Capital Expenditure (CAPEX) Request Template – Free Word Download
Introduction to the Capital Expenditure (CAPEX) Request
In the realm of project management and corporate finance, not all money is created equal. There is a distinct and rigid line drawn between Operational Expenditure (OPEX) and Capital Expenditure (CAPEX). While OPEX represents the day-to-day costs of running a business (like electricity, rent, and salaries), CAPEX represents an investment in the future. It involves purchasing, upgrading, or maintaining physical assets (property, industrial buildings, or equipment) or intangible assets (like software) that provide value for more than one fiscal year. Enjoy this Capital Expenditure (CAPEX) Request Template – Free Word Download
The CAPEX Request form is one of the most scrutinized documents in any organization. Why? Because Capital Expenditure affects the company’s Balance Sheet, not just its Income Statement. When you spend OPEX, that money is gone immediately. When you spend CAPEX, you are acquiring an asset that depreciates over time. This has significant implications for the company’s tax strategy, cash flow management, and long-term valuation. Therefore, a Project Manager cannot simply “expense” a new $50,000 server or a $200,000 software license. They must submit a formal CAPEX Request to authorize the asset creation.
This template is designed to guide you through the rigorous process of securing capital funding. It requires more than just a price tag; it requires a demonstration of long-term value. You must define the asset’s “Useful Life,” calculate its depreciation impact, and justify the Total Cost of Ownership (TCO).
This document acts as the formal authorization to release funds from the capital budget. It is typically reviewed by a Capital Committee or the CFO directly. The following sections will provide detailed instructions on how to articulate the asset’s specifications, the financial return on investment, and the strategic necessity of the purchase. By mastering this template, you bridge the gap between project execution and corporate accounting.
Part 1: Request Header and Classification
This section establishes the administrative identity of the request. Since CAPEX budgets are often allocated annually, accurate tracking is essential.
Request Metadata
Instructions:
Fill out the following fields to ensure the request is routed to the correct approvers and booked to the correct ledger.
- Project Name: [Insert Project Name]
- Asset Request Title: [e.g., Purchase of High-Speed Sorting Machine Model X]
- Request ID: [e.g., CPX-2025-042]
- Date of Request: [DD-MM-YYYY]
- Requestor Name: [Project Manager]
- Department/Cost Center: [The department that will “own” the asset]
Asset Category
Instructions:
Select the type of asset being purchased. This determines the depreciation schedule used by Finance.
Common Categories:
- IT Hardware: Servers, laptops, networking gear (Useful Life: 3-5 years).
- Software Development/License: Perpetual licenses or internal build costs (Useful Life: 3-7 years).
- Furniture & Fixtures: Desks, chairs, cubicles (Useful Life: 7-10 years).
- Machinery & Equipment: Manufacturing robots, forklifts (Useful Life: 5-15 years).
- Leasehold Improvements: Renovations to a rented office (Useful Life: Length of Lease).
Tip:
If you are unsure of the category, ask your Fixed Asset Accountant. Classifying “Software” as “Hardware” can cause compliance issues during an audit.
Budget Status
Instructions:
Indicate if this money was already planned for in the annual budget.
- Budgeted: The amount is within the approved Annual Operating Plan (AOP).
- Unbudgeted: This is a new request requiring a budget transfer or new funds.
- Substitution: We are swapping a previously approved asset for this one.
Part 2: Detailed Asset Description
Finance needs to know exactly what they are buying. “A computer” is not enough detail. You must provide specifications that allow the asset to be tagged and tracked in the Fixed Asset Register.
Item Specification
Instructions:
Describe the asset in detail. Include model numbers, quantities, and key features.
Example:
“This request is for the purchase of three (3) Dell PowerEdge R750 Rack Servers.
- Processor: 2x Intel Xeon Gold 6330.
- Memory: 512GB RAM per unit.
- Storage: 10TB SSD RAID array.
- Purpose: These servers will host the new ERP database for the North American region.”
Location of Asset
Instructions:
State physically where this asset will reside. This is crucial for local tax laws (property tax).
- Physical Address: Building 4, Server Room B, Rack 12. 123 Tech Park Blvd, Austin, TX.
- Custodian: [Name of the person responsible for the asset’s safety].
Replacement Information
Instructions:
Is this asset replacing an old one? If yes, the old asset must be “retired” or “written off” the books.
- Is this a Replacement? Yes/No.
- Asset Tag of Old Item: [e.g., TAG-99382].
- Disposal Plan: [e.g., Sent to e-waste recycler; sold at auction].
Part 3: Financial Investment Breakdown
This is the most critical section. You must build the “Total Capitalized Cost.” Note that CAPEX includes more than just the invoice price of the item; it includes all costs necessary to get the asset ready for use.
