HomeMy WebLinkAboutFND-008-06
Cl~glOn
REPORT
FINANCE DEPARTMENT
Meeting:
GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
JUNE 5, 2006 Resolution #: fPA - ,P..7g~Ob
Date:
Report #: FND-008-06
File #:
By-law #:
Subject:
CAPIrAL PROJECT OVEREXPENDITURE POLICY
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report FND-008-06 be received; and
2. THAT the attached Capital Project Overexpenditure Policy be endorsed.
Reviewed b~~~
Franklin Wu,
Chief Administrative Officer.
NT/hjl
REPORT NO.: FND-008-06
PAGE 2
BACKGROUND AND COMMENT:
1.0 As Council is aware, all capital projects are approved through the annual capital
budget process or in extenuating circumstances by a direct report to council.
Once the budget or council report is approved, the capital project proceeds
through the process outlined in the purchasing by-law based on the dollar value
of the project.
1.1 At the June 5, 2006 General Purpose and Administration Committee meeting,
Council is considering the adoption of a new purchasing by-law through a report
from the Corporate Services Department. A section of the proposed new by-law
reads as follows:
Subsequent to the award of the Contract to the lowest Responsive and
Responsible Bidder, the approval of any over expenditure shall be in accordance
with the Corporation's approved Finance Policy...
1.2 Until now, the policy for monitoring and approval of overexpend itu res for capital
projects was informal. Every capital project is monitored throughout the year by
Finance staff to track budget vs. actual values. It has been determined on a case
by case basis whether additional financing is required. In those circumstances
the applicable department would be required to obtain Council authorization for
the additional funding.
1.3 As a result of the update to the purchasing by-law, it is opportune timing to
formalize the policy for overexpenditures on capital projects.
1.4 It is recommended that the attached policy be approved as the Finance Policy for
Capital Project Overexpenditures.
Attachment "An - Finance Policy for Capital Project Overexpenditures
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1C 3A6 T (905)623-3379 F (905)623-4169
ATTACHMENT 'A'
Municipality of Clarington
Administrative and Corporate Policies
SUBJECT: CAPITAL PROJECT APPROVED BY:[8J Council
OVEREXPENDlTURES 0 C.A.O.
SECTION: H SUBSECTION: Hll DATE APPROVED: DATE UPDATED:
APPLICATION: [8J All Employees 0 Non-Affiliated Employee
0 Affiliated Employee 0 Other:
Purpose:
To provide for authorization of overexpenditures on an approved contract by the Department Head and to authorize Director
of Finance, CAO, and Deputy Treasurer to approve the funding source.
Procedure:
1.0 For capital projects, the Department Head shall be authorized to make commitments to contractors performing
extra work under a contract, where such commitments do not increase the total estimated contract or project cost,
as established at the time of the award of the tender, by the following limits:
CONTRACT OR PROJECT VALUE ADDITIONAL EXPENDITURE LIMIT
Up to $250,000 $25,000
$250,000 to $2,000,000 $25,000 or the lesser of (7% of the value or
$100,000)
Over $2,000,000 Lesser of 5% of the value or $150,000
2.0 The Finance Department shall be advised of the commitment for extra work and the required reallocation of
financing to cover the additional expenditure up to the limits specified above.
3.0 The Director of Finance, CAO, and/or Deputy Treasurer may fund the overexpenditure on approved capital
projects from the original funding source on the following conditions:
1. The overexpenditure complies with the limits above;
2. If the original financing source is Reserve or Reserve Fund that there is sufficient funds to finance the
overage;
3. If the original financing source is the Tax Levy then the Rate Stabilization Reserve Fund or the Municipal
Capital Works Reserve Fund or the General Capital Reserve or any combination aforementioned may be
used to finance the overage.
4.0 If any of the above conditions are not met then the applicable department will report to Council for approval of the
additional commitment and related financing for the capital project overage.
Page 1 of 1 - Administrative and Corporate Policy HII