(President 11/15/66; amended 9/93; 11/07; 2/08; 5/12; 8/7/20)
Effective August 7, 2020, this policy has been revised. For the most current version without redlining, return to V-34.
A capital improvement project provides for the construction, repair, or improvement of buildings or grounds. This includes new construction, additions, renovations, renewals, repairs, site development, utility services, extensions and plant improvements, parking facilities, roads, fixed equipment installation and similar projects. A capital improvement project is defined by the Board of Regents as a project with a total project budget over $100,000. For accounting purposes, capitalization begins with a minimum project budget of $100,000 ($50,000 actual expenses for UIHC).
For construction, repair, or improvements of buildings or grounds with a total project budget under $100,000, Facilities Management Design and Construction and UIHC Capital Management are assigned the responsibility for managing the project when design professionals and contractors are utilized to complete the work.
34.2 Approval Process
Capital improvements are developed in accordance with policies and procedures set by the Board of Regents, State of Iowa, and are accomplished by University administration in consultation with existing committees and facility users. The approval process for capital improvement projects is dependent on the project's budgeted costs and may be found in the Board of Regents Policy Manual 2.3.
New Building Construction
< $1 million
Existing Building Renovation
< $2 million
34.3 Roles in Planning and Oversight
The responsibility for accomplishing capital improvements for projects has been delegated by the Board of Regents to the University administration.
- University Business Manager. The University has assigned responsibility for coordinating the preparation of the University Business Docket including the Register of Capital Improvement Business Transactions to the University Business Manager. Based on the monetary thresholds set forth and established in the Board of Regents Policy Manual 2.3, the University has further assigned the University Business Manager responsibility for approving all capital contractual documents as well as responsibility for recommending and coordinating documents reserved for approval by the Executive Director of the Board of Regents.
- Campus Planning and Development. The University has assigned to Campus Planning and Development the responsibility for advancing the campus Master Plan. The planning responsibility associated with a capital project is either shared or further delegated in certain units or services of specialization including University of Iowa Hospital & Clinics, Utility Systems, Parking Systems and institutional roads.
- Facilities Management Design and Construction. The University has assigned to Facilities Management Design and Construction the responsibility for managing
thecapital projects from conceptdesign to completion including specific planning for project development. The planning responsibility is either shared or further delegated in certain units or services of specialization including University of Iowa Hospitals & Clinics, Utility Systems, Parking System, and institutional roads. The University Campus Planning Committee reviews, considers and advises the University administration on capital improvement activity that has an impact on the campus. Capital Projects Review Committee. The Capital Projects Review Committee has been established as an advisory committee to the University President or the president's designees for the review and evaluation of non-UIHC capital projects valued at more than $1 million. The Committee will make recommendations to the President or designees regarding the approval, modification or disapproval of proposed capital projects along with priority and timing of projects.
- Campus Planning Committee. The Campus Planning Committee reviews, considers and advises the Campus Development Team on capital improvement activity that has an impact on the campus.
- Controller's Office. The Controller's Office is responsible for
coordinating the determination ofthe capitalization, componentization, and depreciation of capital projects and for determining funding sources and monitoring applicable bond reporting compliance.
34.4 Steps in Planning, Designing, and Constructing Improvement Projects
Capital projects require initiation through
Facilities Management or University of Iowa Hospitals & Clinics Capital Management Campus Planning and Development into the Campus Development Plan. For non-hospital projects Once a capital project is approved by Campus Planning and Development, an online requisition system is required to be utilized at https://www.facilities.uiowa.edu/pdc/project-info.asp for the project to continue. After initiation, the process is managed by Facilities Management Design and Construction or UIHC Capital Management to assure conformance to Board of Regents and state requirements and to provide design and construction quality assurance.
The following is a description of the major steps in planning, designing, and constructing capital improvement projects as required by the Board of Regents Policy Manual 2.3.
- Project scope and funding source. For non-UIHC projects exceeding $1 million, establish the project scope and description and identify the funding source by completing the Capital Project Proposal Application.
- Retention of professional design assistance. Facilities Management Design and Construction shall administer
sthe process for retaining architects, engineers, and other design professionals as per the Board of Regents policy on all capital improvement projects, including the retention of professional design assistance required for studies, in support of the campus planning process. All projects exceeding $1 million require the implementation of a specific selection process prescribed by the Board of Regents. The selection of architects for recommendation to the President and the Regents is the responsibility of Facilities Management and UIHC, where applicable. Preliminary plansConstruction documents and project budget. Preliminary plansDrawings and specifications are prepared by the consultantDesign Professional or by the University's Project Manager in consultation with the users of the facility and appropriate administrative personnel. The plans areschematic design is reviewed and approved by appropriate administrative personnel. Alterations to the campus under the review authority of the Campus Planning Committee are referred to that committee for advice and comment. The site selection, preliminary plansschematic design, project budget, source of funds, and other details as appropriate are submitted to either the University Business Manager or the Regents for approval or revision, depending on the established Regents’ policy thresholds.
