In times of economic restraint, it is important that public sector capital expenditure allocation be made prudently. Politicians and government departments will be held accountable for such expenditures which are now monitored by more informed taxpayers, pressure groups and committees. Public fund allocations require a rational, justifiable purpose. This article deals with a method for determining and justifying such capital project expenditures.

DETERMINING THE NEED

The need for a police facility must be perceived as vital and essential. In determining this need, the following strategies may be used.

Decision by "crisis" -

A political decision on capital expenditure may be precipitated by a crisis situation. This may arise where neglect creates public concern, pressure and a demand for action. For example, a suicide has occurred in an antiquated cell where the incarcerated person hangs himself/herself on a horizontal cell bar and the cell has no camera surveillance. A decision is made to spend money to rectify the problem. Thus, a need for a new police facility was precipitated by this public exposure of this cell incident symtomatic of a disfunctional facility.

Decision by advocacy approach -

A popular police chief convinces the politicians and the community of a need for a police facility. This idea becomes reality when the public and politicians realises that it an appropriate solution to fill the need to provide a better police service for the safety of its citizens.

Decision by rational approach -

In order to evaluate police departmental needs, the police planner surveys the demand for police services and the delivery of such services. This requires a method of determining a need in a analytical manner. A Needs Assessment Study is the vehicle which articulates this need in quantifiable terms. For example, a need for a police station can be made clear through a Needs Assessment Study prepared internally by a staff planner or externally through a consultant, depending on the project complexity, staff resources, and available budget.

These three approaches which determine a need are not necessarily mutually exclusive. In other words, a crisis can lead to a police advocacy situation, which in turn may lead to a study detailed determine the detailed police requirements.

SCOPE OF THE POLICE FACILITY CAPITAL PROJECT

Project scope gives dimensions to an idea and thus assists in translating a dream into a reality.

In order to determine the scope of the capital project, the following aspects should be developed in sequence:

- need determination;

- staff determination;

- space determination; and

- concept determination.

Need determination - Need determination requires a study to ascertain the demand for the police service. The factors which come into play are criminal statistics and trend analysis such as:

- demography - community population over the past ten years; current population and future 10- and 20-year population projections;

- past and future economic trends - community's ability to support a facility;

- calls for police service

- staff to population

- unique crime characteristics of a community affecting the demand for particular police service.

- new trends in police service including community based policing.

In order to foresee a demand of the police service, one has to project community growth over at least 10 year. Failing to do so may lead to a facility becoming overcrowded on the day of opening.

Staff determination -

Projected staff can be ascertained by:

- analyzing departmental data over at least the last 10 years and relating staffing and population growth, as well as other social/economic factors;

- using figures of other comparable communities with similar population sizes and staffing ratios for a particular facility; and

- detailed interviews with community officials and department staff to ascertain current and projected staffing needs.

The intangible factor affecting staffing needs is the management and operational style of the police chief and/or department head.

Space determination -

To translate staff requirements into space requirements, detailed division by division and branch by branch interviews with prepared departmental/branch questionnaires are carried out in which staff and work stations are correlated. It is necessary to obtain established space planning standards and/or guidelines. A visual survey of the existing facility is necessary to see current space allocation and to observe problems and opportunities. It is also useful to visit other communities having similar facilities to compare what does and does not work.

Space relationships and site planning -

From the above space determination, adjacency relationships amongst branches, divisions and departments are conceptualized. Specifically determined are: staff relations, staff to public relations, and staff to movement of goods relations. These optimum relationships can be graphically illustrated in a bubble diagram with quantifiable areas. These relationships can be applied to a theoretical site. Site organization in terms of access, parking, shipping/receiving, orientation are determined next. An estimation of site area can be made by assessing parking, landscaping and expansion areas as well as the zoning requirements.

Conceptual design -

Once staffing and space requirements, as well as space relationships are determined, alternative conceptual plans can be generated which would show actual division and branch sizes and organizational patterns. The preliminary building configuration is established once allocations for circulation, washroom, ducts, electrical, stairway areas, etc., are assessed. The summation of above is the building Gross Floor Area (GFA).

DETERMINING THE BUDGET

It is important to assess a reasonably accurate budget, prior to initiating any project. Failing to do so could lead to a difficult project funding adjustments in the future. The budget estimate can be determined by the following.

Construction cost -

From the GFA, a construction cost is estimated. Square foot costs for this building type, in addition to site development costs, are calculated.

