SAO AUDIT RECOMMENDATIONS AND ACTION PLAN
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SAO AUDIT RECOMMENDATIONS AND ACTION PLAN

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Port of Seattle State Auditor Report Responses And Action Plan September 9, 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 RECOMMENDATION PORT RESPONSE ACTION PLANNED ESTIMATED CONTACT PERSON COMPLETION STATUS/ REMARKS OA1. The Port should The Port agrees this Port Chief Executive Officer (CEO) directed Linda Strout 6/1/08 OA1.a. In November 2007 the Port obtained the services of an outside establish a senior-level recommendation has merit. A Port staff to review options and best practices Deputy CEO facilitator with extensive procurement expertise who led a planning Chief Procurement team is in place, and work is for procurement systems, and recommend process that defined roles, responsibilities, and related position Officer (CPO) position. already underway to identify organizational and process change to CEO ...

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Port of Seattle State Auditor Report Responses And Action Plan September 9, 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    
 
  RECOMMENDATION PORT RESPONSEACTION PLANNEDESTIMATED CONTACT PERSONCOMPLETIOSTATUS/ REMARKS OA1. The Port should Strout 6/1/08The Port agrees this Port Chief Executive Officer (CEO) directed LindaOA1.a. In November 2007 the Port obtained the services of an outside establish a senior-levelrecommendation has merit. A Deputy CEO Port staff to review options and best practicesextensive procurement expertise who led a planningfacilitator with Chief Procurement stems, s rocurement for and recommend lace, and work isteam is in onsibilities,rocess that defined roles, res osition and related Officer (CPO) position.already underway to identify organizational and process change to CEOdescriptions for the new Central Procurement Office. In addition, CEO This official should reportand evaluate procurement by March 15, 2008.Tay Yoshitani began the process of establishing a Capital Development directl to the Port CEO anizationsmodels in other or toDivision to oversee the Central Procurement Office – a ste ned desi and be res onsible for a e in ma orthat en rocurement ractices in a more robust manner thanovern the Port’s managing and overseeing Withconstruction projects. facilitator with extensive Outside OA1.a thewhat is included in the recommendation. all rocurement-relatedhel of an outside facilitator rocurement ex ertise hired in activit . This official ro ital November ect in caex erienced 2007. March 8, 2008 the Internal hOA1.b. December 20, 2007 throu should have authority todelivery, the team is reviewingProcurement Team was assembled by the Deputy CEO. hire trained and OA1.band analyzing several options Procurement Internal  inde endent rocurementfor mission, role, ersonnel, Recommendation Team assembledOA1.c. December 20, 2007 throu h March 8, 2008 the Internal officials who will be December 2007. Team includes in and location,re ortin .Procurement Team met weekl charged with reviewing from majorstructure of a Chief representatives and a rovin all orProcurement Office rocurement similar centers within the Port.OA1.d. On March 15, 2008 the Central Procurement Office functions, rocurement-relatedfunctional unit the next over descri tionres onsibilities, and staffin were sufficientl defined and a ob transactions. Current OA1.c Port’s Theseveral weeks. Recommendation Team Procurementfor a Chief Procurement Officer was prepared. delegations of authority meetsCEO has asked the team to weekly. related to rocurement –rovide him with an outline of Lee was a ointedOn March 19, 2008 Dwa ne interim Chief contract awards, a roval lement functional centralized rocuremento tions and a referred ImProcurement Officer and the Central Procurement Office was made of contract changes andrecommendation within 90 office.functionally active on March 20, 2008. amendments, and related of necessar eriodda s. A activities involvin OA1.d Preim lementation lannin will advertise, tion, descri are ob descri ositionOn March 21, 2008 the and advertised for osted was tion expenditure of publicfollow, but the CEO anticipates and select Chief Procurement Officer.a permanent Chief Procurement Officer. funds related tothat the new unit or construction andde artment erational can be o Com OA1.e necessar lete anizational orOn Ma rocess of interviewin 7, 2008 the for a Chief Procurement construction management working logistics.by June 1, 2008. TheOfficer was completed. – should be rescindedteam includes representatives and re-assi ned to thefrom the Port’s executive,On June 12, 2008 the new Director of the Central Procurement Office, CPO and her or his staff.legal, project management, licensed attorney, Ms. Huey has ANora Huey, was announced. engineering, and purchasing Her firstsignificant experience in contracting and procurement practices. staffs. work will be June 30, 2008.da of  0A1.e. On February 28, 2008, CEO Yoshitani announced the creation of the Ca ital Develo ment Division to oversee the Central Procurement Office as well as existin en ineerin and construction functions with in the organization.  On March 20, 2008 the Port functionall established a Central Procurement Office and consolidated procurement functions and activities within this new organization.  A ril 7, 2008 throu h Ma 5, 2008 the or anizational lo istics, roles and responsibilities of the Central Procurement Office were announced Port wide via email.
