As capital budgeting essentially re-invents the company through major long-term expenditures it is arguably one of the most critical functions that financial management performs. However, based on my personal experiences, extensive empirical data, and antidotal data - many firms routinely experience significant failures in their selection of capital projects.
1) For your first topic in this conference I would like for you to briefly review either your personal experiences and/or the financial literature to identify and present a description of one actual capital project/product failure and the reasons attributed to the failure. For those of you who do not have personal experiences the following are some illustrated examples of failed projects/products over the last 50 years you may want to look up and consider: -New Coke,- The Iridium Satellite Communication,- the Edsel automobile, Beta (vs. VHS), the Concord SST, and various Dot Coms. Feel free to research others. In your response please provide financial information regarding the project (what is available): initial outlay, projected cash flows, final dollar losses. This is one to two paragraph exercise - - . I am interested only in your short, concise description and the major reasons you believe it failed.
2) Synthesize your one-paragraph position on what 3-5 specific factors you believe most likely to contribute to capital project analysis failure.