Capital Expenditure (Capex) Approval Request Template
A capex request has to answer four questions fast: why now, how much, what does it return, and what can go wrong. This template structures those answers so approvers can compare projects on the same basis.
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Capital Expenditure Approval Request Template
Capital Expenditure Approval Request
Company: Acme Precision Ltd Request number: CAPEX-2026-014 Date: 2026-10-20 Requested by: Plant Manager, Machining Project: Replace 5-axis machining center Category: Replacement Total requested: $1,250,000
Business Justification
The existing machine is 19 years old, has unplanned downtime above 12% and cannot hold the tolerance required by two new programs.
Cost Breakdown
| Item | Amount | Year | Notes |
|---|---|---|---|
| Equipment | |||
| Installation and rigging | |||
| Tooling and fixtures | |||
| Training and commissioning | |||
| Contingency | |||
| Total |
Financial Returns
Estimated payback 3.8 years, NPV positive at 10% discount rate over 10 years. See attached model.
Key Assumptions
| Assumption | Value | Source |
|---|---|---|
| Useful life | ||
| Discount rate | ||
| Annual savings or added contribution | ||
| Residual or salvage value |
Risks and Alternatives Considered
Alternative of overhaul rejected due to cost and lack of upgraded control. Delivery lead time of 40 weeks is the main schedule risk.
Approvals
A starting-point form. Adapt approval limits and categories to your delegation of authority policy. Attach the returns model and vendor quotes to the request.
Capex tracking from your ERP
Optional: discuss how to link capital requests, budgets and actual spend in your ERP.
Optional. The tool and every export work without this. No spam.
How to use the template
Fill in the fields, export to PDF or Word, then attach the quotes and the return model. Fill the cost breakdown table by hand or in the exported document, including contingency and costs that are often forgotten, such as installation, tooling, training and qualification. Keep the justification short and tied to a measurable problem such as downtime, quality or capacity.
What approvers look at
Approvers usually compare payback, NPV or IRR against the cost of capital, the strategic fit, and the risk. A project in the safety or compliance category may be approved on necessity alone, while a cost-reduction project must show its savings clearly. State the assumptions behind the returns, including useful life, discount rate and the source of each saving.
Alternatives and risks
Always record at least one alternative, including doing nothing. Common alternatives are overhaul, lease, outsourcing and delaying. Risks should cover lead time, qualification of the process or customer approval, technology and supplier risk, and the effect on operations during installation.
Common mistakes
Leaving out installation and training costs, using optimistic utilization, ignoring the working capital needed for the new capacity, counting savings that will not be realized because staff are not removed, and skipping a post-implementation review.
Frequently Asked Questions
What should a capex approval request include?
A project description, category, total cost with breakdown, business justification, financial return metrics with assumptions, risks and alternatives, and the signatures required by the delegation of authority policy.
How do I justify a replacement machine?
Show the cost of keeping the old asset: downtime hours, repair spend, scrap and lost capacity. Then compare with the new machine's cost and benefit over its useful life, including quality or capability gains.
What payback period do most companies accept?
It varies by industry and capital cost. Many manufacturers look for payback within three to five years for productivity projects, while compliance or safety projects may be approved regardless.
Is this template legal advice?
No. It is an internal management form. Adapt it to your governance policy and any lender or board requirements.
If you track capital projects in an ERP fixed assets or project module, we can talk through connecting approved requests to project budgets.
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