Capital Project Costs
Capital Project Costs
(OP)
For those of you that work at or have worked at chemical /petrochemical type plants, was capital project oversite (e.g. time spent managing the project)charged to capital projects? I'm talking about capital improvements; such as, new equipment and processes, etc. I currently work at...let's catagorize it as a production facility...and the project engineers/project managers do not charge their time spent on capital projects to the project. Other places I have worked, always captured any time directly related to a capital improvement. Makes sense to me to lower overhead. I was just curious what ohters experiences were...?





RE: Capital Project Costs
RE: Capital Project Costs
Used to be a big controversy between having functional organizations vs. projectized organizations. Each had its pros and cons. Nonetheless, functional managers are often assigned to overhead, instead of to specific projects. It's just a game people play.
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RE: Capital Project Costs
overhead/O&M does not have these advantages.
good management practices dictate that if you work on capital projects -charge the capital account.
RE: Capital Project Costs
IR...the PEs/PMs charge directly to plant overhead, although they directly support capital improvments. I'm not sure what you mean when you say that this comes form the overhead bucket.
eyec...your description is exactly what I have always been told that capital costs are capitured and depreciated over time for tax purposes.
RE: Capital Project Costs
I've never accounted for depreciation of anything but capital equipment. Maybe I'm missing something......
RE: Capital Project Costs
If a company is trying to minimize ROI, then they'll try to move expenses into some part of the operating expenses, such as PM costs. It seems plausible that a sufficiently creative accountant could probably construct a scenario whereby the bulk of the labor expenses could be shuffled into, or out of, a capital project, depending how one wanted to tweak the tax/ROI scenario.
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