CAPITAL STRATEGY
“HOW THE INVESTMENT OF CAPITAL RESOURCES CONTRIBUTES TOWARDS STRIVING FOR EXCELLENCE”
2005 – 2009
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INDEX
Page No
1. Introduction ...... 3
2. Strategic Aims – “Striving for Excellence” ...... 3
2.3.1 The priorities 4
2.3.2 The Council’s Core Values 4
2.3.3 XL Projects 4
3. Framework for Managing & Monitoring Projects within the
Capital Programme ...... 5
Investment Appraisal – Projects Definition Report (Pro forma).. .. 5
3.7.1 Starting up a project 6
3.7.2 Initiating a project for approval 6
3.7.3 Directing a project to delivery 6
3.7.4 Post Completion Review 6
Directing A Project ...... 6
Monitoring & Evaluation of Approved Projects to Delivery ...... 7
4. Prioritisation...... 7
4.1 Forward Programme 7
4.2 Initial Service Prioritisation 8
4.3 Corporate Prioritisation 8
5. Medium Term Financial Plan (MTFP)
Capital Resources 8
Revenue Implications of Capital Investment 9
6. Approach to Prudential Borrowing ...... 9
7. Approach to Leasing ...... 9
8. Approach to Public / Private Finance Initiative ...... 10
9. Key Performance Measurements and Management Innovation .. .. 10
10. Other Issues ...... 10
Procurement Strategy 10
Partnership Working 10
Cross Cutting Activity 10
APPENDIX A – A framework for successful projects 11
APPENDIX B – Investment Appraisal – Project Definition Report 12
APPENDIX C – Project Appraisal 15
APPENDIX D –The Financial Responsibilities of the Lead Officer In Capital Projects 16
APPENDIX E - Glossary 19
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Capital Strategy
“How the investment of capital resources contributes towards Striving for Excellence”
2005 – 2009
1. Introduction
1.1 The Capital Strategy is the Borough of Poole’s framework for the allocation and management of capital within the authority. The aim is to provide real benefit to the people of Poole and, through capital investment to attain our vision:
“Poole a town of opportunity of which we are proud.
We will tackle its problems, shape its development
and maintain its beauty for this and future generations.”
1.2 Following the State of the Area Debate in the Summer of 2003, Poole Partnership launched a clear, concise and compelling vision for the whole town. The Council has embraced this vision, which recognises the challenges facing the town and launched a new direction that will shape the development of services in the future.
1.3 Poole Partnership brings together key public, business and voluntary sector partners sharing the same vision for improving the well being of local communities.
1.4 The Capital Strategy covers all aspects of the Council’s capital expenditure. It compliments other agreed strategies and policies such as the Housing Investment Programme, the Economic Development Strategy, Local Transport Plan, the Education Development Plan, the Education Capital Strategy and Community Care Plan and must be referred to when setting, reviewing or updating operational strategies and when committing the Council’s capital resources.
2. Strategic Aims – “Striving for Excellence”
The Council is clear about its long term priorities.
2.1 Poole has enjoyed a strong, mixed economy for many years, there has been low unemployment, good health, a world class environment and good services recognised by the Audit Commission’s Comprehensive Performance Assessment (CPA) process.
2.2 This position could be under threat; our population is ageing faster than the national average; our special environment is under increasing pressure; the cost of housing is a real concern for many people, especially the young.
2.3 The Council has identified a number of long term issues that have an impact on the future balance of the town. The Council wants to provide leadership in dealing with them and grasp the opportunities on offer. The priorities provide a sense of direction for the Council and our work with our partners by being clear about what is important in further improving quality of life and securing the future of the town.
2.3.1 The priorities are:
i) Supporting young people – giving them the best possible start in life
ii) Vibrant economy – balanced, strong and sustainable
iii) Clean, green and safe – making a difference to our environment
iv) Strong sense of community – encouraging togetherness and shared action
v) Health and well – being – helping people to keep fit and active
To deliver these priorities the whole Council is looking at them and making sure they are reflected in all business plans and work with partners.
