SAO AUDIT RECOMMENDATIONS AND ACTION PLAN
37 Pages
English
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SAO AUDIT RECOMMENDATIONS AND ACTION PLAN

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37 Pages
English

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Port of Seattle State Auditor Report Responses And Action Plan May 30, 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 published the Officer (CPO) position. This official team is in place, and work is practices for procurement systems, and Procurement CPO should report directly to the [Port] already underway to identify and recommend organizational and process Recommendation organizational CEO and be responsible for evaluate procurement models in change ...

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Port of Seattle
State Auditor Report Responses
And Action Plan
May 30, 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 ACTION STEPS    RECOMMENDATION PORT RESPONSEACTION STEPS
ACCOUNTABILITY  CESOTMIMPLAETTEIDO N SRTEAMTAURSK/ S 
 ESTIMATED ACCOUNTABILITYCOMPLETISTATUS/ REMARKS OA1. The Port should establish a Chief Executive Officer CEO directed this PortThe Port a rees The Port has CEO 3/15/08 De ut senior-level Chief Procurementrecommendation has merit. Port A published staff to review options and best the Officer (CPO) position. This officialteam is in place, and work is practices for procurement systems, and Procurement CPO should re ort directl to the Port or recommend and identif Recommendation rocess and anizational anizational oralread underwa to CEO and be res onsible for models in chanevaluate rocurement March 15, 2008. e to CEO b and Team chart managing and overseeing allother organizations that engage in implemented rocurement-related activit . This interim measures ects. Withma or construction ro official should have authorit to hire an outside facilitator ofthe hel 11/2007 facilitator with extensiveOA1.a Outsidefor the trained and independentexperienced in capital projectprocurement expertise hired in of procurement procurement officials who will bedelivery, the team is reviewingNovember 2007. construction char ed with reviewin and several oand anal zin contracts, tions for a rovin all rocurement-relatedmission, role, ortin re ersonnel, 12/2007 ProcurementOA1.b Internalconsultin transactions. Current delegations oflocation, and structure of a ChiefRecommendation Team assembled services, and the authorit related to rocurement –Procurement Office similar orin December 2007. Team includes of urchase contract awards, a roval of the next overfunctional unit from ma orre resentatives and oods contract changes and amendments, Port’s CEOseveral weeks. Theprocurement centers within the Port. services. and related activities involvinhas asked the team to rovide ex enditure of ublic funds related and tionshim with an outline of o RecommendationOA1.c Procurement 3/13/08 to construction and constructiona preferred recommendationTeam meets weekly. Interim CPO management – should be rescinded named. necessary Awithin 90 days. and re-assi ned to the CPO and her lementation lannineriod of im functional centralizedIm lement6/1/08 or his staff.will follow, but the CEOprocurement office.  anticipates that the new unit or de artment can be o erational bOA1.d Pre are ob descri tion, advertise,3/15/08 June 1, 2008. The workin teamand select Chief Procurement  includes representatives from theOfficer.  Port’s executive, le al, ro ect 6/1/08Interviews are mana ement, en ineerin , and leteOA1.e Com com anizational or necessar lete and the purchasing staffs.logistics. selection process  is underway.  
