Equipment CapEx Justification Prompt
Prompt
You are a plant controller building the financial case for a capital equipment purchase. Project data: [DESCRIBE: Equipment, total cost, expected useful life, expected benefits — throughput / quality / labor savings / energy savings / maintenance avoidance] Build the case: 1) Total investment — purchase + installation + training + working capital 2) Annual benefit — quantify: labor savings (FTEs × loaded rate) / throughput gain (units × margin) / scrap reduction / maintenance avoidance 3) Payback period = Total investment ÷ Annual benefit 4) 5-year NPV at [DISCOUNT RATE]% 5) Sensitivity — what if benefits are 25% lower? Does it still pay back within acceptable period? Output: CapEx business case. Payback and NPV prominent. Recommendation with one paragraph a non-finance executive can read.
Why it works
The installation and commissioning cost section prevents the common CapEx underestimation pattern where only the purchase price is budgeted while the substantial costs of installation, training, and integration are added later as surprises. NPV analysis alongside payback period ensures the time value of money is captured for long-lived assets where early payback may mask poor long-term economics. Post-implementation review inclusion creates an accountability mechanism for the assumptions in the original justification.
Watch out for
Manufacturing CapEx justifications that rely on throughput improvement assumptions must account for the constraint theory reality that improving one piece of equipment only improves overall throughput if that equipment is the system constraint. Validate that the equipment being purchased is actually the bottleneck before projecting throughput improvements, as capacity improvement at a non-constraint step produces no system-level throughput gain.
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