HomeMy WebLinkAboutStaff Report 13888
City of Palo Alto (ID # 13888)
City Council Staff Report
Meeting Date: 2/7/2022 Report Type: Consent Calendar
City of Palo Alto Page 1
Title: Policy and Services Committee Recommends Approval of the Office of
the City Auditor Construction Project Controls Report
From: City Manager
Lead Department: City Auditor
Recommendation
The Policy and Services Committee, City Auditor, and Staff recommend that the City
Council approve the Construction Project Controls report.
Executive Summary
Baker Tilly, in its capacity serving as the Office of the City Auditor, performed a review
of construction project controls as approved in the FY2021 Audit Plan approved by City
Council.
Through the audit activity, the Office of the City Auditor identified five (5)
recommendations. The Public Works Department concurred with each finding and has
drafted action plans for each item.
The Policy & Services Committee unanimously approved the report at the November 9,
2021 meeting (ID #13605; Video).
The Office of City Auditor will perform periodic follow up procedures to validate that
corrective actions have been implemented.
Background
City of Palo Alto Page 2
The Office of the City Auditor included an assessment in the FY2021 Audit Plan
approved by City Council. The objectives of this review were to:
The Policy & Services Committee unanimously approved the report at the November 9,
2021 meeting (ID #13605; Video).
Environmental review is not applicable to this activity.
Attachments:
• OCA - Construction Controls Review (Final Draft - City Council)
The City of Palo Alto Public Works Department currently has approximately 150 active
projects in various stages of planning and construction. Per the Semiannual Update on
the Status of Capital Improvement Program Projects that reflected the status of all
active projects through December 2020, the total budget for the active projects is
approximately $670 million. The active projects include those identified in the Council
Infrastructure Plan introduced in 2014. This is a $235 million plan that includes ten
major capital projects ranging in value from $2 million to $118 million, in addition to the
dozens of other smaller maintenance and improvement projects in the Capital
Improvement Program. Note that other departments who manage capital projects,
aside from Public Works (e.g., Utilities) were excluded from this assessment.
1) Review documented policies, procedures and processes
2) Assess the adequacy of the current controls used to avoid, manage, or mitigate
project risks
3) Verify implemented procedures and processes conform to the documented policy
and procedures and identify any gaps between documented procedures and
implemented procedures
Discussion
The attached report summarizes the analysis, audit findings, and recommendations.
Timeline, Resource Impact, Policy Implications
The timeline for implementation of corrective action plans is identified within the
attached report. All corrective actions are scheduled to be implemented by July 1,
2022.
Stakeholder Engagement
The Office of the City Auditor worked primarily with the Public Works Department and
engaged with additional stakeholders, including the City Manager’s Office and City
Attorney’s Office, as necessary.
Environmental Review
1
City of Palo Alto
Office of the City Auditor
Construction Project Controls
Assessment
October 20, 2021
2
Executive Summary
Purpose of the Assessment
The objectives of Construction Project Controls Assessment was to:
1) Review documented policies, procedures and processes
2) Assess the adequacy of the current controls used to avoid, manage, or mitigate project risks
3) Verify implemented procedures and processes conform to the documented policy and procedures and identify
any gaps between documented procedures and implemented procedures
Report Highlights
The OCA found the documented procedures and controls adequate to manage and mitigate risks on construction
projects. We did not identify any material controls gaps or deficiencies with the implemented controls; however, we have
offered recommendations for improvement to further strengthen the implemented controls. This assessment did not test
the controls for effectiveness. A separate construction audit engagement will be performed on the new Public Safety
Building where the effectiveness of the documented project controls can be observed for an entire project.
Improvement
Recommendation –
Project Reporting
Pg. 8 The OCA recommends developing project reporting that can be used to
track project performance and as a risk mitigation tool.
