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Procedures for Capital Budgeting (4.15)
This online version is for convenience; the official version of this policy is housed in the University Secretariat. In case of discrepancy between the online version and the official version held by the Secretariat, the official version shall prevail.
Approving Authority: Vice-President: Finance and Administration
Original Approval Date: June 1, 2023
Date of Most Recent Review/Revision: N/A
Office of Accountability: Financial Resources
Parent Policy: 4.15 Capital Budgeting Policy
1.0 Capital Budgeting Process
1.1 The development of a capital budget requires the completion of a Project Planning Report, for Facilites Capital Projects, or a Total Cost of Ownership (TCO), as determined by IT capital planning processes, and the development of a Capital Project Funding Schedule. The two components combined comprise a Capital Project Budget.
1.2 A Project Planning Report requires the components set out in section 2.2 in the Procedures for Capital Planning (for Facilities capital projects).
1.3 A TCO requires the components set out in IT Project and Prioritization Procedures.
1.4 Upon the completion of a Project Planning Report or TCO, the Delegated Executive Sponsor, as defined in policy 4.14 Capital Planning, is required to consult with Financial Resources for the development of a Capital Project Funding Schedule (the “Schedule”).
1.5 The Schedule requires a business case analysis, including:
1.5.1 The total Capital Project Cost including any cost escalation or revisions;
1.5.2 Any ongoing operating or maintenance costs that can be reasonably anticipated and quantified;
1.5.3 Any future savings or revenues anticipated to be generated by the Capital Project and specific unit budgets that will be impacted;
1.5.4 Identification of all funding sources, including available and committed funding sources, with a risk articulation for each funding source and signatures of the appropriate signing authority as determined by policy 5.7 Signing Authority Policy, as well as VPs responsible for funding sources, such as fundraising (VP, Advancement), student contributions (VP, Student Affairs), internal operating or reserve funds, (VP, Finance and Administration);
1.5.5 Schedule of annual cash inflows (funding) and outflows (expenditures);
1.5.6 A Calculated Net Present Value, payback period analysis, as well as other relative quantitative or qualitative considerations.
1.6 During the annual budget cycle, Capital Project Budget requests will be consolidated into an Annual Capital Budget report, inclusive of the components outlined in 1.2 and 1.4, will be submitted to Budget Council for review and endorsement. The Budget Counsil is an advisory committee to the President regarding the annual budget development and resource allocation decisions.
1.7 Once endorsed by Budget Council, an Annual Capital Budget for the upcoming fiscal year will be prepared within the upcoming fiscal year budget process and will be provided to Cabinet for recommendation to the Board of Governors for review and approval.
1.8 Capital Projects that are identified outside of the budget development cycle will be considered in accordance with policy 5.7 Signing Authority Policy.
1.9 If in the course of project development or implementation the budget is projected to be greater than the approved Capital Project Budget, a Project Cost Increase Report is required to be submitted and the completion of a revised Capital Project Budget with components set out in section 1.4 is required. The total cost of the revised Capital Project Budget, inclusive of the original Capital Project Budget and any adjustments through a Project Cost Increase Report or TCO update, will be the cost considered for the approval limits set out in policy 5.7 Signing Authority Policy.
2.0 If the revised Capital Project Budget is not approved, the Capital Project will be paused and Facilities and Asset Management or Information and Communication Technologies, Financial Resources and the Delegated Executive Sponsor will explore alternate strategies.
2.1 Project Status Reports will be prepared for all Capital Projects over five (5) million dollars or Capital Projects that are deemed to have reputational or significant financial risk. The intent of a Project Status Report is to provide updated project information on project execution and implementation timelines, project cost and funding status, and financial risks associated with the project.
2.2 The Board of Governors will review Project Status Reports for call Capital Projects over five (5) million dollars.
2.3 The Capital Projects Committee will review project status reports on a regular basis.
2.4 Project Completion Reports will be prepared for all Capital Projects over five (5) million dollars or those that have a reputational or significant financial risk. The purpose of a Project Completion Report is to confirm that financial closure of the Capital Project has occurred and to identify any budget and schedule variances, positive or negative.