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OA2. The [Port] On Resolution 3181 is theJanuary 8, 2008, the Port Commission Commissioners Commission should re- a subcommittee to review the established Davis/Tarletonstructural framework evaluate the current theunderl in dele relationshi ation of Commission authorit currentl Dele ation of Authorit to in Resolution 3181.between the Port Commission described the [Port] CEO Resolutionand the CEO. encom assed in Commissioners OA2.a It in 1994. ted3181 was ado Davis and Tarleton Resolution 3181 and will serve on the subcommittee.has remained substantiall develop and issue a newunchanged for the past 13 Delegation of Authority only one of OA2.byears. However, Subcommittee may retain outside resolution that more erts. exthe five Commissioners who clearly defines thevoted on and signed Commission’s intent with will report back to full Subcommittee OA2.cResolution 3181 remains in res ect to constructionoffice. A with ro osed chan e of CEO Commission mana ement andoccurred earlier this amendments ear. June b 30, 2008. reporting to theGiven these circumstances, it Commission and theis a ro CEO directed Port staff to review and riate that the rovide ublic concernin detailedCommission and the CEO to the es recommendations for chan construction activities. 3181 provisions related to Resolutionreview the provisions of this bedrock document. Ultimatel , construction mana ement and construction the Commission, in activit re ortin b March 15, 2008. conversation with the CEO, will strike the balance between OA2.d Internal team assembled and olic direction and meetin to review s ecific rovisions im lementation, as well as and rocesses. other matters concerning the sco e of the CEO’s authorit . To advance that effort, the CEO has asked members of his executive team, led by the General Counsel, to rovide him with recommendations for updating, clarifying and stren thenin a variet of rovisions in Resolution 3181 within 90 days. The CEO has directed the team to give s ecific attention to the results of this performance audit and the 49 resulting recommendations. In particular, the team is charged
7/22/08  
 ESTIMATED CONTACT PERSONCOMPLETIOSTATUS/ REMARKS  As of June 3rd Division was functionall italthe Ca ment Develo established. The hiring process for the Manager, Capital Development is nearing completion.    OA2.a. On January 8, 2008, the Port Commission passed a motion establishing a subcommittee to review delegation of the Commission’s authorit throu hout the or anization. Commissioners Davis and Tarleton a reed to lead the subcommittee, and invited several members of the public with expertise in governance structures to serve as panelists assistin the subcommittee. Ph llis Cam bell, President, The Seattle Foundation, Thomas L. Purce, President, The Ever reen State Colle e, Jim Warjone, Chairman, Port Blakely Companies and current chair of the Seattle Chamber of Commerce, and Shan Mullin, Partner, Perkins Coie, acce ted the invitation and a reed to assist Commissioners Davis and Tarleton in revising Resolution 3181, the document governing delegation of Commission authority. .  On May 1, 2008 the Subcommittee held its first hearing to accept public comment on ro osed chan es to the Dele ation of Authorit .  On May 13, 2008 the Port opened a 30 day public comment period on the Dele ation of Authorit .  On June 10, 2008 the Port extended the public comment period to June 30, 2008. Also the Subcommittee held its second hearing to accept ublic comment on ro osed chan es to the Dele ation of Authorit . At the same time the Port invited em lo ees to comment on the sub ect.  On June 23, 2008 the Subcommittee held its third hearin to acce t ublic comment on the ro osed chan es to the Dele ation of Authorit .  OA2.b. On May 1, 2008 the Subcommittee held its first hearing to accept ublic comment on ro osed chan es to the Dele ation of Authorit .  On June 10, 2008 the Subcommittee held its second hearing to accept ublic comment on ro osed chan es to the Dele ation of Authorit .  On June 23, 2008 the Subcommittee held its third hearing to accept public comment on the proposed changes to the Delegation of Authority.  OA2.c. Commissioners Davis and Tarleton have spent multiple hours with Port staff discussing best practices for organizational governance.On July 1, 2008 the Subcommittee reported to the full Commission and presented a summary of recommended changes to the Delegation of
RECOMMENDATION PORT RESPONSEACTION PLANNED
RECOMMENDATION PORT RESPONSEACTION PLANNED with rovidin s ecific recommendations for rocess improvements and enhanced checks and balances for ro ect-wide contractin authority, as well as increased public visibility and Commission artici ation for lar er construction ro ects. The CEO then will share these recommendations with the Commission.
