Capital budgeting, the decision making proposal at maintenance management level.

Abstract

In researching Capital Budgeting, special emphasis is employed to the Decision Making proposal presented by Maintenance Management. This study attempts to reveal the Capital Budgeting Techniques used by Toyota South Africa's Maintenance Departments. It interrogates if these techniques are correctly administered, and whether or not an appropriate decision is made. An indepth study of Capital Budgeting theory is done where among others, the following topics are discussed: The Capital Budgeting Process; The Techniques used in Capital Budgeting; Types of Projects; Funding and Risk. The detail of the theory is intended to be as an educator to those oblivious to the standards set out by scholars on these relevant topics. A questionnaire type survey was conducted, where the respondents answered pertinent questions, that adds value to this study. The unique feature of this study is that the sample size of thirty-five, is equivalent to the population of respondents within the company. A holistic picture of only the relevant information is gathered and interpreted, where both graphical and tabular representation is used to explain the findings. What is evident from the survey is that there is a lack of knowledge in the Maintenance Departments with regards to the usage of Capital Budgeting Techniques. The results prove that much guesswork goes into the proposal, as Gut-Feel and Discretion are key components of the decision. This anomaly is due to the finding that the Maintenance Management has not received relevant type training for this facet of their jobs. The recommendation to Management is that training and education be made available to these relevant people. Furthermore, it is proposed that the human resource department maps out the future career path opportunity and expectations that the employer has from the employee. In doing this type of succession planning, the company is assured of the best quality management at all times.