Capital Planning & Project Approval Procedures

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Capital Planning & Project Approval Procedures
A. Scope & Definition
A1.
Scope & Definition
A2.
Definition of a Project
A3.
Maintenance
2
2
3
B. Planning
B1.
B2.
B3.
B4.
B5.
4
4
5
5
6
Linkage to University’s Strategic Plan
Integration with Financial Planning
Governance & Management
Financial Treatment with College
Major Projects
C. Project Appraisal & Approval
C1.
Appraisal & Authorisation
C2.
Authorisation Limits & Processes
C3.
PP & RFA Forms
C4.
Revised RFA
C5.
Post project Appraisal & Evaluation
C6.
Projects over £10m
C7.
Role of the Committees
C8.
Procurement
C9.
Strategic Goals
C10.
Self-Funded Schemes
C11.
Indicators of Success
C12.
Cost & Income
C13.
Operations Costs & Incomes
C14.
Inflation
C15.
Discount Rates / Rates of Return
C16.
Reviewing Alternatives
C17.
Appraisal Narrative
C18.
Risk mitigation & Avoidance
C19.
Project Team Competences
6
7
8
8
9
10
10
14
15
15
16
17
18
19
19
20
21
22
24
D. Monitoring
D1.
D2.
D3.
D4.
D5.
D6.
D7.
D8.
D9.
D10.
D11.
D12.
Definition & Purpose
Project Management Groups
Roles & Responsibilities
Request for Authorisation (RFA)
Project Status Log
Financial Management
Project Expenditure Profile
Project Monitoring Reports
Review of Project Monitoring Reports
Approval of Variations
Consolidated Plans
Infrastructure Co-ordination Group
26
26
27
27
28
28
28
28
31
31
31
31
Appendices
C1.
C2.
D1.
D2.
E1.
Definition of terms
Role of signatories
Investment appraisal tools
Investment appraisal narrative guidance
Project monitoring groups TORs
32
34
36
37
41
CAPITAL PLANNING & PROJECT APPROVAL PROCEDURES
This document sets out the procedures to be adopted in connection with the planning,
appraisal, approval and monitoring of University Capital Investment Projects.
The document is broken down into four sections covering Scope & Definition (section A)
Planning (B); Project Appraisal and Authorisation (C); and Monitoring (D).
These procedures will be reviewed periodically to take account of changes in requirements
and ensure practicality of application.
A
SCOPE AND DEFINITION
A1
Scope of Projects
These procedures are to be used for all major projects in the University including
capital and long-term maintenance projects within the University of Exeter which will
require appropriate approval to proceed. Therefore, all projects involving new build,
refurbishment or other building, grounds or estate related work and equipment,
irrespective of the funding source, should follow these procedures.
These procedures will therefore specifically include:
•
•
•
•
•
•
New build or refurbishment activity
New information systems or major upgrades to same
Equipment purchases >£25k (except wholly and externally funded research
equipment – see below)
Finance Leases for land, buildings and equipment with a PV exceeding £25k
Substantial works to the University’s grounds
Backlog or long term maintenance as defined in the Estates Development Service
(EDS) Service Level Agreement.
In respect of equipment purchases for research or consultancy contracts, these
procedures will do not need to be followed where the purchase of the equipment is
wholly funded by an external research grant. The exception to this rule is where the
purchase of equipment requires significant new build, refurbishment or IT
infrastructure development. The total gross value of the equipment and the
associated additional works will determine the project value and therefore the
authorisation limit. All research equipment purchases funded from internal sources, in
full or in part, (for example, Science Strategy or RKT Strategy etc) are required to
follow these capital procedures.
If a purchase meets the definition of a project, the means of funding does not exclude
a project from following these procedures, except as outlined above. These
procedures therefore apply to outright purchase, leases, hire-purchase agreements
and any form of financing the project.
A2
Definition of a Project
Major projects are those that cost in excess of £25,000.
Defining the distinction between ordinary operating activity and project activity can be
difficult but in general terms the definition of a project in the context of the University
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of Exeter is set out below, although the Infrastructure Coordination Group (ICG) is the
final arbiter in deeming whether something is a project or not.
Projects are defined as:
•
•
•
•
Initiatives with a beginning and an end
Having a determinable implementation period
Having a determinable implementation cost
Having measurable and pre defined objectives / initiatives to achieve
A group or portfolio of projects, which together achieve a set of defined objectives and
which are selected, planned and managed in a co-ordinated way are known as
‘Programmes’. Whilst a programme may be submitted for consideration in a master
plan or strategy led exercise it may not be authorised for expenditure, only projects
may attain authorisation.
Projects may include sub-projects or specific work streams and these should be
authorised as part of a main project.
Where a series of projects are brought forward independently, it will be ICG’s decision
as to whether these should be considered as one project. An example would be the
various elements of the Forum project.
A3
Maintenance
The only exception to the programme rule noted in the definition of a project is the
maintenance programme of the University, which will be authorised annually as a
programme so long as no single activity (capable of definition as a project by itself)
exceeds £200k. Where such items are included in the maintenance budget then they
will be authorised through the normal project authorisation route as set out in these
procedures.
Maintenance
Project value
>= £200K?
Y
Follow Capital
Planning procedures:
obtain appropriate
authority.
N
Treat as part of
“programme”: no
further authority.
Normal reactive, cyclical and planned preventative maintenance budgets will be dealt
with through the revenue budget planning process.
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B
PLANNING
B1
Linkage to the University’s Strategic Plan
The University’s Strategic Plan emphasises the main infrastructure themes and highlevel aims, and also at a high level the Strategic Plan articulates the approach to
financing the Infrastructure Strategy. More detailed explanation of the approach to
financing is contained in the Finance Strategy. Associated with the Strategic Plan
there is an Annual Operating Plan approved by Council for each academic/financial
year. Major infrastructure objectives (including milestones for major longer-term
capital projects) will be included in this plan, progress against which is reported to
Council on a regular basis through the year.
All projects must be developed and appraised within the University’s stipulated
planning procedures and timescales. These procedures cover three types of projects:
•
Projects itemised in the infrastructure strategy;
•
Smaller projects not mentioned in the infrastructure strategy;
•
Opportunistic projects funded from external sources or from the
Infrastructure Strategy strategic fund contingency (i.e. in allocated
funds within the infrastructure fund).
The two documents that support the infrastructure strategy are the Estate Strategy
and the Computer and IT Strategy.
B2
Integration with Financial Planning
Infrastructure planning should be integrated within the normal annual financial
planning timetable.
These plans should be over the same five-year period as the current revenue
planning process; that is, the current year plus four further years. The impact of these
plans on the revenue performance of the University should be incorporated, including
the impacts on the income and expenditure account, balance sheet, cash flows,
colleges and services performance and reserves.
A holistic University plan should be presented to Council and include the impact of
infrastructure expenditure. It should be noted that the inclusion of a project or
programme within the University’s budget does not lead to it being authorised;
rather it ensures that a financial provision has been made to fund it, subject to it being
subsequently authorised.
In addition to the full 5 yearly revisions, the infrastructure strategy will be reviewed
annually by senior management.
In order for bids to be considered formally, they will need to have been pre-screened
by appropriate sections of Corporate Services, Academic Services and Strategic
Planning & Change and then by the Project Accountant. This screening will be
undertaken on behalf of the two principal executive committees of the University,
charged with considering and recommending for approval all University’s Capital
Investment. These are the Infrastructure Co-ordination Group. and the Infrastructure
Strategy Group Project sponsors need to first seek the approval in principal to
proceed with either feasibility work or to establish the strategic fit of their
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project. This approval is sought on the Project Proposal form, which will be submitted
to ICG.
B3
Governance and Management
The University’s dual assurance model provides for accountability, responsibilities
and input for lay-members, management and members of staff / students. The
Registrar & Secretary and the responsible Pro Vice-Chancellor are the management
and lay leads respectively for Infrastructure and the capital programme, with the
Registrar’s Executive Officer being the third party recorder.
The Registrar, under dual assurance, has convened a group – the Infrastructure
Strategy Group – to help to provide high level input to his work. The membership of
this group and its action notes can be accessed at the Infrastructure & Capital
Programme pages.
The Infrastructure Co-ordination Group (ICG), provides a first level of screening of
proposals, ensures that the programme of works is well co-ordinated, and also has
particular responsibility for the backlog maintenance programme. The ICG has a key
role in the planning process. It will be the first formal point of receipt and
consideration of plans from a multiplicity of sources. The appropriate management
approvers will have scrutinised proposals for alignment, synergies and duplication.
ICG will take a view on the relative merits of the proposals from colleges, services
and from the Project Co-ordination Group, on the bases of the indicative funding
allocations set aside, and on an assessment of how the projects will support the unit
and institutional strategic priorities.
Factors such as management capacity, resourcing issues and other practicalities will
need to be taken into account when the plans are drawn up, discussed and ultimately
approved at college/service planning groups (SPGs) and in accordance with the
planning cycle. Input from Professional Services colleagues to these unit-level
strategic plans will be required. Projects should be included regardless of the source
of funding. Strategic Planning and Change staff will ensure that there is cross college
/ service communication across the SPGs and at common points in the planning
cycle.
B4
Financial treatment within College/Service plans and links to the Infrastructure
Fund and risk
Colleges and Services will either in full or in part resource capital works, the balance
will come from either the college / service reserves or the Infrastructure fund: the final
decision will be determined by the ICG. The college / service contribution to fund
capital works will be made by transfer from that college’s / service’s account into the
Infrastructure Fund. As the item will be capitalised, it will take place at the reserve
movement level (and will not directly affect the in-year historic cost position).
The overall infrastructure programme itself will be retained as part of the Institutional
Risk Register.
