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					                                                                    Capital Projects Process


Capital Projects Process

Annex 2

Concept Paper

1. The main features of the project will have been described in the Registration
   document. The Concept Paper should complete the outline and draw attention to
   any changes since Registration. The Concept should deal in sufficient detail
   with the following to enable the PRC to decide whether or not to approve the
   Concept:

       The academic, business or administrative case.
       Strategic fit.
       Impact assessment and risks.
       Funding, including the financial business plan.

    This is the Business Case in outline, which will be incomplete if these four topics
    are not addressed. Project Leaders will need advice and assistance in the
    preparation of their Concepts to ensure that it meets the standard for signature.
    It was suggested in the guidance on preparation of Registration that the
    individuals who can assist in the preparation of the Concept should be
    identified. This is particularly important for financial modelling, if external
    professional assistance may be needed or if there are questions over methods of
    procurement. The Head of PRAO or future signatories of the Concept Paper will
    be able to advise on which of their staff should be consulted.

2. If the project at concept is substantially different1 from the Registered
   project it may be viewed as a new project and the project leader should
   consider a fresh Registration, with the necessary signatures, before
   spending time on working up the Concept.

3. Approval of the Concept is not routine, but approval signals that approval at Full
   Case will normally follow provided (a) the project and circumstances have not
   substantially changed since Concept2 (b) key dependencies and other conditions
   identified in the Concept have been satisfactorily addressed – usually the
   availability of funding, sometimes the reduction of risk. Progression of a project
   may remain conditional on consents other than those the PRC can provide and
   processes outside the CPP: these may include Reports and Graces, planning
   consents, funding approval etc. Preparation of a Concept requires a considerable
   investment in time – and possibly some financial investment.




1
    A proposal to implement in phases what was originally a single project may be a
    substantial change, especially if funding has not been identified for all phases.
2
    If a Full Case is not put forward within three years of the date of approval of a Concept
    Paper the Project may be removed from the CPP list, unless a revised and updated
    Concept Paper is submitted. Schools are expected to review progress annually on all
    Capital Projects as a routine part of their planning round.


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                                                                 Capital Projects Process


4. The Concept will describe any alternative options identified at Registration that
   would each deliver the project and will show the evidence supporting the
   preferred option – perhaps an investment appraisal. The single or preferred
   option will be supported by the business case. The PRC should not normally be
   asked to choose between options.

5. The financial elements of the business case may be presented in summary, but
   will be based on more detailed workings which should be available. The details
   of the business plan, revised and updated, will be included in the Full Case to
   provide the reference point for future review.

6. A complete Concept paper includes a signed cover sheet, similar to that used for
   Registration, and completed risk management forms. Blank cover sheet and risk
   management forms are provided below. The risks will be re-assessed for the Full
   Case.

The Academic, Business or Administrative Case

7. The reasons for the project and its benefits will have been covered in outline in
   the Registration paper but should now be expanded and will include an
   explanation if there has been any change of direction of the project since
   registration. Any conditions of Registration approval will have to be shown to be
   met in the Concept. Account will need to be taken of the advice of the Space
   Management Advisory Group and the Buildings Committee for construction
   projects.

Strategic context, objectives, drivers for change

8. The project should be shown to be consistent with overall strategy, how it furthers
   the aims of the University and fits within the objectives, goals and priorities of the
   sponsors and School/Institution or how it will fulfil a specific plan. A description
   should be provided of the departmental/institutional and University context, and of
   the external context if the project is significant at regional, national or international
   levels. Supporting documents may be attached as annexes.

9. In particular this section should provide the PRC with answers to the following:

      Why is the project necessary and what need is being satisfied? What problem
       is being solved?
      How urgent is it? Why is it necessary now?
      What is the demand?
      What academic and other benefits will follow? When? Who to?

Option appraisal

10. Where there are alternative options, the PRC expect them to be considered and
    evaluated. “Options” are not variations of a theme but distinctly different
    solutions with different cost profiles. Assistance with option development and
    costing can be provided. A preferred option should be identified and the


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                                                               Capital Projects Process


   business plan built around it. An investment appraisal is likely to be needed for
   each of the options.