Cost Components Table
Instructions:
List every cost associated with acquiring the asset.
| Cost Component | Description | Amount ($) |
| Base Asset Cost | The vendor invoice price for the equipment/software. | $150,000 |
| Freight/Shipping | Cost to transport the asset to our facility. | $5,000 |
| Taxes/Duties | Sales tax, import duties, or VAT (if non-recoverable). | $12,000 |
| Installation/Setup | Vendor fees to install and calibrate the equipment. | $10,000 |
| Internal Labor | Capitalized hours of internal staff coding/building (See Note below). | $25,000 |
| Total CAPEX Request | Sum of all above. | $202,000 |
A Note on Capitalized Interest and Labor
Guidance:
- Capitalized Labor: If your internal team spends time coding software or building a machine, their salary for those hours can often be moved from OPEX to CAPEX. This increases the asset’s value. You must track these hours strictly using timesheets.
- Capitalized Interest: For massive construction projects taking years, the interest paid on the loan during construction can sometimes be capitalized. Consult Finance.
Associated OPEX (The “Tail” Costs)
Instructions:
Buying the asset is CAPEX, but running it is OPEX. Disclose the future OPEX impact here so there are no surprises.
- Annual Maintenance Contract: $15,000/year (OPEX).
- Consumables (Ink/Oil/Energy): $2,000/year (OPEX).
Part 4: Strategic Justification (The Business Case)
Why should the company convert its cash (liquid) into this asset (illiquid)? This section argues the necessity of the purchase.
Primary Driver
Instructions:
Select the main reason for the request.
- Growth: Increasing capacity to sell more products.
- Replacement: Old equipment is broken or obsolete.
- Compliance: Required by law or safety regulations.
- Efficiency: Buying a machine to reduce labor costs (Cost Savings).
Narrative Description
Instructions:
Write a paragraph explaining the business context.
Example:
“The current packaging machine (Asset #402) is 15 years old and has experienced 140 hours of downtime in 2024, resulting in $50,000 of lost production. Spare parts are no longer manufactured by the vendor. Purchasing this new ‘SpeedPack 3000’ will increase throughput by 20%, eliminate the downtime costs, and ensure we meet the volume demands of the new contract with Client X. This investment aligns with the corporate strategy of ‘Modernizing Manufacturing Operations’ for FY25.”
Consequence of Denial
Instructions:
What happens if the CFO says “No”?
Example:
“If this request is denied, we will be forced to continue repairing the obsolete unit. We project repair costs will exceed $30,000 next year, and we risk missing critical shipment deadlines during the Q4 peak season.”
Part 5: Financial Analysis (ROI & NPV)
For any discretionary spend (Growth or Efficiency), you must prove the math works. (Note: Compliance/Safety projects may not have a positive ROI, but they are mandatory).
Key Financial Metrics
Instructions:
Calculate and present the standard investment metrics.
- Payback Period:
- Definition: How many months until the savings equal the purchase price?
- Formula: Total CAPEX / Annual Cash Inflow.
- Result: “18 Months.”
- Return on Investment (ROI):
- Definition: The percentage return over a specific period (usually 3 or 5 years).
- Formula:$$ROI = \frac{Net Profit}{Total Investment} \times 100$$
- Result: “24% over 3 years.”
- Net Present Value (NPV):
- Definition: The value of all future cash flows discounted back to today’s dollars. A positive NPV means the investment adds value.
- Result: “$45,000.”
Depreciation Schedule Overview
Instructions:
Finance will handle the actual tax filing, but you should estimate the P&L impact.
- Proposed Useful Life: [e.g., 5 Years].
- Depreciation Method: [e.g., Straight Line].
- Annual P&L Impact: Total Cost / Years.
- Calculation: $202,000 / 5 Years = $40,400 expense per year.
Why this matters:
This $40,400 will show up as an expense on your department’s budget every year for the next 5 years. You are “mortgaging” your future budgets.
Part 6: Alternatives Analysis
Show that you have done your due diligence and aren’t just buying the first shiny object you saw.
Alternative 1: Lease vs. Buy
Instructions:
Did you consider leasing the equipment instead of buying it?
- Analysis: “Leasing would cost $5,000/month. Over 5 years, the total lease cost is $300,000. Buying costs $202,000. Therefore, buying is $98,000 cheaper over the asset’s life.”
- Decision: Buy.
Alternative 2: Repair/Refurbish
Instructions:
Could we just fix the old one?
- Analysis: “Refurbishing the old machine costs $80,000 but only extends its life by 2 years. The new machine lasts 10 years.”
- Decision: Replace.
Part 7: Procurement and Vendor Selection
Who are we paying? This section links the CAPEX request to the Procurement process.
Selected Vendor
Instructions:
Provide details of the chosen supplier.
- Vendor Name: Industrial Automation Inc.
- Vendor ID: VND-554.
- Payment Terms: Net 60 Days.
