On Saturday 25th September 2004 at the 2nd Executive Council meeting of the World Federation held in Leeds, a draft proposal for the Proposed processes and procedures for funding Capital Projects within the remit of the World Federation of KSIMC was presented. 

This is now in the formal consultation exercise till the 31st January 2005, to enable members, Jamaats and individuals to send in their comments, thoughts, suggestions and questions.  All comments will be acknowledged and responded to, within 21 working days. This document will then be formally adopted at the 3rd Executive Council meeting.

To send in your comments or for further information,
email: capitalprojects@world-federation.org 

After considering the comments received, the project team will send the final version to the Secretariat by 28 February 2005 so that it can be signed off at the 3rd Executive Council meeting. 


Synopsis

As a community, we are more and more dependent on khums to fund our capital projects.  However, if we look back into the history of our community, our forefathers funded most of the capital projects from the 80% and not the 20% of their savings.  With the increasing needs of our community it is imperative that we prioritise prudent utilisation of our project spend, particularly given the current economic climate where inflation sometimes exceeds investment growth, thereby eroding the worth of our money.  It is important that we remember the guidance of our current Ayatullah Al Udhama Ali Hussein Seestani on this issue:

“It is highly recommended that these (khums) funds are spent with the clear intention that it is on behalf of the Imam (AS). It is incumbent to maintain priority of importance – the more important ones to be addressed first.  In these times, the most important area in which Sehme Imam (AS) can be spent is to establish the correct practice of religion, propagate the divine message, spread the teachings of our religion and to provide and cover for the costs of the learned people who spend their time in learning. They have dedicated their lives to teaching the ignorant, guiding the misled, advising the Believers, counselling the aggrieved and many more such activities that contribute to the promotion of their faith and perfection of their own selves allowing them to gain proximity to the Almighty.”
                                                                          Minhajus Swaliheen Page 411 Rule No. 1265

 Index

1.  Introduction

 Bismillah hir Rahman nir Rahim

1.1 The Strategic Plan 2003-2008 "Creating Futures together ..." states by 2008, the WF will
      have developed systems and processes to ensure funding for capital projects are based
      on a needs analysis and delivery of census data.
 
1.2 Processes and procedures for funding of capital projects within the remit of the World 
      Federation of KSIMC are necessary: 

• To ensure huqooq funds are spent responsibly
• To ensure there is due care and diligence when undertaking capital projects
• To ensure comprehensive needs analysis and feasibility of maintenance costs are done by Jamaats and regional federations before venturing in capital projects
• To provide a framework for developing capital projects in the community globally

 1.3 Having established a global community under the auspices of the World Federation, we can
       only look forward to a period of unprecedented growth over the next 10-20 years. It is
       imperative that our community studies demographic trends set by our movements, prioritise
       development, set goals and targets that are challenging but with reality checks, achievable
       yet pragmatic, process driven rather than just emotive responses to a situation; taking into
       account sustainability of maintenance costs.


2.   Problems facing current Capital Projects

2.1  A Capital Project is a mammoth task for any individual Jamaat to undertake without well
       thought out processes to ensure that the project is undertaken smoothly without financial
       and technical hitches.

2.2 Of the 120,000 Khoja Shia Ithna-asheries world wide, only 30% contribute to capital
      projects. Such a statistic needs to be redressed so that a greater portion of the community
      feels a sense of communal belonging and ownership. Perhaps this can be achieved by
      generating credibility in the decision making process for the allocation of capital to projects
      and transparency in its audit trail.

2.3 To have rational, planned and sustainable development, a pragmatic approach to capital
      projects is imperative. The Jamaats must make sure that donations from generous
      philanthropists are channelled in the right way, and in a planned fashion. We need to
      professionalize our thinking, our emotions and our processes, and we need to recommend
      our individual Jamaats to follow the guidelines mentioned below, in order to chart a smooth
      voyage to the completion of the project and beyond.

3.  Proposed Processes and Procedures

3.1      The Project Committee

A Jamaat having identified a need for a capital project it would be required to form a project committee:

• Should be appointed by the Jamaat and should operate within a remit that is well defined and independent from the Jamaat’s managing committee.
  
