CAPITAL PROJECT OVERVIEW

OBJECTIVES

• To understand plant fund policies and procedures

• To determine when a plant fund is appropriate

• Complete the Project Establishment Form correctly

• Assist with maintenance and completion of projects

2

GENERAL INFORMATION

• Purpose: Track expenses related to construction,

renovation, repair, replacement, major equipment

purchases, or fabricated equipment on a plant WBS

element (“plant fund” or “project”)

• Business Procedure Manual References:

• BPM E-3-1: Unexpended Plant Fund Policy http://www.uky.edu/ufs/sites/www.uky.edu.ufs/files/bpm/E-3-1.pdf

• BPM E-3-2: Minor Renovation Policy http://www.uky.edu/ufs/sites/www.uky.edu.ufs/files/bpm/E-3-2.pdf

• BPM E-3-3: Fabricated Equipment Policy http://www.uky.edu/ufs/sites/www.uky.edu.ufs/files/bpm/E-3-3.pdf

3

DEFINITIONS

• Fabricated equipment: Construction of a single piece of capitalizable equipment by UK personnel from several smaller vendor purchases

• Funding: Transfer of funds to the plant fund for expenses using Transfer GLs via Journal Voucher (JV)

• Legislative Authority: Projects authorized by the Kentucky General Assembly (GA)

• Overdraft: Posted expenses exceed funding

• Plant fund: WBS element beginning with “4” where capital project revenues and expenses are recorded and tracked for the life of the project

• Responsible Person: Contact for project issues

• Scope: Total budget to complete the project, supported by quotes or invoices

4

PROCEDURES

1. Determine need for construction, renovation, repair,

purchase of equipment, etc.

2. Obtain quotes or estimates

3. If the project total meets the applicable dollar

threshold, a plant fund should be used

• Fabricated equipment: $5,000 or more

• Construction, renovation, repair, replacement: $100,000 or more

• Major equipment purchase: $200,000 or more

• Software purchase or development: $400,000 or more

4. Complete Project Establishment Form and obtain

approvals as required by area

5

PROCEDURES, CONT.

5. Submit Project Establishment Form to Accounting &

Financial Reporting Services (AFRS) with supporting

documentation and funding JV

6. Capital Projects Accountant creates the WBS element

in SAP, establishes the budget, posts the funding JV,

and notifies those involved/responsible for the project

7. End user charges all expenses related to the project

directly to the plant fund WBS element

8. Notify Capital Projects Accountant when project is

ready to close

6

LEGISLATIVE AUTHORITY

• Authorization is required if the project scope meets the

applicable dollar threshold

• Construction, renovation, repair, replacement: $1,000,000 or more

• Information technology (IT) systems: $1,000,000 or more

• Major equipment purchase: $200,000 or more

• References

• UK Administrative Regulation (AR) 8:2, Policies and Procedures

for the Approval of Capital Projects https://dib.uky.edu/regs/sites/www.uky.edu.regs/files/files/ar/ar8-2.pdf

• Kentucky Revised Statutes, Capital Projects and Bonds section

• KRS 45.750: http://www.lrc.ky.gov/statutes/statute.aspx?id=44897

• KRS 45.760: http://www.lrc.ky.gov/statutes/statute.aspx?id=39786

7

LEGISLATIVE AUTHORITY, CONT.

• Major construction projects with scopes of $1,000,000

or more are generally managed by the Capital Project

Management Division (CPMD)

• Work performed by internal departments (Campus or

Medical Center Physical Plant Divisions, Information

Technology Services, or Agriculture Facilities

Management) must not exceed $999,999

8

LEGISLATIVE AUTHORITY, CONT.

• Questions should be directed to the below contacts

prior to initiation of projects or any changes

• University Budget Office (UBO)

• Laurie Sorg

• Elizabeth Baker

• Area Capital Coordinators

• Departments beginning 1 or 9 - UBO

• Departments beginning 3, 7, or 8 – Gus Miller

• Departments beginning 4 – Judy Duncan

• Departments beginning H or M – Teresa Centers

• Any IT projects – Karen Willmott

• Any Athletics projects – Russ Pear

9

EXAMPLE OF STUDENT CENTER PROJECT

Legislative Authority: 2014-2016 Capital Budget

Authorized project scope: $175,000,000

10

PROJECT ESTABLISHMENT INSTRUCTIONS

1. Project Establishment Form

2. Supporting documentation

3. Funding JV

11

1. PROJECT ESTABLISHMENT FORM

• Project Establishment Form on UK eForms website: http://www.uky.edu/ufs/sites/www.uky.edu.ufs/files/eforms/Pr

oject%20Establishment%20Form.pdf

• Project Establishment Form Instructions on UK eForms

website (hyperlink also provided on the PDF form): http://www.uky.edu/ufs/sites/www.uky.edu.ufs/files/eforms/Pr

