high as much of the discussion was related to one thing — the Capital Area Greenbelt, a 20-mile walking and biking trail that loops through and around Harrisburg.

The property has accommodated a connection of the Capital Area Greenbelt for decades with permission from the the owner. However, due to the construction of the nearby Veterans Grove, there has been a detour in place for some time.

In June, members of the planning commission urged the nonprofit to maintain that connection of the Capital Area Greenbelt.

Officials from the Tunnel to Towers say they’re open to allowing the trail to traverse the eastern border of the property, which is parallel to the current access road. They say that given the high volume of foot and bike traffic, the eastern boundary route is the only route that would be acceptable for them. Other routes along the Veterans Village property would have a negative impact on the project’s site plan and its residents, officials said.

The members of the Harrisburg Planning Commission, the director of the city’s planning department and the president of the Capital Area Greenbelt Association all expressed concerns regarding the developer’s suggested proposed trail.

“I’m distressed that our input at the prior meetings was completely ignored,” said Commissioner Vern McKissick.

Geoffrey Knight, director of planning for the city, said that the developer’s plan to allow the trail on the eastern side of the property will dump bikers using the Greenbelt into a street where they will have to ride through the parking lot of the PennDOT facility mixing with drivers. Knight said that plan would be dangerous.

“Having the Greenbelt go across the southern portion of the property and along the access route would have no engagement with the residents, would not require the facility to open up to the general public and can easily be accommodated on which is an existing access road for emergency vehicles,” Knight said. “And frankly, I continue to be kind of baffled by the complete refusal of an adoptive commonsense proposal.”

Knight also said that the Dauphin County General Authority, which owns the Riverfront Office Center that is home to PennDOT, has said they will not reserve any additional space for the Greenbelt.

Lynda Cox, associate vice president for the Stephen Siller Tunnel to Towers Foundation, said that her organization is trying to treat veterans in a dignified way without having hundreds of people walking through their community.

“Our only intent is to take care of the veterans,” she said. “There’s no intention to be nefarious. There’s no intention to prevent people from having fun. There’s no intention to do anything nefarious to this trail. Our only intent is to take care of the veterans. This project brings supportive services and permanent affordable housing to our veteran community.”

Knight responded by saying the trail can be fenced off and cut off visibly with landscaping.

“I don’t understand this insistence that somehow saying ‘well you can walk out on the sidewalk and get dumped into a road here and fight through this parking lot is somehow affecting the dignity of the residents of this facility’. We are not against the use. We are not against the number of units. We are not against [the] services provided here. We’re basically not against any of the design of this project except for the continual refusal to retain the Greenbelt on [the] site.”

Luis Menendez, director of construction for the Stephen Siller Tunnel to Towers Foundation said that security is a top priority for the community’s residents. He said that having a secure space and a safe environment without outside influence is important.

“We can’t vet the general public, we don’t know who walks through there,” he said. “It’s a wooded environment. Anything can go. And that is something that we’re not in [a] position to compromise.”

Commissioner Anne Marek applauded the foundation’s thought and design into the project but was also disappointed with the developer’s plan for the Greenbelt.

“Cleary this is very well thought out, very detailed. I don’t take issue with that,” she said. “I fully support veterans. What disappoints me is that you’re able to take that level of detail when it comes to laying out of your building, structure and services but yet have not gone beyond that to look at a level of any detail and how you integrate into the community and into the cityscape around it and various infrastructure that exists within this property.”

Doug Hill, president of the Capital Area Greenbelt Association, said that talking to the developer about a plan has been mostly through an intermediary.

As part of its motion to table the plan, the planning commission requested that the parties meet to discuss the Greenbelt.

The project previously received zoning hearing board approval of a special exception for a “use not specifically prohibited in the zoning code,” and of a variance application for buildings shorter than the 36-foot minimum. The plan could come back to the planning commission as early as next month.

Harrisburg City Council has until Dec. 30 to make a decision on the project. And because this is only the preliminary land development plan, the developer will still have to submit a final land development plan, and they will have a full year to do so.

The Stephen Siller Tunnel to Towers Foundation plans to build a housing development for homeless veterans at 1103 S. Front St. in Harrisburg. It would include both transitional and permanent housing. Tunnel to Towers Veterans Village would include a 64-unit mixed-use building and 20 “comfort homes” for residents. Rendering provided

The three-story mixed-use building would include 60 studio apartments on the second and third floors. The apartments will have about 390 square feet. Each apartment will include a sleeping area, kitchenette and bathroom with a toilet and shower. There will be laundry facilities on each floor as well as a lounge and meeting rooms for tenant services and social gatherings on the first floor.

