A second opinion before a capital investment: which assumptions should you test?

This guide is for an owner, CFO or management team with a proposed investment already on the table. It offers a framework for starting the review. It does not assess the merits of a particular investment.

Define the decision in one sentence

Make “we need more capacity” specific: which product family, which facility, what start date and which options are under consideration? Buying a new line, removing an existing bottleneck and phasing the investment may require different evidence.

Record the decision owner and deadline alongside the question. A clear question helps keep requests for information proportionate to the decision.

Record the alternatives, evaluation criteria and uncertainties together. NASA's decision analysis guidance provides a framework for considering these elements. Source: NASA, Decision Analysis.

Separate three groups of assumptions

Demand: what supports the planned volume?

Distinguish existing orders, customer intentions and sales forecasts. Record when each item was produced, the period it covers and any conditions attached. If historical sales are being used to support new capacity, examine whether the product, customer and delivery conditions are comparable.

The review question: Which customer behaviour does the planned volume depend on, and what current records support it?

Operations: what supports saleable output?

A machine's stated capacity and its saleable output for the intended product mix are different inputs. List assumptions about installation, commissioning, staffing, quality and the preceding or subsequent production steps. This does not replace a technical assessment; it helps identify where specialist examination is needed.

The review question: Which conditions must hold at the same time for the intended volume to be delivered?

Timing and resources: what must happen when?

When does the plan assume orders, production, delivery and payment will occur? Compare the dates in the relevant plan version with the dates and periods in supplier quotations and customer records. Flag unresolved inputs for the specialist reviewing the financial model.

The review question: If one milestone slips, which other assumptions need to be reassessed?

Use the same record for every assumption

Using the same headings for each assumption makes gaps and responsibilities easier to compare. The AQuA Book also recommends making the rationale, date, effect, reliability and ownership of assumptions explicit. Source: AQuA Book, Assumptions log.

• Assumption: A statement that must hold for the plan to work.
• Evidence: The source, date, covered period and relevant record.
• Gap: The question the evidence does not answer.
• Decision-changing finding: The result that would require a particular option to be reconsidered.
• Next test: Who will examine which record, and by when?

Replace broad statements such as “demand is strong” with a testable statement about a defined product and period. Where evidence is missing, mark the assumption as unverified.

Example: a new production line

Suppose a packaging manufacturer assumes that existing customers will place additional orders during the new line's initial operating period. Its file contains a sales forecast, but customer delivery schedules and product approvals remain unresolved.

The assumption to examine is: “Additional orders for the specified product group will be ready for production and delivery during the line's commissioning period.”

The evidence needed is a comparison of relevant customer records and production readiness for the same period. If one customer's schedule moves, its effect on the overall plan must be examined separately. One lost order does not establish that the entire investment is unsound.

The decision record might end with: “If demand will not be ready in the required period, who will reassess a full launch, a phased launch and deferral?”

Specify what would change the conclusion

Examining how an option changes when an assumption changes can help identify which information to gather first. The Green Book discusses sensitivity analysis and the thresholds at which an option's assessment changes. Thresholds for your company should reflect the investment's circumstances and management's decision criteria. Source: Green Book 2026, Sensitivity analysis and switching values.

The relevant executives and specialists should define the company's decision criteria. The review should bring those criteria, the available evidence and unresolved conditions together.

What should the written opinion make visible?

The question, the version of the plan reviewed, source records, critical assumptions, alternative explanations and unresolved questions. Each open question should have a next test and an owner. A traceable record allows the reasoning to be examined later. Lode's evidence approach.

Financial, legal, tax and technical specialist work requires a separately defined scope. Management retains responsibility for the decision.

Lode's Countersign service provides a written second opinion on the core assumptions of an existing plan before commitment. If you have a decision to examine, briefly describe it and your target date. Do not send confidential documents in the first message.