The Risk Management Committee will periodically consider whether individual
projects of the highest levels of impact should be placed as individual items on the
risk register at University level, or on College/Service risk registers where more
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appropriate. The University’s approach to risk management can be viewed in the
Strategic Planning and Change web pages.
There are opportunities for the raising of significant funds from alumni and other
donors towards high profile projects, and the Infrastructure Strategy will make certain
assumptions on the level and timing of contributions from DARO activities. In some
cases, major donations will be made on the basis of specific usage and these will
need to be earmarked as such.
B5
Co-ordinating and Planning for Major Projects
An important stage in planning will be a pragmatic and practitioner-informed review of
the timing of major projects. Considerations (other than financial resources) will
include: management capacity, availability of contractors, physical site limitations,
proximity to major events and ‘PR’ aspects.
There will be prioritisation issues when large numbers of project customers seek
works at similar times. Where difficulties are encountered the Chair ofICG will make
the final decisions.
There are a number of internal and external inputs to infrastructure planning.
Examples include current and recent data on space occupancy and usage (both
planned and actual), scenarios planned around projections of staff and student
numbers, future patterns of space use, information on successes and failures (see
learning). Information will be provided by Strategic Planning and Change and made
available through the intranet.
Lessons learned and good practice will be adopted and disseminated as appropriate.
There are two main planning cycles within the University:
1. The broader Infrastructure Strategy inputs are drawn across a horizon of more
than a single year, and will be to a large degree based on corporate initiatives
which will have seen extensive discussion within the University community.
2. The annual timetable that will apply in most years, drawing primarily from
proposals from Colleges, Services and the Project Co-ordination Group.
C
PROJECT APPRAISAL AND APPROVAL
C1
Appraisal and Authorisation
The University’s Strategic Plan will be the key feed on criteria for appraisal. In
addition to the major themes set out in the Strategic Plan are a small number of key
performance indicators through which targets are set out and performance
subsequently monitored. The contribution of projects towards these KPIs or metrics,
which may change over time, will be a fundamental part of the appraisal process. A
password to retrieve data on Performance Indicators can be obtained from Strategic
Planning and Change.
The first activity for any project is the screening process. This is designed to identify
early on any proposals that should not proceed or are in need of radical revision.
Typical aspects examined during initial screening are funding availability, risk,
management capacity, conflict co-ordination with other projects, deliverability, extent
of feasibility work required. Screening will be undertaken by appropriate management
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approvers (see Table 1, in C2), who will produce summary reports for consideration
by the ICG.
C2
Authorisation limits and process
The process required to obtain authorisation for a major project under these
procedures (see A2 for the definition of a project) is dependent upon the level of risk
the University is taking. For simplicity, risk has been assumed to vary with gross
expenditure. As such, if the estimated gross expenditure required by the project is
known then the authorisation route and the process to be completed is noted below.
Where a project is considered to be high risk, novel, contentious or otherwise unusual
the Infrastructure Coordination Group (ICG) may request a more onerous
authorisation route. Table 1, below, sets out the key authority routes for projects:
Project –
gross
expenditure
Authorisation
bands
From
To
£25k
£100k
£200k
£500k
£2m+
£100k
£200k
£500k
£2m
From
To
£25k
£100k
£200k
£500k
£2m+
£100k
£200k
£500k
£2m
Authorisation
Management approval /
initial screening
PCG
College / Service
funded projects
IT
Projects
Only
Head of College / Service
DVC / R & S
VCEG
VCEG
VCEG
Yes
Yes
Yes
Yes
Yes
Infrastructure Fund
funded projects
IT
Projects
Only
Head of College / Service
DVC / R & S
VCEG
VCEG
VCEG
Yes
Yes
Yes
Yes
Yes
Dean of
College
/ Head
of
Service
DVC or
Registrar
Yes
Yes
All Infrastructure
funded projects need
to be approved by
ICG for co-ordinating
purposes.
ICG
ISG
Council
For Info
For Info
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Table 1
NOTE on IT Projects: All IT projects need to be initiated through the Projects Office,
in Academic Services, using their procedures prior to proceeding to ICG, ISG and
Council. Contact the Project Office for details of their procedures.
IT projects earmarked in the Infrastructure Fund, can be authorised by the Project Coordination Group (PCG) up to a value of £200k, but still need to be sent to ICG for coordination.
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IT projects making a new call on the Infrastructure Fund can be recommended by
PCG but can only be authorised by ICG / ISG / Council.
A project is not authorised until it has been authorised by the appropriate authorising
committee.
All Projects:
The form of appraisal that projects will need to undertake is set out below:
Project
Proposal
Form
Request for
Authority
form
Investment
Appraisal
Post project
appraisal
Project –
Gross
expenditure
From
To
£25k
£200k
Yes
Yes
Basic
Basic
£200k
£1m
Yes
Yes
Limited
Limited
Yes
Yes
Full
Full
£1m+
Table 2
The rationale for the different levels of appraisal work required for different sized
projects is one of cost / benefit.
In terms of the above levels of Investment Appraisal refer to Appendix D2 for
definition and content.
C3
Project Proposal form (PP) and Request for Authority form (RFA)
A Project Proposal form (PP) is a dual purpose document. It may be used simply to
gauge whether a project aligns with the University’s overall strategy, in which case it
need not include detailed information of cost or funding, but is likely to be a high-level
indicator of the intended merits of undertaking the project. Secondly, the Project
Proposal form can be used to request authorisation for feasibility / appraisal funds.
In both cases Project Proposals must be submitted to the appropriate management
approver, per Table 1 in C2 above.
Once strategic fit is approved or feasibility studies are completed, a Request for
Authority Form (RFA) needs to be completed, giving a fuller description of the project
and seeking authorisation to proceed.
C4
Revised Request for Authority
Once authority has been appropriately received for a project no further authorisation
is required unless:
•
•
•
It becomes foreseeable that the authorised budget for the project will vary by the
lower of 10% or £250,000 (or otherwise agreed in respect of projects in excess of
£3m).
Where a project increases in value such that it crosses an authorisation band.
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•
•
•
•
It becomes foreseeable that the due completion date for the project will slip by 6
months or more after the critical completion date.
It becomes foreseeable that one or more of the key deliverables identified in the
original investment appraisal is no longer attainable to a material extent.
It becomes apparent that the risks of not achieving the project become materially
more onerous such as to jeopardise the prospect of achieving the project.
The authorising committee / body requires additional authorisation at some
milestone or event.
Elements of subjectivity exist with respect to the above. The Project Manager is
responsible for determining whether a project requires revised authorisation. In
addition, where a Project Group is required, the Project Group may require a Revised
Request for Authority form (RRFA).
In the event that a further authorisation is required then the RRFA needs to be
completed. This form can refer to the previously authorised RFA. The revised
documentation need only refer in detail to the revision that has led to the requirement
to seek a new authorisation.
Where revision is in respect of value and the increase in the value now puts the
project in a higher authorisation band, a RRFA needs to be completed for the new
value.
Where a RRFA is required work may continue on the project with the following
caveats:
•
•
•
A RRFA should be provided for re-authorisation and . should be sent to the
earliest available meeting of ICG and then onto ISG and Council if appropriate
All new commitments raised prior to the approval of the RRFA must be authorised
by the chair of the ISG or the chair of the ICG. In the absence of both of these
officers such new commitments must be authorised by the Director of Finance &
Deputy Registrar.
Where revised authorisation is required by Council it should be authorised by
VCEG prior to submission through ICG and ISG.
Where an expected under spend exists on a project, if the Project Manager or Group
wishes to utilise the under spend on new related expenditure not included in the
original appraisal then a RRFA is required to obtain such authorisation. The
authorisation levels required for this are calculated by considering the incremental
spend that is required, but it should be noted that the ICG, or the appropriate
committee must authorise all such proposed incremental expenditures.
C5
Post Project Appraisal & Evaluation
Post project appraisals need to be carried out on all projects.
A post project appraisal determines the extent to which a project met the budget,
timetable and the key deliverables.
Project appraisal is presumed to be scheduled to take place 12 months after the
completion of the implementation expenditure for a project. However, this will need to
be considered for each project.
Post project appraisals should be completed by the Project Manager and should
identify:
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•
•
•
•
C6
The final project cost, which should be compared with both the latest authorised
amount and the original authorised amount. Explanations of all variances should
be noted.
The actual completion date of the implementation stage of the project, which
should be compared with the latest authorised completion date and the original
completion date. Explanations should be given for the variances.
The delivered key deliverables, which should be compared with the latest
authorised key deliverables and the original key deliverables. Explanations should
be given for significant variances.
Any lessons to be learnt from the project, and how these will be embedded in
future.
Type of post-project appraisal
Under £10m
For projects under £10m the post project appraisal and evaluation should follow the
guidance in Estates Development Service or the Academic Services’ Project Office.
Over £10m
All projects greater than £10m should follow the guidance set out by the Association
of University Directors of Estates. Project sponsors / managers should view the
"Guide to Post Occupancy Evaluation".
Non-building projects in excess of £10m should follow the general principal as set
out in the above document.
C7
Role of the Committees
In addition to specific signatories, minute references and dates are required from
various meetings (refer to table 1 in C2 for the approval routes):
C7.1
VCEG
The VCEG acts as the first screening of Project Proposals and Investment Appraisals
above £200k and ensures that they are sufficient to be progressed through the
authorisation route.
C7.2
Infrastructure Coordination Group (ICG)
This Group is the custodian of the Infrastructure Fund.
ICG will co-ordinate ALL projects irrespective of size.
Projects up to £200k which do not require funding from the Infrastructure Fund can be
authorised by the Dean of College / Director of Service or DVC / Registrar (see table
in C1). ICG will still need to receive these projects for information and recording.
Projects over £200k, which are not seeking Infrastructure Fund funding, are still
required to be authorised by ICG.
