Implementation phase in capital budgeting
What do you mean by Implementation phase in capital budgeting ?
The implementation phase for business project that involves setting up of industrial facilities that consists of several stages such as
1. project and engineering designs
2. negotiations and contracting
4. training, and
5. plant commissioning
Translating an investment suggestion into a material is a complex, time- consuming, and risk burdened task. Delays in implementation that are common, can lead to considerable cost overruns. For speedy implementation at a rational cost, the below are helpful.
1. Adequate Formulation of Projects.
A major reason for the delay is not enough for formulation of projects. In other words, if necessary homework in terms of preliminary studies and complete and detailed formulation of the project is not done, many surprises and shocks are likely to spring on the way. Thus the need for sufficient formulation of the project cannot be greater.
2. Use of the Principle of Responsibility Accounting. Conveying specific responsibilities to project managers for implementation of the project within the defined time-frame and cost limits is supportive in quick execution and cost control.
3. Use of Network Techniques. For project planning and control two basic techniques are available –
PERT (Programmed Evaluation Review Technique) and
CPM (Critical Path Method).
With the help of these methods, monitoring becomes easier.