University of Chicago Financial Policy
Subject Area: Capital Planning and Budget Process
Responsible Office: Office of Facilities Services
Approval: V.P. for Administration and Chief Financial Officer
Originally Issued: March 2001
Revised: August, 2006
Refer Questions To: Donald Reaves

PURPOSE:   To establish the process for obtaining University approval for construction, expansion, and renovation projects at various funding request levels. The policy also defines project leadership roles during the project phases of program development, design, and implementation.

POLICY AND PROCESS:

Summary

1. Any academic or administrative unit requesting central funding for a project or proposing to spend $100,000 or more in unit funds on a project shall submit a written description of the project and a project budget to the Budget Office. The Budget Office approves projects under $250,000. All projects involving space allocation must be submitted to the Provost for approval no matter the funding level.
2. Units proposing to spend between $250,000 and $1 million shall submit a written description of the project and a project budget to the Budget Office. The Budget Office will take the proposal to the Provost and CFO for approval. The Provost and CFO will ask the Capital Projects Committee (CPC) to review and approve if they feel the project has significant impact on the University.
3. Any academic or administrative unit contemplating a project greater than $1 million, shall submit a written statement to the Provost explaining the rationale for the contemplated project. Projects between $1 million and $2 million are approved by the CPC. Projects of $2 million or more are approved by the full Board of Trustees or the Executive Committee of the Board of Trustees after review by the Campus Planning and Facilities Committee (CPFC) or the Financial Planning Committee (FPC) or both. If a project that was initially approved for less than $2 million ends up over $2 million, the Board of Trustees will be notified of the scope, budget, and description of the project.
4. The Provost and CFO or the CPC, as appropriate, will provide written authorization to complete the project's program development. The approval memo will describe the scope of the project, the dollar amount required for the programming and feasibility study, the schedule, and any conditions.

Program Development

5. For projects that require a programming and feasibility study, Facilities Services (FS) will lead program development, retain consultants and work with the unit to prepare the study (or master plan or other work, as appropriate).
6. The programming and feasibility study will be reviewed by the CPC, which will also review any space and campus plan considerations. If appropriate, the Faculty Campus Planning Committee will be consulted on the proposed project.

CPC Financial Plan Approval

7. For approved projects, FS will develop and provide to the unit an initial target budget for the project (renovation, expansion or new construction). The unit will work with the Budget Office to develop a financing plan that includes sources of revenue, timing of cash receipts, borrowing assumptions, and other pertinent information. If fund raising is part of the financing plan, the unit will submit the plan to the Vice President for Development for a feasibility opinion.

Trustee Project Approval

8. For approved projects with a total estimated project cost of $2 million or more, the CFO will submit the project to the Financial Planning Committee (FPC) and, if required, the Campus Planning and Facilities Committee (CPFC) of the Board of Trustees for approval along with a request for planning funds and an estimate of the total project cost. Once approved by the FPC and the CPFC, if required, either the Executive Committee or the full Board of Trustees also must approve the request.

Project Implementation - Design Phase

9. If appropriate, after the project and planning funds have been approved, the CFO will establish an Architect Selection Committee and Project Steering Committee. The committees will include representative(s) from the requesting unit, faculty, administrators, and trustees, as appropriate. The Architect Selection Committee will search for and recommend an architect for the project. The Project Steering Committee will play an advisory role to the CFO and will review and make recommendations on major project issues. FS will lead project implementation and will include unit representatives on the project team to insure that unit needs are met and input is heard.
10. Final architect selection requires approval by the CPFC.
11. FS will negotiate with and sign the contracts with the design architect and hire, negotiate with and contract with any additional consultants, project managers, engineers, local architects, etc. necessary for the project. FS will work in consultation with the Legal Office to negotiate all contracts related to the project.
12. The project team will submit the schematic design to the CPC for approval (with the Faculty Campus Planning Committee advising the Provost), and to any community hearings as appropriate. The schematic design, along with an updated project cost estimate, will be submitted to the CPFC for approval.
13. Once the CPFC has approved the schematic design, FS will work with the project team to complete design development.
14. FS will provide cost estimates using either internal resources or outside cost estimators throughout the process. FS will work with the project team to bring the project in at budget. When disagreements exist over budget, program or schedule priorities, FS will bring these issues to the CPC or the Provost or CFO as appropriate, for resolution.

Project Implementation - Construction

15. FS will follow Procurement Policy 1201 in the project procurement process. If construction of the project is to go out to bid, FS will send it out to bid once design development is complete, or at another phase in design if approved by the CFO and CPC. Once the bids have been received, and a construction firm selected from them, FS will submit a final total project cost to the CFO. This final total project cost, if $2 million or more will require approval by the CPC, the FPC, and either the full Board of Trustees or the Executive Committee of the Board of Trustees before construction may begin.
16. If permits or contracts are required, FS will obtain them before construction begins. Requests to begin work before permits or contracts are obtained must be approved by the Provost and CFO. The University may allow some contractor activity to occur before a contract is signed, but only through a letter of intent that will outline financial and risk allocation between parties.
17. FS will supervise the construction project, providing monthly updates on major projects to the CFO who will keep senior management of the University and the Executive Committee of the Board of Trustees informed of their progress.
18. FS will receive a three percent project management fee to fund its work.

Project Implementation - Unit Withdrawal from a Project

19. Units involved in a project but which choose to drop out of the project at any stage will be responsible for paying for the costs associated with programming, feasibility, planning, design, and construction which can be attributed to their specifications and are no longer applicable to the ongoing project. The unit will also be responsible for any additional costs incurred by the project as a result of its decision to drop out of the project. These could include costs associated with re-design, permitting, and the revision to or delay of the project schedule. The costs will be billed to the unit by the CFO and then reimbursed to the unit responsible for paying the costs of project implementation.

*A unit can fund a project up to $100,000. Additions to the project above that level will follow the approval levels listed above.

For center funded projects, a unit can add up to $100,000 of their funds without approval. Adding additional unit funds requires approvals as outlined above.

If funds are added to a project that put the total project budget into the next level, the approvers of the next level will be given written notification of the increase.

On all projects that are jointly funded by both the center and a unit, unit funds will be spent first. Any funds remaining at the end of the project will be returned to the center, up to its total contribution, and then any remaining funds will be returned to the unit.