Full expansion now
Highest immediate commitment; depends most on forecast accuracy and execution speed.
Key conditionDemonstrated demand and tested downside capacity economics.
Home / Decision Memo / SampleA decision review that
SAMPLE DECISION MEMO
A decision review that
shows its reasoning.
Capacity expansion — a worked example of the structure, findings and evidence limits in a written owner's decision memo.
Private owner advisory · Investment decision · Written findings
01 / DECISION IN VIEW
Expand production now, phase it or defer?
A manufacturer is considering a second production line to serve anticipated orders. Management favours a full expansion, arguing that demand will continue to rise.
Executive findings
The expansion could be commercially attractive, but its strongest supporting assumptions have not yet been demonstrated. A phased approach deserves formal comparison before approval.
01 / DEMANDForecast is not committed revenue
Management's demand estimate needs reconciliation to signed customer orders, forecast quality and cancellation exposure.
02 / CAPITALFull cost is incomplete
Installation, commissioning, recruitment, working capital and operating ramp-up should be considered together.
03 / OPTIONSOne proposal is not a comparison
Phased capacity and external production need a cost, timing and reversibility assessment.
02 / EVIDENCE REGISTER
What supports each important claim?
| Claim being relied upon | Evidence required | Finding | What it means |
|---|---|---|---|
| Demand will exceed current capacity | Order book, customer forecasts, historical conversion and utilisation | Not established | Do not size capacity on an untested sales projection. |
| The new line will reach planned output quickly | Equipment specifications, commissioning plan and qualified staff availability | Requires validation | Include ramp-up delays in financial sensitivity analysis. |
| Expansion will improve margins | Full cost model, working capital, overheads and alternative supplier quotes | Incomplete basis | Recalculate expected returns under conservative assumptions. |
| Full expansion is the best option | Comparative modelling of full, phased and outsourced capacity | Options missing | Compare credible paths before approving irreversible capital. |
A missing-evidence finding is not a conclusion that the underlying claim is false. It means the claim cannot yet be relied upon for approval.
03 / ALTERNATIVES
Compare feasible paths, not just the preferred one.
04 / DOWNSIDE TEST
Questions the base case alone cannot answer.
Demand shortfall
What happens if incoming orders are meaningfully below management's forecast?
Commissioning delay
How much additional cash is required if output ramps up later than planned?
Working capital
Can the business fund inventory and receivables while servicing capital commitments?
Reversibility
Which commitments are recoverable if a major customer postpones business?
05 / PROPOSED DECISION CONDITIONS
What should happen before approval?
- Validate the demand base. Reconcile sales projections with the actual order pipeline and customer concentration.
- Complete the all-in investment model. Include commissioning, additional staffing, working capital and financing sensitivity.
- Evaluate at least two alternatives. Compare phased capacity and outsourcing against full expansion using the same assumptions.
- Set explicit thresholds. Agree what demand and cash-flow evidence would justify approval, staging or deferral.
Written conclusion: The preferred investment is not yet supported well enough for unconditional approval. Complete the missing checks and reconsider the options with comparable downside estimates.
06 / SCOPE AND LIMITATIONS
Clear about what has—and has not—been verified.
The memo records judgments based on the materials made available for review. Claims without supporting evidence remain open. Engineering certification, statutory audit, legal advice, company valuation and physical verification are not included unless separately agreed with appropriate specialists.
The purpose of a Decision Memo is to make reasoning, uncertainty and next actions reviewable. The business owner retains responsibility for the final decision.
Need this scrutiny for your own decision?
Start with a short explanation of the choice and your biggest concern. The scope and fee are agreed before any detailed work begins.