Construction & Renovations

Construction & Renovations

Construction and renovation activities include the acquisition, renewal and replacement of long lived assets for institutional purposes and are recorded in the plant funds 80000 (construction campus) or 80500 (construction hospital), 81000 (construction – info tech), and 81500 (construction – hospital IT). Building assets are created at the completion of a construction or renovation project when the costs meet or exceed $500,000. Financial Operations has compiled Capitalization Guidelines for Campus Use as a tool for units to use to help them manage their construction projects. Below are excerpts from the documents as a quick reference.

  • Expenditures must be correctly identified by the use of account codes to indicate whether or not the expense should be capitalized or expensed.  See Appendix A for a list of accounts commonly used for construction projects. 
    • Capital expenditures are incurred when resources are expended to buy, repair, or increase the usefulness of an asset.
    • Non-capital expenses are considered an expense necessary to complete the project but one which does not increase the value or usefulness of an asset.
  • Units setting aside money for future construction projects should typically do so in either their Departmental Equipment Fund (82XXX) or their Maintenance Reserve Fund (83000) depending on which they use.  The Construction Fund (80XXX) should be used to reflect money for a construction project which is currently underway, as well as expendable gifts received for construction purposes. 
  • Construction projects are to be funded up-front when they are established.  An end date is required for all construction projects, and should be in line with the expected time period to complete the project with a maximum end date of five years from the start of the project.  For any project extensions beyond the expected end date, all units should contact Accounting Operations to have the end date updated appropriately.

If a project's total budget meets or exceeds $3 million, it requires regental approval before the project can be bid for contract and must be managed by the office of Architecture, Engineering & Construction (AEC). All projects which require the use of an external architect or engineering services must be managed by AEC.  Generally, departments have the discretion to manage their own building projects if the above conditions do not apply.   

The Provost's Office has developed Capital Project Guidelines for General Fund units on the Ann Arbor campus to use when considering a project. The Capital Project Guidelines provide detailed information on the process of preparing and submitting a capital project request to the Office of the Provost.

Any questions regarding construction projects or capitalization of assets should be directed to Plant.Fund.Staff@umich.edu or to the Plant Fund Supervisor at (734) 647-3778.