Overview: About Capital Projects
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Capital Projects Defined
Buildings, facilities and infrastructure construction projects on the Stanford University campus are under the purview of the Land, Buildings and Real Estate Department. For the purposes of managing these projects, they are divided into two categories:
- those that require a jurisdictional permit and plan check, and
- routine general maintenance projects and non-facility related capital projects.
Regardless of size, cost or funding source, projects that require a jurisdictional permit and plan check, must follow the Form 1 request process. Examples of these projects include new construction, building demolitions and building renovations. A detailed list of project types requiring a Form I and an explanation of the process are at https://form1.stanford.edu/.
While construction is in process, these projects are accounted for as capital projects in the University's financial system to capture related expenditures. This treatment allows the University to categorize expenditures as capital assets or expenses and to collect expenditures in a way that supports indirect cost recovery, service center rate development and financial reporting. Administrative Guide Policy 3.1.2 provides further guidance.
Routine general maintenance projects, such as interior painting and replacement of carpet, do not require the Form 1 process and are managed either by a department or Facilities Operation. Non-facility related capital projects are generally defined as projects under $50,000 and/or with less than one year of life. These projects are not considered capital projects, and thus do not require special accounting treatment.
Key Roles and Responsibilities
Capital Planning & Management (CP&M), within the Land, Buildings and Real Estate Department, is responsible for the development, design and construction of major capital projects. CP&M consists of two areas: Capital Planning and Project Management. Each project has a Project Manager who is responsible for coordination of all aspects of the project.
Some other areas, such as Residential and Dining Enterprises, Utilities, and Facilities Operations manage their own projects. In these cases, CP&M is not involved.
User Group is the faculty, staff and students or other group that has identified the need for a new facility. Typically this group is led by school or department facilities representatives. This group defines the project vision, expectations and program requirements and will provide input during the process.
Support Groups include:
- Development if donors are involved
- Procurement for assistance with contacts and vendor relationships
- The Controller's Office, primarily Capital Accounting for project set up, vendor payments and financial controls
Capital Projects Process
The complete process is explained in Project Delivery Process at http://cpm.stanford.edu/pdp.html. The information below summarizes the financial aspects of the process.
- Project Planning and Approvals
Facilities Project Initiation Policy (Form 1) outlines the requirements for project initiation and approvals. In summary, the planning and approval process is as follows:
- Facilities Projects are initiated by individuals in schools or departments who submit online Form 1 to Land, Buildings and Real Estate to indicate interest.
- Planning continues, refining scope, budget, and funding sources and updating and completing the Form 1.
- Approvals are obtained per the Policy. See https://form1.stanford.edu/processhelp.cfm for an outline of the approval process.
Then, if the project is approved, project set-up commences.
- CP&M completes a PTA Request Form and sends it, along with the approved Form I, to Capital Accounting.
- Capital Accounting reviews the documents and sets up the account (PTA) in Oracle Financials and transfers the funds.
- CP&M also sets up the project in their PRO database to allow the project manager to track actual and projected expenditures against approved budgets.
- Capital Accounting sends an Authorization memo to the appropriate individuals so they can grant signature authority.
- Reference How To: Request New Capital Projects PTA (When Facilities Form 1 is required).
- Contracts are established in accordance with Procurement guidelines.
- As work is done, vendor invoices are received and reviewed by CP&M and/or other responsible departments, and then end-routed to Capital Accounting for final review and approval. These invoices are paid and recorded through the Oracle Financials system.
- The Project Manager informs Capital Accounting when a project is completed. Capital Accounting reconciles outstanding commitments, closes the project and award, and returns unused funds in accordance with the Funding Guidelines.
- Administrative Guide Policy 5.2.1, Financing of Purchases explains loan terms, amortization schedules, and asset categories and lives.