SAO AUDIT RECOMMENDATIONS AND ACTION PLAN

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Description

Port of Seattle State Auditor Report Responses And Action Plan March 25, 2008 The table below addresses 51 recommendations submitted to the Port of Seattle following the Washington State Auditor’s Office report focusing on Port construction practices. The first two recommendations, shown in blue (OA1, OA2), are overarching for the Port in general, and others, numbered 1 – 49, are specific to construction and contracting practices. The latest activities, listed under Action Steps, will be shaded orange, and then green as they are completed. Use the search feature to navigate through the document. Overarching Recommendations Latest Activity Action Completed ESTIMATED STATUS/ SAO RECOMMENDATION PORT RESPONSE ACTION STEPS ACCOUNTABILITY COMPLETION REMARKS RECOMMENDATION PORT RESPONSE ACTION STEPS ESTIMATED ACCOUNTABILITY COMPLETION STATUS/ REMARKS OA1. The Port should establish a The Port agrees this Port Chief Executive Officer (CEO) directed Deputy CEO 3/15/08 On Friday stsenior-level Chief Procurement recommendation has merit. A Port staff to review options and best practices March 21 Officer (CPO) position. This official team is in place, and work is for procurement systems, and recommend Procurement the Port should report directly to the [Port] already underway to identify and organizational and process change to CEO by Recommendation posted a CEO and be responsible for evaluate procurement ...

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• Publié par: Voof
• Nombre de lectures: 18
• Langue: English

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Port of Seattle

State Auditor Report Responses

And Action Plan

March 25, 2008       The table below addresses 51 recommendations submitted to the Port of Seattle following the Washington State Auditor s Office report focusing on Port ’ construction practices. The first two recommendations, shown in blue (OA1, OA2), are overarching for the Port in general, and others, numbered 1 – 49, are specific to construction and contracting practices. The latest activities, listed under Action Steps, will be shaded orange, and then green as they are completed. Use the search feature to navigate through the document.     Overarching Recommendations Latest Activity Action Completed      

SAO RECOMMENDATION PORT RESPONSE     RECOMMENDATION PORT RESPONSE

ACTION STEPS

  ACTION STEPS

ACCOUNTABILITY ESTIMATED STATUS/ COMPLETIONREMARKS

 ESTIMATED  ACCOUNTABILITYCOMPLETIOSTATUS/ REMARKS On Frida March 21 st   the Port osted a osition for the Director Central Procurement Office. The posting closes on A ril 4 th , at which time the Port will review the applications and be in the selection process.

OA1. The Port should establish a rees thisThe Port a 3/15/08 ut CEO CEO directed De Port Chief Executive Officer senior-level Chief Procurement Port staff to review options and best practicesrecommendation has merit. A Officer (CPO) position. This official Procurement procurement systems, and recommend forteam is in place, and work is should re ort directl to the Port chan e to CEO b Recommendation or anizational and rocessalread underwa to identif and CEO and be res onsible for March models in Team 15, 2008.evaluate rocurement managing and overseeing allother organizations that engage in rocurement-related activit . This ects. Withma or construction ro official should have authorit to hire an outside facilitator ofthe hel 11/2007 facilitator with extensiveOA1.a Outside trained and independent procurementexperienced in capital projectprocurement expertise hired in   officials who will be charged withdelivery, the team is reviewing andNovember 2007.   reviewin and a rovin allanal zin o several for tions rocurement-related transactions. ortin re ersonnel,mission, role, 12/2007 ProcurementOA1.b Internal Current delegations of authoritylocation, and structure of a ChiefRecommendation Team assembled in   related to rocurement – contract orProcurement Office similarDecember 2007. Team includes   awards, a roval of contract chan esfunctional unit over the nextre resentatives from ma or   and amendments, and relatedseveral weeks. The Port’s CEOprocurement centers within the Port.   activities involvin ex enditure of him rovidehas asked the team to ublic funds related to construction tions and awith an outline of o Recommendation Team 3/13/08OA1.c Procurement and construction management –preferred recommendation withinmeets weekly.   should be rescinded and re-assigned A90 days. necessary period of to the CPO and her or his staff.im lementation lannin will follow, Im lement functional centralized rocurement 6/1/08 but the CEO anticipates that the office. new unit or department can be o erational b June 1, 2008. The OA1.d Pre are ob descri tion, advertise, 3/15/08 workin team includes and select Chief Procurement Officer. representatives from the Port’s executive, le al, ro ect OA1.e Com lete necessar or anizational 6/1/08 mana ement, en ineerin , and lo istics. purchasing staffs.   OA2. The [Port] Commission shouldResolution 3181 is the structural On Commission January 8, 2008, the Port Commission 2    

