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Creating and Monitoring CapEx Projects

Marc Farrugia
Updated

Creating and Monitoring CapEx Projects

This article discusses the process of creating, monitoring, and closing a CapEx project.

Property managers should review Capital Expenditures guidelines about criteria for CapEx projects, definitions of common terms, and important information for project planning.  
Before any work can begin, the project must be approved. Once approved, a project code will be generated and you can begin coding vendor bills to that project. 
NOTE: No work can be done until an approved project is available in NetSuite. Discuss the project with the RVP prior to submitting any requests to answer any questions and confirm which projects are expected.

 

There are three types of projects: Budget-Only, Parent, and Child projects.
  • Budget-Only Projects:  These projects hold your yearly budget funds and are created for the properties each year by the Fixed Asset Team. Think of it as the wallet for your other projects. Ex: 2024 Recurring Budget for Property X
  • Child Projects:  These are sub-projects created within the Budget-Only project that allow you to divide up your annual budget. You create these in NetSuite as sub-projects to your Budget-Only projects and  give them descriptive names for the overall work that needs to be done. Ex.: Waterpark Maintenance
  • Parent Projects:  These projects are brand new Growth projects that need to have their own budget separate from your recurring annual budget.  Ex.: New Restaurant for Clubhouse
Within the Parent and Child projects are Work Breakdown Structures (WBS),   used to break down the projects into Activity Codes. Activity Codes are a generalized type of task or item used when coding vendor bills.

Example Workflow Structure: 
  • 2025 Recurring Budget (Budget-Only Project)
    • Clubhouse Renovations (Child Project)
      • Building Renovations (Activity Code 1)
        • Contractor Invoice for wall removal (Vendor Bill 1)
        • Lowes bill for paint (Vendor Bill 2)
      • Equipment (Activity Code 2)
        • Lowes bill for rotary saw rental (Vendor Bill 1)
        • Lowes bill for ladder (Vendor Bill 2)
    • Waterpark Renovations (Child Project 2)
      • Landscaping Renovations (Activity Code 1)
        • Contractor invoice for tree removal (Vendor Bill 1)
        • Contractor invoice for pool lining replacement (Vendor Bill 2)
 
To make a new Child project:
1. Obtain third-party estimates and quotes for the materials and labor involved in the new project. Quotes or invoices must be attached (this is required for all project requests) and agree to the funding requested. The Quotes and invoices should include as much detail from the vendor as possible. Some projects require information on square footage or length before they can be approved, getting that in advance will expedite the approval process.

2. Navigate to the project list by going to Payables & Projects, then Projects, then Project List.

3. On the project list, navigate to budget project that will contain the child project. Click View to open the project.

4. Click Create Sub-Project.

5. Enter the Project Name. Be descriptive enough to be able to identify the project on an asset listing, providing location on the property when available. Use the Project Notes box to describe the project and provide other information as necessary. When done, click Save.

6. Once the project has been saved, a project number (Job ID) will be generated.

Now that the project has been created, use the Work Breakdown Structure (WBS) to set the budget using the activity codes for the project. 
The Activity Codes in the WBS tells Accounting what type of improvements are included in the project and determines the useful life. This is important for providing accurate records.
Vendor bills will be coded to these activity codes. For example, for a WWTP pump replacement Equipment would be selected.

1. Scroll to the bottom of your project page and click New WBS.

2. Click the Sun Activity Code box and the dropdown menu will appear. Select the activity code that best matches the cost and click Save. For example, if you are buying a new golf cart, use the code CAPEX-02 Equipment. See CapEx Examples and Definitions for a comprehensive list of items that qualify as a capital expenditure.

For a complete list of the Activity Codes available, see CapEx Examples and Definitions. 

