This video discusses the typical definitions for capital and operating expenditures in a project environment. It also examines the requirement to plan and track these budget categories separately.
- Imagine playing chess when you don't know the rules…and your opponent is taking his pieces…and moving them every which way across the chessboard.…It can get awfully confusing, frustrating,…and might make you believe someone is making up the rules…as you proceed through the game.…Working out different categories of project costs…can seem like playing that frustrating game of chess…if you don't know a few of the rules.…Two concepts that form the basis…of relevant accounting rules are capital costs…and operating costs.…
Capital costs, or CapEx, is money that's allocated…for buying things to create future benefit…in an organization.…Examples are spending for assets like buildings,…machinery, equipment, software, or upgrading…existing facilities, things that the company owns and keeps.…On the other hand, operating costs, or OpEx,…are expenditures needed for the day-to-day running…of the business.…These include wages, costs for utilities,…maintenance, and repairs.…
In addition, the depreciation of plant,…equipment, and machinery often falls under OpEx.…
Note: This course follows the latest guidance from Project Management Institute, Inc., as outlined the PMBOK® 6 Guide.
- Recall best practices for project budgeting and estimation.
- Distinguish common estimation approaches used to build project budgets, and understand when to use them.
- Identify best practices for budget expectation management, while utilizing sound budget refinement techniques.
- Describe and explore agile project budgeting techniques.
- Review various approaches for correcting project budget overruns.
- Review sound budget reporting approaches, including how they can be used to report project status.
- Recognize the issues and changes that can put a project budget in jeopardy.