SAO AUDIT RECOMMENDATIONS AND ACTION PLAN

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Description

Port of Seattle State Auditor Report Responses And Action Plan April 8, 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 The Port has senior-level Chief Procurement recommendation has merit. A Port staff to review options and best practices published the Officer (CPO) position. This official team is in place, and work is for procurement systems, and recommend Procurement CPO should report directly to the [Port] already underway to identify and organizational and process change to CEO by Recommendation organizational CEO and be responsible for evaluate procurement ...

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• management
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• Publié par: Assu
• Nombre de lectures: 31
• Langue: English

Extrait

 

     

Port of Seattle

State Auditor Report Responses

And Action Plan

April 8, 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   C ES 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 

 ESTIMATED  ACCOUNTABILITYCOMPLETISTATUS/ REMARKS The Port has published the CPO or anizational chart and implemented interim measures for the procurement of construction contracts, consultin services, and the purchase of oods and services.     Interim CPO named.   The selection rocess is underway.

OA1. The Port should establish a CEO 3/15/08 ut De CEO directed Chief Executive Officer Port this reesThe Port a senior-level Chief Procurement A Port staff to review options and best practicesrecommendation has merit. Officer (CPO) position. This official Procurement procurement systems, and recommend forteam is in place, and work is should re ort directl to the Port Recommendation e to CEO b and oralread underwa to identif rocess chan anizational and CEO and be res onsible for models inevaluate rocurement Team 15, 2008. March managing and overseeing allother organizations that engage in rocurement-related activit . Thisma or construction ro ects. With official should have authorit to hirethe hel an outside facilitator ofOA1.a Outside 11/2007 facilitator with extensive 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 all o tionsanal zin several for rocurement-related transactions. re ersonnel, ortinmission, role, ProcurementOA1.b Internal 12/2007 Current delegations of authoritylocation, and structure of a ChiefRecommendation Team assembled in   related to rocurement – contract or similarProcurement OfficeDecember 2007. Team includes   awards, a roval of contract chan esfunctional unit the next overre resentatives from ma or   and amendments, and related The Port’s CEOseveral weeks.procurement centers within the Port.   activities involvin ex enditure ofhas asked the team to him rovide ublic funds related to constructionwith an outline of o tions and aOA1.c Procurement Recommendation Team 3/13/08 and construction management –preferred recommendation withinmeets weekly.   should be rescinded and re-assigned90 days. necessary period of A to the CPO and her or his staff.im lementation lannin will follow,Im lement functional centralized rocurement6/1/08 but the CEO anticipates that theoffice.   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 should CommissionResolution 3181 is the structural On January 8, 2008, the Port Commission 2    

 

 

ESTIMATED STATUS/ ACCOUNTABILITY   COMPLETION REMARKS 

SAO RECOMMENDATION PORT RESPONSE ACTION STEPS     re-evaluate the current dele ation of a subcommittee to review the establishedframework underl the in authority to the [Port] CEOrelationship between the Port delegation of Commission authority currently encom assed in Resolution 3181 in Resolution 3181.Commission and the CEO. described and develo and issue a new in tedResolution 3181 was ado delegation of authority resolution that has remained1994. It Davis and TarletonOA2.a Commissioners   more clearly defines thesubstantially unchanged for thewill serve on the subcommittee.   Commission’s intent with res ect to one ears.ast 13 onl However, construction management and OA2.bof the five Commissioners who Subcommittee may retain outside reporting to the Commission and the experts.voted on and signed Resolution ublic concernin construction e chan A3181 remains in office. activities. Subcommittee OA2.c ear.of CEO occurred earlier this back to full ort will re 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 esdetailed recommendations for chan to the conversation with the CEO, will rovisionsResolution 3181 related to 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 b the Sub- Committee.  

SAO RECOMMENDATION PORT RESPONSE ACTION STEPS    

ACCOUNTABILITY ESTIMATED STATUS/  COMPLETIONREMARKS

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,   strengthen control procedures to implement changes where  follows: Engineering &   assure that Engineers’ change order warranted to ensure alignment with  Construction estimates are a re ared without industr best ractices. The Port  Immediate Action: (PMEC) knowled e of the contractors’ has alread be un, and will  e chan All1. a orders are double checked b   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 Contract Administrator the CA before are full and com letel documented. from the TKW erformance audit,  Port. theare 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 1.b Provide trainin liance for to ensure com the Port should re uire full and recommendations into that action each Resident En , CM and ineer RE complete documentation of these plan as appropriate. The Port CA on current requirements for change en es, 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   ll a y n   d d   o a c p u p m ro e v n a t l e s. d     c a o g s r t e   e a s n   a t l ha s t i  i s n  a d n e d p se d c e o n n t d  e ar sti   mat s ecifics.   reviews of contractor change order proposals are vital to transparency  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. Complete.       Complete

