businessman making thumbs up
A capital improvement is the addition or replacement of a major element to a building or fixed structure. Capital improvements can increase the value of the structure or improve its use by individuals or corporations. Government entities such as cities, schools, utility companies, or utility agencies may also use capital improvements to improve the services offered to local citizens. Individuals, businesses, and government entities often use capital improvements for a variety of reasons.
People can use a capital improvement to increase the value of their home by adding an extra room, renovating a living space, or making improvements to items located in the home. Common home improvements may include replacing the heating and air conditioning system or upgrading electrical wiring in older homes. People often use capital improvement plans to increase the value of their home and make it more desirable when the owner needs to sell the home on the open market.
Companies often use capital improvement projects to increase the efficiency of current business operations or to expand and increase operations for new products or services. These improvements are generally expected to generate financial returns for the business in the near future. Companies often develop capital improvement budgets and improvement plans to create long-term goals to improve the business. These plans attempt to define all business needs and develop a schedule to properly complete capital improvements in a timely and efficient manner. Because companies often have limited capital resources, they can’t complete all the capital improvements they want at the same time.
Government entities often use capital improvements as a way to attract new businesses or individuals to move to the state or city. The increase in the number of businesses or individuals in the state and in individual cities may allow governments to generate more taxes as the population increases. Population growth can also increase the number of capital improvements needed to improve city services and operations. Local governments can also develop a business-like capital improvement plan; Residents or citizens of local government entities can provide feedback on these capital improvement plans to ensure their taxes pay for the services or improvements they want.
Individuals, businesses, and government entities must carefully account for all costs when making capital improvements. While initial estimates may indicate low costs to make improvements, large capital improvement projects can quickly go over budget and increase the cost these groups must pay for improvements. Raising more money to pay for projects can be difficult if improvements are deemed inefficient or useless after the project goes over budget.