Financial Planning and Analysis using a dashboard

Written by: Richard Frykberg

AI-Driven Financial Planning and Analysis

Financial Planning and Analysis (FP&A) of capital expenditure incorporates business case preparation, portfolio budgeting, project forecasting, and reporting. Unfortunately, within many organizations, this capital expenditure management process relies on disconnected processes and disparate data sources. This often requires manual collation of data and relies heavily on spreadsheet administration.

A systemized approach to capital project FP&A should address 5 key aspects:

  1. Single source of data for project planning, budgeting, and forecasting.
  2. Flexible digital forms that can capture just the right amount of supporting information.
  3. Seamless collaboration and approval workflow.
  4. Effective initiative evaluation and scoring.
  5. Artificial Intelligence to assist with project definition, selection and control.

Digital transformation and application of artificial intelligence in the financial planning and analysis of capital projects provides many benefits.

Strategic Alignment

Effective capital budgeting does not simply repeat prior period expenditure. Whilst this may have been a viable approach in the past, the current operating environment is more complex.

Rapid technological advances, global competition, and environmental, social, and governance (ESG) expectations are impacting all organizations. This requires a more sophisticated approach to capital allocation and reinvestment.

Adopting zero-based budgeting principles, the critical driver of capital projects must be strategic alignment. Every business unit should define its objectives in line with overall enterprise strategy. These strategic objectives that should then drive the investment priorities for that area.

Effective strategic alignment of capital budgets is most effectively achieved when defined and monitored in a single integrated environment. This will provide all staff and managers with a common yardstick for assessing project importance.


The primary motivation for digital transformation of the capex process is to increase productivity of all participants. Disconnected and spreadsheet-based capex management processes are inefficient and inherently risky.

Administrators spend time to updating and distributing business case and forecasting templates. End-users require significant support to complete capital expenditure request (CER) and authorization for expenditure (AFE) forms accurately and completely.

Administrators then need to collect, validate and collate these documents. It takes time and effort to standardise, aggregate and analyse data to produce meaningful reports.

An integrated, digitally transformed process will require only a single point-of-entry of project financial data. All participants can directly use this information to plan, budget, and forecast project financial outcomes. This allows the financial planning and analysis team to focus on providing effective insights, rather than managing spreadsheets.


In addition to the Financial planning and analysis team, an integrated digital capital management system benefits project managers and executive sponsors.

Capital investments range from simple equipment replacements to major strategic infrastructure commitments expecting to generate decades of benefits. Consequently, evaluating the value and priority of investments requires collecting varying amounts of data.

The investment reason for a project will impact its evaluation. For example, we typically score and rank sustenance initiatives based on risk assessments. For growth initiatives, the net present value of future revenues may be more relevant. Environmental projects may require a direct assessment of greenhouse gas emissions.

The nature of the asset will also impact the information required. The information needed to assess building projects is not the same as that needed for intangible software systems.

Static document templates can either overwhelm users or provide insufficient data-entry fields. Unlike a spreadsheet where all fields are visible, a dynamic web form only shows the necessary data fields. This makes it much easier for a user to provide the required inputs.

Online templates react to user input and selections. Real-time validation and help texts ensure that submissions are complete and consistent. Automated calculations and global assumptions make it easier for users to prepare high-quality submissions.

Online business case template can also collect just the right amount of data at the right time to support the nature of the investment. Users can provide more detailed and relevant inputs as an initiative passes through its various stage gates.

The executive approval experience also benefits from consistent access, metrics, and presentation. With an integrated system, capex approvers are familiar with and have confidence in the information presented. They can easily drill-down to supporting details and documents as required from the financial planning and analysis team.

With a fully digital and integrated capital budgeting system, approvers benefit at every stage. Ideas, investment proposals, business cases, and expenditure requests are all approved in the same system in the same way.

Collaboration and Compliance

A key part of the capital planning process is to collaborate with technical experts and gain endorsements as required. Senior executives must then approve capital expenditure in accordance with delegation of authority policies.

Document-based processes are typically reliant on manual approval routing, with a heavy reliance on email. By contrast, a digitally transformed capital financial planning and analysis solution facilitates seamless workflow in accordance with standardised business rules.

A single source of truth enables both parallel and sequential approval. Automated workflow will provide a detailed audit trail of changes, approval actions, and comments.