The Public Works Department maintains a Semiannual Update on the Status of
Capital Improvement Program Projects that reflects including project budgets,
actual expenditures per the SAP system, projected completion dates and a
brief narrative regarding the current status of each project. In addition, each
project manager maintains their own project reporting related to the project
budget and progress; however, it does not follow the same format as the
Semiannual Update, or as other project managers. This is not considered a
controls deficiency because the project managers are actively tracking the
status of their projects and the Construction Administration Manual, which
defines required procedures and does specify a reporting format. Both the
Semiannual Update and project manager’s reporting only reflect historical data.
There is an opportunity to enhance the reporting to better track project
performance and be used as a risk mitigation tool. A uniform reporting format
should be considered and include the current estimate to complete the project
as well as the original scheduled completion date and the current estimated
completion date. Maintaining this type of reporting on a consistent basis can
help to identify and mitigate potential budget and schedule overruns earlier in
the project. It would also help to provide up-to-date project tracking, and could
streamline the process to compile the Semiannual Update.
Improvement
Recommendation –
Document Control
Pg. 8 The OCA recommends developing a consistent file management
structure.
The individual file management systems observed were adequate and allowed
for the efficient recall of project documentation; however, a consistent structure
could strengthen the City's controls on document management.
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Improvement
Recommendation –
Prevailing Wage
Monitoring
Pg. 8 The Construction Administration Manual should be updated to reflect the
controls that are currently implemented to verify prevailing wage
requirements.
The current implemented controls are not documented in the Construction
Administration Manual.
Improvement
Recommendation –
Schedule Management
Pg. 9 The Construction Administration Manual should be updated to provide
guidance and standards on schedule monitoring as well as remedial
procedures and escalation requirements for non-compliance.
The implemented controls related to schedule monitoring should be
documented in the Construction Administration Manual.
Improvement
Recommendation –
Allowance Usage
Pg. 9 The Construction Administration Manual should reflect the controls that
are currently in place for allowance usage and reconciliation.
There are currently controls in place to manage allowance usage when
applicable and these practices should be documented in the Construction
Administration Manual.
See the Assessment Results section for additional detail on each of these highlights.
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Table of Contents
Executive Summary ........................................................................................................................................................... 2
Purpose of the Assessment ........................................................................................................................................ 2
Report Highlights ........................................................................................................................................................... 2
Objective ........................................................................................................................................................................... 5
Background ..................................................................................................................................................................... 5
Scope ................................................................................................................................................................................. 5
Compliance Statement .................................................................................................................................................. 5
Organizational Strengths ............................................................................................................................................. 6
Technical Assessment ..................................................................................................................................................... 7
Assessment Results ....................................................................................................................................................... 14
Improvement Recommendation – Project Reporting ......................................................................................... 14
Improvement Recommendation – Document Control ........................................................................................ 14
Improvement Recommendation – Prevailing Wage Monitoring ...................................................................... 15
Improvement Recommendation – Schedule Management ............................................................................... 15
Improvement Recommendation – Allowance Usage .......................................................................................... 15
Appendices ........................................................................................................................................................................ 16
Appendix A: X ............................................................................................................................................................... 16
Appendix B: Management Response ..................................................................................................................... 17
Index of Tables
Table 1 – Risk Assessment Phase ..................................................................................... Error! Bookmark not defined.
Table 2 – Risk Framework ................................................................................................... Error! Bookmark not defined.
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Introduction
Objective The purpose of this assessment was to:
1) Review documented policies, procedures and processes
2) Assess the adequacy of the current controls used to avoid, manage,
or mitigate project risks
3) Verify implemented procedures and processes conform to the documented policy
and procedures and identify any gaps between documented procedures and
implemented procedures
Background The City of Palo Alto Public Works department currently has approximately 150 active
projects in various stages of planning and construction. Per the Semiannual Update on the
Status of Capital Improvement Program Projects that reflected the status of all active
projects through December 2020, the total budget for the active projects is approximately
$670 million. The active projects include those identified in the Capital Improvement
(Infrastructure) Plan introduced in 2014. This is a $235 million that includes ten major capital
projects ranging in value from $2 million to $118 million as well as dozens of other smaller
maintenance and improvement projects. Note that other departments who manage capital
projects, aside from Public Works (e.g., Utilities) were excluded from this assessment.
