There For example, the company may predict

There are also a few challenges in implementing qualitative considerations to make the capital expenditure decisions. Firstly, the process to identify, measure and estimate the costs that are related to capital expenditure is usually complicated. This is due to the impossible of automating the qualitative data effectively as qualitative data tends 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 when making a large investment on its capital assets. However, such expectations are not guaranteed and may not happen as what have been predicted.

This is due to incomplete analyzing on qualitative consideration which may influence the outcome decision. For example, the company 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 benefits and costs that are related to capital expenditure spread out over a long-period of time especially for better decision outcome. This is due to extremely time consuming and high-priced to gather a huge amount of data. For example, the company need to spend more time and money to gather more information about resources in order to produce a high quality outcome.

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