 ESTIMATED CONTACT PERSONCOMPLETIOSTATUS/ REMARKS Authorit .  On August 5, 2008 Tom Barnard, Commission Research and Policy Analysis, presented a consolidated draft of the revised delegation of authorit to the full Commission.  On August 12, 2008 the Commission passed the first reading of Resolution 3605, re ealin Resolution 3181, and restatin the master olic directive on the role and res onsibilities of the Port of Seattle Commission and the administrative authority of the Chief Executive Officer.  On August 26, 2008 the Commission passed the second reading and adopted Resolution 3605, repealing Resolution 3181, and restating the master olic directive on the role and res onsibilities of the Port of Seattle Commission and the administrative authorit of the Chief Executive Officer.  OA2.d. The Port Commission assed a motion on Januar 8, 2008 affirming its desires to review Commission Resolution 3181 to ensure that the delegated authority is structured in a manner that ensures maximum ublic trust in the Port and is in line with best ractices in or anizational overnance. Per the motion the Commission established a subcommittee to review Resolution 3181 and to make recommendations on amendments to Resolution 3181 to the full Commission.  The Subcommittee drafted revisions to the construction management sections of Resolution 3181. On Ma 1, 2008 the subcommittee hosted a ublic meetin to receive comment and testimon on the ro osed changes. The Port is now seeking public comment during a 30 day comment period from May 13, 2008 to June 11, 2008. (Note: comment eriod extended to June 30, 2008 1.a. On Januar 24, 2008 b direction of the Chief En ineer interim actions were im lemented re uirin all chan e orders to be reviewed b Construction Managers and Contract Administrators prior to execution and that evidence of that effort to be placed in the files.  On Februar 8, 2008 the item was discussed at the trainin sessions held for action item 1b.  On Februar 27, 2008 the item was discussed at the trainin sessions held for action item 1b.  1.b. On Februar 8, 2008 trainin was com leted on the review rocess for all change orders. This included roles and responsibilities within the new review process and change order estimating.  On February 27, 2008 training was completed on the review process for
1. We recommend that The Port will review its chan e The Port has im lemented and stren thened Ra Rawe The Port immediatel order control rocedures and control rocedures for chan e orders as Chief Engineer implement and will implement changes where follows: strengthen control wwiatrhr ianndteuds ttro  ebnesstu rer aacltiigcnemsent  Immediate Action: rocedures to assure that . En ineers’ chan e order The Port has alread be un, 1. a All chan e orders are double checked b a Construction Manager (CM) and a estimates are (a) and will continue, to make re ared without im rovements as art of the Contract Administrator CA before the knowled e of the 37- oint action lan from the are executed b the Port. contractors’ proposed TKW performance audit, and it 1.b Provide training to ensure compliance for amounts, and (b) change will incorporate the order estimates and cost Performance Auditor’s each Resident En ineer RE , CM and anal es additional recommendations CA on current requirements for change comyplsete layr de ofcululym aenntde d.  into that action plan as order estimates and document training Where cost or rice a ro riate. The Port a rees s ecifics. analysis is used to that independent estimates, 4   
6/5/08  
