Capability template for finance and accounting
Asset replacement options comparison
When an aging asset has more than one proposed replacement or upgrade, the finance lead and the engineering owner get one workbook: the supplied costs, operating assumptions and lives on one basis, with price-basis gaps, unverified savings and open sensitivity questions marked. It recommends no spend.
Add it to a workflow in the Fully Powered Planner, beside the teams and roles that will run it. Book a fit call
The outcome
Three proposals for the same worn-out pump, boiler or transformer rarely arrive in the same shape. One is priced in last year's money, one leaves out installation, one promises savings with nothing behind them, and their working lives run from six years to twenty. The review meeting then spends its time arguing about the paperwork instead of the asset.
This capability puts every option on one footing before the meeting. Each option's costs are restated to a single price year, every project life is turned into a yearly cost so a six-year option and a twenty-year option can sit side by side, and the savings nobody has verified are shown separately from the ones someone has. Whatever cannot be put on the same footing is marked where it stands and written as a question for the person who can answer it.
Nobody is told which option to choose. The engineering owner still validates how the asset will run, finance still sets the rates and tax treatment, and the investment committee still decides whether any money is spent.
Who starts the work, and when
A finance analyst, the asset manager or the engineering owner starts it once the supplier proposals are in and before the investment review is scheduled. It runs again when a proposal is revised, a missing figure arrives or finance changes a rate. The finance lead and the engineering owner review the workbook together before it goes to anyone else.
What they supply
- The proposals, as a list: one row per option, with the supplier, the quote date, what price year it is in, the capital cost, installation and other one-off costs, the project life, any residual value and where it came from.
- The current position: what the asset costs to keep running today, and the cost of keeping and overhauling it, as the baseline.
- Operating assumptions from the engineering owner: annual operating cost for each option, whether each has been validated, and any savings the suppliers claim with the evidence behind them.
- Finance's settings: the approved hurdle rate (the discount rate in the workbook) and whether it is real or nominal, the price year to compare in, the escalation rate for restating older quotes, a rate range for sensitivity, and the tax treatment, only if finance supplies one.
What comes out
One workbook in eight fixed sheets: the basis used; the inputs exactly as supplied; every option restated to one price year and turned into an equivalent annual cost; a second view that adds the claimed savings; the options in order of that cost as a plain fact; the flags; the sensitivity questions, with the figures that make each one concrete; and the decisions and approvals, by role.
A good workbook can be rebuilt by hand from the inputs sheet in an afternoon, and nobody reading it mistakes it for a recommendation.
An invented example
Illustrative example with invented data. The plant, the suppliers, the quotes and every figure below are invented. The plant is an invented biomass power station whose feed pump set P-3 is 22 years old and has three proposed replacements or upgrades. First come the inputs the person starting the work supplied, in full, then the workbook the capability returned.
The inputs
1. Finance's settings (from the finance lead)
Asset: Feed pump set P-3, Example Valley Biomass Plant, 22 years old
Prepared: 12 November 2026
Price year to compare in: 2026
Hurdle rate (the discount rate): 8.0% a year, a real rate, to be applied to costs held flat in 2026 money
Rate range for sensitivity: 6% to 10%
Escalation rate for restating quotes priced in other years: 3.0% a year
Tax treatment: not supplied; compare before tax for now
Currency: USD
2. Options table (supplier proposals, the in-house estimate and the engineering owner's figures)
option,supplier,quote_reference,quote_date,price_basis,capital_cost,installation_cost,other_one_off_cost,project_life_years,residual_value,residual_source,annual_operating_cost,opex_validated,claimed_annual_saving,saving_evidence
KEEP,In-house estimate,EST-P3-01,2026-10-20,2026 USD,62000,0,0,6,0,,131000,yes,0,n/a
A,Supplier A,QA-114,2025-09-15,2025 USD,148000,21000,0,12,0,,112000,yes,9000,supplier datasheet
B,Supplier B,QB-0720,2026-06-30,2026 USD installation excluded,205000,not in quote,0,20,0,,98000,no,14000,supplier statement
C,Supplier C,QC-3381,2026-08-12,2026 USD,176000,18500,6000,15,12000,,101000,no,22000,supplier statement
3. Notes
KEEP is the baseline: overhaul the existing pump set, which gives about six more years.
Operating costs are the plant engineering manager's figures in 2026 money, before any claimed saving.
Option C's other one-off cost is control-system integration.
