Why do we have to follow this process?
The University makes a long-term financial commitment every time it invests in a new building, building addition, or renovation, not only to build the facility, but also to maintain and operate the facility for the entire life of the building. The capital projects process ensures that the University’s long-term investments always are always directed to its highest priority needs.
Additionally, the capital projects process provides a consistent process for submitting, planning, and approving capital projects for General fund academic and administrative units, and ensures that all projects are approved based on the same selection criteria.
Is my unit required to follow the process and guidelines?
The Capital Project Guidelines and process apply to Ann Arbor campus General Fund units only. They do not apply to the Dearborn or Flint campuses. They also do not apply to University’s auxiliary units, which are those entities within the University that are self-supporting and do not rely on the State of Michigan for funding. Auxiliary units include the Health System, Athletics, Housing, University Unions, and Parking and Transportation.
What is required for the September 15th deadline?
All units seeking capital project approval are required to formally submit their capital project Statement of Need to the Provost’s Office by September 15th. This enables the Provost’s Office, and subsequently, the Capital Projects Committee, to review and compare unit needs against institutional priorities and resources collectively versus on a case-by-case basis. Once the Statement of Need is formally submitted to the Provost’s Office on September 15th, the Provost’s Office will spend the next few months reviewing, assessing, and comparing all unit needs. The Provost’s Office will provide the status of the review early the following calendar year in the January or February timeframe.
Can my unit complete any project under $2 million at our own discretion?
While most projects under $2 million may be completed at the unit’s discretion, there are a few exceptions:
- Renovations to space that is available for campus-wide use (e.g., Rackham auditorium)
- Conversion of space to a new function (e.g., classrooms to office space)
- Building expansions
- Changes that affect exterior elements of the building
- Changes in land use
- Proposed financing with debt
Board of Regent’s approval of all projects over $1 million is required and coordinated by Architecture, Engineering and Construction (AEC).
My unit has the funding available to cover the entire cost of the capital project. Do we need to follow the Capital Project Guidelines?
If the estimated cost of the project is less than $2 million, your unit does not have to follow the process outlined in the guidelines. However, if the estimated cost is greater than $2 million, your unit is first required to discuss the project with the Provost’s Office.
Projects over $5 million must follow the Capital Project Guidelines. While having the appropriate funding in place is vital component of preparing a successful proposal, there are a number of other factors that must be considered when approving new building construction or major renovations. The Provost’s Office and Capital Projects Committee take into consideration a number of guiding institutional principles in determining need and priority of all capital project proposals.
For projects estimated at under $10 million and 100% unit-funded, either through unit reserves or signed gift agreements, the unit can proceed with the project without going through the formal capital projects submission and review process. We do ask, however, that units discuss the project with the Provost’s Office before the project is initiated to ensure that the project aligns with institutional needs and priorities.
What if a project already underway has changed in scope and/or cost and is now a project that should technically follow the Capital Project Guidelines?
There are a number of variables that affect the final cost of a project, such as a change in the price of specific construction materials, labor related issues, or a mid-construction change in plans. Regardless of the reason for the change in project cost, it is important that the unit; Architecture, Engineering and Construction (AEC); and the Office of the Provost discuss any matters that may affect the final cost as soon as that matter arises. If the reason for the change cost is related to a change in the scope of the project, these parties would need to discuss the change well before any new plans are made.
In order to fundraise for a project, we need to show conceptual designs to prospective donors. When can my unit do this?
A unit may begin showing them to donors only after the designs have been approved by the Board of Regents and only with permission from the Chief Financial Office (CFO) or Associate Vice President for Facilities and Operations. Designs must not be shared until this permission is granted.
May I turn to external architectural firms for initial estimates or schematic designs?
All initial designs and estimates must be coordinated through Architecture, Engineering and Construction (AEC).
Who pays for the initial estimates by Architecture, Engineering and Construction (AEC)?
The unit is responsible for all costs associated with requesting and executing a capital project, including any fees assessed by AEC for preliminary estimates.
My unit does not have the funding to pay for a capital project in its entirety. What options are there for my unit?
Before any discussions of a capital project occur with the Provost’s Office, the unit should ensure that, in general, it has the financial capacity to support a capital project (including operating costs), whether that means paying for a capital project in its entirety or using a combination of funding sources to pay for the project. In most cases, capital projects are funded using the unit’s fund balances that are available for use (i.e., unrestricted funds), gifts, or grants. Additionally, the Office of the Treasurer provides consulting on financing principles and options in constructing a viable funding plan. Refer to Appendix A of the Capital Project Guidelines for more details.
What criteria used by the Provost’s Office and Capital Project Committee when selecting and approving projects?
The Provost’s Office and Capital Projects Committee take into consideration a number of guiding institutional principles in determining need and priority of all capital project proposals. At a minimum, all proposals must:
- Serve the primary teaching and research missions of the University.
- Enable the University to achieve a level of excellence that cannot be attained with existing facilities or assets.
What happens when a proposal is not approved by the Provost or Capital Projects Committee?
A capital project proposal may be rejected because an insufficient needs analysis, lack of available funding, or proposed project that is inconsistent with overall University priorities. Resubmission is possible in subsequent years.