CHAPTER 8 - CAPITAL EXPENDITURE
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This chapter covers how to select best capital expenditure options and fully evaluate
them in terms of financial viability and meeting business need. It also describes the
controls to be exercised prior, during and after capital expenditure to demonstrate
value for money and compliance to the rules.
Potential Risks and Controls associated with Capital Expenditure
8.2.1 An investment appraisal must be completed for all proposed projects with an
expected cost of £5000 or above (including VAT), in line with the HM
Treasury's Green Book on Appraisal and Evaluation in Central Government.
8.2.2 The investment appraisal must be signed off and agreed before expenditure
a) For Plant and Equipment, Vehicles and Other or Furniture & Fittings the Head
of Finance/Service must sign off the Investment appraisal and send it to the
Area Accountant for authorisation.
b) Capital Expenditure classed as minor works must be sent to the area TSS for
c) For Land and Buildings the investment appraisal needs to be signed off by
the Area Manager and sent to Estates Development Planning Group, Abell
House for consideration by the relevant board.
8.2.3 All capital projects must be evaluated using Form PPE1 within 6 months of
completion in order to:
a) Determine the extent to which benefits anticipated from the project have been
b) Examine the strengths and weaknesses of the project
c) Ensures that the Prison Service benefits from past experience.
8.2.4 Proposals to vire Resource into Capital must be made in writing and sent to:
a) Alan Munnings or Chris Dickinson in FSS, for business units within the
b) George Houghton or Jenni Sneden for business units within the High Security
c) The relevant Directorate Accountant for all other business units
Potential risks and control associated with capital Expenditure
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Best capital investment options are selected and are fully evaluated in terms
of financial viability and meeting business need.
Lack of planning i.e. time pressures, escalating costs
Poor project management – leading to overspends/ inappropriate
All options are not considered
No appraisal technique
Failure to identify business need/ not the right project
Priorities not met
Business plans including full costings options, certified by HoF
Macro impact assessment
Methodology for evaluating projects – option appraisal
Capital Business planning system
Assessment of impact of not obtaining project funding
Standardised approvals process (SMT-Area)
Continuous ranking process
Post implementation review.
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