The workbook
ASSET REPLACEMENT OPTIONS COMPARISON: Feed pump set P-3, Example Valley Biomass Plant, prepared 12 November 2026
SHEET 1. BASIS
Asset: Feed pump set P-3, Example Valley Biomass Plant, 22 years old
Price year: 2026
Discount rate: 8.0% a year, real, from the finance lead
Rate range for sensitivity: 6% to 10%
Escalation rate for restating quotes: 3.0% a year
Tax treatment: pre-tax only; no treatment supplied
Timing: one-off costs at year 0; operating costs at the end of each year; residual value at the end of the project life
Options: 4, with KEEP as the baseline
Status: draft for the engineering owner and the finance lead; no recommendation
SHEET 2. INPUTS AS SUPPLIED
option,supplier,quote_reference,quote_date,price_basis,capital_cost,installation_cost,other_one_off_cost,project_life_years,residual_value,residual_source,annual_operating_cost,opex_validated,claimed_annual_saving,saving_evidence
KEEP,In-house estimate,EST-P3-01,2026-10-20,2026 USD,62000,0,0,6,0,,131000,yes,0,n/a
A,Supplier A,QA-114,2025-09-15,2025 USD,148000,21000,0,12,0,,112000,yes,9000,supplier datasheet
B,Supplier B,QB-0720,2026-06-30,2026 USD installation excluded,205000,not in quote,0,20,0,,98000,no,14000,supplier statement
C,Supplier C,QC-3381,2026-08-12,2026 USD,176000,18500,6000,15,12000,,101000,no,22000,supplier statement
Notes supplied with the inputs: KEEP is the baseline: overhaul the existing pump set, which gives about six more years. Operating costs are the plant engineering manager's figures in 2026 money, before any claimed saving. Option C's other one-off cost is control-system integration.
SHEET 3. ON ONE BASIS (base view: only savings marked verified are counted)
option,one_off_as_quoted,restatement_factor,one_off_restated,residual_counted,project_life_years,annuity_factor,operating_cost_used,pv_one_off,pv_operating,pv_residual,pv_total,equivalent_annual_cost,row_status
KEEP,62000,1.00,62000,0,6,4.6229,131000,62000,605597,0,667597,144412,complete
A,169000,1.03,174070,0,12,7.5361,112000,174070,844041,0,1018111,135098,complete
B,205000,1.00,205000,0,20,9.8181,98000,205000,962178,0,1167178,118880,incomplete: installation not in quote
C,200500,1.00,200500,0,15,8.5595,101000,200500,864507,0,1065007,124424,complete
Residual values left out: C, 12000, no source.
SHEET 4. WITH CLAIMED SAVINGS (not verified unless marked)
option,claimed_annual_saving,operating_cost_less_saving,pv_total,equivalent_annual_cost,row_status
KEEP,0,131000,667597,144412,complete
A,9000,103000,950286,126098,complete
B,14000,84000,1029724,104880,incomplete: installation not in quote
C,22000,79000,876699,102424,complete
SHEET 5. POSITION
Base view, lowest equivalent annual cost first: B 118,880 (incomplete: installation not in quote); C 124,424; A 135,098; KEEP 144,412.
With claimed savings, lowest first: C 102,424; B 104,880 (incomplete: installation not in quote); A 126,098; KEEP 144,412.
Equivalent annual cost at 6%, 8% and 10% rates, base view: KEEP 143,608 / 144,412 / 145,236. A 132,763 / 135,098 / 137,547. B 115,873 / 118,880 / 122,079 (installation not in quote). C 121,644 / 124,424 / 127,360.
Equivalent annual cost at 6%, 8% and 10% rates, with claimed savings: KEEP 143,608 / 144,412 / 145,236. A 123,763 / 126,098 / 128,547. B 101,873 / 104,880 / 108,079 (installation not in quote). C 99,644 / 102,424 / 105,360.
Order across the rate range: unchanged in both views.
This orders the supplied numbers by cost. It is not a recommendation.
SHEET 6. FLAGS
3 of 4 options flagged (per-option flags only).
A: price year differs, saving unverified. Priced in 2025 USD and restated by 1.03 from 169,000 to 174,070; claimed saving of 9,000 a year rests on a supplier datasheet.
B: cost not in quote, operating cost not validated, saving unverified. Installation is not in the quote and is counted as 0, so the row is incomplete; operating cost of 98,000 is not validated; claimed saving of 14,000 a year rests on a supplier statement.
C: operating cost not validated, residual value unsourced, saving unverified. Operating cost of 101,000 is not validated; the 12,000 residual value has no source and is left out; claimed saving of 22,000 a year rests on a supplier statement.