Risks related to construction projects include:
Reputational damage related to projects the public considers unsuccessful
Budget overruns due to excessive change order activity or abusive pricing practices
Schedule delays due to poor or improper project management
Weaknesses in project controls can magnify these risks on capital programs of this size.
Scope We reviewed the processes and procedures documented in the City’s Construction
Administration Manual dated February 22, 2021. We then conducted interviews with project
managers to walk through implemented controls and procedures.
The key controls areas included:
Prime contractor bid and award control
Contract administration and control
Schedule management
Communication and document control
Contractor billing review and approval
Change management
Allowance and contingency management
Verification of completed work
Closeout activities
Compliance
Statement
This audit activity was conducted in accordance with the Annual Audit Plan.
The audit activity was not performed in compliance with the generally accepted government
auditing standards (GAGAS). The audit activity was not performed in compliance with
GAGAS for two primary reasons:
- The individuals conducting the activity did not meet the CPE requirements. As
subject matter experts in construction risk, the team members are not required to
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obtain government audit CPE. Rather, multiple team members are required to be
technically competent construction risk professionals and obtain CPE in construction
risk topics.
o Mitigating factor – City Auditor Kyle O’Rourke and Manager Chiemi Perry
both adhere to CPE requirements and
- The City of Palo Alto Office of the City Auditor has not undergone an External Peer
Review in the required 3 year cycle as required by Standards.
o Note – the Office of the City Auditor will undergo a peer review at the
conclusion of FY22.
We planned and performed the activity to obtain sufficient, appropriate evidence to provide a
reasonable basis for our recommendations based on our objectives. We believe that the
evidence obtained provides a reasonable basis for our findings and conclusions based on
our audit the objectives.
Organizational
Strengths
During this audit activity, we observed certain strengths of the Public Works Department.
Key strengths include:
- The project manager’s interviewed have strong backgrounds in construction,
engineering and project management.
- The procedures for construction contract bid and award contained in the Construction
Administration Manual are both thorough and well defined. The Invitation for Bid (IFB)
document contains adequate instructions to the bidders, criteria for selection,
insurance, bonding, and prevailing wage requirements. It also includes the City's
standard contract documents. The project managers interviewed had thorough
understanding of the bid and award process.
- The Construction Administration Manual has a thorough process for reviewing project
change orders. The project manager’s interviewed follow a consistent and rigorous
process to review and validate change order requests from contractors.
Additionally, Baker Tilly noted the documented controls are adequate to manage and
mitigate risks on construction projects. While we have recommendations to further
strengthen the City’s controls, we did not identify any material controls gaps or deficiencies
with the identified controls. This objective of this engagement was to assess the adequacy of
documented controls. The effectiveness of the controls was not tested.
The Office of the City Auditor greatly appreciates the support of the Public Works
Department in conducting this assessment.
Thank you!
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Technical Assessment
To accomplish our objective, we reviewed the Public Works Construction Administration Manual to gain and
understanding of documented controls related to:
Prime contractor bid and award control
Contract administration and control
Schedule management
Communication and document control
Contractor billing review and approval
Change management
Allowance and contingency management
Verification of completed work
Closeout activities
Key processes were assessed to ensure they are adequately defined and appropriate to mitigate both general
construction risks and risks specific to the City of Palo Alto.
We also performed interviews with project managers to verify documented controls have been implemented as well as
to document any project controls that are not defined in the Construction Administration Manual. During these
interviews we asked individuals to provide examples of documentation. This was done to gain a better understanding
of controls environment and processes in place. We interviewed the following individuals/functions:
Director of Public Works
Airport Division
Environmental Services
Engineering Services
The following matrix summarizes each control area reviewed, the key risks and documented controls to address the risks.
The documented controls are adequate to mitigate the key risks in most instances. Testing to confirm the effectiveness of
the controls related to the project portfolio was not in the scope of this assessment. A separate construction audit will be
performed on the new Public Safety Building where the effectiveness of the documented controls will be tested.
