There management to identify, measure and estimate the

There are a few challenges to apply qualitative considerations to make the capital expenditure decisions in the management. First of all, the process for the management to identify, measure and estimate the costs that are related to the capital expenditure is complicated. This is because implementing 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 expenditure on its capital assets. Unfortunately, such expectation on possible outcomes is not confirmed and not occurs as what have been predicted. This is due to incomplete analysis on qualitative consideration which will affect the outcome decision. 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 which are related to capital expenditure will consume more time especially for better decision outcome.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

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 high quality outcome.