Lives differ: KEEP 6 years, A 12, B 20, C 15. Equivalent annual cost assumes each option could be renewed at the same cost at the end of its life.
Tax treatment not supplied: all figures are before tax.
SHEET 7. SENSITIVITY QUESTIONS
1. Claimed savings change the order: the base view puts B first and C second, and counting the claimed savings puts C first and B second. What evidence will the engineering owner accept for the claimed savings of 9,000 (A), 14,000 (B) and 22,000 (C) a year?
2. B's installation is not in the quote. An installation cost of 54,438 at year 0, in 2026 money (the price year, no restatement), would bring B's equivalent annual cost level with C's in the base view. Who will obtain a priced installation for B?
3. In the base view B and C differ by 5,545 a year (unrounded; the rounded figures above differ by 5,544), which is 5.7% of B's operating cost of 98,000. The operating costs of B and C are not validated. Is each figure firm to within that margin?
4. C's residual value of 12,000 is left out because it has no source. Counting it would lower C's equivalent annual cost by 442, to 123,982, and the order would not change. Does the 12,000 have a source?
5. At 6% and 10% the order is unchanged in both views. Does finance want a wider rate range?
6. Lives run from 6 to 20 years. Do finance and the engineering owner accept that each option could be renewed at the same cost at the end of its life, or should the comparison use a fixed horizon?
SHEET 8. DECISIONS AND APPROVALS
Engineering owner: validate the operating costs of B (98,000) and C (101,000); confirm the project lives of 6, 12, 20 and 15 years; judge the evidence for the claimed savings; obtain a priced installation for B from Supplier B.
Finance lead: confirm that the 8.0% real rate suits costs held flat in 2026 money; supply the tax treatment if an after-tax view is wanted; decide whether the renewal assumption is accepted and whether 6% to 10% is wide enough.
Investment committee: approves any expenditure on feed pump set P-3. This workbook asks for no approval and recommends no option.
Every figure traces to the inputs on sheet 2 (4 options) and the basis on sheet 1. The workbook changes no records, contacts no supplier and sends nothing.
Where it fits
- Finance and accounting, which owns the hurdle rate, the tax treatment and the case that goes to the investment committee.
- Energy, where generating, pumping and network assets run for decades and the replacement question comes with several competing proposals.
- Manufacturing, where a worn line or press has a repair, a rebuild and a new machine on the table.
- Real estate, where boilers, chillers and lifts reach the end of their lives and owners compare repair against replacement.
- Established businesses, where the replacement decision belongs to people who know the asset well and want the numbers on one page.
It sits beside three neighbours without doing their work. Vendor quote comparison compares suppliers against agreed criteria before a purchase. Business line investment review looks at a whole line of business. Annual operating budget builds the year's plan. This one takes proposals that already exist for one aging asset and puts their numbers side by side.
What has to change for your company
Use your own hurdle rate, price year and escalation rate, and say whether your rate is real or nominal. Decide who validates operating assumptions and how an assumption is marked as validated. If finance wants an after-tax view, supply the treatment yourselves; the capability uses only what finance gives it and never chooses a tax method. Set the rate range worth testing and the project lives you will accept without question. Name the people who may supply a missing cost, since the assistant never estimates one. It runs in ChatGPT, Claude, Copilot or Gemini, from the spreadsheets and notes you supply; it needs no connection to your finance or asset systems.
What has been checked
Fully Powered AI wrote this capability template. It was editorially reviewed on 10 November 2026. It was tried once on its invented example in Claude on 10 November 2026, and the record is published beside it. That run was not blind, because the runner had seen the example's published workbook before producing its own. It has not been tested in a client environment or as a packaged version in ChatGPT, Claude, Copilot or Gemini.
Testing in your environment means running it on a past replacement decision your finance lead and engineering owner remember well, plus hard cases written in advance, each with its expected behavior: an option priced a year earlier, an installation left out of a quote, a saving with no evidence, a residual value with no source, two options with very different lives. The finance lead recomputes every figure before anyone relies on the workbook. Pilot acceptance-test preparation builds that test set, and what we test before we call an AI workflow ready describes the record we keep.
The full capability template
Everything above is the outline. The complete capability template is the working version: the roles, the inputs, the procedure, the exceptions and stop conditions, the output format, the reviewer checklist, the acceptance tests, the instructions for an AI assistant and what to customize for your company. It comes with a download and the link to its folder in Fully Powered’s public repository.
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