Dc 9

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St. John's University *

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MISC

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Management

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Nov 24, 2024

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docx

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Uploaded by ahmedmushfiq4

Once we complete the capital budget for the year, we roll right into the operating budget. This, like our reading suggests are ongoing maintenance items such as salaries, engineering expenses that we cannot code to capital projects, tree trimming expense, pole and underground expenses, meter testing, etc. All included in order to keep the capital projects longevity in place, and enhance system reliability over the years. A few tricks we utilize to keep expense costs down are to plan tree right of way projects along with rebuilds or new construction because when we are planning and constructing, we can count the tree cutting to the capital project, so it helps keep down our annual expenses to some extent. We have also started to capitalize the costs of changing transformers on outages due to them being considered capital costs, so we can book the labor under transformer changes at night during trouble calls, further lowering expenses. An operational budget focuses on day-to-day expenses like salaries, supplies, and utilities. It helps track and manage ongoing costs to keep the facility running smoothly. On the other hand, a capital budget is all about long-term investments like equipment, renovations, or new facilities. It helps plan for big projects that have a lasting impact (“Differences and Similarities of Capital and Operational Budgeting”). As for which is more important, it really depends on the facility's needs and goals. Both budgets play crucial roles in financial planning. However, if I had to choose, I'd say the operational budget is more important because it directly affects the facility's day-to-day operations and ensures essential services are maintained. Without a well-managed operational budget, it can be challenging to support the facility's long-term growth and success. Work Cited “Differences and Similarities of Capital and Operational Budgeting.” Small Business - Chron.com, 31 Jan. 2019, smallbusiness.chron.com/differences-similarities-capital-operational-budgeting-33149.html. You are absolutely right in that it depends on the facilities needs and goals. It is impossible to give a blanket statement for every company. I like to think for new companies that a capital budget is more important since there is a lot of growth happening in a short period of time. Meanwhile for more established senior companies, an operating budget is more important so that operations continue smoothly without any major changes. If a company has become established that means they are doing something right so why rock the boat too much.

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