ICG need to authorise any expenditure from the Infrastructure Fund, irrespective of
value.
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ICG need to receive all project proposals seeking advice regarding ‘strategic fit’ and
will determine whether such PPs need to be forwarded to higher committees.
Although a project may be detailed in the Infrastructure fund, this does not preclude it
from following these authorisation routes.
Projects with a gross cost in excess of £500k will need recommendation for approval
from ICG before they proceed to the next stage of the approval process.
The role of the ICG can be divided into several distinct areas:
• Planning (Refer to B2 and B5)
• Monitoring (Refer to D12)
• Checking
• Coordinating
• Authorising
Checking role of Infrastructure Coordination Group
The checking role of the ICG involves the collection of the other data/information
which is assessed, conclusions drawn and action decisions made. The list below is
not exhaustive but reflects the main issues the ICG will consider:
•
•
•
•
•
•
•
•
•
Planning – are projects committed to in the planning process coming forward for
authorisation as expected (timetable, funding requirements, key deliverables)?
Funding – does the Infrastructure Fund have the resources expected, is it able to
sustain the current and expected levels of activity or are further resources
available such that projects rejected during the planning process may now be
included in the Infrastructure programme?
Monitoring – are authorised projects progressing as expected, are they on time, to
budget and expected to provide the key deliverables, are revised authorisations
required, does the Project Manager need to explain performance?
Monitoring/planning – is the phasing of resource use (especially funding) as
expected? Does the phasing need revisiting and what is the impact on the
Infrastructure Programme and the wider University?
Post project appraisal/evaluation – what projects are coming up for review, what
conclusions can be drawn are the key deliverables being achieved?
Strategy – is the overall Infrastructure Programme delivering the University’s
strategy, in what areas is it over performing and where is it underperforming, and
how can this be addressed?
Fundraising – what opportunities for fundraising are arising from the Infrastructure
Programme, are these opportunities being taken, and how is performance against
current fundraising initiatives?
Procurement – are projects utilising the procurement tools of the University, both
on an individual project basis and as an overall Infrastructure Programme basis?
Reporting – what matters need reporting to the VCEG and Council? Are they
being so reported?
Coordinating role of Infrastructure Coordination Group
Projects not requiring funds from the Infrastructure Fund and not requiring the
authority of the Vice Chancellors Executive Group will not be authorised by the ICG.
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However, ICG will need to minute receipt of the appraisal and will, to assist in the
orderly management of the overall infrastructure programme, need to check the
documentation, ensure that adequate monitoring arrangements are in place, confirm
the projects status in the planning process and ensure the project is coordinated
alongside the remainder of the infrastructure programme.
When coordinating a project the ICG will consider:
•
•
•
•
That the project is properly authorised.
The linkage between this project and other authorised projects or projects
committed to by the planning process, in order to maximise any procurement or
other operational efficiencies.
The adequacy of non-financial resources (e.g. staff resources) available to deliver
the project.
The impact on the wider University of the timing of the delivery of the project with
a view to mitigating any adverse consequences arising from its implementation.
Following its coordination role the ICG may instruct as to how and/or when a project is
implemented.
Authorising role of Infrastructure Coordination Group
When authorising a project, the ICG will consider:
•
•
•
•
•
•
•
Does the project provide best value in the use of University resources?
Is the project consistent with the sponsoring college’s / service’s and the
University’s strategic outputs?
Is the project documentation fully and properly completed?
Are resources (including funding and project team) available to see the project
through to completion?
Does the evaluation of the post implementation income and expenditure streams
indicate a sustainable future outcome for the project deliverables, the
college/service and the University?
Are the risks to the project adequately explained, considered and appropriate
management routes indicated?
Are the procurement routes properly considered?
The ICG has three possible options for action following the above considerations:
•
•
•
C7.3
Authorise a project.
Enter into dialogue with the Project Sponsor and Manager regarding the matters
of concern, and request a change to the proposed project or the project
documentation.
Reject a project.
Infrastructure Strategy Group (ISG)
All projects above £500k need to be authorised by the ISG.
The Infrastructure Strategy Group (ISG) will consider the same issues as the ICG,
however, they will rely on the earlier work performed by the ICG and will tend to
consider the strategic and longer term impacts of the matters below:
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•
•
•
•
•
•
•
•
•
Planning – are projects committed to in the planning process coming forward for
authorisation as expected (timetable, funding requirements, key deliverables)?
Funding – does the Infrastructure Fund have the resources expected, is it able to
sustain the current and expected levels of activity or are further resources
available such that projects rejected during the planning process may now be
included in the Infrastructure programme.
Monitoring – are authorised projects progressing as expected, are they on time, to
budget and expected to provide the key deliverables, are revised authorisations
required, does the Project Manager need to explain performance?
Monitoring / planning – is the phasing of resource use (especially funding) as
expected? Does the phasing need revisiting and what is the impact on the
Infrastructure Programme and the wider University?
Post project appraisal / evaluation – what projects are coming up for review, what
conclusions can be drawn and are the key deliverables being achieved?
Strategy – is the overall Infrastructure Programme delivering the University’s
strategy, in what areas is it over performing and where is it underperforming, and
how can this be addressed?
Fundraising – what opportunities for fundraising are arising from the Infrastructure
Programme, are these opportunities being taken, and how is performance against
current fundraising initiatives?
Procurement – are projects utilising the procurement tools of the University, both
on an individual project basis and as an overall Infrastructure Programme basis?
Reporting – what matters need reporting to the VCEG and Council? Are they
being so reported?
In addition the ISG will also consider and control:
•
•
The internal and external communication of the Infrastructure Strategy to the
University community, local and regional stakeholders.
The stewardship of major (in excess of £2m) projects.
The ISG when authorising a projects will consider:
•
•
•
•
•
•
Does the project provide best value in the use of University resources?
Is the project consistent with the sponsoring college’s / service’s and the
University’s strategic outputs?
Is the funding and management capacity available to see the project through to
completion?
Is the project, including its impact, financially sustainable?
Are the project risks appropriately managed such that no material adverse
consequences may arise to the University?
Is the project consistent with the longer-term vision of both the Infrastructure and
the University Strategies?
The ISG has three possible options for action following the above considerations:
•
•
•
Authorise a project.
Refer the project back to the appropriate point in the process, highlighting the
matters of concern.
Reject a project.
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C7.4
Council
Council is the supreme governing body of the University. Council is responsible for
approving the University's budgets, forecasts and key strategies. As part of this
responsibility Council approves the Infrastructure Strategy and the Finance Strategy
which identify the University's investment priorities and the financial envelope for
infrastructure investment. Council monitors the delivery of its approved budgets,
forecasts and strategies to confirm that University resources are utilised in
accordance with its approvals.
In addition, all projects above the ISG’s authority level of £2m need to be authorised
by Council.
Council when authorising a projects will consider:
•
•
•
•
•
Is the project consistent with the sponsoring college’s / service’s and the
University’s strategic outputs?
Is the management capacity available to see the project through to completion?
Are the project risks appropriately managed such that no material adverse
consequences may arise to the University?
Is the project consistent with the longer-term vision of the University?
Other matters, as appropriate.
Council has three possible options for action following the above considerations:
•
•
•
Authorise a project.
Refer the project back to the appropriate point in the process, highlighting the
matters of concern.
Reject a project.
IT projects only
C7.5
Project Co-ordination Group (PCG)
The PCG determines the strategy, timing and prioritisation for all IT-related projects,
including the replacement of, or major upgrade/enhancement to, the University’s
information systems as defined by the PCG.
The role of the Project Co-ordination Group is divided into:
• Planning
• Approving / recommending for approval
• Monitoring
The Project Coordination Group can approve IT projects up to a gross cost of £200k
where they are earmarked in the Infrastructure Fund. The Project Co-ordination
Group can recommend to ICG any project over £200k and projects of any size
requesting Infrastructure Fund funding where they are not already earmarked in the
Infrastructure Fund as per Table 1 in C2.
C8
Procurement
All projects must comply with the University’s Procurement Procedures.
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It is important for Project Sponsors and Project Managers to discuss procurement
arrangements with Procurement Services. The preferred method of initial contact is
by emailing [email protected]
Contact with Procurement Services should be made at the earliest opportunity and
certainly prior to the Project Proposal or Request for Authority being submitted for
consideration by the Committees.
Procurement Services have the authority to vary the terms under which purchasing
may be undertaken at the University in the interest of best value. This variance must
be agreed in writing by Procurement Services, noted in the investment appraisal
narrative, and be compliant with UK and EU legislation and regulations.
C9
Link to University and college or service strategic goals.
All projects undertaken must be consistent with both the University’s and the college’s
or service’s strategic objectives. The investment appraisal must be able to evidence
that the projects outputs will have a positive impact on the strategies of the University
and the budget centres.
It is important to bear in mind when evaluating the positive impact of a project on
strategic goals that colleges, services and the University have limited resources. As
such it is probable that some projects with positive impacts on strategic goals may be
rejected. This is not because they are not good projects, but that with limited
resources capacity exists only to fund the best projects.
The University’s corporate strategy and objectives are set out in the Strategic Plan.
Projects that have a positive impact on one or more of the following will be considered
so long as they do not have a negative impact elsewhere.
The strategic goals are aimed towards ‘Top 10 by 2012’. The strategic measures can
be found on the Strategic Planning and Change web pages.
The investment appraisal should also be considered against the college and service
strategic objectives as set out in the college or service five-year plans.
C10
Self funded schemes
A self-funded scheme is one where the total funding for the scheme is acquired from
external sources specifically for that scheme, i.e. there is no need for the use of the
Infrastructure Fund. These projects still require the same authorisation process as for
other projects, as assessed on the basis of gross expenditure or the level of risk
involved.
