Replacement of major building systems (e.g., chillers, boilers, roofs) falls under capital expenditures because these items are large, non-recurring, and add to or extend the life of facility assets. The capital budget accounts for these costs, which are not part of the day-to-day operations budget.

Correct: Capital budget (A) – Covers replacement of major equipment and infrastructure.

Incorrect:

B. Project fund – May finance special projects but not part of standard budgeting categories.

C. Depreciation fund – An accounting mechanism, not typically a direct budget line for replacement.

D. Operating budget – Covers recurring expenses like utilities, maintenance, and repairs, not full replacements.