• This Project Committee would be responsible for the completion of the project.
  
• Should have one member from the current managing committee to act as a liaison between the project committee and the managing committee.
  
• Liaison between the World Federation, the regional federation and the individual Jamaat should be established through proper systems and processes.  The capital projects committee would be accountable to the managing committee of the day.
  
• Should consist of professionals, and include a professional Project Manager, and also other building professionals (Architect, Engineers, Quantity Surveyor, etc), as well as accountants and financial experts.

Other tasks to include:

• Prepare and present conceptual architectural plans, with square footages and initial budgets to the jamaat, regional federation and World Federation.
  
•  Attain formal approval from the aggregate Jamaat at a general meeting.
  
• The Project Manager prepares a cost loaded bar chart with relevant timelines and cash flows. 
  
• Decide on procurement method (design-build), conventional route (architect – engineer – contractor), cost-plus or management contracting. 
  
• Architectural plans to be finalised, obtain planning approvals, and obtain approval from the General body (for comments, etc). 
  
• Solicit tenders, evaluate on equal basis, negotiate contacts, etc.
  
• Oversee construction and completion of project.
  
• Planning committee.
  
• Technical committee.
  
• Finance and fund raising committee.
  
• To gather all demographic data, non financial data, do a needs analysis, and future needs analysis.
  
• Look into the various aspects of the project i.e. size, design and area, restrictions on land use, etc.
  
• Search for architects and quotations etc.  
  
• This will be based on the needs analysis and data obtained by the planning and financing committees.
  
• Gather all financial related data such as donation capacity within community.
  
• Determine current expenditures and revenue sources, projected expenditures and revenue sources.
  
• Prepare a Business Plan that will show funding sources and a funding strategy for both construction and future maintenance of the project.

Advantages of the Project Committee
 
Continuity:

A separate project management committee independent of the management committee will ensure continuity of the project once it is embarked upon.  Thus even if there was a change in the management committee, it will not affect or hinder the project management committee

Specialization and Efficiency:

The formation of the committee with experts will allow for specialization of tasks and delegation of roles. This will provide quicker results as there are more individuals involved and the burden is not carried out by a handful of individuals.

Click here to view organogram 


3.2    The Feasibility Studies

At the initial stage the project committee’s main objective will be to collect data by conducting a detailed survey within the community:
 
Demographic feasibility:

• Current membership and needs analysis.
  
• Demographic trends and the potential change in requirements.
  
• Suitability of the current and future location/s.

Financial feasibility:

• Ascertain the current financial position of the community and future sustainability of the project.
  
• Current revenue sources and expenses.
  
• Capacity within the community to generate funds.

3.3    Project Plan.

• Identify what requirements needs to be met i.e. mosque, maddressa , community centre etc.
  
• Proposed size based on demographic trends  and sustainability of the location for the next 15 years.
  
• Proposed cost both for building and annual maintenance expenditures, including any debt servicing or loan repayment.
  
• Proposed funding sources and strategy for construction as well as future maintenance, taking into account proposed budgets, cash flows, maintenance costs, etc.
  

3.4   The Endorsement process

Stage 1:   Jamaat Approval: 

Once the project committee has completed its report it should be presented to the Jamaat management committee for their approval.  Once the management committee approves the proposal it should then be taken to the general body for final approval.

Proposed Criteria for General Body Approval:

• 75% of the membership is required to approve this project, however, the Jamaat has the flexibility in the methodology used to obtain consensus and mandate.
  
•  40% of the funding should come from its membership.
  
• For jamaats with less than 25 working households that lack any infrastructure facilities, the procedures relating to demographic surveys and future needs will be relaxed, as it is envisaged that such jamaats will lack the financial and admin resources. However, a Project Plan would still be presented to the Regional Federation for review.
  

Stage 2:   Regional Federation Approval:

Upon receiving the General Body’s approval the plan should then be submitted to the regional federation for consideration on the following basis:

• To provide expertise where possible.
  
• To independently review the findings of the Jamaat.
  
• To manage resources and to prioritise needs within its region.
  
