International Journal of Business, Management and Commerce (IJBMC)

Two areas of cost management that are critical to the success of an organization’s strategic allocation of financial resources are strategic planning and capital budgeting. Most businesses engage in strategic planning and capital budgeting, however, some of the projects that they embark on are not efficiently managed and result in a lack of completion or an overrun of cost. What factors contribute to capital projects overrun or incompletion, and how can these factors be avoided? The purpose of this literature review is to discuss strategic planning and capital budgeting in relation to how managers achieve the organization’s goal of strategic allocation of financial resources. The study will also identify factors that contribute to incomplete or overrun capital projects and look at possible ways to avoid the pitfalls. If capital projects are skillfully crafted through strategic planning, projects overruns will be minimized, if not eliminated.