Capital Budgeting Decisions

  • According to the text, post-completion audit procedures should be performed to evaluate the efficiency and effectiveness of capital budgeting decisions that management has implemented. Discuss the purpose of a post-closing review, and formulate at least five questions that a project manager should answer so that the vice president of finance, who makes the final decision to cancel projects or apply the lessons learned to evaluate future projects, can determine whether the project is on track to achieve the expected results. Indicate how each variance will provide insight in explaining deviation from the expected result.
  • Note: The current Chapter 4 in your textbook is incorrect.  Please use the Chapter 4: Capital Investment Decision file located in the Student Center under eChapters, or click here to download the file.

    • Capital budgeting decisions are among the most important decisions facing business entities. Suggest specific milestones needed to evaluate the performance of capital projects, and suggest some ways to hold managers accountable for spending overruns. Recommend when capital projects should be abandoned due to subsequent cost overruns. Support your position.