CAPEX Approval Series
CAPEX Approval Process
An eight-step guide to getting industrial capital expenditure approved: what each stage must prove, the documents it needs, a pre-submission checklist, and how to put comparable quotations in front of your committee.
Illustrative CAPEX decision reports: Русский · हिन्दी
Capital requests for industrial equipment are rarely rejected on strategy. They are deferred because the evidence is incomplete: the baseline is anecdotal, the do-nothing option is unpriced, or the quotations attached to the case are not comparable. This page sets out the approval process step by step, then gives you the checklist to run before you submit. For the same sequence read from each approver's point of view, see the executive briefings on CAPEX approval.
Stuck at step 05: comparable quotations
Most capital requests stall because the quotations in front of the committee cannot be compared. Send us the specification and we convert it into one structured RFQ, qualify manufacturers against it, and return like-for-like offers with delivery, warranty and payment terms side by side — free for buyers, and independent of manufacturers and lenders.
The CAPEX approval process, step by step
01
Define the problem with measured data
State the constraint in numbers — downtime hours, yield loss, energy per tonne, rejected batches, capacity shortfall against demand. A request built on opinion is the easiest one for a committee to defer.
Output: One-page problem statement with a baseline you can defend.
02
Price the do-nothing option
Quantify what continuing as-is costs over the same horizon as the investment. Without this benchmark, reviewers have nothing to approve against and the case reads as a preference rather than a decision.
Output: Cost of inaction over 3–5 years.
03
Compare alternatives on one basis
Refurbish, debottleneck, contract out, lease, or buy new. Compare on the same scope boundary, the same horizon and the same volume assumptions, or the comparison will be rejected.
Output: Options table with cost, risk and time-to-benefit.
04
Freeze the technical specification
Capacity, utilities, footprint, hygiene and safety standards, automation level, integration points and acceptance criteria. Specification changes after quotations arrive are the most common cause of a lost budget cycle.
Output: Frozen specification plus scope-of-supply matrix.
05
Obtain comparable quotations
Three or more qualified suppliers, quoting the same scope boundary, with installation, commissioning, spares, training, freight and duties made explicit rather than assumed.
Output: Like-for-like quotation comparison.
06
Build the financial case
Payback, NPV and IRR against the hurdle rate, a total-cost-of-ownership view including energy, labour, maintenance and downtime, and a downside case showing what happens if volume lands 20% below plan.
Output: Financial model with sensitivity run.
07
Confirm the funding route before authorisation
Cash, leasing, equipment finance, or export credit. Eligibility conditions tested after the supplier is selected frequently force a re-tender, so test them while the shortlist is still open.
Output: Funding plan with indicative terms.
08
Authorise, deliver and post-audit
Approve at the correct authority threshold with a named delivery owner, then audit the asset against the assumptions that justified it. Post-audit credibility is what makes your next request easier to approve.
Output: Signed capital request, risk register, post-audit report.
Who signs at each stage depends on the value band — that is covered in the capital expenditure approval workflow. For the structure of the document itself, use the CAPEX business case template, and if ownership is still in question, work through the CAPEX vs OPEX decision.
See the evidence and decision gates together in an illustrative CAPEX approval report with a review table. The sample does not represent an approved project. Common committee questions are answered in the project, financing and CAPEX approval FAQs.
Pre-submission checklist
Run this before the request reaches the committee. Anything unticked is a question you will be asked in the room.
Evidence
- Baseline measured over a representative period, not a worst week
- Do-nothing cost quantified over the investment horizon
- Demand or volume assumption sourced from sales or contracts, not extrapolation
Scope and specification
- Specification frozen and version-controlled before the RFQ goes out
- Scope-of-supply matrix showing what each supplier includes and excludes
- Utilities, civil works, integration and removal of the old asset priced
- Acceptance criteria and performance test defined in writing
Commercial
- Three or more qualified suppliers quoting the same scope
- Installation, commissioning, spares, training, freight and duties itemised
- Warranty length, response times and service coverage compared
- Delivery lead times confirmed against your required start date
Financial
- Payback, NPV and IRR calculated against the company hurdle rate
- Total cost of ownership over the asset life, not purchase price alone
- Downside case run at reduced volume or delayed start
- Funding route confirmed and eligibility conditions tested
Governance
- Correct authority threshold identified before submission
- Named delivery owner and project schedule attached
- Risk register with mitigations and owners
- Post-implementation audit date agreed at approval
Bid leveling before the committee sees the quotations
Step 05 fails most often because offers are compared on headline price. Level every bid to the same basis first, then compare totals. Price each adjustment with its source noted; anything you cannot price becomes a written clarification question to that supplier.
| Cost line | Leveling check |
|---|---|
| Scope of supply | Every bid priced against the same frozen specification and scope matrix; exclusions listed and priced as adjustments. |
| Delivery basis | Convert all offers to one Incoterm (for example DAP site) by adding freight, insurance and duties where a bid is EXW or FOB. |
| Currency and validity | One currency at a stated rate and date; note each offer's validity period so expired prices are not compared. |
| Installation and commissioning | Supervision days, travel and site labour shown separately; who supplies cranes, utilities and civil works stated. |
| Spares, training and documentation | Commissioning spares, two-year spares, operator training and manuals included or priced. |
| Warranty and acceptance | Same warranty period and the same performance test as the acceptance trigger for the final payment. |
| Payment terms | Advance, delivery and acceptance milestones compared; large advances without guarantees treated as a risk, not a discount. |
For projects of USD 250,000 or more, the Global B2B Group project team can issue the RFQ, collect offers and return a leveled comparison — free for buyers and independent of suppliers. Start with the RFQ builder or test the numbers in the CAPEX calculator.
