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-For a community government to meet current and future needs in a community, it is very important that:
-•	existing infrastructure be maintained in good working order:
-•	future community needs are identified and prioritized; and,
-•	sufficient capital funding is available to service existing infrastructure and build new infrastructure.
-To meet these challenges, community governments are required to develop and implement a long term Capital Plan.  A Capital Plan (need examples) is simply a process for making good decisions about the acquisition and management of land, buildings and equipment.  The Council and key staff, such as the LGA, Works Foreman and Recreation Coordinator, all play a role in the process.
-It should also be stressed that capital planning is not done in isolation from other types of planning processes and Council approved policies and programs.  For example, any Council plan to do with housing, transportation, the environment, economic development, recreation etc. will involve infrastructure planning.  Proper capital planning starts with a good understanding of the programs and services provided to residents and the infrastructure required for their delivery.
-.3.1	Capital Planning Process
-There are several basic steps in the capital planning process (www.maca.gov.nt.ca/toolkit/infrastructure_plan//Capital%20Planning%20Confrence.ppt):
-. Identifying Services and Evaluating Community Needs
-As noted earlier, capital planning starts with a good understanding of what the community government needs to do and what infrastructure it requires.  Some key questions to consider include:
-•	What services need to be delivered to provide a good quality of life for community residents? Basic needs include survival, food and safety. More advanced needs include recreation, leisure and social development. Service decisions lead to infrastructure requirements.  Examples include:
-o	Fire protection – requires a fire hall and fire truck
-o	Solid waste system – requires roads, landfill site, garbage truck and loader
-•	What is the condition of our existing facilities and equipment?  To determine how much money should be allocated to existing infrastructure, the LGA and Works Foreman need to consider the following factors:
-o	Inventory – keep an up-to-date inventory of all physical assets that the community government owns or manages including fixed assets (buildings, facilities etc) and mobile assets (heavy equipment, trucks, smaller equipment)
-o	Condition rating – complete an assessment of the condition of each significant asset and determine what needs to be repaired and when.
-o	Upgrades – existing facilities may need to be upgraded to meet new standards or legislative requirements (i.e. water treatment plant) or to meet increasing demands due to population growth or new programming
-•	What does the community need for new infrastructure?   This can be a tricky subject to resolve as a Council and community residents may have very different opinions about what the community needs most. This stage of the process requires community consultation which can include meetings, surveys etc.  One approach is to organize needs starting with the basics (survival, safety, shelter) and moving to more advanced needs (recreation, social / cultural, leisure).  Once an initial list of potential projects is identified, it can be further refined on the basis of urgency:
-o	Immediate or short term – these are needs that won’t wait such as water shortages, equipment breakdowns etc
-o	Predictable growth – these are needs driven by population growth and increasing demands on infrastructure that will need to be addressed in the next few years.  Examples include housing supply, water treatment and delivery capacity, need for expanded recreation facilities etc.
-o	Future – these are long term needs that will occur in the next 5-10 years, often as a result of priorities established in other community plans (Strategic Plan, Recreation Plan, Land Use Plan etc).  An example may be the development of new residential lots or the refurbishment or replacement of an old building.
-. Project Substantiation
-Some of the capital project ideas identified in step 1 (e.g. equipment purchases) will be well understood and may not require much additional work in order for a Council to consider them.  However, some capital project ideas, such as the construction of a new building, will need to be “fleshed out” on paper so that a Council has some solid information on which to make a decision. This involves documenting the “what”, “why”, “when” and “how much” of a project starting with a conceptual idea or design and rough cost estimate which are then refined as more information is obtained.
-This type of preliminary planning is referred to as project substantiation and can be very formal or informal depending on the circumstances. The information gathered is summarized in a document known as a Project Brief.  A Project Brief will usually describe the type of facility, provide details on important design features, identify size or capacity requirements, note any relevant issues that need to be addressed and provide some type of cost estimate.
-. Prioritising Projects
-Any proposed capital project is a response to an identified need. A big challenge that community governments face is figuring out what the priority projects should be as there is never enough money to satisfy all needs and wants.  Things to think about when setting capital planning priorities include:
-•	Focusing on essential programs and services.  Clearly, essential items such as water delivery or road maintenance or building houses should receive priority over other choices such recreational or cultural facilities.
-•	Legislative requirements or standards.  Some projects must be done by a certain deadline to keep the community in compliance with applicable health or safety legislation, regulation or standards.
-•	Maximum benefits received.  One way to set priorities is to consider the benefits that the community will receive for the amount of capital funding it will spend.  Projects that yield the biggest “bang for the buck” should be considered first.