The Importance of Time

Project expenditure typically occurs over a number of months or years. Future returns are dependent on project completion. However, resource availability, supply constraints and technical complexities frequently result in shifting project schedules.

Time is money: the timing of future cashflows is thus an important factor in the evaluation of projects when making investment decisions.

An integrated capital budgeting solution will be able to immediately reflect the impact of changes in project schedules. This will impact the evaluation of the net present value of both costs and future benefits.

The Impact of Rates

Disparate data sources inevitably lead to discrepancies in assumptions. This can invalidate metrics that managers rely upon to prioritize initiatives.

4 standard key assumptions include:

  1. The discount rate applied to future cashflows.
  2. Foreign currency translation rates.
  3. Asset useful lives.
  4. Tax rates.

A single data store will ensure that these rate assumptions are common. A consistent mechanism for evaluating initiatives will ensure calculations are consistent, and that comparisons are reliable.

Business Partner Engagement

Most significant capital projects rely on business partners to deliver new solutions. The selection of business partner can be as crucial to successful capital investment as the choice of project. With disconnected capex management systems, it is difficult to monitor and optimize partner engagement.

An integrated project planning system will identify partner relationships. Monitoring these key relationships can help optimize terms of trade and mitigate supplier compliance and performance risks.

Resource Levelling

In addition to funding constraints, a practical constraint to most organizations’ capital project portfolio selection is internal capacity. Key business representatives must oversee and pay attention to capital projects while also fulfilling their business-as-usual activities and responsibilities. With disconnected project planning processes, there is risk that key individuals become over-loaded leading to project failure.

In a connected system, you can identify key-person dependencies early on and consider them when optimizing project portfolios.

Objectivity and Consistency

Passionate representations often heavily influence capital expenditure management decisions. The less structured and formalized the planning process, the greater the risk that persuasion will override data-driven decisions.

Standardizing project definition, scoring, and ranking can greatly improve the objectivity and transparency of decision-making. This will ultimately lead to improvement in the consistency and quality of decisions.

Cashflow vs Profit

Financial planning and analysis teams must evaluate both the economic and an accounting views of capital expenditure effectiveness.

The economic view relies on evaluating future cashflows. The accounting view looks at the accounting and financial reporting impact of capital investments. Whilst the economic view provides the true justification for capital expenditure, the accounting view can significantly impact stakeholders.

Key stakeholders include shareholders and executives. Shareholders focus on short-term reported results as these directly affect share prices. Executive bonuses may also be more closely linked to short-term accounting profits than longer-term business value.

Many legacy processes emphasise one or other of these metrics. Often it is the accounting view of capital project benefits that dominates. The accounting payback period often trumps detailed net present value (NPV) calculations.

An online capital budgeting solution has the ability to simultaneously report both cashflow and accounting impacts. This can be for both an individual project and for the entire capital project portfolio.

AI and Machine Learning

Artificial Intelligence (AI) is not truly intelligent. AI has just learned from a vast amount of data to extrapolate patterns of behaviour.

The CapEx management process can benefit from AI in 3 ways:

  1. Preparing business cases.
  2. Optimizing project portfolios.
  3. Providing more objective forecasts on project costs and schedules.

AI systems learn from your project experiences and provide valuable insights. AI can then extrapolate patterns based on similar projects and individuals.

But only if your project planning and execution data is accessible. Isolated systems conceal this incredible source of insight from the enormous potential of AI-powered assistants.

An online budgeting tool that learns from your experiences and others’ can help plan and control capital projects. AI assistants can access large language models such as ChatGPT to prepare high quality business case submissions. AI can analyse candidate projects and help identify the ‘efficient frontier’ of project portfolios. AI tools can rationalize human forecasts to provide more realistic estimates of future costs and timing.

Digitalized and AI-Driven Financial Planning and Analysis

The key benefit of digitally transforming your capital planning process is that it enables better business decisions. You can avoid waste by not starting bad projects, or by terminating them early. You can select higher value initiatives by more fully evaluating benefits and risks.

Projects aligned to strategic imperatives achieve objectives faster, cheaper, and with less risk. A solution such as Stratex Online Project Forecasting and Analysis helps you make better capital budgeting decisions using trustworthy data and AI insights. Learn more about Stratex Online and how it can transform the effectiveness of your capital budgeting strategies by clicking the button below.