Note: for our controls methodology we follow the Construction Audit and Cost Controls Institute (CAACCI) and the Project
Management Institute (PMI).
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Prime Contractor Bid and Award
Key Risks Summary of Documented Controls
Bid and award process is circumvented Policy and procedures related to bid are thoroughly documented in
Sections A and B of the Construction Administration Manual
Purchasing compiles the Invitation for Bid (IFB) and handles the
solicitation and summarizes the bids (Review of Purchasing not in this
assessment scope)
Collusion and bid rigging IFBs are advertised on the City’s procurement system, PlanetBids, and
can be accessed by all registered contractors
Incomplete bid documents leading to
misinterpreted award criteria and contract
requirements
Projects managers review and compile the technical specifications and
drawings
Purchasing compiles the Invitation for Bid (IFB) and handles the
solicitation and summarizes the bids (Review of Purchasing not in this
assessment scope)
The IFB document contains adequate instructions to the bidders,
criteria for selection, insurance, bonding, and prevailing wage
requirements. It also includes the City's standard contract documents
Low bid response IFBs advertised on PlanetBids and can be accessed by all registered
contractors
Response from unqualified contractors Larger projects involve a pre-qualification process to ensure
prospective contractors have the financial strength and qualifications to
perform the work
Contractors are required to provide valid licensing to perform work to
be considered a responsive bidder
9
Contract Administration
Key Risks Summary of Documented Controls
Non-compliance with insurance and bonding
requirements
Procedures related to insurance are defined in Section B.1 of the
Construction Administration Manual.
Purchasing contract manager (in consultation with the awarding
department and the City’s risk manager as needed) defines the
insurance requirements that are applicable to the project
The contractor awarded the work needs to provide all certificates of
insurance and proof of bonding prior to the contract being executed
Project managers monitor the expiration dates of the documents and
obtain current documents when needed
Non-compliance with prevailing wage
requirements
Section 4.0 of the IFB defines the certified payroll requirements (No
controls are documented in the Construction Administration
Manual – see Recommendations for Improvement)
When certified payroll is required to be provided to the City under the
contract, it is collected weekly
Project managers verify wages are compliant with prevailing wage
requirements
Project managers perform spot checks with trade and craft workers to
verify rates and hours reflected in the certified payroll are accurate
Billing non-compliance See contractor billing and approval
Failure to deliver the project as specified See verification of complete work
10
Schedule Management
Key Risks Summary of Documented Controls
Project delays leading to cost escalation and
delayed placed in service
Project managers interviewed conduct regular schedule reviews with
the contractor at weekly, bi-weekly or monthly meetings depending on
the size and magnitude of the project
The schedule review involves checking the current physical progress of
the project against the project schedule and major milestones, verifying
long lead items are being procured in a timely fashion, and reviewing
look-ahead schedules
The status of current projects are discussed internally at monthly Public
Works project manager meetings
If a project falls behind schedule, project managers issue written notice
to the contractor and require a recovery plan
See Recommendations for Improvement related to documenting
the current procedures
Communication and Document Control
Key Risks Summary of Documented Controls
Budget overruns and schedule delays that
could have been mitigated with timely and
accurate reporting
Each project manager has their own project tracking and progress
reporting document. The documents track amounts expended against
the contract values and have basic information on progress
Public Works compiles a semiannual report reflecting the progress of
all CIP
Project budgets and progress are discussed internally at monthly
Public Works project manager meetings
See Recommendation for Improvement related to project
reporting
Poor document management can result in an
inability to:
Support and defend key decisions on
the project
Verify installed quantities and
physical progress in order to validate
contractor payment applications
Validate change orders
Resolve contractor disputes and
defend against claims
Section C8 of The Construction Administration Manual defines the
principal types of documentation that should be maintained on each
project
Project Managers’ document management systems were observed
during interviews. They were organized and allowed them to access
needed documents. When asked to provide documents as a follow up
to the interviews, the requests were fulfilled within one day
See recommendation for Improvement related to document
control
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Contractor Billing Review and Approval
Key Risks Summary of Documented Controls
Billing errors The following controls are applicable to each key risk:
