The Importance of Planning in a Down Economy

In business and in your personal life, when money is tight you have to be really smart about how to spend it. Governments and businesses are learning some really hard lessons right now – as their tax revenues dry up or their sales drop, they can’t operate the way they used to. It used to be that things would all just work themselves out – but today, a few poor decisions can destroy an organization.

Nowhere is this more important than with capital projects. Capital projects – new buildings, renovations, expansions, and so on – cost millions of dollars and add fixed carrying costs for years. It’s becoming critically important to spend the time and follow a good process to decide what projects are needed before you start on them. I am talking about capital project planning.

Every organization has more projects than they do money – you always have a wish list that is bigger than your resources. So how do you decide what to focus on? You need a system – an organized way to prioritize and select the most appropriate projects. Here is what happens without a good system – projects are prioritized by political or emotional criteria. “Gina is the CEO – Let’s do her project first, maybe she will consider me for that promotion.”

Or, “I’ve always wanted to work on a project like that – so I am going to push for that one to get prioritized.” Whether people admit it or not – this happens.

When you are tight on cash, you need good criteria so that you select only the essential projects. You need good data to support your decisions. And last, you need transparency in the process – you need to provide visibility to all of the stakeholders in the process. When you follow a methodical approach, you take all of the emotion out of the process and you elevate your credibility as well as that of your department and organization.

So how do you get started? Or how do you convince your organization to take this sort of approach? And if you are a taxpayer, how do you get your school board, local government, or any other taxing body to do this? Check out my next post.