2   
ACCOUNTABILITY ESTIMATED STATUS/ COMPLETIONREMARKS
SAO RECOMMENDATION PORT RESPONSE ACTION STEPS   OA2. The Port Commission should CommissionResolution 3181 is the structural On Januar 8, 2008, the Port Commission re-evaluate the current delegation of a subcommittee to review the establishedframework underlying the authorit to the Port CEO dele ationrelationshi between the Port of Commission authorit currentl encom assed in Resolution 3181 in Resolution 3181.Commission and the CEO. described and develop and issue a newResolution 3181 was adopted in delegation of authority resolution has remained1994. It Davis and TarletonOA2.a Commissioners that more clearl defines the for the edsubstantiall unchanwill serve on the subcommittee. Commission’s intent with respect topast 13 years. However, only one construction management andof the five Commissioners who OA2.b may retain outside Subcommittee re ortin to the Commission and the erts. exvoted on and si Resolution ned ublic concernin construction3181 remains in office. A chan e activities.of CEO occurred earlier this year. OA2.c Subcommittee will report back to full Given these circumstances, it is Commission with ro osed a ro riate that the Commission amendments b June 30, 2008. and the CEO review the rovisions of this bedrockCEO directed Port staff to review andGeneral Counsel document. Ultimatel , therovide detailed recommendations for Commission, in conversation withchanges to the Resolution 3181 provisions the CEO, will strike the balancerelated to construction management and between olic direction andconstruction activit re ortin b March 15, im lementation, as well as other2008. matters concerning the scope of the CEO’s authorit . To advanceOA2.d Internal team assembled and that effort, the CEO has asked rovisions ecific review smeetin to members of his executive team,and processes. led b the General Counsel, to rovide him with recommendations for updating, clarifying and strengthening a variet of rovisions in Resolution 3181 within 90 da s. The CEO has directed the team to give s ecific attention to the results of this erformance audit and the 49 resulting recommendations. In
3   
     1/8/08      6/30/08    3/15/08        
     Complete.      Public meeting held Ma 1st. Additional ublic meetings scheduled for June 10thand 23rd. Schedule to present draft resolution to full Commission on July 1stwith first readin on Jul 8thand second reading on July 22nd.  
SAO RECOMMENDATION PORT RESPONSE ACTION STEPS   
ED STATUS/ ACCOUNTABILITY  CESOTMIPMLAETTION REMARKS 
articular, the team is char ed with providing specific recommendations for rocess im rovements and enhanced checks and balances for project-wide contracting authority, as well as increased ublic visibilit and Commission participation for larger construction projects. The CEO then will share these recommendations with the Commission. The Port has implemented and strengthened or The Port will review its change Project control procedures for change orders as is1mt.r  emWneedt ihraeteecnl oyc miomnmtprelonel dm trehonactt e a{dnTudhr ee sP to t] order control procedures and will EManiangeeerminen t,&  im lement chan es where follows: n assure that En ineers’ chan e order warranted to ensure ali nment Construction with in est r Immediate Action: kenstoiwmlaetdes ea rofe  t(hae)  cproenptraarcetdo rwsit hout Port hadsu satlrrye abd bpeaucnti,c aens.d   Twihlle   chan All orders are double checked e1. a(PMEC) ro osed amounts, and b chan e continue, to make im rovements er CM and ab a Construction Mana asContract Administrator (CA) before they oarrde efru lels tiamnda tceos manlde tceols t analyses frompa trht eo fT tKheW  37e-rpfooirnmt aanctcieo na upldaitn,   Port. theare executed b documented. Where cost or rice and it will incor orate the n e Performance Auditor’s additional1.b Provide training to ensure compliance oarndaelry spirso ips oussaelsd,  t[toh eev Palourta]t es hcohualdg recommendations into that action for each Resident Engineer (RE), CM re uire full and com lete lan as a ro riate. The Portand CA on current re uirements for documentation of these reviews, agrees that independentchange order estimates and document including fully documented estimates, cost analysis andtraining specifics. supervisory reviews and approvals. secondar reviews of contractor Additional Action: chan e order ro osals are vital to transparency and noia foylan ses ofimstesatnd am ka eerocmmneadtions  Eva1.c tntaucem eodulta accountabilit and will ensure thate these estimates and reviews arefor standardization and consistenc . well-documented in the files. 1.d Establish a policy outlining when a change order request requires a
4   
      1/24/08    3/5/08      6/5/08  
Part of this work is currently on oin under TKW Item 7. Complete.    Com lete               
SAO RECOMMENDATION   
PORT RESPONSE
STATUS ACTION STEPS ACCOUNTABILITY  ECSOTMIPMLAETTEIDO N REMARK/ S 
se arate estimate in lieu of a direct evaluation of the existing contractor’s chan e order ro osal.  1.e Coordinate policy and procedures with the Chief Procurement Office.  1.f Update CM and CA manuals to reflect new processes and procedures.  1. Provide trainin to CMs, CAs, Port Construction Services (PCS) and Project Mana ement Grou PMG on new cost estimate rocedures.  
