Among the basic steps that should be followed in formulation of capital improvement program are:
Assessing the existing condition of the infrastructure and establishing s/term and long-term physical needs.
Developing alternative projects to meet the short and long-term needs.
Select alternatives and establish priority classification for short and long-term needs.
Estimate the required resources and short term funding.
Assess the impact on the governmental or organizational financial policy.
Establish a monitoring system, control work schedules and financing.
Initiate a replacement and maintenance strategy.
The capital budgeting process begins with the development of a capital improvement program. This involves the
identification of projects that will meet the government needs or public needs for a specified number of years. A vast
majority of projects are identified by government agencies although private organizations may also make suggestions.
Each project submitted is accompanied by supporting rational selling for cost data and justifying narratives.
In carrying out the review process the inter relationships are determined, costs are evaluated and priorities are identified.
As part of the review process, schedules for proposed implementation of projects are synchronized to minimize wasteful
use of resources. In addition, projects that can reasonably be postponed are identified. Capital improvement plan (C.I.P)
may be viewed as an instrument through which a community raises its short-term and long-term physical growth and
development plan. Ideally the C.I.P. is linked to community’s master and long-term plan for identifying public
improvement needs or requirements. C.I.P. is essentially a schedule listing capital improvement in order of priority
together with cost estimate and proposed method of financing them. C.I.P.s are subject to constant charges since each
year the C.I.P. is reviewed and updated with regard to changing needs and priorities of the community or the organization.
By means of the C.I.P, the following activities are undertaken:
Projects are scheduled over a 5 year period
A budget is developed for high priority projects
A revenue policy is developed for project improvement
Departmental activities are co-ordinated to meet project schedules
A system is developed to monitor, evaluate and inform the public about the proposed capital improvement.