• To asses whether adequate support can be provided for the project?
  

Stage 3:   World Federation Final Approval:

Once the regional federation has sanctioned the project, it would be presented to the Executive Council by the regional federation for a mandate on the following submissions:

• The project plan would formalize the accountability process, thereby, ensure quality research and transparency.
  
• Detailed disclosure of facts and figures will enhance credibility for the project and ease fund raising.
  
• Consideration of prioritising projects globally on a needs analysis.
  

Where the Jamaat is not a member of the regional federation or that the regional federation is not a member of the World Federation, the same scrutiny process will be adhered to so as to ensure that all Jamaats have a global mandate for its capital project.  The above prescribed vetting process will also increase project credibility for fund raising and ensure that limited resources are utilised most effectively for the community.

Upon satisfaction of the above, the Khums ijaza holder will issue a letter to authorise the use of Sehme Imam (as) for the capital project. 

3.5   The Funding Process

• Contracts for the project should not be signed until at least 40% of the funds have been collected and the balance is confirmed by pledges or loans to be realised in the following 6 months.
  
• The Capital Project Fund should be open by the regional federations & the World Federation for contributions so that funds are collected through out the year, making capital available for when needed and making it possible for individuals to contribute when they have funds available in their personal accounts.
  
• Regional federations and the World Federation should set timing for their Jamaats to submit their Capital Projects along with approx budgets a year in advance so that the Regional Federation can have a budget in mind when soliciting and generating funds.
  
• The World Federation will actively publicise and encourage donations to the fund. The World Federation would open a separate account for funding projects worldwide, and individuals could make donations to the account, with an option for which project they would prefer their donations to go to.
  
•  The jamaat undertaking the project would also open an account to monitor the funds the received and its disbursement. This account would be open to public scrutiny.
  
• The Jamaat’s project account would also ensure that overspend on any project is made only after strict contractual procedures have been used. Cost over-runs are common in the building industry, and as such, the type of project procurement is of paramount importance in order to keep overspending to a minimum.
  
• The Project Plan must also allow for a fixed percentage set aside for contingencies to allow for overspend. This will act as a hedge against rising costs, unforeseens and change orders made during the construction stage. In the event the contingencies are expended, the project committee will submit an amendment detailing the reasons for the escalation of costs, or organically develop ways and means of right-sizing the project.
  
• The role of the Jamaat is to collect funds. The role of the Regional Federations and the World Federation is to support the collection of funds.
  
• This systematic process of undertaking capital projects will be applicable to all those projects where the contract has not yet been signed.  

 
4.  Template

Proposed Template Submitted to the World Federation Executive Council by the Regional Federation and presented to the Executive Council by its representative.

Name of Jamaat:                                            Regional Federation:

Structures:

• Is there an independent project committee
  established by the Managing Committee?                    YES    NO

• Does the project committee consist of professionals      
  who would add value with clear roles and
  responsibilities?                                                        YES    NO

• Has the project committee ensured that there are          
  structures in place to deliver the tasks identified in
  the project plan?                                                       YES    NO

• Has the Project Committee undertaken a
  demographic feasibility study?                                    YES    NO

• Has the Project Committee undertaken a financial        YES    NO
  feasibility study?

• Has the project committee ensured that the data
  collected has been incorporated into the project plan?  YES     NO

• Has the Project Committee ensured that there are
  funding strategies for the building and annual
  maintenance expenditures?                                        YES    NO  

• Has the Jamaat ensured that 75% of the membership
  has approved this project?                                         YES    NO

• Has the Jamaat secured 40% of the funding                                  
  for this capital project from its membership?                YES    NO

• Has the regional federation reviewed the project?         YES     NO

• Has the regional federation provided expertise for the   YES     NO
  Project?

• Has the regional federation ensured that fundraising
  within the region can be managed taking into account
  other capital projects already in place and other
  foreseeable projects in the future?                              YES     NO
       

Information on this form is correct to the best of my knowledge and
understanding of capital project planning. 
For Allah Subhana wa Ta’ala is All Knowing.

Regional Federation President/Chairman            President/Chairman of Jamaat 
                                                                      undertaking the Project