- Construction documents. Upon receipt of administrative and/or Regent approval of the
preliminary plansschematic design and budget, the University's Project Manager is authorized to proceed with the further development of the plansdrawings and specifications. A second review of plans may be required by the Regents at the design development stage of planning. Otherwise, planning is authorized to proceed through the preparation of final plans and specifications for the project.The final plansdrawings and specifications become part of the contract between the project contractor and University and describe what the contractor is to build for the University. The review and approval of other agencies, such as the state building code commissioner, are also obtained as required.
- Advertisement for bids. The project is advertised by the University on its website, and bids are received from contractors according to Regent policy and state law. Bids are opened and the University or the Board of Regents awards the
constructioncontract, depending on the established Regents’ policy thresholds.
- Construction. Facilities Management Design and Construction of the University,
or UIHC Capital Management,or theirits representative, oversees the construction of the project by the contractor(s). At the completion of construction, the project is accepted by the University, reported to the Board of Regents, and the user occupies the facilityreleased to the user for occupancy or use.
Total-Cost-of-Ownership Stewardship Decision Framework
The University of Iowa employs a broad project decision-making framework based on
the stewardship and total-cost-of-ownership. The total-cost-of-ownership is a composite of financial obligations consisting of the costs for the initial capital design and construction; operations and maintenance; utilities and energy; renewal; and decommissioning or demolition. To take future costs into consideration and aid decision making during the planning, design, and construction phases, the University has established the following design standards, policies, and procedures. Below are some of the policies associated with this framework. Additional University of Iowa Design Standards and Procedures may be found at the following site: https://www.facilities.uiowa.edu/design-standards-and-procedures.
- Commissioning. All new facilities and major renovations shall be commissioned. Commissioning is a process that assures that building systems are designed, installed, functionally tested, and capable of being maintained and operated based on the defined expectations. Project budgets shall support the cost for commissioning.
- Utilities capacity and infrastructure growth funding. All capital project budgets requiring approval of the Board of Regents, State of Iowa, shall include contributions to a utilities infrastructure growth fund for central boiler and chiller plants, where connection to central systems is available. Central plants provide the most cost-efficient production of utilities due to economies of scale. The offset amount apportioned to a capital project will be no more than the estimated cost to install gas-fired boilers and electric-powered chillers in the building, sized to meet building capacity, including 50 percent redundancies, which is the minimum redundancy for a stand-alone system. This offset contribution is to cover the cost of increased capacity in the central plants necessary to meet the demand created by the new and renovated facilities on campus. The provisions of this section may be appealed through the University Business Manager.
- Life cycle cost investments. All new construction and major renovations of facilities that are heated or cooled by a mechanical or electrical system shall implement the recommendations of a life cycle cost analysis. Project budgets for new construction and major renovations
mustshould support meetingthe best overall life cycle investment. Minor renovation projects must invest in conservation improvements up to a seven-year payback level. The provisions of this section may be appealed through the Capital Projects Review CommitteeCampus Development Team.
- Energy rebates. For General Education Fund (GEF)-supported facilities, the energy rebates offered on individual projects will be placed in a University energy conservation account and will be reinvested to further other campus conservation efforts that will help offset the demand created by the new project. For non-GEF facilities, rebates shall be managed by the auxiliary or by University of Iowa Hospitals & Clinics, and must be used to reinvest in energy conservation opportunities.
- Emergency power. All capital projects requiring emergency power shall include the design and installation of an emergency generator, ancillary support equipment, and connections in the scope and budget of the project. Where effective emergency power is available from a central plant, emergency power shall be furnished by the central plant and the project shall include budgeted, capital contributions to the utility enterprise for that emergency power service. The offset amount apportioned to a capital project will be no more than the estimated cost to install an emergency power generator at the building site.
LEED certification.Sustainability. The goal for all new major building and major capital renovations initiated after January 1, 2009, is to meet or exceed the U.S. Green Building Council's guidelines for silver level LEED certification. A major building is defined here as a new building or addition over 20,000 gross square feet, and a major capital renovation is defined as construction that will cost more than 50 percent of the facility's replacement value. LEED Silver refers to a certificate program by US Green Building Council's Leadership in Energy and Environmental Design (LEED) Green Building Rating SystemTM. When financially prudent, sustainable best practices in building design and site planning should be incorporated into non-major project construction and renovations.
