The University of Alabama, Division of Finance and Operations

Establishing and Expending Construction Project Budgets Policy

Unit:  Campus Development
Contact: Tim Leopard
Title:  Senior Associate Vice President
Effective Date: 7/1/2012
Revision Date: 07/01/2013


 
 

Purpose

The purpose of this policy is to specify the guidelines to be followed when establishing budgets and expending funds for construction projects (“Projects”). This policy is set forth to comply with Rule 415 as set by The Board of Trustees at The University of Alabama (hereafter referred to as the “Board”). The goal of this policy is to establish consistency of budget estimations as well as ease of review of project budgets.

Policy

Funds that have been dedicated for projects are derived from a variety of sources. These sources include: University bonds, Public School and College Authority (PSCA) or state provided bonds, gifts, deferred maintenance funds, plant funds, and reserve funds. The University of Alabama’s philosophy is that capital project funds should be primarily for brick and mortar structures and landscaping/hardscaping/lighting or hard construction costs. In general, construction and contingency should represent the majority of the total project cost which is the equivalent of 85% or higher of the total project budget.

The term “Projects” refers to all construction projects administered by Construction Administration. Capital projects are long-term investment projects that require larger sums of monies to fund new construction and additions and renovations that will improve existing facilities. Capital projects may also include infrastructure and land improvement projects, such as: road projects, storm water drainage, utility projects, parking lots, and decks. In some cases, equipment purchases may be considered capital projects.

Project Managers must follow the instructions set forth in the “Procedures for Establishing and Expending Construction Project Budgets” document found on the Finance and Operations Policy Website.

Projects that Must Be Approved by the Board of Trustees

Buildings and other infrastructure projects with a total project cost greater than $750,000 must be approved by The Board of Trustees of The University of Alabama (the “Board”). Additionally, all projects (regardless of cost) which substantially impact the visual appearance of the University or that involve historically significant or otherwise notable structures, as determined by the Chancellor or designee, must be presented to the Board for review and approval. Also, equipment purchases (either as a group for a particular project or as a single item) that exceed $500,000 must be approved by the Board.

Exceptions

Exceptions to the rule on equipment purchases may exist if the project is funded from grant or sponsored program funds. Departmental projects that are not designated as construction projects such as large software projects (over $100,000) will be provided oversight by Financial Accounting and Reporting (FAR).

Records Retention:

The University has adopted a record retention policy for projects that are funded with tax-exempt funds. Documentation should be maintained for the entire terms of the bonds issued plus three years after the bonds have matured. If the bonds are refunded in later issues, the combined term of the issues plus three years will be the required retention period. For example, if bonds were originally issued in 2004 and refunded in 2012, the record retention period would be through 2045 (2012 plus 30 years plus 3 additional years).

Unallowable Expenses for Construction Projects:

 Due to fiscal responsibility, some items that are allowable per the University Spending Policy may not be allowable items for construction projects. Thus, this policy provides guidance to assist in identifying operating expenses that are not allowable on construction projects. Below are the guidelines that will assist in identifying operating expenses that are not allowable on construction projects. While the list is not all inclusive, it does capture the majority of items that should not be charged to capital and construction project budgets. If project managers are not clear on whether a particular type of expense is allowed, they should contact Business Administration for Construction and Physical Plant (BACPP) to obtain a final determination. Items will be added to this list as they are discovered and researched:

  • Meal and entertainment expenses
  • Promotional items (articles of merchandise, generally with a logo such as the University and/or other types of corporations, businesses, etc.), used in marketing or advertising. Examples include T-shirts, caps, tote bags, imprinted pens, and key chains.
  • Travel, unless specifically approved by The Office of the Vice President for Finance and Operations and Treasurer
  • Personal items including clothing, rewards, electronics, decorations, etc.
  • Purchase of vehicles, trailers, fork lifts or similar equipment as well as any maintenance costs associated with these items
  • General and administrative costs normally charged to the operating budget such as office supplies, cleaning supplies, removal tools, etc.*
  • Payroll charges not specifically identified to a particular project
  • Computer software and/or software upgrades used for operations
  • Moveable FFE for all Student Organization projects (i.e., Fraternity and Sorority housing)

*Exception: Consumable office supply costs (e.g. toner, copy paper, pens, etc.) directly associated with an on-site project office may be charged to the construction project, provided appropriate documentation is maintained to indicate the related project.

Violations

Violations of this policy will be handled according to the University of Alabama Employee Handbook.

Specific procedures for the different types of budget line items that are specified for University construction projects can be found in the “Procedures for Establishing and Expending Construction Project Budgets” on the Finance and Operations Policy Website.

Scope

This policy applies to UA employees and contractors.

 
 

Office of the Vice President of Finance and Operations

Approved by Cheryl Mowdy, Assistant Vice President for Finance and Operations, 07/01/2013