RECOMMENDATION PORT RESPONSEACTION PLANNEDESTIMATED CONTACT PERSONCOMPLETIOSTATUS/ REMARKS evaluate chan e order cost anal sis and secondar Additional Action: within the new orders. This included roles and res onsibilities eall chan ro osals, the Port reviews of contractor chan e 1.c Evaluate documentation of anal ses of . order estimatin e and chanreview rocess should require full and order proposals are vital to estimates and make recommendations complete documentation transparency and for standardization and consistency.1.c. On May 29, 2008 a standard procedure for preparing Engineer’s of these reviews, accountabilit and will ensureEstimates was established. reater than ten thousand For modifications including fully that these estimates and 1.d Establish a policy outlining when adollars but less that fifty thousand dollars a Rough Order of Magnitude documented supervisory reviews are well-documented change order request requires a modifications exceeding fifty thousand dollars an For(ROM) is required. reviews and approvals. in the files. se arate estimate in lieu of a directInde endent Estimate is re uired. A standard cover sheet will be used for evaluation of the existin contractor’sall cost estimates; this sheet will also summarize the information change order proposal.contained in the estimate.   1.e Coordinate olic and rocedures withOn Ma 30, to order estimatin was rovided chan e 2008 trainin for the Chief Procurement Office.capital development personnel that are directly affected by the new  procedures. 1.f U date CM and CA manuals to reflect new rocesses and rocedures.On June 2, 2008 trainin was rovided to for chan e order estimatin  capital development personnel that are directly affected by the new 1. Provide trainin to CMs, CAs, Portrocedures. Construction Services PCS and Pro ect Management Group (PMG) on new cost1.d. On May 29, 2008 a standard procedure for preparing Engineer’s estimate procedures. ForEstimates was established. modifications greater than ten thousand   nitude h Order of Ma thousand dollars a Roudollars but less that fift ROM is re uired. For modifications exceedin fift thousand dollars an Independent Estimate is required along with a standard cover sheet.  On Ma 30, 2008 trainin for chan e order estimatin was rovided to capital development personnel that are directly affected by the new rocedures.  On June 2, 2008 training for change order estimating was provided to capital development personnel that are directly affected by the new rocedures.  1.e. As of June 2, 2008 the Engineering Department had coordinated with the Chief Procurement Office to im lement revisions to the Construction Manual Standard O eratin Procedures and the Contract Manual. Training for affected employees was also completed.  1.f. On Ma 29, 2008 online CA & CM Manuals were u dated with the new forms.  1. . On Ma 30, 2008 trainin was rovided to ca ital develo ment personnel that are directly affected by the new procedures.  On June 2, 2008 trainin was rovided to ca ital develo ment ersonnel that are directl affected b the new rocedures.  2.a. On February 22, 2008 an analysis of project trend logs detailing
2. We recommend that The Port has begun a review The Port will review current project trend logs, Joyce Kirangi 5   
8/31/08
RECOMMENDATION PORT RESPONSEACTION PLANNEDESTIMATED CONTACT PERSONCOMPLETIOSTATUS/ REMARKS the Port undertake a of chan e orders and trend identif inconsistencies and note corrective Internal Audit order amounts which coincided with the contracts amount waschan e review of all ma or recent lo s to identif similarities actions or evaluate recommendations. Managercom leted. On March 3, 2008 this information was forwarded to the and ongoing projects to between Port estimated costsInternal Audit Manager. identify cases where and contractor proposed Immediate Action: en ineers’ estimates and amounts. The Port will take 2.a Identif all cases where en ineers’ 2.b. On Februar 26, 2008 the Internal Audit Mana er forwarded a co contractors’ proposed remedial action as appropriate estimates and contractors’ proposed of the proposed review methodology to SAO. amounts are consistently and also apply the process amounts are consistently the same and the same and, in such im rovements described determine underl in causes.On Au 5, 2008 the Internal  ustAuditor submitted the draft Internal Audit cases, undertake a above in Recommendation 1. re arin the Port’s res onse. staff isRe ort. Port further evaluation of the Additional Action: underl in causes; 2.b Review matches identified and 2.c. The re ort to Senior Mana ement will ha en at a later et to be followed b remedial recommend remedial action. determined date. actions as appropriate. 