Proposed Revision: April 2008 DRAFT Capital Project Approval Process Table of Contents I. Preliminary Project Proposal 1 II. Final Project Proposal 1 III. Project Proposal – Executive Review Committee 2 IV. Financial Plan 2 V. Programming Study 3 VI. Annual Renovation and Infrastructure Plan 3 VII. Project Approval – Executive Review Committee 3 VIII. BOV Authorizations 4 IX. Post Approval Actions 4 X. Post Approval ERC Actions 6 XI. Post Approval BOV Actions 6 Exhibits: A – Project Initiation Form B – Business Plan C – Debt Assessment D – Private Funding Assessment E – Annual Renovation and Infrastructure Plan F – Decision Brief G – Loan Terms and Conditions Sheet H – Loan Approval and Acceptance Form Key Stakeholders: University Budget Office Office of the Architect of the University Facilities Management Treasury Operations Comptroller/Debt Accounting Development and Public Affairs Process for Revision:Contact Assistant Vice President for Budget and Financial Planning, University Budget Office (email@example.com) Proposed Revision: April 2008 CAPITAL PROJECT APPROVAL PROCESS This process applies to all University of Virginia projects, including the Academic Division, the Medical Center, and The University of Virginia’s College at Wise, as well as those to be constructed or financed by the University on behalf of other entities (for example, the Judge Advocate General’s School). I. Preliminary Project Proposal 1. Sponsoring unit identifies a facilities need (i.e. a building expansion or renovation or construction) that will exceed $1 million. Sponsor works with its internal constituencies – department heads/directors, deans/vice presidents, senior vice president – to develop project concept. During the development of the Ten Year Plan, this cycle will be initiated by call going out from the Vice President for Management and Budget (VPMB) for project proposals. The following steps through I.5. must be completed prior to submission to the VPMB. 2. Sponsor obtains a Project Initiation Form (Exhibit A) from the University Budget Office’s Capital Budget website or the University’s Forms Directory. Sponsor develops Part I of the Project Initiation Form, including a description of the proposed project and a preliminary scope, budgeting, and funding plan. EXCEPTION: For Academic Division or Medical Center renovation or infrastructure projects, with a budget between $1 million and $5 million to be funded from non-general fund cash (no general funds and no debt), steps I through V are replaced with the Annual Renovation and Infrastructure Process. See Step VI. 3. Sponsoring dean or vice president approves the preliminary proposal in Part I of the Project Initiation Form and forwards to either the VPP or the EVP/COO (as appropriate based on the type of project) via e-mail. 4. The Executive Vice President and Provost (EVP/PRO) or the Executive Vice President and Chief Operating Officer (EVP/COO) (as appropriate based on the type of project) provides a preliminary approval of the Project Initiation Form and forwards this to the University Budget Office (UBO). At this point, the responsible executive vice president is simply approving the sponsor’s preliminary project and scope in concept. 5. UBO uploads Part I of the Project Initiation Form to the Capitalplan.org database hosted by Prager, Sealy & Co. The project is flagged as a preliminary proposed project in the database. UBO notifies the University Architect’s Office and Facilities Management of the new proposal. II. Final Project Proposal 1. A work group is established, lead the Office of the University Architect (OUA), and comprised of representatives from Facilities Management (FM), UBO, the sponsoring unit and, if the project is an academic project, the Senior Academic Facility Planner from the Provost Office and, if the project is a medical center project, a member of the Medical Center 1 Proposed Revision: April 2008 Capital Project Authorization and Approval Process Page 2 Planning & Capital Development Office.. This workgroup will complete Part II of the Project Initiation Form, providing an official review of the site, scope, project budget range, and funding plan. This review will include, but is not limited to, consideration of utilities, storm water management, and other site work; LEED certification, the parking impact, and the application of the Grounds Improvement Fee. During the development of the Ten Year Plan, this review will also include placing the project at an appropriate biennium of the Ten Year Plan. 2. After Part II of the Project Initiation Form is completed, the Project Initiation Form is returned to the EVP/PRO or the EVP/COO for final approval. 3. UBO replaces the preliminary project in the Capitalplan.org database with the EVP-approved project. The project is flagged as a proposed project in the database. III. Project Proposal – Executive Review Committee 1. The Executive Review Committee (ERC) is composed of the EVP/COO, the Senior Vice President for Development and Public Affairs, the EVP/PRO, the VPMB, the Vice President and Chief Financial Officer, and the Architect for the University. The Architect for the University will present new projects which been through both Part I and Part II of the Project Initiation. The ERC will consider whether to modify the project proposal or to provide approval to proceed with additional detailed review of the project (i.e., Financial Plan and programming study) and to tentatively add the new project approval to a future agenda of the Board of Visitors. During the development of the Ten Year Plan, this ERC review will be held at one time for all proposed projects. 2. If ERC suggests modifications, UBO will make the changes to the project record in the Capitalplan.org database. 3. Following ERC authorization and approval, UBO will initiate the Financial Plan review process and the OUA/FM will initiate a programming study. If the programming study is to be completed as a pre schematic design service by the selected A/E of record or as a separate professional services contract, ERC approval to advertise and select the A/E is required. (Melody – what funding source?) 