On an overall basis, companies rate their capital investment planning process at
5.8 On a scale of 1 (poor) to 10 (best). Companies that are unhappy with their process cite the following problems:
• “Gaming” of the process
• Special treatment of certain capital investments (such as information technology projects)
• The effect of executive incentive bonuses on investment decisions
• The treatment of implementation and uncertainty risks by the project appraisal process
Also, only about half of the companies examined conduct post investment reviews. However, when such reviews do get done, the primary intentions are perceived to be to learn lessons from investment decisions and to improve forecasting. Fewer companies use the reviews to help improve their capital planning process.