2.c Provide report to Senior Management.On August 5, 2008 the Internal Auditor submitted the draft Internal Audit   onse. Port’s res re staff is the arinRe ort. Port 2.d Take a ro riate remedial action as directed by Senior Management. 2.d. Results from the internal auditor will be reviewed with Senior  Mana ement and remedial action will be taken b construction mana ement and contract administration ersonnel.  Next steps:  2.b & 2.c Port staff will com lete and submit the res onse to the Port’s Internal Auditor on September 10, 2008.  3.a. On Februar 27, 2008 trainin was com leted on the review and documentation rocess for all Chan e Orders as well as roles and responsibilities within this new review process.  3.b. On March 12, 2008 team members were established and the team was formed.  3.c. On Februar 7, 2008 minimum chan e order documentation re uirements were included in the new chan e order review rocess and checklist. These requirements are an update to already existing requirements in the Construction Manual.  3.d. As of June 2, 2008 revisions incor oratin im roved chan e order negotiation and documentation procedures have been made to the Construction Manual Standard O eratin Procedures.  3.e. On May 30, 2008 required training for affected personnel was completed.  On June 2, 2008 required training for affected personnel was completed  3.f. As of June 2, 2008 the rocesses were coordinated and carried out b members of both the Engineering Department and the Central
3. We recommend that The Port has be un revisin The Port will revise its Standard O eratin Ra Rawe the Port revise its SOP its construction Standard Procedures manual to include s ecific Chief Engineer Manual to include specific Operating Procedures Manual guidelines for proper and accurate change guidelines for proper and as part of its TKW foorldloerw idoc sutmeentation, and will take the accurate chan e order erformance audit action lan. n s: documentation. The S ecificall , this revision will Port] should provide include more guidelines for Immediate Action: trainin to its consultant chan e order ne otiations and 3.a Provide trainin on current re uirements staff/construction documentation. Port staff will for chan e order documentation for CMs, managers to improve the receive necessary training to REs and CAs. manner in which [the support these new guidelines. Additi al Action: Port is documentin on project change orders. 3.b  Estatbilcish team to evaluate current prac es.  3.c Establish minimum chan e order documentation requirements and provide change order review checklist.  3.d Review current documentation of change order negotiations and develop standard format.  
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7/31/08
6/5/08
RECOMMENDATION PORT RESPONSEACTION PLANNEDESTIMATED CONTACT PERSONCOMPLETIOSTATUS/ REMARKS 3.e Provide trainin to ins ectors, REs, CMs,Procurement Office. CAs, Pro ram Leaders, Pro ect Managers, PCS, Facilities & Infrastructure, internal designers and internal auditors on new rocedures.  3.f Coordinate process with new Central Procurement Office CPO , which will rovide ualit control, oversi ht and continuous improvement.  4. We recommend that As noted in the Port’s The Port will develop standard operating Ray Rawe the Port develo res onse to Recommendation rocedures that ali n with best industr Chief Engineer Standard O eratin 3, the Port has be un ractices and will take the followin ste s: Procedures (SOPs) that revisions to its procedures al n with i Immediate Action:  riagcticendustry manual to bettera cconfosr. m to 4.a  A neotiation summar will be reviewed SOPs dos . erofeb AC ap rdcneat ib yr tts eonri Phtes utdt top nCubryr a CM Porent  deviro adequate information executes any change order. re ardin chan e order n 4.b Provide trainin in con unction with egotiations.  change order training described in 3.a.  Additional Action: 4.c Determine best industry practice for chan e order ne otiations.  4.d Identify differences, if any, between best industry practices and those applicable to Port o erations.  4.e Develop and/or revise current Port standards.  4.f Provide training to appropriate staff.  