Overpayments to contractors Section C5 of the Construction Administration Manual defines
contractor billing review procedures
Payment for work that has not been
completed
Project managers observe physical progress to verify work and/or
quantities installed
Project managers review the Project Inspectors daily inspection reports
as additional confirmation of physical progress
Project managers check the math and confirm any unit rate billings
comply with the bid documents
If errors are noted, billings are sent back to the contractor for revisions
Change Management
Key Risks Summary of Documented Controls
Overpriced change orders Section C9 of the Construction Administration Manual defines change
order procedures
Change orders are checked for arithmetic accuracy
Where applicable labor rates and materials rates are compared to the
bid documents to ensure consistency with bid amounts
When applicable labor rates are compared to certified payrolls
If needed, the project management team may do an independent take
off to verify the quantities and pricing are reasonable
Change orders for duplicate scope and
rework
Section C9 of the Construction Administration Manual defines change
order procedures
Change order scope of is compared to the bid documents to confirm it
is a change in scope
RFIs related to the change order scope are reviewed
Unauthorized change orders Section C9 of the Construction Administration Manual defines change
order procedures
The Construction Administration Manual contains an authorization
matrix detailing approval limits
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Allowance and Contingency Management
Key Risks Summary of Documented Controls
Unauthorized allowance usage The following controls are applicable to each key risk:
Allowance costs co-mingling Project Managers track project contingency (this is a requirement in
Section C9 of the Construction Administration Manual)
Allowances are broken out as separate line items in the bid documents
All allowance usage requires an Allowance Usage Request. This is
documented using a process similar to change order review and
approval
See Recommendations for Improvement related to contingency
management.
Verification of Completed Work
Key Risks Summary of Documented Controls
Work not installed per specifications The following controls are applicable to each key risk:
Failure to deliver the contracted scope Section C1 and C8.1 of the Construction Administration Manual define
procedures related to verification of completed work
Each project has a project inspector that reviews progress and verifies
compliance with specifications
The project inspector completes daily inspection reports
Project managers review the daily inspection reports to confirm
progress
Project managers perform regular site visits to verify the work in place
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Closeout Activities
Failure to deliver the contracted scope Section C11 of the Construction Administration Manual defines
procedures related to closeout activities
A punch list is generated by the project manager once the contractor
notifies the project manager the work has been completed
A Letter of Acceptance is issued to the contractor once all work is
certified complete
Subcontractor claims or stop payment
notices against the contractor
Section C11 of the Construction Administration Manual defines
procedures related to closeout activities
The contractor is required to provide an affidavit certifying all
subcontractors and material suppliers have been paid along with stop
payment notice waivers
Inability to operate manage and maintain the
asset
Section C11 of the Construction Administration Manual defines
procedures related to closeout activities
Article 9.8.2 of the General Conditions document stipulates that O&M
Manuals, as built drawings and manufacturer warranties need to be
submitted prior to final payment
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Assessment Results
Improvement
Recommendation – Project
Reporting
The OCA recommends developing project reporting that can be used to
track project performance and as a risk mitigation tool.
In our initial request to the Public Works Department on March 22, 2021, we
asked for a schedule of construction projects in progress along with projects
completed in the past 12 months, including a description of the project, the
initial project budget and the current or final budget. The Public Works
Department provided the most recent Semiannual Update on the Status of
Capital Improvement Program Projects that reflected the status of all active
projects through December 2020. This report reflected each project’s budget,
actual expenditures per the SAP system, projected completion dates and a
brief narrative regarding the current status of each project. In addition we
reviewed the individual project reporting from eight projects with approximate
expenditures of $48 million (see Appendix A). We noted each project
manager maintains their own project reporting related to the project budget
and progress; however, it does not follow the same format as the
Semiannual Update, or as other project managers. This is not considered a
controls deficiency because the project managers are actively tracking the
status of their projects. However, the reporting produced only reflects
historical data and there is an opportunity to enhance the reporting to better
track project performance.
