Capex Program Modelling
This use case explains how to model multi year capital expenditure programs for capital projects and infrastructure in Model Reef.
You will:
Represent projects and asset classes in the branch and category structure.
Build a capex pipeline across years, phases and asset types.
Connect capex to depreciation, maintenance and operating models.
See the impact on Balance Sheet, Cashflow, Cash Waterfall and valuation.
Use scenarios to compare alternative program and phasing options.
When to use this pattern
Use this pattern when:
You manage a portfolio of capital projects or infrastructure investments.
Capex is material to cashflow, funding and valuation.
You need a long dated view of spend, commissioning and reinvestment.
You want a repeatable framework for program level decision making.
It is a foundation for:
Multi Phase Project Cash Flows
Funding and Drawdown Structures
Long Horizon Scenario Planning
Build a Capex and Depreciation Model
Architecture overview
Capex program modelling uses:
Structure
Branches for projects, programs and asset groups.
Asset variables for capex and depreciation.
Capex schedules
Planned spend by period, phase and asset class.
Contingency and escalation where needed.
Asset behaviour
Depreciation methods and useful lives.
Replacement and renewal cycles.
Links to operating models where capacity drives revenue or cost.
Financial outputs
Capex in Cashflow and Cash Waterfall.
Asset balances and depreciation in Balance Sheet and P&L.
Inputs to valuation through FCFF and FCFE.
Define the program, project and asset structure
Start by setting up branches that match how you plan and report capital programs, for example:
Capex Program
Project - Plant A Upgrade
Project - New Line 3
Project - IT Infrastructure Renewal
Within each project branch, use Asset variables for the main asset groups, for example:
Assets - Plant and Equipment - Line 3.
Assets - Buildings - Plant A.
Assets - IT Infrastructure - Core Network.
If you already have an operating model, ensure project branches are consistent with the wider branch structure so that asset and operating impacts can be seen both separately and at group level.
Build capex schedules by phase and asset class
For each project and asset class, create drivers and series in the Data Library for:
Planned spend per period (month, quarter or year).
Phase tags such as design, construction, commissioning.
Contingency or risk allowances as percentages or explicit series.
Escalation factors for inflation or scope changes where appropriate.
Implement Asset variables with timing that reflects these schedules. You can either:
Import the capex schedule from a spreadsheet or source system, or
Enter it manually using manual series or scheduled rules.
This results in a time series of capex cash outflows per project and asset type.
Configure asset lives, depreciation and commissioning timing
For each Asset variable, specify:
Depreciation method (for example straight line, reducing balance or units of production where available).
Useful life or depreciation period.
Start date for depreciation, which may be different from the first spend date if assets are capitalised at commissioning.
Use timing fields to approximate commissioning by:
Aligning depreciation start with the period when assets are ready for use, or
Applying partial year depreciation rules via schedules if required.
Model Reef will then:
Increase asset balances as capex is incurred.
Reduce carrying values via depreciation over the useful life.
Record depreciation expense in P&L and accumulated depreciation in Balance Sheet.
Link capex to operating capacity and cost where relevant
Where projects change capacity or cost structure, connect capex to operating models by:
Adding drivers for capacity units (for example tonnes, MW, rooms, seats).
Adjusting revenue or throughput drivers once the project is commissioned.
Updating operating cost models for new efficiency or maintenance patterns.
Including maintenance capex as separate Asset variables linked to utilisation drivers.
Treat initial capex and recurring maintenance capex separately so you can see both:
Expansion or upgrade investment.
Ongoing capital required to sustain performance.
Reflect capex in Cashflow, Cash Waterfall and funding needs
With capex schedules and depreciation configured, Model Reef will automatically:
Show capex as Investing Cash Outflow in the Cashflow Statement.
Show capex lines in the Cash Waterfall below FCFF.
Reflect asset balances in the Balance Sheet.
Flow resulting depreciation into P&L.
Use these outputs to:
Assess the funding required for the capex program.
Compare timing of spend and returns.
Feed capex into the valuation engine via FCFF and FCFE.
You can then layer in Funding and Drawdown Structures to represent how capex is financed.
Use scenarios for program scope, timing and phasing
Clone the base model into scenario models to explore:
Different project start and finish dates.
Alternative phasing of capex across periods.
Scope changes that alter total capex and asset lives.
Sequencing options across multiple projects or sites.
Different maintenance strategies over the long run.
In each scenario, adjust:
Capex series and phase allocations.
Depreciation lives and commissioning dates.
Operating capacity and cost assumptions linked to the projects.
Funding assumptions for capex, once you connect this pattern to funding models.
Compare scenarios using:
Peak and cumulative capex.
Asset balances and depreciation profiles.
Cashflow and headroom impacts.
Valuation metrics where you use the valuation engine.
Check your work
Troubleshooting
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