(TCO H) Capital projects are a critical part of governmental activities at the f

Question

(TCO H) Capital projects are a critical part of governmental activities at the federal, state and local level. The steps in the capital budgeting process are significant part of selecting projects from many competing potential projects in a world of limited resources.

(A) Describe and explain the steps in the capital budgeting process. Provide two examples of each. (15 points)

(B) Under what circumstances might a governmental unit select a project that is not high on the preference list? (15 points)  

Explanation / Answer

Capital budgeting is the process that organizations use for decision making on capital project. The capital project lasts for a relatively longer time, normally more than one year. As the project is usually large and has essential impact on the long term success of the organization, it is important to make the right decision.

Capital Budgeting Process

B) In the government set up sometimes projects are selected keeping in mind general welfare concerns of public at large.

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