Essay on Capital Replacement & Maintenance Budgets: Setting an Annual Plan

Introduction

In every organization, it's important to have maintenance budgets as well as the capital, which can be used to handle all the replacement plans. The maintenance budget is normally divided into two. There are projects and operating budgets. Every company should set this budget on an annual basis. Capital replacement usually means cost used for purchasing equipment and other things that are used in the company and have a useful life. Therefore, this task will review how capital replacement and maintenance budget are important in the operation of every company.

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Maintenance Costs for the Zamboni

Maintaining a field is expensive, particularly if the field has natural grass. But it is the role of the manager and director of the field to make sure that all the items in the ground are well maintained. However, there are some of the items which normally have a life span, and most of the field managers and directors do not consider this. For example, in our case Utopia operational team, the manager and director have no idea about the Zamboni, which has lasted for years. According to the case study, the field was build 20 years ago, and the life span of these Zamboni is 20 years. Thus, it is important for the management of the Utopia to always indicate the maintenance cost of long-term assets like Zamboni. As the operational team, it is important to communicate early about the maintenance cost to the company's management.

Kitchen and Equipment Renovation Costs

Every company should include the renovation cost in its budget. Renovation is a way or redecorating as well as improving a certain structure (Marsh, 2019). When a structure is renovated, it looks attractive to the people. Utopia is a multipurpose stadium; it should always be renovated. The renovation will highly have helped the company to earn more profits as compared to the past, simply because most of the people will hire this particular place due to its attractiveness. Also, Utopia will be in the top position of its competitors. Convincing the management team to allocate $100,000 to the renovation budget so as to renovate the kitchen and other equipment used in the kitchen will make Utopia kitchen unique. More guests will be expected to come and do their catering activities at backstage, and this will be another form of investment for the company. On top of this, in case a certain team has hired the kitchen department, most likely, it is also expected to hire the event venue.

Purchasing Costs for Security Items

According to some studies, hospitals, as well as the sports stadiums, are among the free gun areas (Dinces, 2016). In the United States, it ensures that there is no entry of guns in those places; there are some detectors that are normally bought. These detectors are provided to the security team to ensure all the individuals accessing those places do not have any gum arms. Thus, it is important for the security department to have these kinds of items at Utopia stadium. Asking for money from the management team would help in purchasing the metal detectors as well as installing as they prohibit any firearms in the Utopia Field. Being a big stadium and ground of multipurpose, different events, and thousands of people can be expected to be there on any particular day. Therefore, after these metal detectors would help the security department to maintain total security.

Replacement Costs

Most of the stadiums are normally affected by the issue of rain, particularly during the rainy seasons. The management teams should consider replacement or maintenance costs of the stadium as the climate conditions are unpredictable. A roofing system can be one of the greatest problems that are connected with the stadiums, and it may bring about negative impacts (Malek, Ali & Baharum, 2016). Although ensuring that the roofing systems are of modern technology is expensive, it's worthwhile as the structures become fantastic after replacement. To understand what the stadium requires in the roofing system, the management needs to hire expert engineers who can be in a position of determining which is a need. Recommending the management of Utopia multipurpose stadium to look for engineering professional it will be of great help. Simply because if the management team handles this issue to avoid $15,000, which has been estimated as a business operation in inspecting and designing the roofing system, more expenses may occur. Thus, it is important to include replacement costs in the annual capital budget of the company.

Some Recommendations to Utopia Management Team

The management of Utopia stadium should understand the performance of the asset, as well as their expected service life. When installing the roofing systems, it is important for the management team to have the knowledge of replacement costs. Thus, understanding this particular thing can be difficult, and they should have an engineering team who would be doing this work for them. Also, they should at least study the ideas of roofing design form these experts to understand what is expected to be estimated at the company's annual capital budget.

When spending on purchasing costs in Utopia, it would be more important to understand the performance, productivity, and functionality of and asset. For example, before planning or spending on buying the meter detectors, it is good to have known how effective it would be if installed. Most of the new technology items highly help in improving the economy of a company.

In renovation costs, the team should ensure that it spends less than five percent of the property's original cost (Dinces, 2016). Although sometimes it may depend on what is being renovated, it is not advisable to spend a lot of cash in the renovation of the company's structure, and it can be a huge expense; thus, losses expected.

Lastly, the management team at Utopia stadium should ensure a continuous substituting of assets, i.e., by shifting to the modern or current assets. This will help in solving some of the replacement costs that a company can use. Also, it is important for the company to ensure its existing items to prevent many losses.

References

Dinces, S. (2016). The Attrition of the Common Fan: Class, Spectatorship, and Major League Stadiums in Postwar America. Social Science History, 40(2), 339-365.

Malek, M. A. B. A., Ali, A. S. B., & Baharum, M. R. B. (2016). Asset Modelling on Cost Replacement towards Transparency of Building Replacement. In MATEC Web of Conferences (Vol. 66, p. 00036). EDP Sciences.

Marsh, J. P. (2019). An examination of factors affecting student-athlete satisfaction with stadium facilities (Doctoral dissertation).