Investment planning is closely linked to strategic planning. The investment planning process includes not only identifying and realizing individual investment projects, but above all creating a coherent investment program in order to provide the required resources for a successful implementation of the corporate strategy.
The following types of investments can be distinguished: initial or new investments, replacement investments, rationalization investments, expansion investments, disinvestments, and investments made in accordance with official requirements ("obligate investment").
The investment planning process typically takes place in several phases:
- Proposal for investment and description of the investment problem
- Decision preparation: This phase includes setting up alternative actions, gathering data and information relevant to decision-making (quantitative and qualitative), checking for compatibility with corporate goals and legal provisions, checking for technical and economic feasibility, carrying out a viability study for the remaining alternative actions, and taking into account interdependencies, soft factors, and insecurities.
- Make decision on investment
- Carry out investment
- Investment monitoring (on-going and follow-up)
The result of the investment planning process is an investment plan which lists all investments planned for the strategic planning period. The investment plan is incorporated into the financing plan.