2.3.2 The Council’s Core Values support the way the business is operated:
i) Public Focus – we put the public first
ii) Efficiency – we strive to be efficient in everything we do
iii) Openness – we do things openly and honestly
iv) Partnership – we will work with others to make Poole a better place
v) Leadership – we will make difficult decisions about the future of Poole
vi) Equality – we will promote equality of opportunity for the benefit of all.
In addition the Council is leading a programme of strategic improvements, XL Projects, which together will exploit the opportunities and make a step change to the quality of life in Poole.
2.3.3 These XL Projects being:
i) Customers First – a commitment to be a Council that is easy to do business with, at a time and in a way that suits the customer.
ii) Full Sail Ahead – regeneration with an emphasis on the Twin Sails bridge, providing more jobs, affordable housing and a vibrant Town Centre with new public waterfront.
iii) Schools for the Future – a central role in the life of communities delivering improved standards and opportunities and a wider community involvement.
iv) Poole Connects – Active Communities – effective new partnerships empowering communities and building local enthusiasm, identity and decision making.
v) Pride in Poole – working with the community and partners to care for our environment and build our pride in the town.
2.4 How resources are used, including the prioritisation of capital expenditure is key to the delivery of the Council’s ambitious plans as it is “Striving for Excellence.”
3. Framework For Managing & Monitoring Projects Within The Capital Programme
3.1 The Capital Programme consists of both projects and allocations of forecast spend. Allocations include resources identified for third party delivery of outcomes i.e. grants, including Housing renovation and devolved funding for schools.
3.2 The framework set out for projects within the strategy applies to schemes, which have a specific beginning and end date and have specified outcomes.
3.3 A capital project is defined as an individual capital scheme which may form part of a programme of capital works and is in excess of £50,000.
3.4 A framework for successful projects is outlined in diagrammatic format in Appendix A.
Investment Appraisal - Project Definition Report (Pro forma)
3.5 At instigation all projects are required to complete a Project Definition Report pro forma (Appendix B) for all investment over £50,000.
3.6 The Project Definition Report is intended to support a multi stage process covering “Starting up a Project” to “Post Completion Review”.
3.7 There are many stages to the development of a project. The Project Definition Report is designed to enable versions to be approved by Management Team as the project progresses. These will cover:
3.7.1 Starting up a project -“Determining the Best Way Forward”
This will include:
i) Description of Scheme
ii) Project Brief
- The purpose of the project (objectives)
- Outline of scope and activities envisaged
- Benefits anticipated (Outcomes)
iii) Project Personnel requirements
iv) Role & Responsibilities
- “Who is responsible for what”
v) Developing the Business Case - “Assessing Options”
vi) Business Benefits include:
- Analysis of perceived cost and benefits (“Whole life”)
- The ongoing revenue costs and/or income impact to the Council associated with the project.
vii) Risk Assessment & Actions Proposed
viii) An Option Appraisal
- Alternative solutions and procurements are considered and evaluated
3.7.2 Initiating a project for approval -“Ensuring delivery will be on time and within budget”. This will include final detail to enable formal approval and release of budget resources for project “go - ahead”:
i) Planning Project – detail plans developed
ii) Refined Business Case – detail clear and professionally supported
iii) Control Set up
- Risk Assessment undertaken
- Project Team (Roles & Responsibilities) finalised
- Technical support details (e.g. Quantity Surveyor report)
3.7.3 Directing a project to delivery – “Plans are being adhered too”
i) Proper management arrangements are in place.
3.7.4 Post Completion Review – “How have objectives been achieved?”
i) At the end of all projects a post completion review will take place. This will include:
- Outcomes of the Project
- Actual costs compared to budget
- Milestones achieved
ii) As projects progress they are appraised at all stages by Management Team, against established criteria (Appendix C).
iii) Feasibility funds are corporately made available to develop the investment appraisal if necessary from the stage of starting up a project to initiating a project. Approval is via Cabinet supported by Management Team and the established monthly corporate monitoring process .
Directing A Project
3.8 All projects over £250,000 require the approval of Council for inclusion within the Capital Programme.
3.9 Members of Cabinet will make recommendations to Council on projects to be included within the Capital Programme.
3.10 Individual projects within a programme of works exceeding £50,000 require the approval of Cabinet.
3.11 A second stage investment appraisal will be required to support all proposals included within the capital programme, budget release will only take place after this stage.