Financial summary or business plan

11. The detail of the business plan will depend on the nature of the project, but there
    are some common features. Financial years are academical years. The first
    year of the business plan will be the year in which expenditure is first incurred,
    which may be the year in which the Concept is developed. The last year will be
    after the development phase when the project has entered a steady state. For
    example, for a building, that may be when it is fully occupied and commissioned.
    For a construction project to house a new activity, when that activity has been
    built up to its intended level. The plan will show:

      Project development costs
      Furnishing, equipment and removal costs
      Capital expenditure phased over an appropriate period
      Recurrent costs, including an assessment of indirect costs
      Capital funding
      Recurrent income and any other funding

12. Some income and costs may not be new, being transferred from elsewhere (if an
    existing activity moves into a new building, for example). The project may
    generate savings, or may generate new costs not covered by new income. They
    should be assessed. The result should be a clear picture of the capital required
    including the cost of furniture and equipment, the full economic recurrent cost,
    how those costs would be met and the financial implications for the University of
    proceeding with the project.

13. Advice on the calculation of those costs and income is not part of this guidance
    because of the variety of approaches required for different projects and the ready
    availability of up-to-date and expert advice from officers. The sources of that
    advice should be available from within the team already identified by Project
    Leaders (see paragraph 1 above) but the Head of the Planning and Resource
    Allocation Office may be consulted in any case of doubt.

14. The scope of the financial summary will depend on the nature of the Capital
    Project. The guidance in the CPP is therefore not prescriptive. The CPP itself
    does not require any particular financial target to be met, such as recovering
    costs over a period, but any targets set by another authority for the project,
    perhaps at Registration stage, should be explained and the summary should set
    out the extent to which they will be met.

15. Concept Papers should not be put forward without indicating sources of capital
    funding and how recurrent costs would be met, but it is not necessary at this
    stage to have secured the funding; securing it may be a key dependency. The
    risk of not securing it will need to be assessed.



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                                                               Capital Projects Process


16. Submissions are not bids for funds, unless bids have been invited. There should
    therefore be no assumption that additional capital or recurrent costs will be met
    from current University or public funds, or from future fundraising, unless it can be
    substantiated. Assumptions need to be fully supported if authority to proceed is
    to be given. Although the University has a capital fund, it is expected that
    departments will normally contribute at least 15% of the total construction project
    cost (including fees) from fund raising or other sources. The concept paper
    should clearly show how much the department believes it is able to contribute
    and an appropriate level of contribution will be determined by PRC.

17. Some questions may need to be addressed, eg:

      If income is projected to exceed expenditure what will the surplus be used
       for?
      If the projected income is not sufficient to meet expenditure in any year, how
       will the balance be made up? Does income lag behind expenditure? Will
       they catch up, and when?
      If other activities are to be discontinued or reduced, eg by the disposal of
       surplus space or employing fewer staff, will there be a transfer of funding
       reducing the need to find new income? If the project was not pursued, would
       the income still be available and what else might be done with it?

Sensitivity

18. Estimates and forecasts must be to a reasonable degree of accuracy, but
    uncertainties should be stated and, where possible, the financial effect quantified.

Consortia

19. The project may be on behalf of a consortium and, if so, the consortium will wish
    to ensure the Concept paper describes how costs and income will be shared. If
    the consortium includes institutions outside the University, evidence must be
    provided that those institutions support the Concept paper.

Consequential changes

20. Direct consequences that (for example) liberate space or funding to be recycled
    in the project will need to be described as part of the supporting case, but the
    project may create opportunities that are beyond the responsibility of the Project
    Sponsor to describe. Nevertheless, other opportunities created by the project
    may help approval and the Project Sponsor, if suspecting that such a case could
    be made, should identify the possibility and indicate who may be able to provide
    further information. If, for example, opportunities are opened up elsewhere in a
    School, School officers may wish to give some detail when indicating School
    support.

Carbon and sustainability

21. The paper should set out the likely impact of the project on the University’s
    carbon emissions including how the project will contribute to the aspiration to


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                                                               Capital Projects Process


   substantially reduce the overall level of emissions. Costs associated with carbon
   reduction/ efficient use of energy should be regarded as part of the overall cost of
   the project.

Main assumptions, dependencies and key risks

22. The main assumptions and dependencies should have been identified in the
    description of the project. They should be summarised at the end. The following
    questions provide a checklist, but the list is not complete:

      Does this project make any broad assumptions which need to be fulfilled,
       such as the acquisition of land, planning permission, donations?

      What must be in place before the project can progress? Such as funding,
       people, Reports, legislation, planning approval. Which of these are in control
       of the University, and which are not?

      What effect will there be on staff and student numbers? What implications are
       there for the estate? Are any further developments contingent of the
       successful implementation of this project (eg by the release of space, or a
       phase 2)? How are these issues to be addressed? When and who by?