The reasons for this are:
•
That following these procedures will lead to the adoption of best practice and
ensure that the University is complying with HEFCE guidance and the HEFCE
Financial Memorandum.
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•
•
•
•
•
All major projects need to be consistent with the University’s overall strategy; this
process gives a methodology to check that projects are consistent.
Whilst the project may not be expected to require Infrastructure Fund monies if it
were to overspend then the Infrastructure Fund may become the funder of any
overspend.
By reviewing major projects at various levels opportunities arise for improvements
to be identified and incorporated into the project plans.
Any non-external funding will require University cash balances to satisfy external
contractors, this cash needs to be managed on a whole University basis. The
adoption of these procedures will provide a basis for good cash management.
Where a project is externally funded it is the University that will be legally
contracted. These procedures provide a route to advise the University of the
assets, liabilities and risks under the contract.
Thus, all self-funded schemes should follow the same procedural route as other
contracts using these procedures.
C11
Key deliverables / indicators of success
The University has limited resources (including financial and staff resources) with
which to undertake projects. As such, a mechanism is required in order to evaluate
projects. This process will need to establish two key issues:
•
•
Firstly, a project will need to indicate that on balance the overall impact is
beneficial to the college’s / service’s and University’s strategic missions.
Secondly, as the University does not have sufficient resources to undertake all
projects that are beneficial to the University, it will be necessary to rank in order of
greatest to least benefit those projects that pass the beneficial test hurdle.
Other areas of these procedures identify the costs and risks of the proposed project.
The Project Sponsor and Project Manager need to identify the key deliverables and
the key indicators of success. The achievement of these will be assessed after the
completion of the project using the post project appraisal or post project evaluation
(for larger projects).
All projects have three core key indicators of success:
•
•
•
Did the project satisfactorily end at the planned project completion date?
Did the project use less than the originally identified net of implementation costs
and incomes?
Did the project achieve the identified key deliverables at the identified time?
The Request for Authorisation form (RFA) needs all of these to be specified. To
enable the Project Accountant to complete a thorough pre-screening of the
investment appraisal, all supporting calculations, spreadsheets and assumptions
should be submitted with the Project Proposal / Request for Authorisation /
Investment Appraisal.
A major project’s achievement of the University’s priority strategic key deliverables will
improve the prospects of a project achieving funding from the Infrastructure Fund,
although this does not exclude the prospect that other deliverables may also qualify a
project for funding. Other key deliverables are (for example):
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•
•
•
Improving staff student ratios.
Improving environmental sustainability.
Improving efficiency of business processes.
When assessing the key deliverables of a project it is important to quantify the
improvement the project will deliver, and to phase when these improvements will
occur. The performance of the project against these will be assessed after the
completion of the implementation stage of the project using post project appraisals or
post project evaluations (for larger projects).
C12
Implementation costs and income
Implementation costs and income are those expenditures and incomes associated
with the implementation stage of the project. These expenditures and incomes are
identifiable by the fact that they are directly related to the delivery stage of the project,
temporary and not recurring in nature. They are required to create the conditions for
and to facilitate the achievement of the key deliverables of the project.
These cost and revenue streams usually carry the most risk as they are ad hoc and
non repetitive in nature. As a result limited opportunities exist to learn and adapt from
past experience. It is important that the appraisal recognises this fact and engages in
significant consideration of these expenditures and incomes.
All implementation costs should be included in the “Invest” column of the Option
Appraisal form. All implementation revenues should be included in the “Income”
column of the Option Appraisal form. Costs and incomes should not be netted off as
they have different risk characteristics, even if the total amount of income equals the
total amount of expenditure.
Provision should be made for contingencies – see below.
With respect to inflation the normal basis of calculation of implementation costs and
income is to do all calculations at today’s prices. Exceptions to this are noted in the
inflation section.
C12.1 Implementation expenditure – gross expenditure
It is important to analyse this expenditure between its constituent parts / activities as
they normally have different phasing and risk characteristics. The appraisal should
include a table in the narrative setting out all material cost / activity elements. These
should be grouped so that dependencies between them can be identified. For
example all preliminary exploratory works and fees should be grouped together with a
sub total where necessary.
A suitably qualified individual or team should be engaged at the earliest opportunity to
establish the cost estimates for a project; the appraisal should refer to this person or
team. An important method of assessing the validity of cost estimates is to determine
how they have been calculated and considering the underlying assumptions.
Additional reliance will be given to cost estimates if they can be benchmarked against
previous similar projects / activities. Finally assurance of cost estimates may be
gained from an external validation of some or all of the gross expenditure. The
appraisal should note what work has been undertaken to assure the accuracy of any
material / risky or uncertain cost estimates.
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In addition it is likely that different teams will deliver different categories of work.
Where risky or uncertain work / activity is a material part of the cost estimate then the
appraisal should note how this work is to be undertaken and the additional
reassurance that can be placed on this category of work being delivered to the value
noted in the appraisal.
C12.2 Contingencies
Contingencies included within the gross expenditure should be identified.
C12.3 Implementation income – external income
Where external income is a material component of the funding of a project it is
important to identify from whom the income is coming, what (if any) are the conditions
upon its receipt, the form such funding will take (e.g. cash, donation, “in kind”), the
risks to its receipt and the conditions which govern when it will be received.
Where external income is to come from more than one source each should be
considered separately. If dependencies exist between certain external income
sources then these should be highlighted (for instance if one donor will only give
match funding or if some funding by one party is dependent upon funding by another
party).
Where a source of external income is from fundraising it is important to note the
status of any fundraising initiative, e.g. have the monies been raised and received by
the University, is some of the total sum pledged but not as yet received, have some
monies yet to be raised? A table should be included in the appraisal setting out the
full position on the fundraising initiative.
C13
Operational costs and income
All projected cash flows arising as a result of the Option appraisal modelling need to
be included. Many of these cash flows will be incorporated within implementation
costs and incomes (above); all others are included here.
Non-implementation cash flows need to be included on the Option Appraisal form
under the respective option. All cash inflows should be included under the “income”
column and all cash outflows under the “spend” column. Cash flows must not be
netted off.
Items which do not lead to real, actual cash flows should not be included, (i.e.
depreciation).
The impact of taxation should be included in costs and revenues, the most relevant
tax cost is expected to be VAT. Unless strong information to the contrary exists it
should be assumed that current taxation legislation, regulations and rates will remain
constant.
With respect to inflation the normal basis of calculation of operational costs and
income is to do all calculations at today’s prices. Exceptions to this are noted in the
inflation section (C14).
A particular difficulty with operational cost and income is the length of time these
costs and revenues may be incurred, potentially over 20 or 30 years.
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Where costs and income are expected to experience a period of growth and then
remain static, the period of growth should be identified and, using best judgement and
historic experience, the costs and income should be included within the Option
Appraisal form under the appropriate heading.
Some costs and income are erratic in nature, for example lifecycle costs linked to the
maintenance of a building or specialist items of equipment. In such cases, where the
amounts involved may be material (where material is defined as where not allowing
for the inflation differential may lead to an incorrect decision to approve a project that
should otherwise have been rejected, or conversely a project that should have been
approved being rejected) best judgement and historic experience should be used to
reflect when these costs and income may crystallise and what their value will be at
that point. The estimated amount should be included within the Investment Appraisal
form under the correct heading and point in time. Care needs to be taken not to
double count costs already included on the Option Appraisal form.
C14
Inflation
Implementation costs and income may occur over several years, and operational
costs and income may very well be recurring in nature. Operational costs and income
may occur over the maximum 25 year period in the Option Appraisal form. These
operational costs and income should be calculated at today’s prices, which are prices
that are not inflated. The discount rates used are on the assumption that no inflation
is included within the cash flow analyses.
The only time where some inflation may be included is where the different cost and
income cash flows will be subject to different inflation rates. For example construction
cost inflation may be materially different to those of pay. “Materially” in this context is
defined as where not to allow for this inflation differential may lead to an incorrect
decision to approve a project that should otherwise have been rejected, or conversely
a project that should have been approved being rejected. If such a situation
regarding inflation arises then you may either:
•
•
C15
Set a standard rate of inflation, probably the current RPI, and allow for inflation
only to the extent that it differs from this, and then only by the extent it differs from
this. The standard approved discount rates should be used in this situation; or
Apply actual inflation to all of the various components of the project cash flows.
This may mean that several different rates of inflation are required. These
different rates should be noted as assumptions in the appraisal narrative. If this
option is used then the discount rates used in the Option Appraisal form should be
increased by the current RPI.
Discount rates and expected rates of return
Discount rates are used on the Option Appraisal form. They are used to determine
the Net Present Value of a project (NPV). The only issue is that no clear guidance
exists on what is an appropriate discount rate.
Discount rates are used to assess three factors:
•
•
The value society attaches to present, as opposed to future consumption.
The time value of money, for example if offered £100 today or £100 in one year’s
time it is rational to accept the £100 now as you could invest the money in a low
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•
risk asset (e.g. building society account) and have more than £100 in one years
time.
Risk: in the option above if offered £100 now in repayment of a debt of that value,
or £200 in a year’s time, then, assuming the individual offering the money was
very trustworthy you may be inclined to accept the £200. Alternatively if the
individual was not trustworthy then you may be inclined to take the £100 now.
Whilst this is a very simplistic example it indicates that when assessing the value
of money over time we also assess the risks arising from the income source.
Discount rates endeavour to do this.
For projects between 0 and 30 years the risk free discount rate will be the Bank of
England base rate; the actual rate(s) used by the University do need to be higher than
this and the discount rate used to evaluate projects will be the risk free discount rate +
the RPIX.
For the purposes of the University capital procedures Council has agreed that three
main discount rates should apply to the University (the current rates are shown on the
Option Appraisal form):
•
Core activities.