We recommend enhancing the current report format to include the current
estimate to complete the project as well as the original scheduled completion
date and the current estimated completion date. Maintaining this type of
reporting on a consistent basis can help to identify and mitigate potential
budget and schedule overruns earlier in the project. It would also help to
provide up-to-date project tracking, and could streamline the process to
compile the Semiannual Update.
Additionally, this type of project reporting can be used to assess the
performance of specific contractors or project types. This would allow the
Public Works Department to identify trends such project as projects or
contractors that consistently incur a high magnitude of change orders or
consistently fall behind schedule.
This type of reporting can be maintained manually using readily available
tools such as Microsoft Excel; however, the City would benefit by exploring
project management software options that could generate this reporting more
efficiently. Use of a project management software could also help with
consistent file management as well (see Document Control
recommendation).
Improvement
Recommendation – Document
Control
The OCA recommends developing a consistent file management
structure.
Each project manager has their own file management structure. We
observed the different file structures during our interviews by asking project
managers to share their screens and navigate through their file systems with
us. The individual file management systems were adequate and allowed for
the efficient recall of project documentation; however, a consistent structure
15
could strengthen Public Works’ controls on document management. As noted
in the Project Reporting recommendation, the City could consider a project
management software option that would also act as a project file
management system.
Improvement
Recommendation – Prevailing
Wage Monitoring
The Construction Administration Manual should be updated to reflect
the controls that are currently implemented to verify prevailing wage
requirements.
The contractor's requirements for prevailing wage and certified payroll
submission are defined in Section 4.0 of the Invitation For Bids (IFB)
document. The procedures performed related to collection and review of
certified payrolls by the project managers, which is required if the project is
grant funded, are not reflected in the Construction Administration Manual. In
circumstances where a project is grant funded, the City policy requires that
the project manager verifies compliance with prevailing wage requirements.
This process should be reflected in the Construction Administration Manual.
Additionally the Construction Administration Manual should detail the City's
remedies for non-compliance.
Improvement
Recommendation – Schedule
Management
The Construction Administration Manual should be updated to provide
guidance and standards on schedule monitoring as well as remedial
procedures and escalation requirements for non-compliance.
The project managers interviewed all conduct regular schedule reviews with
the contractor at weekly, bi-weekly or monthly meetings depending on the
size and magnitude of the project. Typically the schedule review involves
checking the current physical progress of the project against the project
schedule and major milestones, verifying long lead items are being procured
in a timely fashion, and reviewing schedule look-ahead schedules. The
remedies currently used by the project management team if a project falls
behind schedule is to issue written notice to the contractor and require a
recovery plan. In addition, progress on current projects is discussed internally
at Public Works meetings that occur each month. These practices should be
documented in the Construction Administration Manual.
Improvement
Recommendation – Allowance
Usage
The Construction Administration Manual should reflect the controls
that are currently in place for allowance usage and reconciliation.
Projects may contain budgeted scopes of work the City is considering, but
the City has not yet finalized the design. Such scopes are broken out in the
bid documents as an allowance line item. The City can then elect to buy
these items at a later date once the design is completed. The project
manager’s interviewed stated charging against the allowance requires an
allowance usage request. There is a specific document for this request and
the review process follows the same procedures as executing a change
order. These practices should be documented in the Construction
Administration Manual.