The 20 “comfort homes” will be one-story structures. All the units will be capable of being ADA compliant. The “comfort homes” will have about 500 square feet of space. Each home has a separate living room, a central kitchen area with a bathroom and a separate private bedroom.

The “comfort homes” will be offered to veterans who are 55 and over. Each comfort home will have a ramp. Both the homes and the apartments can be for permanent living. However, the nonprofit hopes that veterans who use the apartments will transition into permanent housing.

The community will have fencing with a controlled entrance and exit, and 24-hour surveillance.

Veterans Village will offer support services for veterans including job training, legal services, benefits assistance, education assistance, and mental health support and counseling. The community will assist in providing transportation for its residents, allowing them to find employment or visit nearby VA offices. Each floor will have a case manager.

From approximately 1890 until 1970, the entire property was used as a steel mill. The property is mostly vacant but still retains some of the building foundations and site infrastructure from when the property accommodated a steel mill. The property is near the PennDOT building, the Veterans Grove tiny-homes village for homeless veterans, railroad tracks and the Susquehanna River.

The Stephen Siller Tunnel to Towers Foundation is a New York nonprofit, which promotes housing for disabled first responders and families of their survivors and housing for homeless veterans. It was founded in memory of Stephen Siller, a New York City firefighter who died at the World Trade Center on Sept. 11, 2001.

This will be the first Tunnel to Towers Veterans Village in Pennsylvania. The nonprofit is currently developing or looking to develop veteran villages in several states.

Several veterans who spoke at the meeting including Calobe Jackson, said in the end they just want to see this project approved.

“I urge you to compromise on this. Somebody loses a little bit, somebody will gain. But I think you should pass this and do this for the veterans,” Jackson said.

Three projects that will provide housing for the homeless are in various phases of development at 1101 and 1103 S. Front Street. In addition to Tunnel to Towers Veterans Village, Veterans Grove, a 15-unit tiny-home community will serve homeless veterans. Veterans Grove welcomed its first residents in June. Eden Village, a 31-unit tiny-home community will provide transitional housing for the homeless. Officials for Eden Village provided a sketch plan to the planning commission in July.

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Exclusive: Intel CEO to pitch board on plans to shed assets, cut costs, source says

• Medium Text
• Intel CEO Pat Gelsinger and other executives to present plans to trim down company
• CEO will present ideas at mid-September meeting,
• Plans could include selling Altera programmable chip unit, sources say
• Capital spending cuts may include German factory expected to cost $32 billion, source says
• Intel has retained Morgan Stanley and Goldman Sachs to advise on asset sales

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Reporting by Max A. Cherney in San Francisco and Milana Vinn in New York; Editing by Kenneth Li, Anirban Sen, Paritosh Bansal, Deepa Babington and Mark Porter

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Milana Vinn reports on technology, media, and telecom (TMT) mergers and acquisitions. Her content usually appears in the markets and deals sections of the website. Milana previously worked at GLG and PE Hub, where she spent several years covering TMT deals in private equity. She graduated from CUNY Graduate School of Journalism with Masters in Business Journalism.

Google search monopoly US case remedies to come by December

The U.S. Department of Justice plans to issue an outline by December on what Alphabet's Google must do to restore competition after a judge earlier found the company illegally monopolized the market for online search, prosecutors said at a court hearing in Washington on Friday.

Why the time is right to reinvent capital-project delivery

Projects 5.0 is a new model for the delivery of large capital projects in heavy industry. In the first of a forthcoming series of publications, we make the case for a radically different approach in the sector, and outline the six fundamental changes that could transform project-delivery performance.

In the last two decades, leading industries have slashed the cost and time of project delivery by changing how they execute projects. The cost of space flight has fallen by 75 percent, for example. Carmakers have accelerated new-model development by more than 30 percent. Leading manufacturers have halved lead times and doubled productivity and factory output.

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Applying the same underlying principles to large capital projects in heavy industries could achieve a similar step change in performance, with the potential to reduce actual project cost and time by 30 to 50 percent, more than doubling project returns. Yet the sector has struggled to achieve even moderate rates of productivity improvement or to deliver projects on time; a recent survey of senior project executives found that on average, projects overrun their budgets and schedules by 30 to 45 percent.

The coronavirus crisis has further accelerated the urgency for change. Lockdowns, labor shortages , and supply-chain disruptions have set construction programs back by months. The prospect of a long, uncertain period of recovery is forcing companies to rethink future project plans.

To address these old and new challenges, Project 5.0 builds on the Fourth Industrial Revolution’s advances, which introduced automation, machine learning, smart technologies, and the Internet of Things into conventional manufacturing and industrial practices. Incorporating these techniques into a broader set of changes, including stronger partnership networks, greater agility and flexibility, and thoughtful future-proofing, promises to unlock capital projects’ full potential to deliver lasting value.

