Justify It: Tips for Getting Your Cap Ex Approved

It’s that time of the year, when you need to prepare for the money side of engineering.
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It�s that time of the year, when you need to prepare for the money side of engineering.

The last generation of vacuum-tube AM transmitters lacked efficiency and makes newer solid-state replacements easy to justify as capital purchases. To some of us, budgeting is just another chore that we need to check off our list. However, others actually see it as a chance to get the financial resources needed to get the job done right and to be in a better position than the previous year.

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The challenge is always how to justify the money you are requesting.

My objective in this article is to give you a few tips that have worked for me. You know your station better than anyone else, so you are in the best position to come up with the numbers. But there are a few principles that, if applied correctly, will increase your chances of successfully justifying what you need in engineering.

YOUR STATION IS A BUSINESS ENTERPRISE THAT NEEDS TO MAKE MONEY AND SAVE ON EXPENSES

The above statement is true whether your station is commercial or public. You need to remember that, although the engineering department may not have the means to make money for the station, you can implement measures that can save money. Money saved can be considered money earned.

Being effective is being able to achieve goals; being efficient is minimizing waste. Most of the time, we need to find a happy compromise between achieving goals and minimizing waste � between getting tasks done and saving on expenses. Sometimes a thing that we see as a must-have does not appear important to non-engineers. Bridging that perception gap is all that stands in the way between you and your funding.

Put on the thinking cap of the business owner. If the station is your own business, what will you spend on and where will you save money? You will spend money on projects that improve the final product and save money on other areas. As a business owner, you want to invest in that which will bring in more money (more value to the product) and also that which will reduce expenses, to help realize a profit.

There are at least two main accounts that are big items on the engineering operations expense budget: electricity and salaries. The cost of electricity is one expense where you can make a significant difference on the bottom line. When you show how your project can save on the cost of electricity, you can then demonstrate the benefit of the investment in terms of its rate of return.

TALK ABOUT INVESTMENT, NOT JUST EXPENSES

An investment makes money or recovers money. An expense is usually the last thing you want to have, but it�s a �necessary evil� to keep things running. Nobody wants to hear about how money will go out of a business, in the same way that we are not fond of receiving bills to pay. Expenses need to be re-packaged as investments in your dictionary. When describing your capital project as an investment, of course, you need data to make your point; when the numbers are right, facts will sell it.

That more-efficient transmitter is an investment to cut down on electricity cost, not only from an increase in overall efficiency, but also from a drop in cooling needs. If you have it, add in the savings in repair expense and even off-air time. In your capital project, be careful to ensure that you get your investment properly protected by factoring in the needed Transient Voltage Surge Suppressor, correct grounding and cool/clean air management.

Click To Enlarge Let�s look at an example now. Table 1 shows the published parameters of four real 10 kW AM transmitters from different manufacturers. These numbers are straight from sales brochures.

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These parameters are nothing but Greek to laymen. It is our job to make it understandable to business people, and this is why we need to express the benefits in dollars.

Click To Enlarge Table 2 shows the computation for operating expense savings with respect to older solid-state transmitter. If you buy Transmitter X for $100k, for example, it will only take about four years for Transmitter X to pay for itself; or to put it another way, you could have bought the more-efficient Transmitter X from the wastage of operating the older solid-state transmitter over four years. Show your boss how transmitter X will not only pay for itself in four years, it will also save your station over $27,000 every year starting on the fifth year of operation.

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One word that I find is not helpful in justifying projects is the word �new.�

�New� does not always mean better or more cost-effective. Rather than �newness,� emphasize greater efficiency or �better maintainability.�

Non-technical people do not use the word new the way we do. They may think that you are just being subjective � as in getting that new office chair because it is more comfortable than the old one. They don�t get that when you say new equipment, that translates to better reliability, good maintainability, more efficiency or less problematic. As I mentioned before, just because equipment is new doesn�t mean it won�t create problems.

Ultimately, I advise not to using the word �new� at all.

Justifying a project for budgeting purposes not only requires understanding of engineering, but also being able to portray the deal in a way that you want it perceived � as an improvement that the station needs. Although we don�t want to judge the book by its cover, a gift should be packaged well in order for the perceived value to be high.

Lintag is assistant chief engineer for KRON 4 in San Francisco, Calif. You may contact him at rlintag@kron4.com.

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