Core activities are those related to mainstream teaching and research activities. It
is also to be used for infrastructure developments largely focussed developing the
mainstream teaching and research activities.
•
Non-Core related activities
These are activities linked to or supporting the mainstream and teaching activities
but are not vital to be undertaken by the University and / or carry different risk
characteristics. Included in here are projects related to student residences and
international students.
•
Other rates
For projects where the driver is to generate a surplus or where the risks are
significantly higher the project manager in association with the ICG will need to
agree a suitable discount rate. In these circumstances the investment appraisal
narrative should explain the choice of the rate and explain its suitability.
The current applicable rates are shown on the Option appraisal form within the
Project Authorisation Workbook.
C16
Reviewing alternatives
When considering how to achieve the objectives of a project several options may be
identified. Of these, some will be disregarded for a variety of financial and other
reasons. The remainder should be the subject of an appraisal to determine the
optimum method of attaining the projects goals.
It is important to bear in mind throughout this process that the ultimate objective of a
project is unlikely to be a new building or a new computer system, although this may
be an outcome. The objective of a project is to attain a goal that will assist in the
achievement of a strategic University, college or service objective. The developments
of a new software package, the construction or refurbishment of a building are
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facilitators of these goals, not usually objectives in themselves. When considering
alternatives it is important to maintain this clarity.
The normal methodology when considering and comparing alternatives is to look only
at the cash flows that are caused by the project option being considered. This
ensures that all of the options are directly comparable and that the resultant NPV is
that of the project options alone and not pre-existent or other incidental activities.
To be included in the NPV calculation the cash flows should satisfy all three of the
following criteria:
1) They are cash flows. (e.g. Depreciation is not a cash flow)
2) They are incremental (this can be positive or negative)
3) They are in the future (ignore costs already incurred)
In larger projects, with more diverse options, achieving the objectives becomes more
complex. The different options require different resources, put varying strains on the
University, college or service involved, and have different opportunity costs. In these
circumstances, and normally in respect of the larger £1 million plus projects only, it is
acceptable, if the ICG approves, to consider the whole of a budget centre’s cash
flows. If this approach is adopted then some pre-existing cash flows will also be
included in the option appraisal. It is vital that all options are treated in exactly the
same way. The adverse impact of this approach is that whilst the resultant option
NPVs can still be used to compare between projects, they no longer give the NPV of
the project alone. This is because the NPV includes some pre-existing non-project
activities. If this approach is adopted it should be disclosed in the appraisal narrative.
C17
Appraisal narrative
The appraisal narrative plan notes the item to be included. The objective of the
appraisal narrative is to allow ICG, ISG, VCEG, and Council to approve the
recommendations made in the appraisal and supporting documentation. To achieve
this it is important that the documentation needs to:
•
•
•
•
•
Be easy to read: avoiding unnecessary complexity and immaterial or irrelevant
information.
Be concise: the most complex appraisal narrative should not exceed ten pages,
including one page for an executive summary.
Include an executive summary: the members of the above committees and groups
are busy; the documentation should provide them with a one page summary of
the key issues.
Be clear: remember that the project’s objectives are probably not (say) a new
building but other strategically aligned outputs.
Be specific: with quantities and timings for costs, income, risks and key outputs
wherever possible.
The groups are being asked to authorise a substantial amount of expenditure, they
need to be reassured that all options have been considered, all risks identified and
managed, and that the team identified is able to achieve the project deliverables to
time and budget. A long, badly written, rambling and incoherent appraisal will fail in
this regard.
The appraisal narrative plan repeats some issues (such as risk) several times. This
does not mean that the same narrative should be included at each point. For
example, in the executive summary a bullet point list of the key risks only may be
required, together with reassurance that they have been managed (assuming they
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have). In the initial investment section there is, again, reference to risks. Here the
approach may be to focus on just the initial investment risks and how they have been
resolved. Finally, in the key risks to the delivery of outputs section it may be decided
to refer only to the risks in delivery of the final projects objectives. When writing the
appraisal the appraisal narrative plan is designed to provide guidance and a broad
template. It does not need to be rigidly adhered to, but bear in mind it is the standard
template and will be what the above groups and committees are accustomed to
using. Therefore, serious consideration should be given to deviating from the
template, and this should be done only where there is sensible cause.
The following points are not mentioned in the appraisal narrative plan, but, where
relevant, these must be included in the narrative:
C18
•
Where a non-standard discount rate has been used. The rate used and the
reason for it should be noted.
•
If a full budget centre appraisal has been used rather than just looking at
incremental cash flows. Again, the reason for this should be noted together with
some additional information giving the authorisers of the project some indication
of the scale of the project alone.
•
All departures from the capital procedures need to be noted in the executive
summary and then commented on in more detail later in the appraisal. The
authorisers need to be reassured that the quality of the appraisal, and hence their
decision, has not been impaired by any such departures.
•
Where the option selected for approval by the authorisers is not the most
favourable NPV option the reason for this needs explaining. Where this is the
case, it needs noting in the executive summary.
Risk mitigation and avoidance
All projects carry with them risk, where risk is in reality referring to uncertainty. The
important risks to a project need to be identified and discussed. Methods of avoiding
or mitigating the risk should be considered and articulated in the project appraisal.
It is necessary to consider the risks arising from the performance of the project for
three main reasons:
•
•
•
If a project is to be delivered in line with a plan then consideration needs to be
given to those issues that may throw the plan off course. These issues (risks)
need to be addressed in the most appropriate way.
The authorisers of projects need to have confidence that the key deliverables can
be delivered on time, and to budget, with an acceptable level of risk.
If the performance of a project would be materially affected by an event it will be
advantageous to the Project Manager to have previously identified and explained
this risk to the authorisers of the project.
Important risks in this context are risks that could lead to:
•
•
A material increase in the resources required in achieving a project: principally
financial resources but these could also include other resources such as staff or
management time.
A material increase in the amount of time taken to complete the implementation
period of a project, or the time taken to achieve the goals of the project.
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•
The prospect that some or all of the key deliverables of the project may, to a
material extent, not be achieved or be achieved later than planned.
A material change is one which would have led to a change in the decision to
authorise the project had such an outcome (higher costs, longer period to complete
the project, fewer deliverables at the end of the project) been seen as a probable
outcome when the project commenced.
All risks or uncertainties, which have the potential to have a material impact, as
outlined above, need to be considered. Having concluded that they may have a
material impact the next issue to consider is how probable are they to occur. The
greater the prospect of a risk arising, the greater the need to consider the avoidance
or mitigating actions.
The table below notes the key decision points:
Impact
Probability
Action
Risk 1
High
High
Identify avoidance or mitigating
solutions for the risk.
Risk 2
High
Medium
Risk 3
Medium
High
Risk 4
High
Low
Risk 5
Low
High
Risk 6
Medium
Medium
Risk 7
Medium
Low
Risk 8
Low
Medium
Risk 9
Low
Low
Use judgement to decide
whether to comment only on
risk (as below) or to identify
solutions to the risk (as above).
Comment only on the risk and
note that it is not considered
likely to have a material impact
on the project and as such no
further work has been
performed.
The existence of risk when performing a project is inevitable. All actions and projects
involve risk. The key issue is how they are monitored and managed and what
changes can be made to the project plan to minimise the prospect of the key
deliverables being thrown off course by the risks.
All risk management exercises will involve changes to the way the project is
resourced or delivered or to the outcomes of the project.
With risks that need addressing one solution is to avoid the risk altogether. For
instance, if a risk exists such that the performance of a project may detrimentally
impact upon the normal term-time operations of the University, it may be possible to
avoid the risk by undertaking the project in the summer, or at night when normal
University operations are not ongoing.
In some instances it may not be possible to avoid a risk. The next consideration
should be how to mitigate a risk. Risk mitigation does not eliminate a risk. Mitigation
reduces the probability or reduces the impact of a risk.
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It may be impossible, or very disruptive to avoid or mitigate all risks. In these
scenarios it may be appropriate to consider increasing the level of monitoring that is
undertaken with respect to a risk. If the use of monitoring is the chosen method of
managing a risk then the appraisal needs to make clear what action will be taken
should the risk crystallise.
Actions that may be considered in order to manage risks include:
•
•
•
•
•
•
•
Changing the way the project is delivered.
Changing the timing of the project or particular activities within a project.
Entering into discussions with colleges or services impacted by projects to
ascertain whether certain levels of disruption may be acceptable.
Considering the use of suppliers or contractors with key skills or products.
Insuring against particular risks.
Introducing more rigorous monitoring arrangements for the project or particular
activities in a project.
Considering the competency sets of the project team members.
The above list is not exhaustive and project teams are encouraged to consider all
methods of managing risks.
Having identified a method of managing a risk, its impact on the project needs to be
considered. What are its resource / cost / time implications and impact on the project
deliverables? Is it the best solution? In some instances it may be better to live with
the high risk and introduce more rigorous monitoring: only using the proposed
solution if this indicates that the risk is likely to materialise.
C19
Project team competencies
Different types of projects require different competency sets for the team managing
the project. It is important for the appraisal to consider the competencies required by
a project team to carry out a project proficiently and with an acceptable level of risk.
Care should be taken to avoid building up a project team that is too large to manage.
Where a project team becomes large due to the scale and complexity of a project
consideration should be given to separating the operational project delivery team (the
project team) from those with stakeholder duties (the user and University
representatives).
The stakeholder role could be formed into a separate group that meets with the
Project Manager at suitable times, although this would only normally be suitable for
the riskiest and largest projects.
Key issues to be addressed when considering a project team are set out below. For
small less risky projects one or two individuals may perform all the all of these roles.
For larger riskier projects it may be necessary to have more than one team and to use
external advisors and consultants.