- Currency: USD.
Bid Summary
Instructions:
Prove that the price is fair.
- Single Source? [Yes/No]. If Yes, attach justification (e.g., “Only vendor with patented technology”).
- Competitive Bids:
- Bid A (Selected): $150,000.
- Bid B: $165,000.
- Bid C: $148,000 (Rejected due to poor technical specs).
Part 8: Project Timeline (Asset Creation)
When will the asset be “In Service”?
Instructions:
Provide the dates.
- Order Date: [When will the PO be cut?]
- Delivery Date: [When does it arrive?]
- Installation/Testing: [Duration].
- In-Service Date: [The day it is turned on and functional].
Crucial Accounting Note:
Depreciation starts on the In-Service Date, not the Order Date. This date triggers the accounting entries.
Part 9: Risks and Assumptions
Risks to the Investment
- Technological Obsolescence: “Risk that a newer, faster machine comes out in 2 years, rendering this one outdated.”
- Utilization Risk: “Risk that market demand drops and we do not run the machine at full capacity.”
- Installation Delay: “If the site is not ready for the heavy power requirements, installation costs could rise by $5,000.”
Assumptions
- Tax Rate: “Assumed a corporate tax rate of 21% for NPV calculations.”
- Inflation: “Assumed 0% increase in maintenance costs for the first 2 years.”
Part 10: Approval Workflow
CAPEX usually requires higher authority signatures than OPEX.
Signatures Required:
- Project Manager: Verifies technical specs and need.
- Department Head (VP): Verifies budget availability and strategic fit.
- Finance Director/Controller: Verifies correct accounting treatment (Capital vs. Expense) and ROI math.
- Chief Financial Officer (CFO): Final authorization for cash release (usually for amounts >$50k).
- Board of Directors: (Only for massive investments, e.g., >$1M).
Part 11: Step-by-Step Guide for Completing the CAPEX Request
To ensure your request sails through the approval process without being returned for “more info,” follow this guide.
Step 1: The “Capital vs. Expense” Test
Before you start, ask yourself: Does this purchase meet the capitalization criteria?
- Does it cost more than the capitalization threshold (e.g., usually $5,000)?
- Does it last longer than 1 year?
- Is it a new asset or a distinct upgrade (not just a repair)?If the answer to any of these is “No,” stop. You need an OPEX request, not a CAPEX request.
Step 2: Get the Quotes
Never estimate CAPEX based on a website price. Get a formal PDF quote including shipping, taxes, and installation. These “hidden” costs can blow your budget if ignored.
Step 3: Consult the Tax Team (if large)
If you are buying equipment in a different state or country, tax implications can be huge. Sometimes buying in December vs. January makes a difference for tax write-offs. Ask Finance: “When is the best time to buy this?”
Step 4: Calculate the TCO
Look at the Total Cost of Ownership. If you buy a cheap printer (CAPEX) but the ink (OPEX) costs a fortune, it is a bad investment. Be prepared to answer questions about the long-term OPEX tail.
Step 5: Define the Asset Tags
If you are buying 50 laptops, do not just write “50 Laptops” on one line. You may need to provide a spreadsheet so Finance can issue 50 unique asset tags.
Part 12: Glossary of CAPEX Terms
- Asset Tag: A unique barcode or ID label physically attached to the equipment for tracking.
- Book Value: The original cost of the asset minus the accumulated depreciation.
- Depreciation: The allocation of the cost of an asset over its useful life.
- Write-Off: Removing an asset from the books because it is lost, stolen, or broken beyond repair.
- CIP (Construction in Progress): An accounting holding account for costs while an asset is being built but is not yet ready for use. Depreciation does not start while money is in CIP.
Conclusion
The CAPEX Request is more than a purchasing form; it is a strategic proposal. By completing this template, you demonstrate that you understand the financial weight of the investment. You are not just asking to spend money; you are asking the organization to add an asset to its foundation.
A well-crafted CAPEX Request protects the Project Manager. It clearly defines what is being bought, how much it ultimately costs, and what value it delivers. It prevents the awkward situation 2 years later when someone asks, “Why did we buy this expensive machine that sits idle?” You can point to the request and say, “We bought it based on these volume projections, which have since changed.”
Final Checklist for this Template:
- Is the total cost fully loaded (Shipping, Tax, Install)?
- Is the “In-Service Date” realistic?
- Have you verified the Useful Life with Finance?
- Is the distinction between this CAPEX and associated OPEX clear?
- Are the ROI and Payback Period calculations shown?
- Is the quote attached?
By adhering to the discipline of this template, you ensure your project resources are funded correctly and compliant with corporate governance.
Meta Description:
A detailed template for a Capital Expenditure (CAPEX) Request. Includes asset description, financial analysis (ROI/NPV), TCO breakdown, and approval workflows.
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