 

 

ACCOUNTABILITY  E C S O T M I P M L A E T T ED STATUS/   IONREMARKS

SAO RECOMMENDATION PORT RESPONSE ACTION STEPS     re-evaluate the current dele ation of established the inframework underl a subcommittee to review the authority to the [Port] CEO of Commission authority currently delegationrelationship between the Port encom assed in Resolution 3181Commission and the CEO. described in Resolution 3181. and develo and issue a newResolution 3181 was ado ted in delegation of authority resolution that has remained1994. ItOA2.a Commissioners Davis and Tarleton   more clearly defines thesubstantially unchanged for thewill serve on the subcommittee.   Commission’s intent with res ect to onl one ears. However,ast 13 construction management and may retain outside OA2.b Subcommitteeof the five Commissioners who reporting to the Commission and the experts.voted on and signed Resolution ublic concernin construction chan e A3181 remains in office. activities. ear. OA2.c Subcommittee will re ort back to fullof CEO occurred earlier this Given these circumstances, it is Commission with proposed a ro riate that the Commission amendments b June 30, 2008. and the CEO review the rovisions of this bedrock document.CEO directed Port staff to review and provideGeneral Counsel Ultimatel , the Commission, in to the esdetailed recommendations for chan conversation with the CEO, will related to rovisionsResolution 3181 strike the balance between policyconstruction management and construction direction and implementation, asactivity reporting by March 15, 2008. well as other matters concernin   the sco e of the CEO’s authorit . team assembled and meetinOA2.d Internal To advance that effort, the CEOto review specific provisions and has asked members of hisrocesses. executive team, led b the General Counsel, to provide him with recommendations for u datin , clarif in and stren thenin a variety of provisions in Resolution 3181 within 90 days. The CEO has directed the team to ive s ecific attention to the results of this performance audit and the 49 resultin recommendations. In articular, the team is char ed with providing specific

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        1/8/08           6/30/08         3/15/08              

        Complete.                               Port staff continues work su ortin the Commission as directed by the Sub- Committee.  

SAO RECOMMENDATION PORT RESPONSE ACTION STEPS    

ESTIMATED STATUS/ ACCOUNTABILITY   COMPLETION REMARKS 

recommendations for rocess improvements and enhanced checks and balances for ro ect- wide contractin authorit , as well as increased public visibility and Commission participation for larger construction ro ects. The CEO then will share these recommendations with the Commission. 1. We recommend that The Port The Port will review its chan e  The Port has im lemented and stren thened Pro ect immediatel im lement and order control rocedures and will  control rocedures for chan e orders as Mana ement, follows: Engineering & strengthen control procedures to implement changes where n in  Construction assure that E g eers’ change order warranted to ensure alignment with  Immediate Action: (PMEC) estimates are a re ared without industr best ractices. The Port ad be un, and will 1. a All chan e orders are double checked b knowled e of the contractors’ has alre proposed amounts, and (b) change continue, to make improvements a Construction Manager (CM) and a order estimates and cost anal ses as art of the 37- oint action lan  the CA beforeContract Administrator are full and com letel documented. from the TKW erformance audit,  the Port.are executed b Where cost or price analysis is used and it will incorporate the to evaluate chan e order ro osals, Performance Auditor’s additional  trainin1.b Provide ensure com to for liance the Port should re uire full and recommendations into that action each Resident En ineer RE , CM and complete documentation of these plan as appropriate. The Port CA on current requirements for change a es that order estimates and document training r s e u v p ie er w v s is ,  o in ry c   l r u e d v i i n e g w  f s u   l a ly n   d d   o a c p u pr m o e v n a t l e s. d     co g s r t e  analsi i s n  a d n e d p   e s n e d c e o n n t  d e a s r ti   mates,  s ecifics. ntractor n order   r p e ro vi p e o w s s a   l o s f     a c r o e vital to    t c r h a a ns g p e a   rency  Additional Action:  and accountabilit and will ensure  1.c Evaluate documentation of anal ses of that these estimates and reviews  estimates and make recommendations are well-documented in the files.  for standardization and consistency.   1.d Establish a olic outlinin when a change order request requires a separate estimate in lieu of a direct evaluation of the existing contractor’s change order