Note: Do not use the following codes, as they are for Main Office Use Only:
  •     • CAPEX-11 Green Energy Systems
  •     • CAPEX-22 Capitalized Interest
  •     • CAPEX-23 Management Fee
  •     • CAPEX-24 Annual Recurring Capex Budget
  •     • CAPEX-25 Annual Utility Recurring Capex Budget
  •     • CAPEX-26 Acquisition Capex Budget
3. Now that there is an activity code in place, you need to select where the project gets its funding. To do this, click Source Budget.

4.  You need to choose the budget source for each activity code. Use the dropdown to select the activity code that needs funding, then click Next.

5. The next screen will show the budget the funds are being sourced from, and the amount of funding available. Using the third-party quotes and invoices obtained for the project, enter the cost of this activity in the Amount to Use box. When done, click Save.

You will now see this amount listed in the WBS page for this activity code. 

  •     If you need to add more activity codes, click Edit at the top of the page.
  •     Click the grey area in the Sun Activity column to highlight the next row. Click Add Row to select another activity code. Multiple rows can be added at a time, save before sourcing the budget. Repeat the process to source the budget for each line that is added.

6.  Once you’ve added all the activity codes to the WBS, click Set As Baseline Budget. 

7.  On the confirmation screen click the Project Name to return to the project screen.

8.  Scroll down to the bottom of the page to view the WBS lines added to the project.

9. In the Primary Information section, you will need to upload the quote and invoice files you gathered. Ensure that each file name is descriptive so it’s easy to coordinate the files with the activity codes in the WBS. Click Choose Files to Upload to upload these new files.
Note : Have contractors put clear descriptions on the invoice including all the relevant details. Comments handwritten on invoices or added in the notes section of the NetSuite project screen will be ignored while determining qualification.

10. Click the Attachments tab. The file will show up there as soon as it has finished uploading.

11.  The project is ready for approval. Click Submit for Approval to send to your RVP for review.

To update attachments for a project, navigate to the project and ensure that you are in "view" mode (not "edit" mode) on the project page. Click the Attachments tab and ensure the view is set to Sun Default View . Upload additional attachments as needed and/or remove existing attachments.  

If edits are needed to the Work Breakdown Structure, follow the guidance on this video to make the required updates:
 

NOTE: There may be instances where a vendor's quote includes items that are not capitalizable, and therefore are not counted as part of the CapEx project's budget. In those cases, create a written statement that explains this and upload it as a reconciliation form along with the quote. The reconciliation note needs to explain any discrepancy between what is being quoted and the amount being budgeted for the project. The note needs to specifically identify which parts of bill are being submitted for approval.

For example: if a contractor's quote is for $30,000 but only $20,000 is qualified for CapEx, write a note saying that $20,000 is part of the CapEx project and the remaining $10,000 will come from a different budget.
As the project gets underway and you begin to code vendor bills, you may discover that you need to adjust the project’s budget and/or add additional activity codes to the WBS. Any changes you make to the project and the project’s WBS must be resubmitted and go through the approval process again. These changes must be explained in the Budget Change Reason box before submitting the new WBS.
To source additional funds:

1. Navigate to the project that needs more funds. Select Budget Change Request.

2. Select Source Budget.

3. In the left drop down, select the code that needs additional funds.
Note: If you need to add another line item, select the code you need to add.

4. Use the right drop down to select the project that will provide the new funds, then click Next.

Note: Only projects with available funds will appear in this list. If the list is empty, that means there are no more funds available in any of the property’s projects, and you should contact your RVP for assistance.

5. (1) Enter the budget change reason. (Ex. Cost of supplies increased, forgot to include a line item, etc.) (2) Enter the amount of additional funds needed. (3) Click Submit.

6. Attach any documents associated with the budget change.

7. Click Submit for Approval.

8. Once the project has been submitted, it goes through all required approvals per workflow.
There may be cases in which a new Growth project needs to be created for a property. Growth projects expand upon or add new features to a property that will add value and/or raise revenue. Because they were not planned as part of the annual budget, a new parent project will need to be created with a budget that is separate from the existing Budget-Only project. 
To create a new Growth project:
1. First, speak with and obtain approval from the property’s RVP, next, obtain approval from the Corporate Strategy and Investments team (before requesting the project or doing any work); a ROI (Return on Investment) analysis will be required. 