3.12 Details of Project Management arrangements will be required in support of all projects over £50,000.
i) Prior to commencement of a project over £50,000 the Council’s Corporate Management Team will ensure that appropriate project management arrangements are in place and that a Responsible Officer is identified (Appendix D).
Monitoring & Evaluation Of Approved Projects To Delivery
3.13 Responsible Officer may delegate the management of the project to a Project Manager, but they cannot delegate their absolute responsibility.
i) Where a Project Manager is used there needs to be evidence that their skills and experience correspond to the requirements of the job.
3.14 Responsible Officers will be responsible for undertaking regular reviews and reporting to Cabinet any necessary actions.
3.15 Responsible Officers will ensure all changes within the project are captured, logged, assessed and the decision is properly recorded and referred to the appropriate decision making body.
3.16 Responsible Officers will submit regular financial and performance monitoring reports to Portfolio Holders/Policy Directors.
3.17 The Head of Financial Services will provide regular monthly reports to Cabinet and the Senior Management Team outlining resource allocation and progress.
3.18 All capital projects can be reviewed at any stage. The Responsible Officer will ensure that all documentation (i.e. Investment Appraisal Project - Definition Report) kept around each capital project is sufficiently clear to enable a competent third party to review the project with minimum additional explanation.
3.19 At the end of a project the Responsible Officer will undertake a post completion review to evaluate how effectively its original objectives and performance indicators have been met. This report will be made available to the Council’s Scrutiny Committee.
4. Prioritisation
4.1 Forward Programme
i) The authority’s Medium Term Financial Plan is based on a 4 year rolling programme.
ii) The prioritisation process ensures that the programme is informed by the outcome of all relevant reviews and improvement/development plans.
iv) Additionally, corporate property requirements are identified through the Asset Management Planning process.
4.2 Initial Service Prioritisation
i) Each year within the Council’s business planning process Service Heads draw up their capital investment plans, in accordance with service needs and objectives, prior to developing a prioritised list of the service requirements.
ii) The Capital Spending Service Heads are required to liaise closely with the Corporate Property Service Head, who utilises information from the corporate and Service Asset Management Plans and advises on project appraisals.
4.3 Corporate Prioritisation
i) Through consultation, Portfolio Holders/Members of Overview Groups and key partners advise service officers on the projects which the services wish to put forward for inclusion.
ii) A corporate prioritisation exercise is undertaken to compile a corporate list of projects for approval within the capital programme.
iii) A corporate resource strategy is developed to support both service strategies and the Council’s XL projects.
5. Medium Term Financial Plan (MTFP)
Capital Resources
5.1 The Capital Strategy has been prepared in the full knowledge that resources to fund the necessary investment may not come directly through capital allocations of the authority. Currently the Council’s own allocations support approximately 30% of the total programme.
5.2 It is inevitable given the limitations on funding that capital resources are prioritised and the Capital Strategy provides a framework for this.
5.3 The MTFP articulates the Council’s Capital Strategy over a 4 year period.
5.4 Currently the Council project resources forward for 4 years excluding external resources to the Council. External resources include Supported Capital Expenditure allocations both from the single capital pot and separate programme element.
5.5 The anticipated level of useable capital receipts incorporated into the projections relates to the corporate “pot” only, as defined by the Council’s own rules, and totals on average around £800,000 per annum.
5.6 In addition to useable capital receipts a corporate revenue contribution to capital of £1.2 million is anticipated.
5.7 Total projected Council resources of £2 million supports an annual programme of, on average, £8.5 million.
Revenue Implications of Capital Investment
5.8 Costs of Borrowing or loss of Investment
The Medium Term Financial Plan will build in the impact of Capital Expenditure over a 4 year period.
5.9 Running Costs
Ongoing revenue costs and/or income form part of the business case appraisal and are built into the Medium Term Financial Plan as projects are approved.
6. Approach To Prudential Borrowing
6.1 The Council’s approach to prudential borrowing is to support decisions to invest that are affordable and represent both a prudent and sustainable level of capital investment.