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University of Leeds

Guidelines on Investment Decision Making:

Building and Refurbishment Projects

Advice may be obtained from Clive Smith (Treasury Manager)

E-mail: c.r.smith@adm.leeds.ac.uk


Sound decision-making processes are a fundamental aspect of good governance and management in any organisation. This requires a clear identification of the need or problem to be solved. It also requires objective evaluation of the alternative options, if objectives are to be met and value for money secured. The outcome of such decisions may have a significant impact on the University, both in the short and long-term.

Decisions should be justifiable: the reasons for them should be analysed and supported by evidence. To obtain maximum value from the evaluation process it is necessary to understand the assumptions on which the decisions are based, and also the circumstances that might lead to a different outcome. Consequently the assessment of risk and uncertainty will be as important as the base estimates for each option.

The University must follow both Treasury and HEFCE guidelines1 and is ultimately accountable to the Committee of Public Accounts on the use of public monies. In addition, grant awarding bodies require that the University demonstrates good practice has been followed in respect of investment decision making. This is particularly so when resources are scarce and when the University has to establish value for money.

The HE Sector was subject to major criticism in 1998, following the publication of the Committee of Public Accounts report on the management of building projects in English higher education institutions (“HEIs”). This report arose from a National Audit Office study into major capital projects. A key observation was that HEIs did not set out clearly the objectives for a project, which meant it was unlikely that an accurate assessment of the costs and benefits could be made. A crucial element in the decision making process is the identification of objectives and their link with higher level strategy.

The following guidelines combine the University and external requirements on investment decision making. An illustrative case study is available on the Finance web site.

1 Hefce Good Practice Guidance: Investment Decision Making (April 2003/17)

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