Skip to main content

Login with RealMe®

To access the Procurement online service, you need a RealMe login. If you’ve used a RealMe login somewhere else, you can use it here too. If you don’t already have a username and password, just select Login and choose to create one.

What’s RealMe?

To log in to this service you need a RealMe login.

This service uses RealMe login to secure and protect your personal information.

RealMe login is a service from the New Zealand government that includes a single login, letting you use one username and password to access a wide range of services online.

Find out more at www.realme.govt.nz.

​​Capital expenditure costs (CAPEX)

Capital costs (CAPEX) in property co-locations will apply when a new fit-out is required for the building.

Costs will typically be captured at the project level on an ‘as incurred’ basis and then allocated to agencies based on their share of the agreed area allocation. Pending the project, a lead agency may have available funds to completely cover CAPEX requirements.

In a property project, a standard fit-out cost is made up of four components.

1. Main contractor hard fit-out (MCHF)

This includes things like:

  • modifying heating and air conditioning equipment for the sub-divisional hard fit-out
  • installing fire protection equipment
  • lighting
  • plumbing, and
  • draining.

2. Sub divisional hard fit-out (SHF)

For example:

  • the installation of tenant doors and enclosed meeting rooms (including the computer room)
  • joinery for utility areas
  • security cables and equipment, and
  • IT networking cables and equipment.

3. Soft fit-out (SFO)

This includes:

  • desks, chairs and other furniture
  • fixtures like refrigerators and microwaves
  • relocating and installing equipment like multifunctional devices (AV and end-user computing like laptops and phones are often excluded from this).

4. Consultancy fees for design, engineering, project management, and legal

Costs associated with negotiation, design and delivery services need to be capitalised.

MCHF and SHF are normally written off – fully depreciated – over the initial lease term. SFO is typically written off over six years. This is consistent with current accounting policies and practices.

CAPEX principles

Fit-out cost (CAPEX) is transferred at the start of the project

The lead agency is the head lessee and has 100% ownership. It controls the management, repair and replacement of the fit-out, which includes the furniture, fixtures and equipment.

  • Participating agencies transfer capital to the lead agency at the start of the project.
  • Participating agencies are individually responsible for securing their capital contribution either through baselines or a new budget bid.
  • If the lead agency has funds to cover all CAPEX, no contribution is required from participating agencies.

Agencies will meet the capital obligations they've committed to at all stages of the co-location

If an agency exits a co-location during a tenancy, their contribution can only be recovered if a replacement agency joins and contributes the outstanding capital.

It’s expected that the exiting agency will settle the costs incurred to date and committed to under the MoU and co-location agreements, in place for any work completed prior to the replacement agency joining.

  • Participating agencies must meet any associated charges (eg capital charge) in relation to their capital contribution made at the start of the project.
  • GPG will work with the replacement agency to ensure that the exiting agency is able to recover some or all of their original CAPEX.

CAPEX costs are proportionally determined based on area allocation

Total fit-out costs for each agency will be based on agreed co-location area allocation. This can be based on FTE or desk numbers, plus the proportion of all shared spaces and, as relevant, any specialist areas provided specifically for one agency’s use.

  • The lead agency will establish and maintain the area allocation model, using the area allocation tool.
  • All agencies pay a proportion of shared space, regardless of the level of usage.

Asset transfers are treated as capital injections and withdrawals

Where possible, reusable assets will be used. These assets will be transferred to the lead agency balance sheet at Net Book Value, along with the corresponding accumulated depreciation.

  • Asset transfers will be treated as a capital injection and withdrawal by lead and participating agencies respectively, with corresponding increases and reductions in equity. The capital charge for this injection will be billed to agencies accordingly.
  • The published Treasury rate for capital charge at the time will apply.

Return of capital at the end of the lease period

At the end of the lease period, the lead agency returns any transferred capital from the accumulated depreciation on the asset.

If a participating agency exits early (part way through the lease period) there is no return of capital by the lead agency. The incoming agency buys out the exiting agency. This is consistent with the principle of minimising risk on the lead agency.

  • If this constitutes a finance lease arrangement, Minister of Finance approval will be needed.
  • Lead agencies will test with their auditors whether a finance lease arrangement applies.

Lead agency responsibilities

To successfully facilitate CAPEX principles with participating agencies, lead agencies will be responsible for:

  • working up agreed area allocations with the design team and participating agencies
  • developing and agreeing MoU and co-location agreements with participating agencies
  • financial negotiations regarding development agreements and/or deed of lease with the landlord
  • establishing internal governance and financial processes as necessary, for example billing mechanisms and setting up shared service appropriations.

Lead agencies and participating agencies will need to engage with their own internal finance teams and Treasury vote analysts to ensure approvals and agency due process is followed.

Top