- Campus Enhancement Program. The University created the Campus Enhancement Program to continually advance the campus landscape, public art, or other visible surface improvements that will “enhance the experience of campus community members and visitors.” This program requires all capital projects contribute to the Campus Enhancement Program fund, when the estimate for construction equals or exceeds $100,000, except for the following:
- Projects located on campuses outside of the Iowa City, Coralville, North Liberty area;
- Projects resulting from a disaster (flood, tornado, fire, etc.).
- The provisions of this section may be appealed through the University Business Manager.
34.6 Capitalization and Reconciliation
Building, infrastructure and land improvement projects with estimated budgeted cost of $100,000 or greater ($50,000 actual expenses for UIHC) are considered to be capital projects for accounting and asset valuation purposes. Projects with budgeted cost of less than $100,000 ($50,000 for UIHC) are expensed as the cost is incurred. Projects are ready to be capitalized when they are deemed to be substantially complete by Facilities Management Design and Construction for projects $100,000 and Capital Management for projects between $50,000 and $100,000. Substantial completion indicates that the building and/or system is ready for occupancy and/or use. The Capital Assets Management department will capitalize construction projects
three two times per year based on information provided by the Business Office Capital Project Accountant, Facilities Management and UIHC Capital Management.
- Buildings. The cost of buildings must include all components and additions that comprise the basic structure or function to service the building. All direct expenses necessary to put a building or structure in its intended state of operations will be capitalized, including:
- purchase or construction cost (materials, labor, direct overhead),
- professional fees (architects, engineers, commissioning, testing services, attorneys, appraisers, etc.),
- building permits,
- interest on indebtedness.
- Renovations and improvements. Building renovations must significantly increase the future economic benefits of the area being renovated and meet the $100,000 threshold ($50,000 for UIHC) in order to be capitalized. Future economic benefits are increased by extending the useful life, improving productivity, or improving the quality of service. Expenditures not meeting these criteria should be expensed. Costs associated with repetitive or ongoing building repairs, maintenance and refurbishment, such as painting, wallpapering, wall repair, floor coverings, or other preventative maintenance should be expensed. The valuation method, or the costs to include in the capitalization of renovations and improvements are the same as for buildings in paragraph a above.
- Fixed equipment. Building components such as lighting, electrical systems, plumbing, air conditioning, and elevators shall be considered fixed equipment rather than movable equipment. The cost of this fixed equipment will be capitalized with the cost of the building project and will include acquisition, transportation and installation charges. Fixed equipment may be componentized and depreciated separately from the original building project. Moveable equipment, artwork or any other type of asset that is not a building component should not be capitalized as a part of the building
- Leasehold improvements. Improvements made to buildings and other structures on property that is leased to the University are capitalized if they meet standard University capitalization policies. The valuation method, or the costs to include in the capitalization of leasehold improvements are the same as for renovations and improvements to University-owned property — see paragraph b above.
- Purchased land. Land is non-expendable, real property. The
cost to include in thecapitalization of land cost shall include sall of the costs incurred in preparing the land for its intended use. These include but are not limited to purchase price, appraisals fee, municipal assessment sfees, environmental studies, broker's commissions, legal and recording fees, title insurance and site preparation costs (including draining, clearing, and grading). Reconciliation of construction-in-progress.Construction-in-progress (CIP) review. Construction-in-Progress (CIP)CIP is the cost of capital projects that are under construction at a balance sheet date. CIP represents a temporary capitalization of labor, materials, and equipment of a construction project. Recurring review and reconciliation of CIP balances is required by the Balance Sheet Reconciliation policy and must be performed by staff with knowledge of the construction capital projects. This review will be performed by the Business Office Capital Accountant. Reconciliations will be maintained and available for audit purposes.Balances willshall remain in CIP until a constructed asset is capitalized at the time it is deemed to be substantially complete by Facilities Management as outlined within this section (ready to be utilized or occupied). Review of CIP balances is conducted by Capital Assets Management (CAM) department in conjunction with building capitalizations.
- Reconciliation of capital assets. Projects that have reached substantial completion will be capitalized from CIP to full capital assets by
the Capital Assets Management (CAM) departmentCAM. CAM will lead the effort to componentize building components as appropriate. On a quarterlymonthly basis, CAM will reconcile the capital asset balances in the PeopleSoft Asset Management system with balances in the General Ledger system. Reconciliations willshall be maintained and available for audit purposes.