What describes a capital expenditure (capex) approval process and its typical pipeline?

• A. Process to authorize major investments; stages include business case, approvals, funding, procurement, and project delivery.
• B. Process to fund minor repairs; steps include quick approvals and small procurement.
• C. Process to reduce costs; steps include renegotiation and deferred maintenance.
• D. Process to manage operating expenses; steps include budget review and routine maintenance.

Answer: (A)

Capex involves investments in long‑term assets and requires a formal, multi‑stage process. The description that fits this is a process to authorize major investments, with stages that cover building a solid business case, obtaining the necessary approvals, securing funding, conducting procurement, and delivering the project. This sequence captures the governance and planning needed for significant, long-lasting assets—from the initial justification through to execution and delivery.

Context helps: capital expenditures are different from routine spending. They’re capitalized on the balance sheet and usually involve substantial sums and long time horizons, which is why a detailed business case and governance approvals are essential. In contrast, the other options describe activities tied to maintaining operations or cutting costs—small repairs, quick approvals for minor items, or managing operating expenses—which fall under opex and routine maintenance, not capex.