Sample interview questions: How do you assess and prioritize capital expenditure projects?
Sample answer:
Assessing Capital Expenditure Projects
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Technical Feasibility: Evaluate the technical viability of the project, including its ability to meet operational requirements and align with current and future business objectives.
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Financial Viability: Determine the project’s financial impact, considering its return on investment (ROI), payback period, and potential risks to earnings and cash flow. This includes evaluating capital costs, operating expenses, and potential revenue streams.
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Strategic Alignment: Assess the project’s alignment with the company’s long-term strategic goals and objectives. Determine its potential to enhance competitiveness, market position, and create value for stakeholders.
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Risk Assessment: Identify and assess the potential risks associated with the project, including technological obsolescence, regulatory changes, or market fluctuations. Develop strategies to mitigate these risks and ensure project success.
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Opportunity Cost: Consider the opportunity cost of alternative investments and projects that could be pursued instead of this capital expenditure. Determine the potential benefits foregone by allocating resources to this project.
Prioritizing Capital Expenditure Projects
Prioritization criteria should be established based on the company’s specific objective… Read full answer