Six Questions Before a Major Capital Commitment

Part 5 of The Five-Lens Decision Framework series. By Chip Gardner, Gaggle Force Consulting.

People often assume that the value of a seasoned executive in a capital decision is the answer. In many cases, the greater value is the quality and sequence of the questions asked before capital is committed.

Whether the decision involves a new line, a plant expansion, an acquisition, or another major investment, these are the six questions I ask:

1. What happens if we do nothing?

Capital requests are often evaluated only on their own merits. I first want the cost of inaction quantified.

2. Whose number is this — and what did the last forecast teach us?

Every projection has an author and a history. Track record on assumptions is often more informative than model sophistication.

3. What is the smallest version we could prove first?

A major commitment rarely needs to be funded all at once to test the underlying thesis.

4. What does this do to our flexibility eighteen months from now?

Capital is not only money; it is optionality being consumed.

5. Who owns the outcome if it goes sideways?

Before capital moves, I want a clearly accountable executive — not a committee — attached to the result.

6. What did we learn the last time we made a commitment of this scale?

Every company has a history of major decisions. I want to know what actually happened compared with what was projected.

No executive can eliminate uncertainty. The contribution of experience is the discipline to identify the assumptions, risks, and tradeoffs that deserve attention before the check is written.

Contact: (941) 799-9450 · chip@gaggleconsulting.com