Project Manager
A project manager’s role is to manage the day to day activities of a project such that
the outputs are delivered to time using the agreed level of resources (including the
budget).
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The project manager should have the necessary project management skills to enable
them to discharge this function efficient and effectively.
The Project Manager is responsible for reporting the progress on the delivery of the
project to the ICG, via the Project Accountant in Finance Services.
User Representation / Client
In all projects the user needs to be involved in how the project is progressing and as a
point of contact in ensuring that complications arising during the implementation stage
of the project can be discussed. The user representative will be the custodian of the
project outputs and key deliverables. The user may comprise one representative or
more.
In addition any project activities that may cause disruption to the user’s operational
activities need to be discussed and communicated to them through the user
representative(s).
University Representation / Client
In larger, reputational, sensitive, or novel projects, a University representative will be
required. The University representative will be a member of the Vice Chancellor’s
Executive Group or their nominated Senior Management Group member.
The University representative will be responsible for ensuring that the key
deliverables identified in the project appraisal are achieved.
In addition any project activities that may cause disruption to the University’s
operational activities need to be discussed and communicated through the University
representative.
Technical Expertise
Depending upon the nature of a project certain areas of technical expertise may be
required. The appraisers of a project need to be satisfied that appropriate technical
expertise exists within a project team to ensure that a project is capable of proficient
delivery.
It is possible that this will be acquired externally (for example quantity surveyors etc.),
but where such expertise exists within the University consideration should be given to
inviting these specialists on to the project team.
Where a project materially covers issues of University strategic significance, for
example the development of the Web or the development of learning spaces, then a
specialist from that area of the University should be invited to join the team. Similarly,
where a project involves building works a member of the Estates Development
Service team would be expected to be a technical specialist.
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D
MONITORING
D1
Definition and purpose of project monitoring
Monitoring is the process of review carried out during the lifetime of a project. Key
elements of the project plan are compared to what is actually happening as the
project progresses. The elements to be monitored will include:
•
•
•
•
The financial plan.
Timescales and progress against milestones.
Other key deliverables.
Risks.
The main purpose of monitoring is to ensure delivery of the project outputs within the
agreed time and resource usage. Where variations to plans are identified through the
monitoring process, then either remedial action must be initiated to bring the plan
back on track, or the variations must be reported and approved through the
appropriate channel.
In addition to monitoring the individual project and its progress against plan, the
impact of the project in relation to relevant consolidated plans must also be
monitored. Consolidated plans will include the University capital programme, longterm maintenance plans and individual college or service plans.
The approved monitoring processes are designed to:
•
•
•
D2
provide assurances to ISG and to Council that the University’s resources
allocated to specific projects are being managed effectively.
provide regular information on project progress to stakeholders.
assist in the preparation of robust financial forecasts at University level.
Project Monitoring Groups
A Project Monitoring Group (PMG) should be formed for every project of value £2m or
above. ISG may request for a PMG to be formed for projects below this £2m
threshold. Normally, the group will be chaired by a member of VCEG and serviced by
EDS. Membership will include the Project Sponsor (or nominated representative),
representatives from EDS and Finance and other senior University representatives
representing appropriate stakeholders.
The terms of reference for the Project Monitoring Group include overseeing the
management of the project to ensure that project outputs are delivered within
programme and budget; to report on any deviations to the authorised investment
appraisal and ensure compliance with Capital Procedures.
The full generic terms of reference can be viewed at Appendix E1.
The quorum for the group is the Chair (or nominated deputy), one representative from
EDS and one representative from the College/Service sponsoring the project.
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D3
Roles and responsibilities
Overall responsibility for project monitoring lies with the ISG. They will receive reports
on individual projects and on progress against plans. The ICG will review reports and
consider RFAs and RRFAs. Where required, these will be passed to ISG and Council
for approval or re-approval as set out in the Authority Table.
It is the responsibility of the Project Manager to ensure delivery of the project,
including financial management. They will report progress to the Project Sponsor and
to the ICG. They will be supported in this process by the Professional Services, as
follows:
•
The Project Accountant, in Finance Services (Corporate Accounting), is
responsible for:
•
•
•
•
•
•
•
D4
The allocation of project references to RFA forms.
Maintenance of the project status log.
Allocation of financial account codes.
Distribution of monthly transaction and project balance reports.
Preparation of project monitoring reports in liaison with the project manager
(although completion of these reports still remains the responsibility of the
project manager)
Co-ordination of individual project monitoring reports.
Preparation of consolidated project monitoring reports.
•
For IT projects, the PCG is responsible for undertaking the monitoring role of the
ICG and provide it with up to date reports on the performance of IT projects for
each ICG meeting.
•
Estates Development Service are responsible for supporting individual project
managers involved in estate-related projects, ensuring that they have
implemented appropriate procedures to manage financial aspects of the project
and progress these against other plans. For IT projects Academic Services will
provide equivalent support to individual project managers.
•
Finance Services will provide support to project managers on other projects, as
necessary.
Link to appraisal and authorisation – Request for Authority (RFA)
For non-IT projects the key elements of a project will be set out in the RFA form,
completed prior to the authorisation process. Each RFA will be allocated a unique
project code by the Project Accountant, in Finance Services (Corporate Accounting),
and will be recorded on the project status log. This will usually correspond with the
project code allocated to the Project Proposal form.
With respect to IT projects the authorisation will be through the IT Authorisation Limits
and Process as detailed in the table in C1.
When a project has been approved, the project status will be amended on the project
log. Finance Services will set up an appropriate account code on the main financial
system (Aptos), and will load the approved budget, profiled by year as appropriate.
Details of the Project Manager will be confirmed and that person will be informed of
the project account code.
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D5
Project status log
For non-IT projects the Project Accountant in Finance Services will maintain a project
status log. This will record details of each RFA including:
•
•
•
•
•
•
•
•
•
•
Project code;
Project status (approval pending, approved, approved with variations, completed);
Date and minute number of approval;
Aptos account code;
Total approved expenditure budget;
Total external funding;
Total internal funding;
Frequency of monitoring required;
Date and amount of approved variations;
Date of last monitoring report received.
For IT projects a similar process will be undertaken by the Project Administrator.
D6
Financial management
The Project Manager must ensure that appropriate procedures are put in place to
manage financial aspects of the project. This will include preparing a detailed
breakdown of the project budget and the expected expenditure profile and
ensuring all financial commitments and contracts are recorded against the relevant
budget.
Actual project expenditure will be recorded in the University’s main financial system,
and may be processed via an acceptable job costing system. Detailed financial
progress against plan may be collated in spreadsheets using data from either system.
However this data must be reconciled on a monthly basis to the balance on the
project code in Aptos.
To assist the reconciliation process, monthly transaction reports will be produced
each month by Finance Services and issued to individual project managers, together
with project balance reports, showing total expenditure to date against budget.
D7
Project Expenditure Profile
In order to assist in the preparation of cash flow forecasts, project managers will be
asked to prepare a profiled budget. This will be a monthly profile for the first 12
months of the project and quarterly thereafter. The expenditure profile should be
updated each month and forwarded to the Project Accountant in Finance Services.
D8
Individual project monitoring reports
Individual project monitoring reports must be prepared at appropriate intervals. The
frequency will depend on the size and duration of the project, and will be agreed at
the start of the project following consultation between the Project Sponsor, the Project
Manager and the Project Accountant (Finance Services). The ICG may also specify
the required frequency when they approve the project.
Project monitoring reports must follow a standard format and consist of a summary
report and accompanying commentary. The monitoring report consists of four
sections (detailed below):
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Section 1 - Project Details
These details will be obtained from the RFA completed when the project is put
forward for approval, or will have been agreed when the project has been authorised:
•
•
•
•
•
•
•
•
•
Project reference.
Aptos code.
Project name.
Project sponsor.
Sponsoring college or service.
Project start date.
Project completion date.
Project variation limit.
Indicator as to whether a Revised Request for Authority (RRFA) is required.
Section 2 - Approved budget
•
•
•
Approved budget, profiled by year of planned expenditure.
Forecast variance to budget.
Liability for additional project resource.
Section 3 - Revised Forecast
•
•
•
•
Previous forecast.
Revised forecast.
Variance to previous forecast.
Actual to date.
Section 4 – Commentary
This should include, as a minimum, comments on the following:
•
•
•
•
General comments on progress against plan.
Reason for any project slippage.
Amendments to project outputs.
Key risks identified.
Guidance for completion of individual project monitoring reports
Section 1
Project Reference – a unique reference is provided by Finance Services when the
RFA is completed.
Aptos code – Finance Services issue an Aptos account code when the project has
been approved.
Project name – the project is identified by a name consistent with the activity and
outcomes of the project.
Project sponsor – this is the person nominated by the college or service that will
benefit from the project.
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Sponsoring college or service – the name of the college or service that will benefit
from the project.
Project start date – the date the project was expected to commence or the actual start
date.
Project completion date – the date approved for completion updated for subsequent
forecast changes.
Project variation limit – forecast project expenditure may vary by the lower of £250k or
10% of the approved expenditure budget (or as otherwise agreed by ICG) before a
revised request for authority is required.
Indicator as to whether a Revised Request for Authority is required – this box will flag
YES if the forecast variance to budget exceeds the project variation limit.
Section 2
Approved budget – the budget (expenditure, external and internal funding) approved
by the appropriate authorisation committee for the project, profiled by year of planned
expenditure, including any approved variations to budget.
Forecast variance to budget – this will calculate automatically when details of the
latest forecast are completed in section 3 and will show the difference between the
approved budget and the latest forecast.
Liability for additional project resource – when the project is approved, it will be
agreed who will be responsible for funding any additional resources. This box will
show the amount of additional funding required if there are variations against budget.
Section 3
Previous forecast – details of the forecast completed in the previous monitoring
report, including unallocated contingency.