4    

            1/24/08       3/5/08           6/5/08  

Part of this work is currently ongoing under TKW Item 7.   Com lete.     Complete

SAO RECOMMENDATION PORT RESPONSE    

ACTION STEPS

ACCOUNTABILITY ESTIMATED STATUS/ COMPLETIONREMARKS

ro osal.   1.e Coordinate olic and rocedures with the Chief Procurement Office.   1.f Update CM and CA manuals to reflect new rocesses and rocedures.   1.g Provide training to CMs, CAs, Port Construction Services PCS and Pro ect Mana ement Grou PMG on new cost estimate procedures.   u 2. n    d W er e t   a r k e e c   o a  m re m v e ie n w d    t o h f  a a t  ll [   th m e a  P or o   r r t e ]  cent  The Port has begun a review of  i T d h e e n   ti P f o   r i t n   c wi o ll n  r s e is v t i e e n w c   i c e u s r   r a e n n d t    p n r o o t j e e   c c t o  t r r r e e n t d i   v lo e  gs,     chan e orders and trend lo s to  c and on oin ro ects to identif cases identif similarities between Port  actions or evaluate recommendations. where engineers’ estimates and estimated costs and contractor contractors’ ro osed amounts are ro osed amounts. The Port will  Immediate Action: consistentl the same and, in such take remedial action as a ro riate 2.a Identif ineers’ all cases where enConstruction cases, undertake a further evaluation and also apply the process estimates and contractors’ proposedManager of the underl in causes; followed b im rovements described above in  theamounts are consistentl same and   remedial actions as appropriate. Recommendation 1. determine underl in causes.      Additional Action: 2.b Review matches identified and Internal Audit recommend remedial action. Manager    2.c Provide re ort to Senior Mana ement. Internal Audit  Mana er 2.d Take appropriate remedial action as Construction directed b Senior Mana ement. Manager   3. We recommend that the Port The Port has be un revisin its  The Port will revise its Standard O eratin PMEC Proce n revise its SOP Manual to include construction Standard Operatig guideli d n u e r s e   s f   or m  p a r n o u p a e l  r t   o a  i n n d c   l a u c d c e u   r s at e e  c c if h ic a   nge  5    

          3/5/08           TBD     TBD   TBD        

          Com lete.            

Part of this work is currently

D STATUS/ ACCOUNTABILITY   C ES O T M I P M L A E T T E ION REMARKS 

SAO RECOMMENDATION PORT RESPONSE ACTION STEPS     s ecific uidelines for ro er and Procedures Manual as art of its order documentation, and will take the accurate change order TKW performance audit action following steps: documentation. The Port should lan. S ecificall , this revision will rovide trainin to its consultant include more uidelines for chan e Immediate Action: staff/construction managers to order negotiations and3.a Provide training on current requirements improve the manner in which [the documentation. Port staff willfor change order documentation for CMs, Port is documentin ro ect chan e receive necessar trainin toREs and CAs. orders. support these new guidelines. Additional Action: 3.b Establish team to evaluate current ractices.   3.c Establish minimum chan e order documentation re uirements and rovide change order review checklist.   3.d Review current documentation of chan e order negotiations and develop standard format.   3.e Provide trainin to ins ectors, REs, CMs, CAs, Program Leaders, Project Mana ers, PCS, Facilities & Infrastructure, internal desi ners and internal auditors on new procedures.   3.f Coordinate rocess with new Central Procurement Office (CPO), which will provide quality control, oversight and continuous im rovement.   4. We recommend that the Port As noted in the Port’s res onse to  The Port will develo standard o eratin PMEC   lo Standard  procedures that align with best industry d P e ro v c e ed p ures (SOP   s O ) t p h e a r t a   t a i l n ig g  n with b R e e g c u o n m  r m ev e i n si d o a n ti s o  t n o     3 it ,  s t   h p e r   o P c o e r d t  u h r a e s s     practices and will take the following steps:  industry practices.    to better conform to manualCurrent [Port]   6    