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 4.a. As of March 25, 2008 the re uirement for a ne otiation summar was included in the chan e order review and checklist.  4.b. On February 27, 2008 training was completed on the review and documentation rocess for all Chan e Orders as well as roles and responsibilities within this new review process.  4.c. On March 11, 2008 a team was established to review best industr ractices for chan e order ne otiations.  On A ril 3, 2008 team members interviewed various ublic a encies to determine best industr ractices for chan e order ne otiations.  4.d. On A ril 3, 2008 the team develo ed a s read sheet to com are various local a encies best industr ractices for chan e order negotiations.  On A ril 14, 2008 the team determined that the method currentl used b the Port of Seattle is consistent with industr best ractices.  On Ma 29, 2008 Pre-Ne otiation Position form for chan e orders valued at or above two hundred thousand dollars was established.  4.e. On April 14, 2008 it was determined by the team that the current “Summar of Ne otiations” form is consistent with best industr ractices. The form shall contain a chronolo ical summar of the ne otiations and all pertinent information shall be attached to the form.  On Ma 29, 2008 Pre-Ne otiation Position form for chan e orders valued at or above two hundred thousand dollars was established.  4.f. On Ma 30, 2008 trainin for Port of Seattle ersonnel directl affected by the new procedures for change order negotiations was conducted.  On June 2, 2008 training for Port of Seattle personnel directly affected by
The Port’s res onse to chan e order Ra Rawe 5. Port mana ement The Port will review its should take immediate ac estimates is addressed under Chief Engineer pr tices of contract schedule Recommendation 1. steps to assure that [the enforcement and the Port ri orousl enforces evaluation of time extension all contractual schedule re uests to identif where Port mana ement will immediatel ensure that the Port enforces, consistent with best requirements. Then, further improvements can be ractices, all contractual re uirements for when re uests for time made. The Port will a re aration and submission of schedules b extensions are made, s ecific attention to the taking the following steps: they can and should be practices of other state and  properly evaluated. [The local agencies with respect to Port should also rovide schedulin and enforcement Immediate Action: n thi 5.a Provide training on current contract Cmhoaren goev eOrrsidgehr t porfo tchees s to when conductigs review. schedule requirements for CM and CA ensure that estimates are staff. ro erl created and used. 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 re uirements, the Port will im lement enforcement consistent with the project specifications.  Additional Action: 5.d Review industr best mana ement practices for specifying and im lementin schedule enforcement.  5.e Implement any improvements identified in item 5.d.  5.f Provide trainin to CM, CA, PCS and PMG on revised procedures.  
 ESTIMATED CONTACT PERSONCOMPLETIOSTATUS/ REMARKS the new rocedures for chan e order ne otiations was conducted.  On June 19, 2008 training for Port of Seattle personnel directly affected by the new procedures for change order negotiations was conducted.   5.a. On Februar 27, 2008 trainin was com leted on the review rocess for all Change Orders as well as roles and responsibilities within this new review process, including construction schedules.  5.b. As of Februar 26, 2008 All active ro ects were reviewed for contractual schedule compliance. Information gathered from the com liance review was utilized to develo the schedule trainin resentation.  5.c. As of February 26, 2008 a compliance survey of all active projects was erformed. A list of items re uirin attention or res onse was identified.  From Februar 26 to A ril 4, 2008 construction mana ers and resident en ineers met to discuss the necessar action ste s. This was done to achieve compliance in schedule requirements for each contract in com liance.  On April 4, 2008 all ongoing non-compliant contracts were reviewed and resident en ineers issued notification letters to the Contractors that were out of com liance. Where a licable the re uested Contractors submit required documentation to bring contracts into compliance.  5.d. On A ril 4, 2008 a team was established to benchmark other overnment a encies ractices and olicies relatin to schedule and schedule compliance.  5.e. Review of other a encies ractices is com lete, com arisons were analyzed and recommendations were implemented. Action complete on July 31, 2008.  5.f. On Ma 29, 2008 trainin associated with the revised schedule enforcement procedures and processes was conducted by Engineering and Procurement Office Staff.  On June 2, 2008 training associated with the revised schedule enforcement procedures and processes was conducted by Engineering and Procurement Office Staff.  On June 19, 2008 training associated with the revised schedule enforcement rocedures and rocesses was conducted b En ineerin and Procurement Office Staff.
