AGENDA ITEM 3
UCL Estates
New Space and Estates Capital Projects Approval Policy
Author: Emma Smith, Capital Accountant
Date: October 2014
AGENDA ITEM 3
VERSION CONTROL
VERSION
0.1
0.2
0.3
0.4
0.5
AMENDMENTS:
First draft issued
NOTES
Feedback requested by
04/04/14
Second draft incorporating comments from Feedback requested by
Vice Provost Operations, Director of
02/05/14
Estates, Director of Finance, Director –
Financial Control & Analysis
Third draft incorporating comments from
For circulation to CPSC
Director of Finance
Incorporation of EMC comments
For circulation to CPSC
Updated for CPSC comments relating to
School/Department budgets for small
projects
DATE
25/03/14
28/04/14
12/05/14
01/10/14
15/10/14
AGENDA ITEM 3
New Space and Estates Capital Projects Approval Policy
Purpose and definitions
This document sets out the approval policies for space acquisition and Estates capital projects which
must be observed prior to any external expenditure being incurred. This includes any external
expenditure on early stage options appraisal and feasibility studies.
New space means additional space not already occupied by UCL, acquired through:
-
purchase of freehold or leasehold
lease agreement
termination of leases with external occupiers of UCL space
agreement to occupy donated/free space.
New space can only be acquired by the Estates Division.
An Estates capital project is a defined scheme of work for the acquisition, build, refurbishment or fit
out of property. The major part of the planned expenditure on the project should meet applicable
UK accounting standards definitions of capital expenditure. This means the works must provide
incremental future benefits to UCL or be the replacement of a separately identifiable component of
the asset that has previously been capitalised. There may be a small proportion of associated
expenditure on fees for early stage options appraisal and feasibility studies which does not meet the
definition and it may be cost effective and efficient to add non-capital works to the project delivery,
in which case the total cost will be applicable for approval purposes. Only costs that are directly
attributable to bringing the asset into working condition can be capitalised. Examples of capital
expenditure include:
-
Purchase price of land/building, including legal and professional fees
Site preparation
Construction costs including professional fees
Delivery and installation of furniture/equipment
Installation of physical IT infrastructure.
For the purpose of applying this policy, the gross cost of a capital project means the total external
expenditures incurred and should:
-
Include all external expenditure on feasibility and options appraisal (although this may not
meet the definition of capital expenditure)
Include external spend by other UCL departments (such as ISD)
Exclude any estimated grants or donations income
Include VAT.
The funding source for the gross cost must be identified in the initial proposition and full business
case submitted for first stage / second stage approval as part of the process outline below. This
should be one, or a combination, of:
AGENDA ITEM 3
-
Internal (capital)
Internal (revenue)
External.
For internally funded projects the specific budget must be identified and any unbudgeted
expenditure quantified on an annualised basis.
For external funding the specific source and any conditions attaching should be identified.
Estates capital projects can only be initiated in conjunction with the Estates division.
If there is any doubt as to whether a project meets the above definitions guidance should be sought
from the Capital Accountant, Estates.
This document should be read as a supplement to the UCL Financial Regulations and does not
replace any of the authorisation requirements for incurring expenditure contained within the
Financial Regulations (refer to Section 7 of the Financial Regulations for the non-pay expenditure
approvals process).
All approval limits within this policy are inclusive of VAT.
New space approval requirements
All new space acquisitions must be approved by Finance Committee, regardless of the cost to UCL of
the space itself.
An initial proposition should be prepared for submission to the Capital Programme Sub-Committee
then the following approval steps must be followed:
Step
1
4
Approval body
Capital Programme SubCommittee (CPSC)
Estates Project Review Group
(PRG)
Estates Management
Committee (EMC)
Finance Committee
5
Council
2
3
Action
Approval in principle of initial proposition (confirmed
Capital Programme priority)
Full business case submitted to PRG for technical review
and recommendation to EMC
Recommendation to Finance Committee
Approval of total additional cost to UCL (aggregate of lease
costs and unbudgeted running costs of the space for a 10
year period), up to £10m
Approval if total additional cost is £10m or greater
Capital projects approval requirements
Capital projects with an estimated gross cost of less than £250k can be approved by the Director of
Estates following approval by the School or Professional Services Estates Strategy Board, provided an
appropriate source of funding (see ‘Purpose and definitions’ above) has been identified.
AGENDA ITEM 3
For all projects with an estimated gross cost of over £250k the approval process is split into two
stages as outlined below.
First Stage – Faculty/Department plan to confirmation on Capital Programme
First Stage approval must be sought prior to any external spend being incurred. The approval
process should be initiated through the development of an initial proposition by the
Faculty/Department for submission to the School or Professional Services Estates Strategy Board.