        3/5/08         6/5/08                                 7/31/08

       

on oin under TKW Item 11a.   Complete

       

SAO RECOMMENDATION PORT RESPONSE     SOPs do not rovide ade uate industry best practices. information regarding change order negotiations.

ACTION STEPS

ESTIMATED STATUS/ ACCOUNTABILITY   COMPLETION REMARKS 

Immediate Action: 4.a A negotiation summary will be reviewed b a CM and a CA before the Port executes an chan e order.   4.b Provide training in conjunction with chan e order trainin described in 3.a.   Additional Action: 4.c Determine best industr ractice for chan e order ne otiations.   4.d Identif differences, if an , between best industr ractices and those a licable to Port operations.   4.e Develo and/or revise current Port standards.   4.f Provide trainin to a ro riate staff.   5. Port mana ement should take The Port will review its ractices of  The Port’s res onse to chan e order PMEC at the contract schedule enforcement and  estimates is addressed under immediate steps to assure th [  Recommendation 1. Port] rigorously enforces all the evaluation of time extension contractual schedule re uirements. re uests to identif where further Then, when requests for time improvements can be made. The  Port management will immediately ensure that extensions are made, they can and Port will pay specific attention to  the Port enforces, consistent with best should be ro erl evaluated. The the ractices of other state and  ractices, all contractual re uirements for Port should also rovide more local a encies with res ect to  re aration and submission of schedules b oversight of the Change Order scheduling and enforcement when  taking the following steps: duct pr r o o p ce er s l s y     t c o r   e e a n t s e u d r   e a   n th d  a u t  s e e s d ti .  mates are coningthis review.   Immediate Action: 5.a Provide training on current contract schedule requirements for CM and CA staff.

7    

  1/24/08       3/5/08     6/5/08                     6/5/08                       3/15/08    

  Complete.       Complete

                      Complete    

SAO RECOMMENDATION    

PORT RESPONSE

ACTION STEPS

ACCOUNTABILITY   E C S O T M IM PL A E T T E I D O   N  S R T E A M T A U R S K /  S 

  5.b Review all active projects for compliance with contractual schedule re uirements.   5.c If any contracts are not in compliance with contractual schedule requirements, the Port will im lement enforcement consistent with the project specifications.   Additional Action: 5.d Review industr best mana ement practices for specifying and implementing schedule enforcement.   5.e Implement any improvements identified in item 5.d.   5.f Provide training to CM, CA, PCS and PMG on revised procedures.   6. We recommend that the Port The Port concurs that chan e  The Port immediatel ceased an informal PMEC immediatel cease its informal order ne otiations should be based  method of resolvin chan e order differences. method of resolving change order on all relevant factors, including  Immediate A tion: differences, and that [the Port] formal schedule, scope, means,  c im rove its chan e order methods, ricin , and o erational 6.a Port staff was notified that this ractice is documentation requirements to considerations. Improvements to no longer permitted. include that details of change order standard procedures that are  be must ne6.b A summar oti tions ne otiations must be based on underwa will em hasize chan e a discussions of sco e/means and order documentation trainin ,  CM and a CA before a areviewed b methods/pricing differences. including a focus on the above  be  canrderge ohcna tPo  eht yb detucexe factors. r .   Additional Action: 6.c All change order negotiations will be fully documented.

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  4/4/08     4/4/08           6/5/08       7/31/08     8/1/08         1/24/08     1/24/08         6/5/08    

  Complete.  

