Make vs. buy vs. lease

I need to avail myself of City Manager' Morrison's long-standing offer to educate me on how the city makes decisions about capital purchases.  It's my fault:  I just haven't made the time, and he's offered his.

Here's the question:  The city needs X -- a piece of software, a backhoe, office space .... How do we decide as a city whether we should

• Make or build X ourselves
• Buy X outright
• Lease X?

It's a fundamental financial question.  Every organization faces it, and making the right decision can have large financial impact.

Like most financial questions, the answer depends on the availability and cost of capital; the organization's risk aversion; and historical and political considerations.  The important thing is to have a process for analyzing  each case and a way to evaluate, over time, whether the organization has been making good decisions.

My main reason for bringing the subject up is that, based on the lack of questions I hear asked at City Council Workshop sessions, I doubt whether there are any elected officials who concern themselves with these issues.  If there are good processes in place, that won't matter in the short term, but it might in the long run.