Estimated gross cost £250k <
£2m
Action
Estimated gross cost £2m<
1 School Estates
Strategy Board
2 Project Review
Group (PRG)
3 Capital
Programme
Sub-Committee
(CPSC)
Approval in principle and
recommendation to PRG
Approval in principle and
authorisation of fees budget
N/A
Approval in principle and
recommendation to PRG
Recommendation to CPSC for
approval
Approval in principle (confirmed
Capital Programme priority) and
authorisation of fees budget up to
£2m
4 Estates
Management
Committee
5 UCL formal
committee
N/A
Authorisation of fees budget £2m to
£5m
N/A
Fees budgets in excess of £5m must
be approved by the relevant UCL
committee in line with UCL
authorisation levels set out in
Financial Regulation 7.2.
Step
Approver
Action
Second Stage – Development of project to full approval
Second Stage approval must be sought before commencement of any work additional to the initial
scope and budget approved for fees.
This stage is initiated through the preparation and sign off of a full business case for which the
Project Sponsor is responsible. For guidance on development and sign-off of business cases refer to
‘Guidance for Completing & Submitting Business Cases for Estates Projects and Property
Acquisitions/Disposals’.
Step
Estimated gross cost £2m<
Approver
Estimated gross cost £250k <
£2m
Action
School
1
Estates
Strategy Board
Approval in principle and
recommendation to PRG
Approval in principle and
recommendation to PRG
Action
AGENDA ITEM 3
2 Project Review
Group (PRG)
3 Capital
Programme
Sub-Committee
(CPSC)
4 Estates
Management
Committee
(EMC)
5 Finance
Committee
6 Council
Approval and authorisation of
budget provided there is
sufficient budget within the limit
delegated to PRG by CPSC1
N/A
Recommendation to CPSC for approval
N/A
Approval of projects with estimated
gross cost up to £5m
N/A
N/A
Recommendation to EMC for approval
Recommendation for approval to
Finance Committee for projects with
estimated gross cost £5m or greater
Approval of projects with estimated
gross cost £5m < £10m
Recommendation for approval to
Council for projects estimated gross
cost £10m or greater
Approval of projects with estimated
gross cost of £10m or greater
Budget change approval requirements
Budget increases up to the lower of:
- 10 per cent of the original approved budget, or
- £250k
can be approved by the Director of Estates within a defined Capital Programme contingency
allowance determined by the CPSC.
Budget increases exceeding the contingency allowance or greater than £250k must be submitted to
PRG for recommendation for approval to a UCL committee appropriate to the circumstances, with
reference to materiality of the increase relative to the original approval granted.
Resubmission of rejected or deferred proposals
First approval stage
At the first approval stage the proposal should be resubmitted to the next meeting of the approval
body which rejected it, addressing any feedback from the approval body. If permitted by the
approval body the proposal can be submitted to the next stage with sign off of the required changes
1
CPSC will determine a “small projects” budget for projects with estimated gross cost less than £2m as part of
the approved Capital Programme. This will be delegated to School / Professional Services Estates Strategy
Boards to manage.
AGENDA ITEM 3
by stakeholders. If deferred from addition to the Capital Programme by CPSC with no other reason
for rejection, the proposal will automatically be reconsidered by CPSC during its periodic review of
the Capital Programme.
Second approval stage
At second approval stage the business case should be resubmitted to the next meeting of the
approval body which rejected it, addressing any feedback from the approval body. If permitted by
the approval body the proposal can be submitted to the next stage of approval with sign off of the
required changes by business case stakeholders.
AGENDA ITEM 3
Capital Project Approval Process Workflow
First Stage
From Faculty plan to confirmation on Capital Programme (no external spend)
Faculty/Dept
/Division plan
Summary of
proposal including
financial dimensions
(cost and income)
School/PS
Estate
Strategy
Board
Initial review/
sign off
Project
Review
Group
Technical review/
advice
Decision in principle
and authorise spend
on fees if project
<£2m
>£2m
Fees over £2 million
Capital
Programme
SubCommittee
Decision in Principle
Authorise spend on
fees / recommend
to EMC if fees spend
>£2m
Estate
Management
Committee
Authorise spend on
fees / recommend
to Finance
Committee if fees
spend >£5m
AGENDA ITEM 3
Second Stage
Development of project to full approval
Development
of the project
Academic sponsor
work with Estates
team to brief and
design proposals and
business case with
FBAD
School/PS
Estate
Strategy
Board
Final review / sign
off
Projects over £2 million gross cost (including VAT)
Project
Review
Group
Technical review /
sign off
>£2m
Capital
Programme
SubCommittee
Recommendation
to EMC
Estate
Management
Committee
Approval /
recommendation
to Finance
Committee if
above £5m