EXHIBIT E
Capital
Budget Control Policy
1.0 Purpose:
The Capital Budget Control Policy will provide the necessary guidelines to improve the management, administration, and reporting of capital projects.
The aim of this policy is to:
1. Define
the Capital Budget reporting requirement to Council
2. Define
the process for requesting the reallocation of capital budget funds within
approved projects
3. Define
the process for closing capital projects and the transferring of unexpended
funds to reserves
4. Define
the process for the request of any new projects after the annual Capital budget
has been approved.
2.0
Capital Reporting
The Treasurer will report to Council semi-annually on the status of all capital projects. This regular reporting will provide Council with the tools necessary to make effective decisions on all capital related items requiring approval.
2.1
Status
Updates from Departments
To accurately administer the capital
budget, Finance must be aware of the status of the project. On a quarterly basis, Departments will be
required to forward to Finance an accurate, descriptive status of each
project. The status must include the
percentage of work complete and a projected forecast for completion. Departments should also disclose any third
party agreements or other situations that may delay the initiation or the
completion of the project. The
information provided for each project will be consolidated semi-annually and
reported to Council, for information purposes only.
2.2
Percentage
of Funding Encumbered to Date
The status provided by the Departments will describe the work in progress. In addition to this information, Finance will provide a summary of the encumbrances to date. This report will include the percentage of budget encumbered, the known commitments, and expenditures. The information in this report will be for information purposes only.
2.3
Requests for
Reallocation, Closed Project, and New Projects
Council will, on a semi-annual
basis, approve or deny the reallocation of capital project funds, the closing
of capital projects, and requests for new projects. Council will receive a detailed listing of
each request for the reallocation of capital funds, a detailed listing of each
project being closed, and any requests for new projects that may have been
submitted.
3.0
Reallocating
Capital Funds:
Throughout the life of a capital project there may be a need to make adjustments to the project that was originally approved. These adjustments may be to the budget dollars required or to the project scope to adequately complete the project. Reallocated funding or new funding proposed must be appropriate to the project.
The establishment of a corporate-wide contingency capital project
was approved by Council
Approved reallocation of capital funds will result in the budgets of all affected projects amended and the funding transferred to reflect the approved change.
3.1
Request for
Additional Funding of an Approved Capital Project
During the annual Capital budget process, Departments make every attempt to ensure that the budget request is sufficient to complete the defined scope of the project. Unanticipated costs may arise however, requiring additional funding. Requests for additional funding to an approved project are governed by the Expenditure Control Policy.
The request must include:
· The project name, original scope and budget;
· The amount of additional funding required
· An explanation of why the additional funding is required
· The benefits of proceeding with the project at the increased cost
· The identification of surplus funding from other existing projects, that can be re-allocated to fund the additional requirement, including an explanation for the surplus;
Or
· The identification of the contingency capital project as a source of funding will be considered by the Treasurer.
· Other funding source, if necessary
Requests for additional funding will be
included in the semi-annual report to Council for approval. Additional funding
after the project has commenced or requests that cannot be accommodated in the
semi-annual report will be taken directly to Council with the consent of the
Treasurer.
3.2
Request to
Change the Scope of an Approved Capital Project
A considerable effort is expended in assessing the capital assets of the organization and the needs of the Community in preparation for the annual capital budget. The scope of the approved project (additional works, materials or expanded mandate) may change however, as the priorities of the organization and the Community change. Departments must forward all requests for a change in the scope of an approved project to the Treasurer for consideration. The request must include:
· The project name, original scope and budget;
· The impact of not proceeding with the project as originally defined
· The scope and budget of the revised project
· The benefits of approving the revised project
· Any budget shortfall/excess
· The identification of surplus funding, from other existing projects, that can be re-allocated to fund the additional requirement, including an explanation for the surplus
Or
· The identification of the contingency capital project as a source of funding will be considered by the Treasurer.
· Other funding source, if necessary.
These requests will be included in the semi-annual report to Council for approval. Requests that cannot be accommodated in the semi-annual report will be taken directly to Council with the consent of the Treasurer.
3.3
Request to
Consolidate Capital Project(s) of a Similar Scope
Many capital projects are submitted each year as part of an asset or infrastructure repair and replacement program. These projects are not always completed within the calendar year in which they are approved. This results in multiple active projects of a similar scope. This can be cumbersome to manage and may result in expenses being allocated incorrectly. Departments may request that projects of a similar scope be consolidated. The Treasurer will consider consolidation requests that clearly outline the incomplete work of each project and their anticipated costs. Any identified budget excess will be returned to the originally source of funding. These requests will be included in the semi-annual report to Council for approval. Requests that cannot be accommodated in the semi-annual report will be taken directly to Council with the consent of the Treasurer.
4.0
Closing of
Capital Projects
The timely closing of capital projects is imperative to ensure that surplus funds are not expended unnecessarily, and to ensure that the monies are returned to their original funding source.
4.1
Capital Projects Initiated with Excess Funds
Projects are often initiated and kept open without activity for several years. Projects that remain inactive for a period of twenty-four months will be closed and the funding returned to their original funding source. A project will be considered inactive if it has no commitments or expenditures applied to it during the previous twenty-four months. Departments requesting a project remain active must present a business case to the Treasurer for consideration.
4.2
Capital Projects Uninitiated after Twenty Four
Months
The annual submissions for Capital budget approval are prepared with the assumption that the project will be completed within the calendar year. Projects that remain uninitiated twenty-four months after approval are therefore likely to have inadequate funding. The scope of the project may also have changed as the asset has aged further. Projects that remain uninitiated twenty-four months after approval will be closed. A project will be deemed uninitiated if there are no commitments or expenditures within the two year period. Departments will have the opportunity to resubmit these projects for consideration during the annual Capital budget process.
4.3
Requests for
New Capital Projects
Throughout the year, there may be the need to commence a capital project that was unanticipated during the annual capital budget process. Departments may submit their requests for new capital projects, supported by a business case, to the Treasurer. Surplus budget dollars from closed projects or the Corporate-wide Contingency Capital Project may be identified as a potential source of funding for the new project. These requests will be included in the semi-annual report to Council for approval. Requests that cannot be accommodated in the semi-annual report, due to time constraints, may be addressed directly to Council with the consent of the Treasurer.