Are You Planning Ahead?
- “Your Dad is upset that we have to spend all this money on the renovation”
- “If we would have done small improvements a few times, we wouldn’t have had to spend all this money at once.”
Management doesn’t like huge spikes in capital expenses.
Generally, management won’t allow for massive spikes in capital expenses because of budgetary constraints or impact on the stock price. That means, you’ll be stuck with equipment that’s in poor condition.
What should you do?
If you haven’t yet, start nailing down these groups of equipment. Start thinking about the next 5-10 years. Start understanding when equipment will be aging out and plan for that eventuality. If you can, spread those replacements over multiple years to minimize the spike. That will be more palatable for your management team. Reliability is about the future, not the now.