2. Obtain third-party estimates and quotes for the materials and labor needed to complete the project. Quotes or invoices supporting the requested amount must be attached (this is required for all project requests) and include a copy of the Corporate Strategy email and Investments team approval.

3. Navigate to the New Growth Project page.

4. Enter the Project Name. The name should be descriptive enough to be able to identify the project on the asset listing, providing location when available, for example, Retail Store Build a Bear Machine.

5. Use the Project Notes box to describe the project and provide other information as necessary.

6. Select the Project Start Date using the dropdown calendar. This date will default to the date the project was created.

7. Select Growth in the Project Type dropdown.

8. Select Parent in the Budget Type dropdown.

9. Click Save.

Once completed, a confirmation notice will be created, indicating the project has been saved and now has an assigned number.

10. Scroll to the bottom of the screen and click New WBS to set up the project’s budget.

11. Click the Sun Activity Code box and select the activity code that best matches the cost. 

12. Use the quotes to enter the unit price and quantity needed for this project.  

13. Click the grey line beneath this first entry, then click Add Row to select another activity code. Repeat the process to add budget items as needed, then click Save.

14. Once all activity codes have been to the WBS, click Set As Baseline Budget. 

15. On the confirmation screen click the Project Name to return to the project screen.

16. Click Choose Files to Upload or drag quotes and invoice files to the box. Ensure that each file name is descriptive so it’s easy to coordinate the files with the activity codes in the WBS.

17. The project is ready for approval. Click Submit for Approval and the project is sent to your RVP for review. 

Once your RVP has approved the project, it will go to the Fixed Asset Team for final approval. 

NOTE:  The final approval of the project depends on the cost and the approver’s spend limit. See Delegation of Authority for more information. If a project is rejected at any step in the process, the property manager must review the rejection reason(s) and edit the project before resubmitting the project for approval.

There may be cases when money from one project is needed to help fund another. In this case, the Transfer Budget function will be used. 

1. Navigate to the Transfer Budget function by going to Payables & Projects, then Projects, then Transfer Budget.

2. Use the Destination Project dropdown to select the project that will be receiving the money.

3. Use the Activity Code dropdown to select the activity code where the funds will be applied.

4. On the right, a list of projects the money can be sourced from will populate. Choose the project to use for your budget source.

5. With the source budget selected, click Find Activity Codes.

6. In the Available Activity Codes you will find the available amount of funding. In the Amount to Use box, type in the amount of funds you are transferring over, then click Save.

7. You will receive a notification that the funds have transferred successfully.

Use the Project Transaction Detail and the Project Summary reports to track your property’s budget and expenditures. These reports are updated daily and can be emailed, downloaded, and exported into Excel as needed.

To view the Project Transaction Detail Report, go to Reports, then Accounting Related Reports, then Project Transaction Detail.

On this screen you can see all the transactions related to each project on your property, as well as the transaction IDs, associated vendors, and billing codes.

Property managers can use the Project Summary Report to see a list of all of their property’s current CapEx projects. If they wish to see more about a project, they can click into the project name or project id to drill down deeper into the report.

To view the Project Summary Report, go to Reports , then Accounting Related Reports , then Project Summary.

When a vendor bill has been received it will need to be coded to the project. This ensures that the bill is paid using funds that come out of the project’s budget and is reflected. 
1. Navigate to the vendor bill you need to code to a project.

2. In the coding section of the bill, click Expense Category to choose Community Project from the dropdown. Once you choose the expense category the coding popup will open.

3. In the coding popup, ensure that the property code is correct if you work at different properties. 

4. Use the Project dropdown to select the project associated with this bill.

5. Complete the rest of the popup information, then click Submit. 

6. The coding popup will disappear and the line item will now be coded to the specific project. Click Save to save the bill. 

