Outlaythe

Outlaythe is a term used in economic planning and project budgeting to denote a composite measure of non-revenue costs required to initiate and sustain a project through its early phase. The concept is intended to capture all non-recoverable expenditures that occur before any cash inflows are realized, including capital expenditures, initial working capital, permitting and regulatory fees, and initial contingency reserves.

Etymology and usage: The term blends “outlay” with a formal-sounding suffix to signal a defined budgeting metric. It is not part of standard accounting practice, and its adoption varies by organization. In practice, outlaythe is used alongside other metrics such as net present value (NPV) and total cost of ownership (TCO) to compare proposals.

Calculation: Outlaythe equals capital expenditure plus initial working capital plus nonrecoverable contingencies plus one-time regulatory and permitting costs plus the first-year operating reserve. Some models discount these cash outlays to present value when comparisons span multiple years.

Relation to other metrics: Outlaythe focuses on upfront and non-revenue costs, distinguishing it from total cost of ownership, which includes ongoing operating costs, depreciation, and disposals, and from NPV, which assesses the present value of all cash flows over the project life. It is most useful in early-stage screening and sensitivity analyses when decision-makers want to isolate non-revenue commitments.

Limitations: The metric depends heavily on assumed contingencies and regulatory costs, which can vary by context. Critics argue it can duplicate information already implied by other measures and may mislead if used without clear scope and consistent assumptions.

See also: Cost estimate, Capital budgeting, Net present value, Total cost of ownership.