oject%20Establishment%20Form%20Instructions.pdf

12

13

Section 1 and 2

completed at the

department level

Section 3 for AFRS

use only

SECTION 1: PROJECT INFORMATION

14

Department must complete all fields in Section 1

Note: Many items have helpful tips when cursor is hovered over the PDF field

15

• Project Title: Name of the project

• Start Date: Date the project will begin

• End Date: Estimated date the project will be complete

• Location: Building name and number, including room

numbers if applicable

• Campus Guide: http://www.uky.edu/CampusGuide/

• Capital Assets Accounting: http://www.uky.edu/ufs/capital-assets-

accounting

16

• Business Area: Select appropriate area for which the project

applies from the drop-down menu

• Functional Area: Select 1060-Other Maintenance and

Operation Expense from the drop-down menu

• Exception: Auxiliary Enterprises, such as Athletics or Hospital, use

the appropriate area for which the project applies. Listing available

under BPM E-17-16: Chart of Accounts-Functional Area: http://www.uky.edu/ufs/sites/www.uky.edu.ufs/files/bpm/E-17-16.pdf

• Department Number: Five digit code designating the

academic or support unit for which the project applies.

• Listing available under BPM E-17-7: Departmental Codes: http://www.uky.edu/ufs/sites/www.uky.edu.ufs/files/bpm/E-17-7.pdf

17

• Responsible Person: Name of contact for project issues

• Responsible Cost Center: Capital cost/funds center for the

department, usually begins with 1412-• Search SAP t-code ZFI_COBJ by department number

• Requesting Cost Center: Based on area performing work and creating/approving orders• Campus Physical Plant Division (PPD) – 1043801050

• Capital Project Management Division (CPMD) – 1043800150

• Medical Center Physical Plant Division (MCPPD) – 1043800470

• Information Technology Services (ITS) – Cost center funding project

• Vendor/Ag Facilities Management (Ag FM)/Other – Cost center funding project

EXAMPLE OF STUDENT CENTER PROJECT

18

19

• Work to be performed: Explain what the project entails

• Classification of space: Select yes or no based on whether

the current space will be modified for a different use and

explain (i.e. classroom to lab, lab to offices, etc.)

• Upgrades: Select yes or no based on whether the

renovation, new item, etc. is an upgrade when compared to

what currently exists and explain

• Example: Additional features, more capacity, etc.

• Not an upgrade: exact replacement, only new

• Justification of request: Explain the purpose of the project

20

• Legislative Authority: Must obtain proper approval and

provide documentation if applicable. Some information will

be included as part of the WBS element’s properties:

• Legislative Authority: Biennium dates (i.e. GA 2016-2018)

• Legislative Authority Date: Beginning of biennium (i.e. 7/1/2016 for

the 2016-2018 Biennium)

• Board Date: Date of Board of Trustees or UBO approval

SECTION 2: ESTIMATE/FUNDING INFORMATION

21

Department must complete all applicable fields in Section 2

Note: Many items have helpful tips when cursor is hovered over the PDF field

22

• Quotes/estimates should be obtained prior to submitting a

Project Establishment Form and are summarized in Section 2

• Enter the information on the appropriate line in relation to

the quotes/estimates received from an area for the project

• Campus Physical Plant – PPD

• Capital Project Management – CPMD

• Info Technology Services – ITS

• Med Center Physical Plant – MCPPD

• Vendor/Ag FM/Other – External vendor, College of Agriculture

Facilities Management, or other source not provided

23

• Estimated Amount/Scope: Total of all estimates/quotes by

area performing work

• Amount Funded: Total amount funded for each area, must

equal the total scope unless approved exception to full

funding exists

• Project Total: Total of Estimated Amount/Scope and

Amount Funded

EXAMPLE OF STUDENT CENTER PROJECT

24Note: Exception to full funding since the project has funding of $160,000,000 in bond proceeds

25

• Signatures are required prior to submitting the Project

Establishment Form and should follow the approval

guidelines as determined by area

• Area Fiscal Officer/Sr. Vice President is determined by

the beginning of the department number:

• 1, 3, or 9 – Anthony Russell, Brad West, Roxanne McLetchie

• 4 – Judy Duncan

• 7 or 8 – Angel Reed, Gus Miller

• H or M – Teresa Centers

SECTION 3: WBS ELEMENT INFORMATION

26

FOR AFRS USE ONLY

Note: Many items have helpful tips when cursor is hovered over the PDF field. This section is for AFRS use,

but all fields are available for entry if the department has the information available.

2. SUPPORTING DOCUMENTATION

• Total scope must be supported with vendor quotes,

PPD estimates, etc.