Property managers should close a project when all of the work on a project is complete and the asset is usable. Vendor bills can be coded to a project for 8 months after closure. After this 8-month period, the project becomes inactive and is not available for coding. At least monthly, property managers and RVPs should review open projects to see if projects are usable and should be closed.
1. Navigate to the project you wish to close and click Edit to open it.

2. Click the Status dropdown and select Closed. Click Save when done.

3. A notification will alter you that the project’s status has been changed. The NetSuite timer will automatically begin the 8 month countdown until the project goes inactive and can no longer be billed. 

Note: If you are unsure about what day the project will be inactive, scroll down to the System Information tab. There you can see the date and time the project was closed.

CapEx projects submitted in NetSuite go through the approval workflow before review by the Fixed Asset Team. In most cases projects are approved by RVPs, and then may require additional DVP or SVP review/approval, depending on the project's amount. Any Main Office CapEx projects will be routed for leader approvals in the system.

View projects in NetSuite by clicking on the ellipse menu, then navigating to Payables & Projects, then Projects, then Project List.

Once a project is submitted for approval, it routes to the leader (in most cases, the RVP). If a project is rejected, the reason(s) the project has been rejected will be provided and the submitter must make changes before resubmitting for approval. Once the RVP/leader has approved the project, it’s sent to the Fixed Asset Team for approval.

Note: A project may need to pass through multiple levels of approval before the property manager can begin work, depending on the project cost. See Procurement Policy for more information.

Before approving a project, consider:

  • Does the project meet the criteria for capitalization?
    • See CapEx Examples and Definitions for specific criteria.
    • If the project is not capitalizable, cancel the project. The funds will automatically be returned to the parent project.
  • Is the project name an accurate representation of the asset that will be created?
  • Is the project's WBS breakdown supported by the attached documentation (quotes, invoices, etc)?
  • Does the supporting documentation provide adequate details about the scope of the project (e.g. measurements, quantities, etc.)?

If any of the above criteria is not met, reject the project and work with the submitter to make any needed changes.

Keep the workflow moving efficiently by reviewing projects carefully before approving them. Follow the points above to ensure all project details have been reviewed. Failure to review projects carefully could result in rejection at further steps and require resubmissions.

Operations leaders may also consider the following for projects to ensure property teams are well-prepared to begin the project.

  • Have different vendors/suppliers been consulted to ensure the best price and work is achieved?
  • Does the timeline seem reasonable?
  • What, if any, contracts will be needed. See Procurement Policy for details on entering into contracts, or Construction Contracts & Payments for details on construction projects.
  • Are licenses and permits required for the scope of work?
1. Navigate to the list of projects awaiting your approval. See the NetSuite dashboard tile.

You can also view projects awaiting approval by navigating to Payable & Projects, then Projects, then Project List.

2. Open the project for review.

3. Review the project information and check the attached documents. If needed, you can click Edit to update information without sending it back to the property manager and Fixed Asset Team for re-review.

If the project has everything it needs to proceed, click Approve. 

If the project amount is within the spend limit, the project is fully approved and the project will be available for bill coding. If the project is above the approver’s spend limit, it will go to the next level for approval.
When you reject a project, you will need to provide a reason for rejection and, if applicable, the instructions the property manager needs to follow when resubmitting the project for approval.

1. Click Reject.

2. A rejection box will appear. In the Rejection Reason box, enter the reason for rejection. Be specific and provide instructions if there is something needs to change before resubmission of the project.

3. Click Reject to reject the project. It will return to the property manager for edits and re-submission, if applicable.

In the event that an approved project is rejected by the Fixed Asset Team, the submitter must update the project appropriate to address the failure reasons and resubmit the project.

Email notifications are sent when projects are rejected. Review the specific rejection reasons and follow the provided instructions

 


 

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