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Capital Budgeting Is A Step Process An Organization

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Capital budgeting is a step by step process an organization use to evaluate the merits and

viabilities of long-term investment project. The evaluation techniques used in capital budgeting

essentially center on the costs of investments relative to the benefits that will be generate from

the investment. Capital budgeting is important because its “decisions impact the firm for several

years” (Capital Budgeting, 2009) so, they must be carefully planned.

The VDOT, as many organizations, uses capital budgeting to enable the organization to estimate

and forecast its revenues, monitor and control expenditure, and look out for new investment

projects to plan, deliver, operate and maintain a transportation system that is safe, enables …show more content…

Richmond, 2014).
The agency’s payroll increase 2 percent ($7,763,878), 4 percent ($15,527,757) or 5 percent ($19,409,696) for the year 2014 can improve employee’s satisfaction and play a distinctive role, especially at 5 percent increase, on how well employees perform. However, the increase in salaries especially at 4 and 5 percent can greatly affect the organization budget as the agency total expenditure is already greater that its revenue.

2014
2014 ( 2% )
2014 ( 4%)
2014 (5%)
Total Payroll
$388,193,923
$395,957,801
$403,721,680
$407,603,619
Increase

$7,763,878 $15,527,757 $19,409,696

Trend Analysis Over the past five years, the Virginia Department of Transportation has conducting larger

numbers of projects and studies to find the need, costs and impacts of proposed projects in the

State, but also worked and still working to “preserve the public’s investment through the delivery

of an effective and efficient statewide maintenance program to protect and enhance the

transportation infrastructure and the safety of the traveling public” (Fiscal Year, 2013). Just

looking into the VDOT two largest programs, the highway maintenance and operation (38%),

and the highway construction (37%), we notice that funds allocated for each program has yearly

changed. In 2015 for instance we have a decrease of about 26 percent on the construction

program compares to 2014, and a projected increase of about 83 percent in 2016 compare

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