8/1/08
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RECOMMENDATION PORT RESPONSEACTION PLANNED
RECOMMENDATION PORT RESPONSEACTION PLANNEDESTIMATED CONTACT PERSONCOMPLETIOSTATUS/ REMARKS 6. We recommend that The Port concurs that chan e The Port immediatel ceased an informal Ra Rawe 6/5/08 24, 2008 an email was issued to all Construction6.a. On Januar the Port immediatel order ne otiations should be method of resolvin chan e order Chief Engineer and staff with a directive to sto an informal resolution ofMana ers cease its informal method based on all relevant factors, differences.change orders and actions.  includi dofif freerseonlvciensg,  cahnadn tghea to rtdheer  scoe,n gm feoarnms,a l msecthheoddusl,e , Immediate Action:  uired with reOn Februar 2008 this item was discussed, alon 8, Port] improve its change pricing, and operational 6.a Port staff was notified that this practice isdocumentation, at the training sessions held in conjunction with action order documentation considerations. Improvements no longer permitted.item 1b. re uirements to include to standard rocedures that 6.b A ne otiations summar must be that details of chan e are underwa will em hasizeOn Februar 2008 this item was discussed, alon 27, re with uired ch e order d reviewed by a CM and a CA before a obred bera sneedg ootni adtiiosncsu smsiuosnt s traiannign, includinoc uam feonctuast ioonn  chane order can be executed b the dcotitaenum tat, onniart ehsses gni dnic nooisnh le with acjunctionb1 m .noiteti of sco e/means and the above factors. Port. methods ri6.b. On January 24, 2008 an email was issued to all Construction differenc/eps. c i ngAdditional Action: Managers and staff that all change order negotiations and actions shall be 6.c All chan e order ne otiations will be fullreviewed b rior to the Construction Mana er and Contract Administrator documented.execution.   6.d Chan e order documentation will be held sessions 2008 this item was reviewed at the trainin 8,On Februar im roved as outlined inin con unction with action item 1b. Recommendations 1, 3, 4 and 5.  On February 27, 2008 this item was reviewed at the training sessions 6.e Port mana ement will rovide interimheld in con unction with action item 1b. uidance until revised rocesses and procedures are put in place.6.c. As of February 27, 2008 the change order training sessions held for  all Resident En ineers, Construction Mana ers, and Contract Administrators, em hasized that all ne otiations shall be full documented. The requirement for a negotiation summary has been included in the chan e order review and checklist.  6.d. As of June 2, 2008 Change Order documentation was improved as outlined in Recommendations 1, 3, 4, and 5. These improvements were included in the Construction Manual Standard O eration Procedures.  6.e. As of February 27, 2008 the change order training sessions held for all Resident en ineers, Construction Mana ers, and Contract Administrators, em hasized the re uirement for im roved chan e order documentation, including a new change order review and checklist.  7.a. On February 26, 2008 the Internal Audit Manager forwarded a copy of statistical sam le methodolo to SAO.  7.b. On August 5, 2008 the Internal Auditor submitted the draft Internal Audit Report. Port staff is preparing the Port’s response.  7.c. Following the completions of the review, the Port will determine if further review is necessary.  7.d. As of August 30, 2007 corrective action was taken by CM and CA
7. We recommend that The Port will undertake Using a statistical sampling methodology, Joyce Kirangi the Port undertake a additional review of chan e Internal Audit will review Port construction Internal Audit review of the chan e orders usin rocedures contracts and determine whether the Port has Mana er orders negotiated and ent with e d paid for other incorrect mark-ups. In addition approved under all acoundistiist standa radcsc top teto the statistical sample mentioned above,  contracts to determine if determnigne whether other Internal Audit will use a risk-based audit there were other incorrect incorrect mark-ups on change avuplpnreoraacbhl et oto t epsat yomtheenrt  cofo inntrcaocrtrse tcth amt amrikg-uhtp sb.e  mark-ups on change orders exist. orders. Immediate Action: 9   
8/31/08