SAO RECOMMENDATION PORT RESPONSE    

ACTION STEPS

STIM STATUS/ ACCOUNTABILITY   E COMPL A E T T E I D O   N REMARKS 

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.   2 u . 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 en t d i   v lo e  gs,     chan e orders and trend lo s to  ec and on oin ro ects to identif cases identif similarities between Port  actions or evaluate recommendations. w e estimated costs and contractor co h n e t r r e act n or g s i ’ n   e r e o rs’  o e s s e t d i   m a a m te o s u   n a t n s  d a   re roosed amounts.  The Port will  Immediate Action:      consistentl the same and, in such take remedial action as a ro riate 2.a Identif ineers’ cases where en allConstruction cases, undertake a further evaluation and also apply the process tn opor destoermcata npss ’cod triaenst  ena dt ehs maistentlare cons   raMegan of the underl in causes; followed b im rovements described above in amou s remedial actions as appropriate. Recommendation 1.  causes. indetermine underl      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   PMEC 3. We recommend that the Port The Port has be un revisin its  The Port will revise its Standard O eratin revise its SOP Manual to include construction Standard Operating  Procedures manual to include s ecific guidelines for proper and accurate change 5    

8/31/08         3/5/08           TBD     TBD   TBD        

          Com lete.            

Part of this work is currently

ESTIMATED STATUS/ ACCOUNTABILITY   COMPLETION 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 develop Standard Operating Recommendation 3, the Port has  procedures that align with best industry Procedures (SOPs) that align with begun revisions to its procedures  practices and will take the following steps: industry practices.    manual to better conform toCurrent [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

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

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   immediate steps to assure that [the contract schedule enforcement and  estimates is addressed under   Port] rigorously enforces all the evaluation of time extension  Recommendation 1. contractual schedule re uirements. re uests to identif where further ents can  Port management will immediately ensure that Then, when requests for time improve   m cif   ic b   e a   tt m e a n d ti e o .  n     T to he  the Port enforces, consistent with best    s e h xt o e u n ld s   io b n e  s  r a o re  e m rl a   d e e v ,  a t l h u e a y t   e c d a .  n    a T n h d e    t P h o e rt  r w a il c l ti p c a e y s     s o p f  e other state and  ractices,  all contractual reuirements 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: conductin is review     . 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 st d i .  mates are gth 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 ESTIMATED STATUS/  COMPLETIONREMARKS

  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 Action: differences, and that [the Port] formal schedule, scope, means,  ractice is6.a P rt staff was notified that this im rove its chan e order methods, ricin , and o erational o documentation requirements to considerations. Improvements to no longer permitted. include that details of change order standard procedures that are   ne otiations must be based on underwa will em hasize chan e 6.b A ne otiations summar must be 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 change order can be executed by the factors. Port.   Additional Action: 6.c All change order negotiations will be fully documented.

8    

  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.     Complete.

        Com lete.     Com lete.      

SAO RECOMMENDATION PORT RESPONSE    

ACTION STEPS

ESTIMATED STATUS/ ACCOUNTABILITY   COMPLETION REMARKS 

  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  paid for other incorrect mark-ups. In addition there were other incorrect mark-ups determine whether other incorrect  to the statistical sample mentioned above, on change orders. mark-ups on change orders exist.  I a nte r r o n a al c   h A  t u o d   i t t  e w st il   l o   t u h s e e r     a c  r o i n s t k r - a b c a ts s   e th d  a a t  u m d i it  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.

9    

          6/5/08 8/31/08                             TBD

                    Complete.                           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 d   a c t o e n  i tr n a fo c r t  m ex atio e n n   d r i e tu g r a e rding  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 Manager, Business   s. and  u -to-date, and will make  Services 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 a   l p   roj 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         es review  of the small works program to prevent unforeseen cost overruns.  to im rove timel trackin of actual  re are cost estimates for small works s stem ro ect costs on contracts. There  im rovements. will be an emphasis on providing  Immedi te ActioStarted safe uards to reclude work  a n: authorizations from exceedin the  10/07 order contracts, PCS does not en o8.a On 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.     

10    

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.           Com lete.             Complete.