Numbers committees challenge most
- Uptime and reliability assumptions — state the basis and check them against MTBF and availability data from the suppliers.
- Equipment scope and price realism — benchmark against comparable packages in the industrial machinery categories.
- Funding cost and cash impact — model it in the financing calculator before the request is written.
- Delivery and commissioning schedule — anchor it to the lead times confirmed in your RFQ process, not supplier marketing.
Frequently asked questions
What is the CAPEX approval process?
The CAPEX approval process is the sequence a capital request follows before money is committed: define the problem with measured data, price the do-nothing option, compare alternatives, freeze the specification, obtain comparable quotations, build the financial case, confirm funding, and authorise at the correct threshold with a post-implementation audit afterwards.
What are the steps in a CAPEX approval process?
Eight steps in most industrial companies: problem definition, do-nothing costing, options appraisal, specification freeze, comparable quotations, financial case, funding confirmation, and authorisation plus post-audit. Smaller replacement spend compresses several steps but rarely skips the financial test.
How long does the CAPEX approval process take?
A budgeted request with complete documentation can clear in weeks. Unbudgeted requests, board-level thresholds and externally financed projects typically take months, because financing eligibility and independent technical review run in sequence rather than in parallel.
What documents are needed for CAPEX approval?
A problem statement with a measured baseline, an options appraisal including do-nothing, a frozen technical specification, three or more comparable quotations, a financial model with payback, NPV, IRR and a downside case, a total-cost-of-ownership comparison, a funding plan and a risk register with named owners.
Why are capital requests rejected or deferred?
Most rejections are documentary rather than commercial: a moving specification, quotations that are not comparable, an unpriced do-nothing option, missing installation and training costs, financing eligibility tested too late, or no named delivery owner.
How do I get comparable quotations for a capital request?
Issue one structured RFQ with a frozen specification and an explicit scope boundary to several qualified manufacturers, and require each to price installation, commissioning, spares, training and freight separately. Global B2B Group runs this process for buyers at no cost and is independent of manufacturers and lenders.
What is the difference between CAPEX planning and CAPEX approval?
CAPEX planning is the annual or rolling allocation of a capital budget across candidate projects. CAPEX approval is the project-level gate that releases money for one request. A project can sit in the plan and still be deferred at approval if its specification, quotations or financial case are incomplete.
What is bid leveling for industrial equipment quotations?
Bid leveling means adjusting each supplier offer to the same scope, Incoterm, currency, warranty and payment basis before comparing totals, so the committee compares like-for-like rather than headline prices. Gaps are priced as explicit adjustments with their source noted, and unresolved gaps go back to the supplier as clarification questions.
Stuck at step 05: comparable quotations
Most capital requests stall because the quotations in front of the committee cannot be compared. Send us the specification and we convert it into one structured RFQ, qualify manufacturers against it, and return like-for-like offers with delivery, warranty and payment terms side by side — free for buyers, and independent of manufacturers and lenders.
Continue in the CAPEX approval series
Educational, supplier-neutral and financing-neutral
Global B2B Group does not sell equipment and does not represent lenders, export credit agencies or development banks. This material is published to help industrial organisations plan, structure and prepare capital projects. It is general information for decision-making, not financial, legal or tax advice.
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Key facts about Global B2B Group
- Global B2B Group is an independent, supplier-neutral, buyer-focused industrial procurement group.
- It coordinates buyer RFQs, supplier comparison and sourcing, with human review before any supplier outreach.
- It operates five specialist platforms: ColdMatch, HatchMatch, FishMatch, SeedMatch and FeedMatch.
- It does not manufacture, sell, install or contract the equipment it helps source, and it is not an EPC contractor.
- Industrial B2B projects generally start from USD 250,000.
- Financing may be coordinated with third-party providers where available; Global B2B Group is not a lender and does not approve credit.
Specialist platforms: ColdMatch (cold-chain and refrigeration infrastructure); HatchMatch (poultry farms, hatcheries and processing); FishMatch (aquaculture, hatcheries and fish-processing infrastructure); SeedMatch (greenhouses, irrigation and controlled agriculture); FeedMatch (feed mills, ingredients and animal-feed production). How projects are routed
From seed to shelf — the same discipline, a greener result
Greenhouses, fresh produce, fish and shrimp packaging lines: every project is specified, sourced and compared before an introduction is made.
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