4. If the programming study and/or Financial Plan results in adjustment to the scope or budget, the revised project will be presented to the ERC for approval During the development of the Ten Year Plan, only projects that will be considered in the first two years of the plan will require the Financial Plan and Programming Study (?) steps. IV. Financial Plan Proposed Revision: April 2008 Capital Project Authorization and Approval Process Page 3 1. UBO begins work with the Sponsor to develop the Business Plan (Exhibit B), using the template from UBO’s Capital Budget website or the University’s Forms Directory, to determine expected funding from all sources for the capital project and on-going operations of the facility. 2. If the Sponsor and UBO identify University debt as a planned or potential (i.e. bridge financing for pledges) fund source, UBO will request that the Director of Treasury Operations evaluate the impact of issuing any University debt for the proposed project and make a recommendation as to whether to proceed with the debt assumption in the Finance Plan. The Director of Treasury Operations will forward the completed Debt Assessment (Exhibit C) to UBO. During the development of the Ten Year Plan, Treasury Operations will consider the projects singularly and also in total in order to develop an overall Debt Assessment on the impact of all proposed debt in the Ten Year Plan. 3. If the Sponsor and UBO identify philanthropy as a planned fund source, UBO will provide relevant information to the Senior Associate VP for Principal Relationship Development who will evaluate the private funding prospects for the proposed project. The Senior Associate VP will forward the completed Private Funding Assessment (Exhibit D) back to UBO. 4. UBO will incorporate the Debt Assessment and the Private Funding Assessment into the Business Plan and will seek appropriate approval of the Business Plan from the Sponsor and appropriate VP. 5. The UBO will upload the Business Plan into the Capitalplan.org database and will forward the Business Plan to the Architect’s Office for presentation to the ERC as a part of final project approval. V. Programming Study 1. [steps to be added by FM/OUA/Senior Academic Planner] (Suggest Tom provide first draft here – again funding source for programming study by consultants?) 2. Results or pending decisions from the Programming Study will be forwarded to the Architect’s Office for presentation to the ERC as part of final project approval. VI. Annual Renovation and Infrastructure Plan 1. Internal, ERC, and BOV review and approvals are simplified and shortened for projects on the Annual Renovation and Infrastructure Plan (ARIP). Annually, each area develops a summary (see Exhibit E) of major maintenance, interior renovation, fit-out of shell space, and infrastructure projects with budgets $1 million and $5 million to be funded from non- general fund cash anticipated to be completed in the next year. Debt or state general funded projects cannot be approved through this expedited process. The respective VP reviews the APIP in conjunction with the annual operating budget review and submits to UBO by April 1st of each year. Proposed Revision: April 2008 Capital Project Authorization and Approval Process Page 4 VII. Project Approval – Executive Review Committee 1. The ERC will review each project’s Financial Plan and results from the Programming Study and will consider whether to modify the project proposal or to provide approval to seek approval from the Board of Visitors. During the development of the Ten Year Plan, the ERC will consider the Plan in full for recommendation to the Board. Annually, the ERC will review and approve the University’s ARIP for recommendation to the Board. 2. If ERC suggests modifications, UBO will make the changes to the project record in the Capitalplan.org database. 3. Following approval to take the new project to Board of Visitors, UBO will add the project approval to the Finance Committee agenda (working with the EVP/COO office), the Buildings and Grounds (B&G) Committee agenda (working with the VPMB office), and any other appropriate committee as related to programmatic approval. VIII. BOV Authorizations 1. The chair or his/her designee of the appropriate committees will perform Programmatic Consultation and Reviews for each project. This will include: Education Policy Committee for academic buildings; College at Wise Committee for College buildings; Medical Center Operating Board for Health System buildings; Student Affairs and Athletics Committee for student, athletic, or housing projects; and Buildings & Grounds Committee for infrastructure projects. (Project Sponsor with UBO and/or O of A?) will develop any needed materials, including write-ups, resolutions, and presentations, for this review. 2. The Finance Committee will review the Business Plans (including Debt Assessment and Private Funding Assessment) and Intent-to-Issue Debt items. UBO and the Treasury Office will develop any needed materials, including write-ups, resolutions, and presentations, for this review. During the development of the Ten Year Plan, the Finance Committee will consider the Plan, including overall Debt Assessment, in full. As a part of the annual operating budget review, the Finance Committee will review and approve the University’s ARIP. 3. The Buildings and Grounds Committee will review each project, the scope and budget range and consider approval. UBO will develop any needed materials, including write-ups, resolutions, and presentations, for this review. During the development of the Ten Year Plan, the B&G Committee will consider the Plan in full. Proposed Revision: April 2008 Capital Project Authorization and Approval Process Page 5 4. UBO will update BOV approval information in the Capitalplan.org database. 5. ERC reviews BOV-approved projects and determines priority based on consideration of state funding requests, debt capacity, etc. IX. Post-Approval Actions 1. Under Restructuring, only projects requesting state general funds are required to be submitted through the formal state processes. For these projects, UBO will develop necessary requests, with assistance of the Architect’s Office and Facilities Management. During the state’s Six Year Plan cycle, the University will include courtesy submission of Form H-1s for all projects approved as part of the first six years of the University’s Ten Year Plan. 2. UBO monitors actions by the Governor and General Assembly Reports to approve general- fund projects for authorization actions. 