Capital Projects

Glossary

asset

Property, plant, and equipment used to generate profit.

asset performance shortfall

Inability of the asset created or modified by the project to perform according to specifications. The dimensions of asset performance include rates of production, product or service quality, and level of operating costs.

Assess stage

The first stage of the stage-gate process. The primary activities in the Assess stage are to complete the project frame, identify options for achieving the business case, and develop the initial business case.

authorization decision

The decision to proceed into the Execute stage. Although the authorization decision is not irreversible, stopping a project after it starts Execute will result in considerable sunk costs that rapidly escalate to 50 percent of the total budget or higher.

authorization

The release of the full capital budget to the project team to complete the project. Authorization typically occurs at Gate 3 in the stage-gate process.

base case

The results of the investment analysis used to evaluate profitability and risk of a project using the most likely option or alternative.

boundary conditions

Specify the limits to the opportunity and the potential dimensions of the capital project to achieve business objectives.

business case

Explains the business justification for the project, documents the objectives and key performance targets, describes the project scope and strategy, and summarizes the investment analysis.

business objectives ...