• Documentation or Project Establishment Form must

provide sufficient information regarding the work to

be performed

• Indicate any special instructions, such as funding by

multiple sources with specific allocation, grant-

funded, etc.

• Approval for exception to full funding if applicable

• Legislative authority if applicable

27

EXAMPLE OF STUDENT CENTER PROJECT

28

Estimate/Budget from CPMD

3. FUNDING JV

• Park one-sided JV by entering only the debit entry to

charge the cost center funding the project

• Use Transfer GL account 755030 (Transfer to

Unexpended Plant Funds) for the debit

• JV amount must equal the total scope unless an

exception has been approved for partial funding

• Upon creation of the plant fund WBS element, the

Capital Projects Accountant will add the credit entry

for posting

• Projects funded by grants do not require a funding JV

29

EXAMPLES OF STUDENT CENTER PROJECT

30

1. One-sided JV for funding from one source only:

2. One-sided JV for funding from multiple sources:

ONGOING PROJECTS

1. Expenses

• Pro-card, purchase order, etc.

• Plant fund should be charged directly in the WBS element field,

not cost center or grant

• Any charges erroneously posted to a cost center or grant must

be transferred from that cost center or grant to the plant fund

WBS element in order to properly track project expenses,

regardless of original posting date

• PPD or ITS work orders

• Area performing work charges plant fund directly

• Settlements and direct billings generally post at month end

31

ONGOING PROJECTS, CONT.

2. Scope changes

• Notify the Capital Projects Accountant and provide

supporting documentation for the increase or decrease

• Increases – a funding JV for the increase amount should

be submitted with the documentation so project funding

equals the scope

• Decreases – the difference will be returned to the cost

center that originally funded the project so funding

equals the scope (or allocated appropriately if funded by

multiple sources)

32

ONGOING PROJECTS, CONT.

3. Overdrafts

• Not permitted – must be funded by month end

• Capital Projects Accountant will contact the Responsible

Person for funding before monthly closing

• Grant-funded projects – funds are drawn from the grant

on a monthly basis to reimburse the plant fund (cover

overdrafts as they occur), no action required unless there

are issues with the grant

• Persistent overdrafts may result in the project being

locked to prevent additional expense postings while

there are insufficient funds

33

ONGOING PROJECTS, CONT.

4. Funding JV• Similar to the initial funding JV, the department should

debit their cost center with GL account 755030

• Following standard Transfer guidelines, the plant fund WBS element should be credited with the appropriate GL account that corresponds with the debited cost center• Example: Funding a project from a Restricted 1215- cost center

results in a credit to the plant fund WBS element with 740100 (Transfer from UK Restricted)

• AFRS links for assistance: http://www.uky.edu/ufs/accounting-and-financial-reporting• Transfer Accounts – list of all transfer GL accounts

• JV Hints – see TRANSFERS at end for general information

• Amount on JV must equal the amount of the scope increase or overdraft

34

ONGOING PROJECTS, CONT.

Review plant fund transactions in SAP

• T-code: CJI3

• At prompt, select Database Profile: 000000000001

• Select Variant: CAMPUS

35

ONGOING PROJECTS, CONT.

• Enter plant fund in “WBS Element” field, then Execute

36

ONGOING PROJECTS, CONT.

• Detail is similar to KSB1 for cost centers

• Actual postings are displayed

• Encumbrances (PO, JV, etc.) are not shown

• Drill-down into transactions

• Overall credit balance – project has sufficient funding

• Overall debit balance – project is in overdraft

37

ONGOING PROJECTS, CONT.

Review plant fund budget vs. actual in BW

• FI Financial Accounting – Funds Management/Budget

Control – Capital Projects Budget vs Actual

• Enter Fiscal Period/Year and Funded Program (WBS)

• Overview of expense and encumbrance totals to date

38

PROJECT COMPLETION

• Notify Capital Projects Accountant when the project is

complete to close out

• There should be no encumbrances such as open

purchase orders

• Excess funding will be returned to the cost center that

originally funded the project if applicable

• When funding is split between multiple sources, the excess

amount will be returned based on the original funding allocation

• Plant fund WBS element will be locked, with no further

posting allowed

39

QUESTIONS

• Accounting & Financial Reporting Services

• Chantal Le Rutter, Capital Projects Accountant

Phone: 257-6242 | Email: c.ler@uky.edu

• Bill Coleman, Capital Assets Accounting Manager

Phone: 257-1111 | Email: william.coleman@uky.edu

• Area Capital Coordinator

• Area Fiscal Officer

• Department performing work

• Campus Physical Plant Division: http://www.uky.edu/facilities/CPPD

• Medical Center Physical Plant Division: http://ppdmc.uky.edu/

• Capital Project Management Division: http://www.uky.edu/cpmd/

40