3. For Non-General Fund projects (including those approved as part of the University’s ARIP) exceeding $2 million, the University must notify the Governor and the chairs of the Senate Finance and House Appropriations Committee 60 days in advance of the start of construction. UBO will draft such correspondence upon approval by the Board of Visitors and forward to the VPMB to review and obtain the signature of the President before forwarding to the state officials. 4. UBO coordinates the update of the Prager database for authorization information and provides information to Facilities Management to update PIMS. 5. For projects authorized to proceed by the ERC? (including those approved as part of the University’s ARIP), Facilities Management prepares HECO-2 Forms; the Budget Office approves HECO-2 Forms; and Facilities Management approves and provides notification to DGS. (Melody – by restructuring we have post appropriation autonomy so we approve the HECO 2 for GF locally as well as NGF. We do send copies of all approved HECO 2’s, 8’s, 14’s to DGS via BCOM meeting the Management Agreement requirement that for all Capital Projects over $2M we notify DGS on project initiation (copy of the HECO 2), prior to construction (copy of the HECO 8) and at acceptance of construction (copy of the HECO 14) – (Note we do for all projects). 6. Facilities Management prepares and submits GF allotment requests to the Department of Planning and Budget. 7. Facilities Management creates projects and awards in the Integrated System as needed for new authorized projects. 8. The Controller’s Office (Senior Technology Advisor) coordinates update of the Capitalplan.org database for revised draw schedules and project expenditures by automatic upload from Oracle Grants Management actual data and Facilities Management draw schedules on a regular basis or upon request by Treasury Operations. Proposed Revision: April 2008 Capital Project Authorization and Approval Process Page 6 9. Facilities Management must develop a Decision Brief (Exhibit F) outlining any project budget increases or any scope reductions of over 10%? (including those projects approved as part of the University’s ARIP). The Budget Office will review each Decision Brief developed by Facilities Management regarding changes in project budgets to determine the impact on the existing Business Plan. If a modification is required, the Budget Office will coordinate with Treasury Operations and Development as needed. (Who approves the Decision Brief based on size of change worth considering further?) See section XI 3 and 4 below for BOV approval criteria. 10. VP/CFO coordinates the lending of funds as outlined on the approved Business Plan for each respective project from the University’s central bank to sponsoring units. The VP/CFO and sponsoring unit will execute a loan approval and acceptance document between the VP/CFO and the dean or Vice President of the sponsoring area. See Exhibit G for sample loan terms and condition sheet and Exhibit H for a sample loan approval and acceptance document. X. Post Approval ERC Actions 1. Preceding Schematic Design. ERC may require an evaluation of fund raising efforts at the end of the preliminary design stage before moving to schematic design. If fund raising is lagging behind projections, ERC may request that the project scope be reduced or timing of project be adjusted to stay within funding. 2. Post Schematic Design. ERC will approve a firm, not-to-exceed, project budget at the completion of schematic design. 3. Preceding Construction. This phase begins only if (1) 100% of philanthropy identified on the approved Finance Plan, valued on a present value basis, is either received or committed via written enforceable pledges on a present value basis are in hand and (2) 100 % of the written enforceable pledges will be collected prior to construction completion. Exceptions can be made if either (1) the project sponsor demonstrates funding to cover short-term financing costs as pledges are collected or (2) the EVP/COO and the Finance Committee chair approves the beginning of construction. XI. Post Approval BOV Actions 1. The Finance Committee will review and approve any Acquisition Requests. Space and Real Estate Management will develop any needed BOV materials, including write-ups, resolutions, and presentations, for this review. 2. The Finance Committee will review and approve debt actions, including Intent to Issue Bonds and Bond Issuances. Treasury Operations will develop any needed BOV materials, including write-ups, resolutions, and presentations, for this review. Proposed Revision: April 2008 Capital Project Authorization and Approval Process Page 7 3. The Buildings & Grounds Committee, at appropriate point, will review and approve Concept, Site, and Design Guidelines, Architect/Engineer Selection, Schematic Designs, Easements, Demolitions, and Deed Restrictions. At the time of the Schematic Design consideration, the Committee will also approve the firm, not-to-exceed project budget. Facilities Management and the Architect’s Office will develop any needed BOV materials, including write-ups, resolutions, and presentations, for this review. 4. The Finance and Buildings & Grounds Committees, or their respective chairs, will review and approve any project budget increase in excess of 10 percent. If approved by the Committee Chairs, the full Committee is later notified of these actions. UBO will develop any needed BOV materials, including write-ups, resolutions, and presentations, for this review. 5. The Buildings & Grounds Committee, or its respective chair, will review and approve any scope reductions in excess of 10%. If approved by the Committee Chair, the full Committee is later notified of these actions. UBO and/or the Architect’s Office will develop any needed BOV materials, including write-ups, resolutions, and presentations, for this review.
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