There qualitative considerations for the management to

There are a few obstacles in applying qualitative considerations for the management to make a capital expenditure decisions. First, the process of identifying, measuring and estimating the costs that are related to capital expenditure usually complicated. This is because automating the qualitative data effectively is impossible as qualitative data tend to be less statistical compared to quantitative data.

For example, improvement of employee’s morale due to a new facility is difficult to be measured. In addition, a company usually expect for a possible outcome in making a large investment on its capital assets. Unfortunately, such expectation on possible outcomes is not guaranteed and may not occur as what have been predicted. This is due to incomplete analysis on qualitative consideration which may affect the outcome decision.

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As example, the management may predict that investment on its new building will produce a possible outcome however it turns out vice versa as they does not consider the environmental impact to the society. Last but not least, the costs and benefits which are related to capital expenditure will consume more time especially for better decision outcome. This is because, gathering a huge amount of data will be extremely time consuming and high-priced. As example, the management need to spend more time and money to gather lots of data about resources in order to produce a high quality outcome.


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