        Com lete.     Com lete.      

SAO RECOMMENDATION PORT RESPONSE    

ACTION STEPS

ACCOUNTABILITY   E C S O T M IM PL A E T T E I D O   N  S R T E A M T A U R S K /  S  

  6.d Change order documentation will be im roved as outlined in Recommendations 1, 3, 4 and 5.   6.e Port management will provide interim uidance until revised rocesses and procedures are put in place.   7. We recommend that [the Port] The Port will undertake additional  Using a statistical sampling methodology, Internal Audit undertake a review of the chan e review of chan e orders usin  Internal Audit will review Port construction Mana er orders ne otiated and a roved rocedures consistent with  contracts and determine whether the Port has under all contracts to determine if accepted auditing standards to  t p o a  t id h   e f   o s r t   a o t t i h st e i r c  i a n l  c s o a rr m e p c l t  e  m m a e rk n - ti u o p n s e .  d  I   n a   b a o d v d e it , i   on      there were other incorrect mark-ups determine whether other incorrect on change orders. mark-ups on change orders exist.  Internal Audit will use a risk-based audit a roach to test other contracts that mi ht be vulnerable to payment of incorrect mark-ups.    Immediate Action: 7.a Obtain State Auditor’s Office (SAO)   confirmation of the sam lin and risk-   based audit methodolo that will be   used.      7.b Review those contracts identified b the sampling and risk-based audit methodology.    Additional Action CM and 7.c Determine if further review is necessary, CA based on outcome of the immediate action.   7.d Implement cost recovery where appropriate.

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          6/5/08 Pending review of Internal Audit work plan and decisions on audit support resources with CommissionComplete. Audit Committee.                      TBD       Corrective action was

SAO RECOMMENDATION PORT RESPONSE ACTION STEPS    

 

ESTIMATED ACCOUNTABILITY   COMPLETION  S R T E A M T A U R S K /  S 

8. We recommend that [the Port]  The Port will review its  Information & Communications Technology PCS General im rove mana ement information  mana ement information s stems  ICT will work with PCS to investi ate o tions Mana er, s stems to rovide more accurate  to ensure that information available  for rovidin additional visibilit and more ICT Senior a r n o d  e u c p t  - a to n - d date i tr n a fo c r t  m ex atio e n n   d r i e tu g r arding  to project managers is accurate  a r c o cu e r c a t  t a e  n a d n  c d  o u n p tr -t a o c - t  d e a x te  e in n f d o it r u m r a e t s i . o    n T  r h e e g   a P r o d r i t n   g  S M e a r n vi a c g e e s r   , Business      con es.  and u -to-date, and will make The Port should develo a better  im rovements as necessar . The  will assi n a business anal st to develo e m x e p a e n n s d   i f t o u r r  t e r s a   c a k g i a n i g n   s a t c  i t n u it a i l  l pro s j t e i c m t  ates  Port will conduct a systematic  b sy u s s t i e ne m s  c s  a r p e a q b u i i l r it e ie m s e ,  n e t v s, a   l a u n at al e y  o ze p   ti c o u n rr s  e a n n t  d        to prevent unfo a t     e overruns.  review of the small works program  reare cost estimates for small works sstem  reseen cos  to im rove timel trackin of actual ro ect costs on contracts. There  im rovements. will be an emphasis on providing safe uards to reclude work  Immediate Action: Started authorizations from exceedin the  order contracts, PCS does not o en8.a On10/07 contract amount. authorize work that would increase the   amount s ent to above 90% of the   contract value.      Additional Action: 8.b Continuall evaluate o tions to limit 3/31/08 contract spending beyond that 90%   threshold. Options might include further   reducin the maximum contract value   and/or limitin cumulative value of all   work authorizations.      8.c Provide trainin for staff on revised 3/31/08 procedures for tracking small works expenditures against budgets.   

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taken b CM and CA with the recover of $8,895.54 as of 8/30/07.   Part of this work is currentl ongoing under TKW Item 1a, 1b & 10a.           Com lete.           Complete.