💸 CAPEX vs OPEX — Full Breakdown for Facilities Management
📌 1. Definitions
🏗️ CAPEX (Capital Expenditure)
CAPEX refers to money invested to acquire, upgrade, or extend the life of physical assets.
These expenses create long-term value and are usually planned yearly or as part of asset lifecycle management.
In FM terms:
CAPEX is for major repairs, replacements, upgrades,
💸 CAPEX vs OPEX — Full Breakdown for Facilities Management
📌 1. Definitions
🏗️ CAPEX (Capital Expenditure)
CAPEX refers to money invested to acquire, upgrade, or extend the life of physical assets.
These expenses create long-term value and are usually planned yearly or as part of asset lifecycle management.
In FM terms:
CAPEX is for major repairs, replacements, upgrades, and new assets that have a useful life of more than one year.
🛠️ OPEX (Operational Expenditure)
OPEX refers to expenses required for the daily running and upkeep of a facility.
These costs are recurring, predictable, and necessary to keep operations functioning smoothly.
In FM terms:
OPEX covers maintenance, manpower, cleaning, utilities, AMC, consumables, and routine upkeep.
📌 2. Key Characteristics
🏗️ CAPEX Characteristics
• One-time or infrequent large investments
• Adds value to the property
• Improves life or performance of an asset
• Recorded as an asset, not an expense
• Depreciated over a fixed number of years
• Requires senior-level approval (CFO, MD)
• Long planning, vendor assessment, budgeting required
• Linked to lifecycle management (HVAC, electrical, civil equipment)
🛠️ OPEX Characteristics
• Recurring monthly/annual expenses
• Directly affects annual cash flow
• No asset value added
• Recorded as operating cost
• Usually approved by operations/line managers
• Part of annual operating budgets
• Linked to SLAs, AMC, manpower, soft/hard services
• Must maintain quality without exceeding budget
📌 3. Examples Relevant to FM
🏗️ CAPEX Examples (FM)
• Replacing old HVAC with a new VRV/VRF system
• Major civil renovation (flooring, roofing, plumbing overhaul)
• Installing new CCTV/Access control system
• Lift modernization or replacement
• Fire alarm panel or sprinkler system revamp
• Parking expansion
• New DG Set, UPS, transformers
• Store fit-outs (retail)
• Workspace redesign projects
🛠️ OPEX Examples (FM)
• Housekeeping manpower and materials
• Security contract
• Technical staff salaries
• AMC for HVAC, electrical, and firefighting
• Pest control services
• Annual license renewals (FSSAI, Fire NOC, lift license)
• Utilities (electricity, water, fuel)
• Consumables (mops, chemicals, PPE, stationery)
• Repairs under minor maintenance
• IT support services
📌 4. How CAPEX and OPEX Affect Business
CAPEX Impact
✔️ Reduces long-term maintenance cost
✔️ Improves equipment reliability
✔️ Boosts Asset Value
✔️ Increases safety & compliance
✖️ Requires high financial commitment
✖️ Long approval cycle
✖️ Wrong CAPEX planning → losses for years
OPEX Impact
✔️ Ensures daily operations run smoothly
✔️ Controls annual operating budget
✔️ Improves customer and employee experience
✔️ Helps maintain SLA/KPI performance
✖️ Over-cutting OPEX → drop in quality
✖️ Improper control → unnecessary monthly spend
✖️ Under-skilled manpower → safety risks
Source: LInkedIn Page of Anoop Sivaraman
There are many variations of passages of Lorem Ipsum available, but the majority have suffered alteration in some form, by injected humour.
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