Abstract
The primary goal of most companies is to maximise profits. However, this is not always reflected in the way in which investment projects are analysed and selected. This is despite the availability of extremely useful capital budgeting techniques for effective decision-making.
Empirical data was analysed qualitatively focusing on a single engineering business unit in a South African petrochemical company. The results of the research have established that engineers in the South African petrochemical industry use various tools for capital budgeting, especially the NPV and IRR, with little use of the ARR and DCF methods. Furthermore, the research observed that, the years of experience notwithstanding, personnel with just an engineering qualification, do not have adequate proficiency in the use of capital budgeting tool. Conversely, Engineers with finance/business qualifications have demonstrated competencies in the use of complex capital budgeting tools, thus, enabling them to provide more robust information for objective and far reaching investment decisions.
It is recommended that the firm provide opportunities for engineers in this business unit to improve on their capital budgeting knowledge and skills through structured short-to-medium term training to enhance their proficiency in adopting multiple tools.