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Appendices
Appendix A: Project Reporting
The OCA reviewed the project reporting for the following projects:
Project Project ID Area Total Project Budget Actual Expenditures
Highway 101
Pedestrian/Bicycle
Overpass Project
PE-11011 Council Infrastructure Plan $ 22,889,453 $ 14,142,494
High and Bryant
Street Garages
Waterproofing
and Repairs
PE‐18002 Building and Facilities $ 443,376 $ 257,431
Cubberley Roof
Replacements
CB‐16002 Building and Facilities $ 860,400 $ 569,606
Rinconada Park
Improvements
PE‐08001 Parks and open spaces $ 8,742,375 $ 2,350,551
Street
Maintenance
PE‐86070 Street and Sidewalks $ 11,055,995 $ 5,226,631
Airport Apron
Reconstruction
AP‐16000 Airport Projects $ 44,573,110 $ 23,736,439
Primary
Sedimentation
Tank
Rehabilitation
WQ‐14003 Wastewater Treatment $ 20,681,849 $ 738,257
Plant Repair,
Retrofit and
Equipment
Replacement
WQ‐19002 Wastewater Treatment $ 7,332,834 $ 760,983
Total $ 116,579,392 $ 47,782,392
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Appendix B: Management Response
Recommendation Responsible
Department(s)
Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action
Plan
The OCA recommends developing project reporting that can be used to
track project performance and as a risk mitigation tool, including
enhancing the current report format to include the current estimate to
complete the project as well as the original scheduled completion date
and the current estimated completion date. Maintaining this type of
reporting on a consistent basis can help to identify and mitigate
potential budget and schedule overruns earlier in the project.
Public Works Public Works Department appreciates the audit observations which
affirm strong project management and controls that manage and mitigate
construction risks. The audit recommendations generally seek to
enhance or further document existing practices, and the department is
confident that they can be addressed with a modest investment of staff
resources.
Concurrence: Partially Agree
Target Date: 7/1/2022
Action Plan:
1. Review current project tracking practices and formats in use: by
2/1/2022
2. Standardize updated project tracking formats, including some
potential differences between approaches due to factors such as
project size and recurring vs. one-time project: by 4/1/2022
3. Update Construction Administration Manual and complete staff
training and implementation of updated practices: by 7/1/2022
The OCA recommends developing a consistent file management
structure. Each project manager has their own file management
structure. A consistent structure could strengthen Public Works’ controls
on document management. As noted in the Project Reporting
recommendation, the City could consider a project management
software option that would also act as a project file management
system.
Public Works Concurrence: Partially Agree
Target Date: March 1, 2022
Action Plan: Public Works has a standard file management structure for
capital project documentation. The department will confirm and make
any potential updates to the existing file management structure,
document the file management structure in the Construction
Administration Manual, and complete staff training and implementation of
the updated practice. Note: Additional supplemental filing systems will
also be maintained as required by grants (e.g. Caltrans, FAA).
The Construction Administration Manual should be updated to reflect
the controls that are currently implemented to verify prevailing wage
requirements. The contractor's requirements for prevailing wage and
certified payroll submission are defined in Section 4.0 of the Initiation
For Bid (IFB) document. The procedures performed related to collection
Public Works Concurrence: Agree
Target Date: March 1, 2022
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Recommendation Responsible
Department(s)
Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action
Plan
and review of certified payrolls by the project managers are not
reflected in the Construction Administration Manual. This process
should be reflected in the Construction Administration Manual.
Additionally the Construction Administration Manual should detail the
City's remedies for non-compliance.
Action Plan: Public Works is in the process of updating the Construction
Administration Manual and will include this information in the current
update.
The Construction Administration Manual should be updated to provide
guidance and standards on schedule monitoring as well as remedial
procedures and escalation requirements for non-compliance. The
remedies currently used by the project management team if a project
falls behind schedule is to issue written notice to the contractor and
require a recovery plan. In addition, progress on current projects is
discussed internally at Public Works meetings that occur each month.
These practices should be documented in the Construction
Administration Manual.
Public Works Concurrence: Agree
Target Date: March 1, 2022
Action Plan: Public Works is in the process of updating the Construction
Administration Manual and will include this information in the current
update.
The Construction Administration Manual should reflect the controls that
are currently in place for allowance usage and reconciliation. Projects
may contain budgeted scopes of work the City is considering but has
not yet finalized the design. These are broken out in the bid documents
as an allowance line item. The City can then elect to buy these items at
a later date once the design is completed. The project manager’s
interviewed stated charging against the allowance requires an
allowance usage request. There is a specific document for this request
and the review process follows the same procedures as executing a
change order. These practices should be documented in the
Construction Administration Manual.
Public Works Concurrence: Agree
Target Date: March 1, 2022
Action Plan: Public Works is in the process of updating the Construction
Administration Manual and will include this information in the current
update.