Introduction
Universal Part Company is an entity which is has been commitment to improving its competitive advantage in the market. Due to this, they require $100 million in the next 10 years to sustain its growth levels. These will be raised through debt and equity. These comprise of a capital structure of 30% of debt and 70% equity. The company also plans to sell its trucks within the next 12 months or lease them for shipping products to customers. Therefore, for the purposes of this paper, the capital plan stages for the UPC Company are developed. These will help in the management of the capital so as to achieve the set objectives either in the short or long run.
Capital plan
There are various plans which can be evident over time. They comprise of the following:
Financial plan phase
In this phase it is good to note that it is a reliable source of funding which gives a justifiable capital plan. It is due to this reason which makes a good financial plan to be core factor during capital improvement plan. Therefore, the key issues which should be addressed in this phase of the plan comprise of developing an accepted and solid finance plan and prepare a one year budget and a CIP which has a 10 year forecast. Besides, Identify the monetary assets, quantify the debts, establish goals for operating budgets or the reserve funds which can used on the schemes, identifying other sources of funds (grants, revenue streams, development contribution and revolving loans) and quantifying savings, revenues and operating costs which arises from the project implementation (Westerman, 2004). The UPC Company has been doing so well since they have identified their sources of funds and have broken it into a yearly capital budget plan. They have also identified their source of revenue stream per year from either leasing or selling their trucks. These will assist them in achieving the objectives of the project hence a competitive advantage.
Project Identification and Prioritization phase
In this phase, all the potential financial projects are identified from all possible sources. These will assist in preventing the company from engaging in accomplishment of unwanted needs. The identification process is also vital since it allows the project team or capital budgeting team to address the capital needs promptly and find a wide range of alternative course of actions (Keays, 2017). The capital need identification should include information as the project's appraised costs, scope and schedule, funding sources, funding sources and its impact on the operating budgets and its useful life (Westerman, 2004). The categorization should be based on the type of the project and its purpose to allow UPC Company in the identification of the resources and make a decision on how to allocate them optimally. These ensure that there is efficiency in the utilization of the available funds, a process which shall ensure that the company efficiently meets its objectives.
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Project Management phase
In most of the projects, the implementation process has proved to be a challenge over time, a situation which leads to a project failure. A careful creation of a plan, definition of the scope and ranking in accordance with priority has no value if the assignment has not materialized as it was initially planned based on time and budget. Therefore, during this phase, the following activities should be carried out during the project management. They composed of development of RFP and issuance, assortment of the strategy consultants, design a project management and monitoring process, prepare and execute the bidding procedure, monitoring and management, budgeting, and construction contract harmonization (Westerman, 2004). These will enable the project managers to have an easy time in the management process since all the problems which can arise can be amicably handled.
Monitoring and reporting
It is a phase which involves the collection of data from different parts of the organization as far as the project is concerned, assess and analyze them to identify whether the project operates within the scope, budget and time. The outcome should be reported to various stakeholders so as to make improvement when there is deficit in the achievement or goals or to close the project.
Conclusion
In the situation where the UPC has implemented the project in accordance with this capital plan, then they will stand a chance to improve their performance and operations over time. These will improve their comparative and competitive advantage either in the short or long run.
Reference
Blackwell, E. (2011). How to Prepare a Business Plan: Create Your Strategy; Forecast Your Finances; Produce That Persuasive Plan. London: Kogan Page.
Davey, J. A., & Barrington, R. E. (2016). Capital plan. Wellington, N.Z.: Formation Productions Ltd.
Keays, S. (2017). Investment-centric project management: Advanced strategies for developing and executing successful capital projects.
National Film Board of Canada. (2014). A Capital Plan.
Sherman, A. J. (2012). Raising capital: Get the money you need to grow your business. New York: American Management Association.
Westerman N. (2004). Managing the Capital Planning Cycle. Best Practice Examples of Effective Capital Program Management. https://www.gfoa.org/sites/default/files/ManagingTheCapitaPlanningCycle.pdf.