-•	Operating and maintenance expenses.  One area that is often overlooked is the impact of new infrastructure on a community government’s current operating budget.  Once a new facility is built, it usually requires additional operational spending also.  Common examples include staff and other costs to deliver programs and basic operating expenses such as heat, power and general upkeep.
-•	Public support.  To the extent possible, a Council should be focused on projects for which there is strong support from the public.
-. Developing Cost Estimates
-Once a list of priority projects is established, the next step is to estimate the cost of acquiring or building the infrastructure and the operational costs associated with it:
-•	Capital costs – these typically include planning and design costs, material and equipment purchases, transportation costs, building costs and commissioning costs.
-•	Operations costs – these normally include utility costs (heat, power, water), maintenance costs, insurance costs etc. If the infrastructure will be used for the delivery of new programs and services, there may also be costs associated with increased staff levels, equipment and materials purchases etc.  These costs will occur each year for the life of the asset.
-The basic idea is to estimate as accurately as possible all related costs so that there are no surprises later once the project is done.  Similar to the project substantiation stage, cost estimates may range from very preliminary to very advanced depending on the level of information available.  Most project cost estimates are described as follows:
-Class A – this is the most precise type of estimate and is usually based on unit price estimates which require full specifications and working drawings. The accuracy expected is plus or minus 5-10%
-Class B – this is usually based on a systems approach that reflects how a facility is constructed.  The expected accuracy is plus or minus 10-15%
-Class C – this is based on limited site knowledge and probable conditions such as costs per square foot. This type of estimate is accurate within plus or minus 15-20% and is often used for preliminary planning purposes.
-Class D – this is a very preliminary cost estimate that usually reflects little or no site information.  It is considered a rough estimate only and may be accurate within plus or minus 25-35%.
-. Identifying Funding Sources
-Once the estimated cost of a capital project is known, the next step is to consider the funding sources available to the community government to pay for the project.
-LGAs should be aware that different funding sources come with different rules on the types of projects and expenditures that are considered to be eligible.
-Under the terms of the New Deal, community governments have several potential sources of funding for capital projects:
-Community Public Infrastructure Funding (www.maca.gov.nt.ca/resources/policies/Community%20Public%20Infrastructure.pdf) – capital funding provided annually by MACA to support community governments with the provision of community public infrastructure required to deliver community programs and services. The following expenditures are considered eligible:
-•	Direct costs (materials, equipment and construction)
-•	Project management costs that are directly relevant to the project;
-•	Crushing and stockpiling gravel materials for road maintenance (subject to some rules);
-•	Capital leases;
-•	Community land use planning;
-•	Feasibility, engineering or planning studies for community public infrastructure;
-•	Purchase costs for water and sewer vehicles (subject to some rules); and,
-•	Land development projects.
-Federal Gas Tax Funding (www.maca.gov.nt.ca/resources/GTF_Control_Management_Framework.pdf) – capital funding provided by the Government of Canada which must be used for environmentally sustainable community infrastructure, including:
-•	Water and wastewater treatment and distribution;
-•	Solid waste sites;
-•	Active transportation infrastructure, including trails and sidewalks;
-•	Dust control;
-•	Community energy systems; and,
-•	Capacity building
-Borrowing – with the legislative changes that were made when the New Deal was introduced, most community governments have the ability to borrow money to help finance capital projects.  This ability to borrow and the fact that the CPI and Gas Tax funding is predictable provides a community government with the flexibility to pay for a capital project by using a combination of available funding and loans, thus spreading out the costs over a period of years.
-Private/Public Partnerships (www.lgant.ca – Introduction to P3 pdf) – known as a P3 arrangement, this is a partnership between a community government and a private sector business that is established for the purposes of completing a capital project.  P3s can take a variety of forms but the basic goal is to combine the strengths of both partners and share risks.  Usually, the community government remains in control as the decision-maker on a project but relies on the private company to handle the commercial functions such as project design, construction, finance and operations.  In return, the community government makes monthly payments to the company to enable it cover all capital and operating costs for the facility and earn a profit.
-. Preparing the Capital Plan
-With the list of priority projects in hand, it is time to assemble the Capital Plan.  Using the cost estimates and schedules developed for each project, an initial plan can be developed that summarizes the project work planned for each year.  Projects in the near future will normally have much more precise cost estimates and project schedules while projects that are contemplated for 5-10 years in the future may be much less precise.
-The basic purpose in assembling the plan is to make sure that the community government has the resources (money, staff, capacity) required to complete the amount of work involved.  If not, some projects may need to be deferred or reduced in scope or even cancelled.  Once the plan is done, it needs to be updated each year to reflect new information and new project ideas.

7.3 capital planning.1306876761.txt.gz · Last modified: 2017/12/05 17:50 (external edit)

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