       (If the Registration identified confidential matters (such as staff issues) which
       were unresolved and are still not resolved as the Concept is being developed,
       the risk may be too high for project approval until they are resolved.)

      What are the key risks of the project, and how great are they? An attempt
       should be made to examine every aspect and stage of the project to ask what
       could go wrong, the prospect of it doing so, and what would have to be done
       to cope with it or put it right (and at what cost). Examples of risks include: (a)
       actual figures vary so much from planning assumptions that the viability of the
       project is affected (e.g. student numbers or market salaries are much higher);
       (b) circumstances change to reduce the need (e.g. a competitor institution
       implements identical plans); (c) conditions of planning permission or Section
       106 requirements altering the scale or design of the building, or refusal of
       permission or objections; (d) promised funding is not forthcoming or specialist
       staff are not available; (e) the project fails because promised external interest
       does not materialise (e.g. it fails to attract research grants); (f) external
       interest and demand is far greater than can be coped with. Advice on
       assessing these risks is available from officers.

      What is the timetable for submission of the Full Case, any necessary Reports,
       the granting of other permissions, and (assuming approvals) of project
       implementation and completion?

Measuring achievement

23. Project Leaders will have identified the key project objectives when the Project
    was Registered. These and the business plan will be used in due course to
    assess whether or not there has been successful delivery of the project. Project


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                                                             Capital Projects Process


   leaders may wish to include any other indicators and decide how the project
   should be evaluated and when.

Next steps

24. Assuming approval of the Concept, costs may be incurred in the preparation of
    the Full Case, usually associated with the need to employ external consultants.
    The Project Leader and Sponsor must have established a good estimate of those
    costs and the Project Leader must include an estimate at the end of the Concept
    Paper.

25. If PRC approves the concept paper, costs of future development may be
   regarded as an eligible charge on the capital fund, subject to the funding
   agreement and donation/contribution tariff set by PRC, depending on the
   strategic importance of the project.

26. The Concept Paper must then set out the timetable for further work, how it will be
    achieved and who by.

27. Approval of the Concept may be followed by publication of a First Report; further
    work may be conditional on the Grace.

   The Concept Paper must conclude with clear, complete and unambiguous
   recommendations to the Planning and Resources Committee.

28. Concept Papers should be sent to: Ben Warn, Planning and Statistics, The Old
    Schools (baw32@admin.cam.ac.uk; [01223 3]39911



PRAO
29 November 2011




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                                                                    Capital Projects Process



         University of Cambridge: Planning and Resources Committee
                             Capital Projects Process:
                                    Concept Paper


Project Name

CPP file reference

Project ID

Project Leader               Name & Title                Position

Department / School /
                             Of which the completed project will be a part
Institution
Project Sponsor
(Typically Head of           Name & Title                Position
Department)
Project Champion
                             Name & Title                Position
(Typically Head of School)
Estimated capital cost of
                               £m
project


  I approve the recommendations set out in this Concept Paper:

Project Leader                 Signature:                               Date

Project Sponsor                Signature:                               Date

Project Champion               Signature:                               Date

Head of School (if not
                               Signature:                               Date
included above)




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                                                                                      Capital Projects Process

RM1 (Risk Management 1)

             RISK MANAGEMENT FORM                                       REFERENCE Completed by:




Item:
 Risks identified/What can go wrong?
 List what the risk is under categories such as:

 Reputation, Governance, Finance, Operational (staff, compliance, estates)

 What are the possible consequences if the risk were to emerge?

 1.
 2.
 3.
 4.
 5.

 What is the predicted severity of       What is the predicted likelihood of the     What is the total risk score?
 the risk? (Scale 1 –5, see Impact       risk? (Scale 1 – 5, see Impact Guide)       (severity x likelihood, Scale 0 –
 Guide)                                                                              25)




 What actions could be taken to reduce the likelihood and severity of the risk to an acceptable level?
 1.
 2.
 3.
 4.
 5.

 What risk indicators could be used to monitor the risk? (These provide early warning, minimum of 3)
 1.
 2.
 3.
 4.
 5.

Recommendation:

 Signature:                                                                        Date:


                         Guidance on risk management can be found on the Risk Management website
                                    (http://www.admin.cam.ac.uk/offices/secretariat/risk/)




                                                  uk/offices/secretariat/risk/)
           Page 8 of 8

				
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