Finance

Finance studies budgeting, investment and cash flow in the broad sense: how resources are allocated and accounted for over time against risk and return.

The FM finance capability applies general financial principles to life-cycle budgeting, multi-year maintenance and accounting for facility spend. FM is rarely the source of financial theory, but must reason fluently within it to defend an investment decision to a finance function that thinks in different terms.

• Is the business case for a facility investment expressed in the same financial language (NPV, payback) as other investments in the organisation?
• Which part of the facility budget is genuinely adjustable in the short term, and which part is locked into contracts?

• General corporate finance literature (cost of capital, investment appraisal).

• A multi-year maintenance plan without financial translation into NPV or payback rarely wins an internal capital competition.

• Budgeting and life-cycle financing of FM

• Investment appraisal and multi-year budgeting

• Demand organisation

  The demand organisation translates facility need into financial language the rest of the organisation recognises.

[Content pending]

The standards section arrives in Part 7.

• An investment rejected purely on annual cost, without factoring in the life-cycle cost of deferral.

No open research question specific to FM; the financial methodology is established, the challenge lies in consistent application within FM, not in the theory itself.

• Brealey, Myers & Allen, Principles of Corporate Finance.