Revised forecast – details of the latest revised forecast, including unallocated
contingency. This should be completed by the Project Manager after reviewing all
relevant information relating to the project and after discussion with the Project
Sponsor.
Variance to previous forecast – this will calculate automatically and will show the
movement in forecast income and expenditure between the previous and the latest
forecast.
Actual to date – actual expenditure and income to date, taken from the latest monthly
transaction and balance reports.
Section 4
The purpose of the commentary is to provide narrative explanation for any variances
in the financial plan, in the key deliverables, or in the timescale. Risks identified as the
project progresses should be highlighted, and the proposed action to mitigate these
risks detailed. It may be useful to build up the commentary over the lifetime of the
project, retaining the narrative from previous reports. This commentary will act as a
useful reference during the post project appraisal.
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D9
Review of project monitoring reports
The completion of the project monitoring reports is the responsibility of the Project
Manager although, in practice, these will be completed by the Project Accountant in
liaison with the Project Manager. These monitoring reports should be forwarded to
Finance Services (Corporate Accounting), to the Project Sponsor and to the relevant
college or service accountant within Finance Services. Finance Services will review
the monitoring report and, if any variances are material, will present the report to the
next meeting of ICG in the first instance, followed by the appropriate authorisation
route.
If the project shows variance to plan outside the approved limits, a Revised Request
for Authority must be completed. This will be submitted through the appropriate
channels for approval – refer to Capital Processes - Appraisal and Authorisation.
Finance Services will update the project status log.
D10
Approval of variations
When a Revised Request for Authority has received approval the Project Manager
and Project Sponsor will be notified by Finance Services and the project status log
will be updated.
D11
Monitoring of consolidated plans
Finance Services will maintain a consolidated schedule of approved projects. This will
show the profiled budget for each project and the associated funding. This will be
updated each month following receipt of individual monitoring reports showing any
revisions to forecasts and in the light of approved variations.
Finance Services will also prepare each month a consolidated schedule of actual
expenditure to date against approved budgets.
D12
Monitoring role of Infrastructure Co-ordination Group
The Infrastructure Coordination Group will receive the following reports:
•
•
•
•
•
Consolidated schedule of approved projects.
Consolidated schedule of actual expenditure to date against approved budget.
Summary of revisions to individual project forecasts within variation limits.
Revised requests for authority submitted for approval.
Summary capital monitoring report detailing:
• Total actual capital expenditure for the month and year to date.
• Total forecast capital expenditure for the year.
• External grant funding received to date and forecast for the year.
Individual project reports will be presented where there are particular issues to be
brought to the attention of the Infrastructure Coordination Group.
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Appendix C1: Definition of terms
Due date – this will be the date the planning process indicates that the form should be
provided to the ICG.
External income – this is income received from sources external to the University to fund
the implementation gross expenditure that is required to deliver the project. Such sources
include HEFCE, fundraising, Government, local authorities, the NHS, and commercial
organisations. The income should be phased (i.e. analysed across University financial
years) to identify when the cash is expected to be received.
Gross expenditure – this relates to the implementation expenditure only, which should be
shown gross (i.e. not reduced for any contributions or monies that may be received towards
implementation cost of the project). The expenditure should be phased (i.e. analysed across
financial years) to identify when the cash requirements of the expenditure are expected to
arise.
Implementation costs and income – these represent the financial impact on colleges /
services and the University of the implementation stage of the project. These should reflect
future (i.e. as yet not incurred) external costs and income only. Implementation costs and
income are identifiable by the fact they relate specifically to the development of the
environment in which the project deliverables may be achieved, they have a date upon which
these revenues and expenditure will cease and they have different (usually higher) risk
characteristics to the ongoing projects’ income and expenditures.
Latest project completion date – this is the date by which the project implementation stage
of the project needs to be completed to allow the successful delivery of the project.
Latest project start date – this is the latest date the project can commence (start incurring
significant irrecoverable costs) with the expectation of completing the project in sufficient time
to allow the achievement of the project deliverables as set out in the Request for Authority
form.
Liability for additional project resources – this describes who is responsible for funding
any additional resources (especially financial) a project may require due to overspends or
overrun of other resources. It will usually be expected to be the sponsoring college or
service.
Planned project completion date– this is the date the project implementation stage is
expected to be completed and handed over to the Project Sponsor to commence the
achievement of the project deliverables.
Planned project start date – this is the date the project is expected to begin incurring
significant irrecoverable costs.
Project name – the name used here should be the same as that used in the planning
process. The name should be consistent with the activity and outcomes of the project. The
project name should be different to any current, recent or committed project name.
Project sponsor – this is the nominated person in a college or service that will benefit from
the project. In the case of cross-University projects the sponsor should be a member of the
college or service who is the custodian for this activity at a University level. A project
sponsor will have the responsibility for delivering the outcomes of the project once the
implementation stage is completed. The head of college or service would normally nominate
the sponsor.
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Reference – each project has a unique reference. A reference is provided by the Project
Accountant in Finance Services (email: [email protected]) on receipt of the
completed Request for Authority (RFA) form.
College / Service / University Funding – this is the balancing figure after accounting for all
gross expenditure and external income. It will represent the internal funding required of the
University. These could be from college or service reserves, from the Infrastructure Fund,
the Strategic Development Fund, or other sources internal to the University. It represents the
cash requirement that needs to be funded by the University.
Sponsoring college or service – this is the name of the college or service that will benefit
from the delivery of the project post implementation, either directly or through the
achievement of a University-wide goal for which they are responsible.
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Appendix C2: Roles of signatories
Project Sponsor
To indicate that the project, as set out in the Project Proposal and / or Request for
Authorisation meets the objectives of the college / service and the University. In addition, as
a non-expert, they are noting their understanding of and agreement with the proposed
delivery route and the timetable and resource requirements.
If the Project Sponsor is in agreement with the above then they may sign the Project
Proposal for and / or the Request for Authorisation (RFA) form.
Project Manager
To indicate that the project is suitably summarised in the Project Proposal and / or the
Request for Authorisation and that the proposed project delivery method will lead to the
delivery of the project outputs at the agreed time and resource usage as set out in the Project
Proposal and / or the Request for Authorisation. They are also required to confirm that they
are satisfied that the project can be delivered within the risk levels as set out in the project
proposal and / or appraisal.
If the Project Manager is in agreement with the above then they may sign the Project
Proposal form and / or Request for Authorisation (RFA) form.
The Project Manager is also confirming that they will keep the Infrastructure
Coordination Group (ICG) fully appraised, which must be done via the Project
Accountant, of the progress in delivering the project and will, at the earliest point,
inform the Infrastructure Coordination Group (ICG) of any changes to the key
deliverables, the timetable, the risks or the resources required for the project. Also, if
such changes are of a material nature they will ensure a Revised Request for Authorisation
(RRFA) form is submitted and authorised prior to committing to avoidable variations to the
authorised project.
Other (technical)
Technical specialists will be required for certain types of project. The Project Sponsor should
ensure that appropriate technical specialists are invited to contribute to the investment
appraisal prior to seeking its authorisation.
A technical specialist will normally be requested to contribute in two circumstances:
•
•
Where a project is novel or unusual aspects to it which require their input.
Where the project has cross University impacts either due to its size or due to its impact
on other University strategies, polices or initiatives.
The specialist may be internal to the University (e.g. Estate Development Service (for
buildings or ground contracts) or Academic Services (for IT or network related contracts), or
external for issues such as tax advice or specialist buildings/facilities..
Before signing the Request for Authorisation (RFA) form the technical specialist should
ensure that the investment appraisal adequately reflects, in material areas, their views and
concerns.
Academic Services / Corporate Services
To subject both the Project Proposal and Request for Authorisation (RFA) forms to a
screening early on in the process. Appropriate departments from within each service will
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provide input and advice in the areas of feasibility, appointment of consultants, project
management and procurement.
Finance Services
To scrutinize all documentation and calculations relating to the project. The Project
Accountant needs to be satisfied that any matter contained therein has been appropriately
addressed, or is adequately commented upon before signing the Request for Authorisation
(RFA) form.
Head of College / Service
To sign the report if they are satisfied that the appraisal delivers the outputs they wish to
achieve within the correct timeframe and using the appropriate level of resource. They are
indicating their acceptance of the resource requirements on their budget centre and the
disruption and risks that may arise from its delivery, especially if they are accepting the
liability for overspends.
Finally they are agreeing to deliver their element of the outputs following the implementation
stage of the project.
Deputy Vice Chancellor / Registrar & Deputy Chief Executive (for projects in excess of the Head of
College Dean/ Director of Service limit)
To indicate their concurrence (as University managers) with the budget centre and noting
that they are satisfied that the project is in the strategic interest of the budget centre and the
University.
Vice Chancellors Executive Group (VCEG) (for projects in excess of the DVC / Registrar & Deputy Chiefs
Executive limit)
Any member of the Vice Chancellors Executive Group may sign to indicate that the project
appraisal has been considered by the Group and that the Group intends to champion the
investment appraisal through the authorisation process. The Group needs to satisfy itself that
the project represents the best use of the University’s resources in achieving the strategic
goals and that funding is available for the delivery of the project.
In addition the Group needs to be comfortable that the documentation supplied is sufficient to
ensure the project will be authorised by subsequent Committees.
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Appendix D1: Investment appraisal tools
Three investment appraisal tools are described below. All three use cash flows as the driver
for the value of a project. Cash is the fundamental financial driver, as ultimately it is the key
factor in driving business success.
