POLICY OBJECTIVE

To administer public works contracts under the authority given the Trustees in the Public Contract Code including those sections, referred to as The California State University (CSU) Contract Law.

POLICY STATEMENT

Reference: Executive Order No. 672 February 1, 1995

The capital outlay process for the California State University was restructured effective fiscal year 1997/98. Executive Order No. 672, delegated capital outlay management authority to campus presidents (July 25, 1997). Beginning with that fiscal year the Chancellor’s Office began receiving funding for two categories of projects, streamlined and nonstreamlined. Streamlined projects typically receive funding for preliminary plans, working drawings, and construction in one fiscal year and are governed by provisional language in the appropriation. These projects must be submitted to the Board of Trustees for approval of schematics and completion of each subsequent phase must be submitted to CPDC as detailed below. Nonstreamlined projects must also submit schematics to the BOT for approval, are governed by Section 2 of the Budget Act, the DOF must approve allocation of funds for each phase, and the PWB must approve preliminary plans.

Major Restructuring elements

• Campus presidents received authority to manage all approved capital outlay projects from initial funding through completion of the project (E. O. No. 672).
• With delegation, campuses may contract for all services, including construction contracts.
• CPDC will continue to maintain its policy and budgeting role in the development, processing and administration of the systemwide annual capital outlay program and five-year capital improvement program. CPDC will also provide consultation to campuses on matters of design and construction management.
• Increased capital outlay financial management authority through a single appropriation and lump-sum funding (preliminary plans, working drawings, construction, and maybe equipment) for each capital outlay project.
• Approval of alternative project delivery methods.
• A streamlined professional appointment and project approval process (E.O. No. 666)

Program Accountability

A process has been established to ensure that campuses that have delegation authority are prepared to manage a complex program. The process consists of four accountability measurements that allow the chancellor’s office to establish campus eligibility, monitor project development, evaluate performance, and mitigate budget problems through strict financial accountabilit y. The four measurements are:

I) Certification of Eligibility

Each campus must be certified to qualify for delegation. This is accomplished through a Certification Review Board (CRB). This board reviews and evaluates campus Capital Outlay Management Plans that define the campus organizational, operational structure and expenditure authority. Upon review, the board recommends certification to the executive vice chancellor and chief financial officer of Business and Finance. Updated plans shall be submitted every 2 years and/or when campus operational structure changes are made which impact the management plan.

Certification is continuous unless a post project performance review determines that problems exist due to negligence of the campus in the management of the capital outlay process. The CRB may recommend the campus be placed on probation in order to allow them the opportunity to remedy the operational/management deficiencies. If the review of a subsequent project evaluation indicates these types of problems and board recommended corrective remedies couldn’t be implemented by the campus, the board may recommend to the executive vice chancellor and chief financial officer of Business and Finance that certification be withdrawn.

II) Project Development Compliance

Campuses that have delegation authority are required to submit the following to their CPDC Facility Planner:

At completion of each phase; schematics, preliminary plans, and working drawings:
• A letter certifying project is within scope and budget, including any corrective action required to keep the project within the established scope, budget and schedule
• Set of Plans and Specifications
• Architect’s Cost Estimate
• Room Summary (CPDC 3-1)
• Current CPDC Form 2-7 and CPDC 2-7.5
• CEQA compliance documentation (schematic phase only)
When proceeding to bid:
• All items listed above, and,
• If applicable, a list of allowances and/or alternates
• A statement of Finances Prior to Bid
At award of construction contract:
• A complete set of bid documents
• Abstract of Bids
• Statement of Finances After Receipt of Bids
• CPDC Form 2-7 at award.
A milestone checklist for each project will be distributed to the vice president with the project allocation notice for their internal use.

III) Post Project Performance Review

The management of capital outlay projects is reviewed and an evaluation of the outcome is measured against a set of performance criteria. These are intended to identify any management issues that require correction or may be a cause for
reconsideration of the delegation authority. The criteria to be used are as follows:

• Time related to the overall process, and for each phase of the total project cycle.
• Resources required to complete the project, compared to original budgets, project architect’s estimate, construction estimates, and actual costs. Projects may be compared to similar types for validation of actual cost.
• Changes that are required including number, type and amount of change orders. These should also be expressed as a percent of the construction contract. Change-of-scope items processed and number of addenda processed during bid phase should also be listed.
• Claims against the project, including the number and amount. Claims should also be expressed as a percent of the construction total. Additionally, this criterion would describe the method used for settlement, i.e., negotiated settlement in construction, Claims Review Board process, mediation, arbitration or litigation.

Capital Planning, Design and Construction will conduct the performance reviews for all capital outlay projects. The results will be reviewed with the campus for their comments prior to the final performance review submittal to the Certification Review Board. The level of review for projects will be dependent on the previous review of campus project management. The performance review will be sent to the campus vice president.

IV) Financial Accountability

Financial accountability for each project must be maintained. Criteria to be used are as follows:
• Campuses will be required to use every means available to fund excess budget requirements during project development and implementation. This may involve the use of local resources or the elimination of non-essential project elements (value engineering).
• Augmentations for budget overruns are not available from the State for streamlined projects. Augmentations from local sources should not exceed 10% of the project budget. .
• Augmentations for nonstate funded projects are the responsibility of the campus and are not restricted to the 10% limit of the project budget.
• Campus participation in the CSU Construction Claims Program is required for all State funded capital outlay projects. Its purpose is to provide a source of funds to resolve construction claims resulting from streamlined projects. The source of funding is 1% of the construction contract value at award.
• The use of the Claims Program fund is to be considered after all attempts are used to resolve and minimize the claim. Claims should be handled either through negotiated settlements during construction or the Claims Review Board process. CPDC staff will facilitate this process and provide consultation to campuses in order to resolve claims issues and avoid litigation.

APPLICABILITY AND AREAS OF RESPONSIBILITY

REVISION HISTORY

RESOURCES AND REFERENCE MATERIALS

Useful Guidelines:

Related Principles:

Sound Business Practices:

Laws, State Codes, Regulations and Mandates:

COGNIZANT OFFICE(S)

CO Manager:

Nancy Freelander-Paice
Executive Program & Fiscal Manager, CPDC AVC Office
CSU Office of the Chancellor
nfreelander-paice@calstate.edu

Subject Expert: