Worksheet · Strategy Health Check
Argue next year's capital from the portfolio roles
When each business bids for capital on its own case, the biggest and loudest get the most. This sheet starts from each business's role and sets capital and leadership time to match. It builds the Competent step of the check:
The plan allocates capital and the leadership's time from the portfolio roles, naming which businesses are meant to be net sources of cash and which net users.
Step 1. Look at the last three years
| Business | Role | Capex, last three years | Share of group capex | Share of group EBIT | Cash generated or used |
|---|---|---|---|---|---|
Look for a business whose share of capital has not moved while its role has.
Step 2. Build next year from the roles
Split each business's request into must-spend (safety, compliance, keeping assets running), committed (projects under way) and choice (new money).
| Business | Role | Must-spend | Committed | Choice requested | Choice allocated | Intended net source or user of cash | Leadership days a quarter |
|---|---|---|---|---|---|---|---|
| e.g. Specialty coatings | Grow | $4m | $6m | $10m | $14m | User | 8 |
| e.g. Building products | Hold for cash | $12m | $2m | $9m | $0 | Source | 3 |
Choice capital goes to the businesses marked grow first. A business marked hold for cash gets must-spend capital unless the board makes an exception in writing.
Step 3. Check
- The plan names each business as an intended net source or net user of cash.
- Leadership time follows the roles as well as capital.
- Any allocation that matches last year's share is explained by the role, not by habit.
Done when: the plan sets capital and leadership time from each business's role, and names the intended net sources and users of cash.
Adapted from our own capital allocation method (Deloitte, 2015).
From the Strategy Health Check. Your report links the sheet for each of its moves.