Net present value (NPV)
A project’s NPV is calculated by reducing the value of future money to the current value of
the same money, using a “discount rate” (the rate used to discount future cash flows to their
present value). Using this methodology requires the cash flows arising from a project to be
allocated accurately over time (usually years). For example £1,000 in one year’s time with a
discount rate of, say, 6% is worth £943 today (£1,000/1.06), £1,000 in two years time it is
worth £890 (£943/1.06) today. The sum total of all the discounted cash flows gives the NPV
for an option. The discount rate is used to represent a combination of two principal factors,
the time value of money and risk. As the risk rises so the discount rate increases. The
option with the highest (or least negative) NPV is the most financially attractive. The main
issue with this approach is determining the discount factor.
NPV is to be the main financial appraisal tool for the University.
Internal rate or return (IRR)
This methodology calculates the discount factor required to give the project a NPV of £NIL.
As with NPV, above, it does require the cash flows arising from a project to be allocated
accurately over time (usually years), but it is not necessary to stipulate a discount rate as this
is the output of the methodology. A problem with IRR is that it does not recognise risk. In
addition it requires the implementation period to be in one time unit (for pragmatic purposes
usually a year is used), the outcomes of this methodology become more difficult to interpret
for projects with a longer implementation period. Neither is it useful where the
implementation costs are met by an external funder. Finally it gives no indication of scale of
projects. IRR is a useful secondary tool however.
Pay back
The payback methodology is useful for small projects with low implementation costs and
smooth revenue stream thereafter. It calculates the amount of time taken to for the project
derived revenue streams to repay the implementation costs, the shorter the time the better.
This methodology does not work well for larger projects with multi year implementation
periods. In addition it is not effective with projects that do not earn a payback (e.g.
refurbishment projects) or with projects that have irregular future revenue streams. Finally
the methodology does not deal with risk. It is not proposed to use this methodology at all in
the University capital processes, but it is accepted that some may find it useful for small
projects of under 1 year in duration
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Appendix D2: Investment Appraisal: narrative guidance
(basic, limited and full)
Project levels – gross expenditure:
Basic:
£25,000
to
Limited:
£200,001
to
£1,000,000
Full:
£1,000,001 and over
£200,000
Introduction / Executive Summary: (No more than one side of A4)
Basic:
Complete all of the boxes on the Referral for Authorisation form.
Limited (as basic plus):
Briefly:
• That the University’s procedures have been fully followed. Any deviations from best
practice should be commented upon and explained.
• Set out the expected initial investment cost, its net present value and, if appropriate, the
internal rate of return.
• Note other key points, concerns, actions, risks as required.
• Conclude on advantages of scheme as recommended and decisions required.
• Set out purpose of investment (why at all?)
• Explain briefly the history behind the scheme (why now?)
• Describe how key outputs align with University objectives / strategic goals – link to budget
centre plan if applicable.
• Highlight the key issues / risks and actions which have been or will be taken to mitigate
them.
• Where mitigation has been used the reader should be made aware of any residual or
outstanding matters.
Full (as basic and limited plus):
Briefly:
• Indicate the on-going recurrent financial return of the scheme once the project is complete.
• Describe and demonstrate with examples how key outputs align with University objectives /
strategic goals – link to budget centre plan if applicable.
The following are standard headings and prompts to aid the writing of the appraisal narrative.
They relate to ‘limited’ and ‘full’ appraisals only.
Note: The ‘full’ appraisal narrative must comprehensively expand and discuss all
issues for consideration.
Scheme objectives:
What outputs and changes to existing outputs are expected from the project?
• Quantities.
• Timescales.
• Locations.
• Quality.
How are they in line with University/ College objectives?
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Methods of achieving scheme objectives:
Consideration must be given to at least three options – the option to ‘do nothing’; the
recommended option; and the next best option.
For each option the following must be considered:
• Short- and long-term impact on scheme outputs.
• Initial investment costs.
• Long term revenues, costs and capital requirements.
• The project net present value, initial investment cost and where appropriate the internal
rate of return and pay back.
• Market issues of supply and demand (consider price, quantity and quality).
• Key risks and impact on project (note: greater detail of the key risks to the delivery of
outputs of the recommended option are to be included later in the appraisal).
The appraisal should recommend one of the options with explanations of the choice given (in
terms of outputs, costs, risks, time, etc). This should also link in with the University
objectives.
Scheme management:
The narrative should include:
• The initial investment management team (Project Sponsor, Project Manager, other
technical – EDS, external consultants, etc) and what skills they bring.
• The longer-term management of asset – who and what experience have they of such
operations.
• Assurance that management team can deliver the outputs.
If necessary, it should also include what is needed to consider attracting appropriate
management to the University to undertake and / or run operations once the project has been
completed
Initial investment:
Outline the initial investment plan to include in more detail for each distinct part of the
investment:
• Main areas of work.
• Timescales.
• Costs.
• Disruption.
• The key risks (to the initial investment only as the detailed risks to the delivery of outputs of
the recommended option are to be included later in the appraisal).
Describe how each of the above will be managed and risks controlled or mitigated (note: risk
here relates to the initial investment only). Highlight residual risks and their potential impact
despite these mitigation methods and discuss sensitivities if costs, timescales and disruption
change on outputs of scheme.
Scheme financial / non-financial returns:
Differentiation between cash and non-cash items needs to be considered and defined.
The financial returns of the proposed scheme should:
• Include the net present value and, if appropriate, internal rate of return.
• Include the gross income and expenditure streams over the next 20 years (or other more
appropriate timeframe).
• Differentiate between variable and fixed costs (and income streams).
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The non-financial returns of the proposed scheme could include:
• Working towards ‘Top 10 by 2012’.
• Working towards being a Top 100 global university by 2015.
• Reputational enhancements.
• Improve student experience (e.g. social space with no identifiable financial return).
• Boost staff morale (for example, from improved working space).
Regarding the gross income and expenditure streams, it should also note:
• What they are.
• Upon what do they depend?
• How are they calculated?
• What assumptions have been made in the calculation (including assumptions about the
market place)?
Note: Where the proposed project relies upon the selling of outputs to an external market,
consider market issues in a separate paper appended to this report.
Key risks to delivery of outputs:
What are the major risks facing the recommended option (or those of not carrying out the
proposed project at all)? As noted above full details of each risk must be documented.
For each of these risks:
• Describe the risk and how it may manifest itself on the project and its outputs.
• Perform sensitivity analysis on each risk and re-evaluate outputs and financial returns.
• Describe how each risk will be mitigated, highlighting on-going residual risk despite these
mitigation methods. How much will the mitigation cost?
Consideration of potential exit strategies as a mitigation route should be explained if risks
cannot be controlled.
Financing options:
How will the scheme in total be financed and over what period? How will potential
overspends be funded?
Examples of internal funding:
• University cash including:
o
University loans.
o
Budget centre funds / reserves (Colleges and Services).
o
University reserves (including Infrastructure Fund, Strategic Development Fund, etc).
Examples of external funding:
• Grant / Contract income (HEFCE, ERDF, Wellcome Trust, etc).
• Partnership arrangements (INTO).
• Fundraising.
Considerations of internal funding issues need to be detailed (because impacts on cash
balances affect covenants with HEFCE, external lenders, and other internal monitoring
procedures).
It is recommended that, wherever possible, an external funding route should be explored.
Procurement route, accounting impacts & other issues:
Proposals must be in accordance with the University’s Financial Handbook and guidelines
and be undertaken using Office of Government Commerce (OGC) processes.
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Consideration will need to be given to:
• Taxation (both direct and indirect).
• Personnel.
• Impacts on other colleges or services and other campus occupants (both direct and
indirect) – examples include disruption, availability of space / services.
• Other institutions.
Scheme performance measures / Environmental Performance:
At the end of the project how will we know if the project is a success or a failure?
Targets should be set:
• Over the period of the implementation of the project (in line with milestones).
• For the period until the full achievement of the project outputs.
• Finally for a further 12 months afterwards (note: 12 months is a presumption, in some
schemes it may need to be longer).
At least five key measures should be identified and satisfy the rules below:
• Specific.
• Measurable.
• Accurate – the less judgmental the better.
• Reliable.
• Time based.
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Appendix E1: Project Monitoring Groups - Terms of
Reference
1. To assist the University in the delivery of the project outputs of projects properly
authorised by Council and the Infrastructure Strategy Group in a timely and cost efficient
manner.
2. To be responsible to the Infrastructure Strategy Group for the delivery of the project
deliverables in accordance with the original / authorised timetable and budget.
3. To report to the Infrastructure Coordination Group and the Infrastructure Strategy Group
any material deviation from the authorised investment appraisal as soon as such a
material deviation is foreseen.
4. To be responsible to the Infrastructure Coordination Group and the Infrastructure
Strategy Group for ensuring compliance with the agreed Infrastructure Procedures and to
report any deviation from these procedures.
5. To receive and approve plans, designs and other project proposals consistent with the
authorised investment appraisal after due consideration of value for money, fitness for
purpose, the environmental impacts and sustainability issues.
6. To consider and approve the procurement process for the project after due consideration
of value for money, fitness for purpose, the environmental impacts and sustainability
issues.
7. To consider the adequacy of the staff allocated to deliver the project and to approve the
appointment of all external project consultants.
8. To receive and consider reports from the project managers and consultants.
9. To monitor the financial performance of the project against the original and the latest
approved project budget.
10. To oversee the production of and approve any revised investment appraisals for
submission (through the Infrastructure Coordination Group) to the Infrastructure Strategy
Group.
11. To prepare a report for the Infrastructure Coordination Group and the Infrastructure
Strategy Group after each meeting.
12. To consider and monitor the plans to minimise the disruption caused during the
implementation period of the project so as to ensure that normal working and studying
practices can be maintains as far as is practicable.
13. To consider and monitor a communications plan with respect to the project to users and
other staff and students that is consistent with the overall Infrastructure communications
plan.
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Capital Planning & Project Approval Procedures
Page 41 of 41
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