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An industry ready for change.

At the root of the sector’s unenviable record is a project-delivery model that has remained largely unchanged for a quarter of a century or more. It is a model plagued by issues and inefficiencies: a lack of integrated systems thinking; prioritizing short-term cost management over long-term outcomes; poor communication between stakeholders; and bespoke projects and rigid planning systems that struggle to identify or adapt to changing demands. In conversations with industry leaders and sector experts, we synthesized the major sources of value loss that afflict today’s capital projects (Exhibit 1).

Industry leaders are experimenting with a growing list of new technologies and processes, from digital twins to AI-enabled planning algorithms. These tools have started to deliver real results: one mining company combined real-time digital-tracking and monitoring tools with lean construction practices to trim six months from its original 18-month construction schedule.

A real transformation of capital-project delivery will require more than targeted interventions, however. At best, narrowly focused tools and technologies can address only a small part of the overall value at stake. At worst, poor technology and process deployment can end up adding unnecessary complexity and confusion to the project.

Projects 5.0: A cleansheet approach to project delivery

The time is ripe for radical change in delivering large capital projects: starting with a clean sheet and rebuilding the project-delivery model from the ground up. Over the past year, we have worked with industry leaders and experts from around the world to reimagine how such a model would operate. We set ourselves the challenge of creating a model that could achieve five key objectives:

• Reduce actual project cost and time by 30 to 50 percent
• Produce safe and predictable outcomes
• Provide a platform for innovation and continuous improvement
• Maximize total project value for all stakeholders, including the end user
• Enable projects to meet sustainability goals

This “Projects 5.0” initiative had to pass one further test. It had to be a workable solution that could be implemented using elements, methods, and technologies that not only are available, but are proven to unlock value. Studying the most successful elements of various delivery models has allowed us to identify six fundamental changes required to transform large capital project delivery (Exhibit 2):

• An ecosystem of partners that collaborates across multiple projects to maximize end-to-end value and deliver optimal functionality for the end user.
• Industrialization and innovation, with the adoption of standard processes for repeated tasks. Extensive use of standardization and modularization reduces recurring design costs and enables offsite construction. Investment in innovation drives continual experimentation, with successful ideas rapidly deployed as new or updated standards.
• Agility, flexibility, and resilience, combined with a stable backbone of disciplined processes, progress monitoring, and management. Cross-functional teams work together to develop and deliver project elements, solve problems, and respond to change. Resources are rapidly reallocated within and between projects according to need.
• Sustained capability building with a redesigned “people supply chain” that ensures companies acquire, develop, and retain the labor and talent they need for consistent, high-productivity work across all project phases.
• A data-driven operating model resting on a robust digital architecture, shared by all stakeholders in the ecosystem. The project-technology platform should enable real-time visibility of progress, facilitate collaborative design and problem solving, and enable data-and insight-driven decision-making.
• Future-proofing of projects, with the use of metrics and incentives that consider full lifecycle impacts, future opportunities, and risks, while promoting innovation for long-term commercial and environmental sustainability.

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Reimagining the change.

In September 2020, we conducted a worldwide survey of more than 300 senior executives and decision-makers in the large capital-project value chain, including owners, main contractors, engineering-service providers, and equipment manufacturers. We asked them to estimate the feasibility of these six changes and their potential impact on project delivery.

Respondents believe that the successful implementation of these changes could reduce both costs and project durations by 30 percent or more (Exhibit 3).

The survey also suggests that while the industry is ready for change, few leaders have begun the transition to an improved project-delivery model. More than 75 percent of respondents said that a significant shift in the project-delivery model was part of their organization’s strategic agenda, with more than half putting it at the top of their priority list. Yet 86 percent of respondents said that their organizations had not made significant progress on this point.

Changing a project-delivery model that has been in use for decades is always going to be challenging, especially when the work involves multiple stakeholders and multi-million-dollar capital investments. Transitioning to a Project 5.0 model will therefore be a journey with multiple phases. Companies can start by setting bold aspirations for the future they want to achieve, creating a roadmap with priority initiatives—including ones specifically designed enable significant mind-set shifts across the ecosystem—and defining new ways of working.

In a forthcoming report, we will take an in-depth look at the six fundamental changes required in the new project-delivery model. We will also describe the key actions that will enable the transition to Projects 5.0, and lay out a plan for rapid, sustainable change.

Shankar Chandrasekaran is a partner in McKinsey’s Mumbai office; Shakeel Kalidas is a consultant in the Johannesburg office, where Gerhard Nel and Prakash Parbhoo are both partners; Mina Mir is an expert in the Dubai office; and Anuradha Rao and Siddharth Srikanthan are consultants in the Chennai office.

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First Published: Sep 06 2024 | 5:35 PM IST

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