Factors affecting construction costs are as follows:

In Canada,

Goods and Services Tax -

This tax creates an increase of between +2% to + 5% above the construction cost estimate. A portion of the 7% GST forwarded to the federal government is rebated back to the municipality, depending on the different material and labour supplied towards the project.

Future construction costs must be considered within the current budget. These additional cost factors are:

Escalation Cost-

Historically, cost estimates require an escalation factor in the amount of 4% to 10% increase of total construction cost per year. However, uncertainty may exist about future costs. Recessionary times could affect the escalation cost negatively, where future costs rather than rising due to inflation, are lower because of keen competitive bidding as a result of a depressed construction industry.

Contingencies Cost-

Two contingencies costs must be considered:

- During the studies and design phases of the work - The initial phases of any public facilities study involves many unknown factors which eventually become more evident at a more advanced stage. For example, new departments that may be integrated into the facility, increased electronic/computer requirements, environmental control systems, architectural considerations, ratepayer neighbourhood input. Any one of these factors could potentially increase the basic building cost. Generally, at the end of the studies phase, a design contingency in the order of between 15% and 20% is not unreasonable to be allotted over and above the basic cost estimate. This design contingency figure reduces to approximately 5% at the end of the design phase.

- Prior to commencement of construction - A contingency cost ranging between 2% to 5% of construction cost estimate is used, in anticipation of unforeseen site conditions and construction modifications, while the building is being erected.

Consultant Fees -

Funds are also allocated for consultants' fees. This would be for services rendered for the studies phase and full architectural services phase. Architectural fees range between 8% to 12% depending on the size and complexity of the facility and whether it is a renovated or new facility. Interior design services and fees are required if new furniture and corresponding space planning and installation are required. Their fee range between 10% to 15% of furniture cost.

Additional Costs -

Any carrying costs related to cash flow and debentures required to raise money for the project should also be added to the overall project cost.

Money should also be set aside for various miscellaneous costs related to building permits, surveys, environmental assessment, soil reports, and legal fees in land purchases. If required, consideration should be made for new furniture and equipment for the new facility. Another cost consideration would be either the moving of personnel and/ or retained furniture and equipment to the new premises. Also, in the case where a building is being renovated and expanded, there are costs associated with transferring personnel to rented quarters while the building is being renovated and expanded.

Cash Flow -

During all phases of the above work, a financial plan parallels the schedule of work. Funds must be allocated for progress payments during the completion of each phase of the work, normally paid on a monthly basis. See below for the phases.

All the above figures should be listed and quantified into a total project cost.

DETERMINING A SCHEDULE FOR THE PROJECT

Generally, most projects are scheduled within a five- year Capital Works Plan. These projects are coordinated with the different departments in order to integrate projects so that construction takes place in a logical sequence. For example, installation of services, i.e. gas/telephone/water and sewer lines and municipal roads are done before housing development and police facilities are built.

Within this five-year plan, each project has a life span starting from the initial determination of need to the final completion and occupancy of the building. Generally, a deadline for assessing potential capital projects and a determination of budget is set for any given year, as well as a time frame when the projected expenditure has to be released. The following are the sequence of steps:

1. The studies phase -

(needs assessment and/or feasibility study) of a capital project, which might entail research, analysis, studies and recommendations, could take from three to six months.

2. The design phase -

for the project could range between four months to over a year, depending on the complexity of the project. The design phase might entail predesign, schematic design, design development, contract documents, and site review phases.

3. The construction phase -

is for tendering the project, awarding the contract to a general contractor, and in the actual construction of the project, which could range between eight months to two years, depending again on the complexity of the project.

Therefore, the starting time from the initial decision to initiate a project to the actual occupancy date could range anywhere between two to five years.

SUMMARY

Determining the need, scope, budget and schedule is documented in the form of a needs assessment studies report. This is forwarded to the appropriate working committee for comments and approval prior to full council approval.

The professional thoroughness, integrity and logic of the report are essential in order to gain approval. Furthermore, coordination and communication amongst the consultant, the government coordinator and the working committee are essential for the report to be accepted. Once the report is accepted by council, fund allocation and implementing the capital project can commence.

Capital projects could be realized with a minimal amount of difficulties and time wasted by considering the above procedures. It is important that during any government undertaking, it is seen that the taxpayer's dollar is spent wisely and effectively. This is possible by planning the work in a deliberate and logical manner.

By: Nelson Wong