2. We recommend that the Port The Port has be un a review of The Port will review current ro ect trend undertake a review of all ma or chan e orders and trend lo s to lo s, identif inconsistencies and note recent and ongoing projects to identify similarities between Port corrective actions or evaluate identify cases where engineers’ estimated costs and contractor recommendations. estimates and contractors’ ro osed ro osed amounts. The Port will amounts are consistently the same take remedial action as Immediate Action: Construction and, in such cases, undertake a appropriate and also apply thedentify 2.a  I shwre ela laces simstgienernenoc cartsetadna ed oos rtorsManager further evaluation of the underl in rocess im rovements describede causes; followed b remedial actions above in Recommendation 1. the same andamounts are consistentl as appropriate.determine underlying causes.   Additional Action: Internal Audit 2.b Review matches identified and Manager recommend remedial action.  Internal Audit
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8/31/08     3/5/08      TBD   TBD
          Trainin course and content in develo ment. Construction and Contract Mana ement trainin scheduled for May 30thand nd June 2 .      Complete.       
SAO RECOMMENDATION PORT RESPONSE ACTION STEPS   
ATUS/ ACCOUNTABILITY  ECSOTMIMPLAETTEIDO N RSETMARKS 
2.c Provide re ort to Senior Mana ement. Mana er  Construction 2.d Take a ro riate remedial action as Manager directed b Senior Mana ement.  3. We recommend that [the Port] The Port has begun revising its The Port will revise its Standard Operating PMEC construction Standard Procedures manual to include specific rseveicsiefi cit s uSidOePli nMeas nfuora l troo inecrl uadned  Procedures Manual as Oparetr aotfi intgs  uidelines for roer and accurate chane accurate chan e order TKW erformance audit action order documentation, and will take the documentation. [The Port] should plan. Specifically, this revision following steps: rovide trainin to its consultant will include more uidelines for staff/construction mana ers to chan e order ne otiations and Immediate Action: improve the manner in which [the documentation. Port staff will training on current requirements3.a Provide Port] is documenting project change receive necessary training tofon CMr  Rs, aEsC dn .sA eroahgnroc fatiomentdocuder 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 provide change order review checklist.  3.d Review current documentation of change 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 process with new Central
6   
 TBD         3/5/08     6/5/08                 7/31/08
Part of this work is currently on oin under TKW Item 11a.  Com lete     Com lete.   Com lete.          Trainin course and content in develo ment. Construction and Contract Management training
SAO RECOMMENDATION PORT RESPONSE ACTION STEPS   
ACCOUNTABILITY ESTIMATED STATUS/ COMPLETIONREMARKS
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 pprroaccteicdeurs eas ntdh awt ilal ltiagkn e wtihthe  fboellsot iwnidusttryp s Procedures (SOPs) that align with begun revisions to its procedures ng s e : industr ractices.  to better conform to manualCurrent Port SOPs do not rovide ade uate industry best practices. I4m.am  eAd inaetgeoAticattiioonn:   edsummary will be revi information regarding change order CM and a CA before the Port ewb a negotiations. chan eexecutes an 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.  
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     1/24/08    3/5/08   6/5/08           6/5/08
scheduled for May 30thand June 2nd.      Complete.    Complete              Trainin course and content in development. Construction and Contract Management training scheduled for
SAO RECOMMENDATION PORT RESPONSE ACTION STEPS   
ACCOUNTABILITY  CESOTMIPMLAETTEIDO N SRTEAMTAURSK/ S 
5. [Port] management should take The Port will review its practices The Port’s response to change order PMEC estimates is addressed under immediate ste s to assure that the of contract schedule enforcement Port ri orousl enforces all and the evaluation of time Recommendation 1. contractual schedule requirements. extension requests to identify Then, when r sts for time Port management will immediately ensure extensions aree qmueade, the can and bweh emrea dfue.r t hTehr ei mPporrto vweillm eants  can that the Port enforces, consistent with best should be ro erl evaluated. The s ecific attention to the ractices ractices, all contractual re uirements for also vide mor preparation and submission of schedules by oPvoertr]s ishhot uolfd  the C phraone Ordere  owfi toht rheesr setactt et oa sndc hloecdaull iang eanncdie s takin the followin stes: rocess to ensure that estimates are enforcement when conductin properly created and used. this review. Immediate Action: 5.a Provide training on current contract schedule re uirements for CM and CA staff.  5.b Review all active ro ects for com liance with contractual schedule re uirements.  5.c If an contracts are not in com liance with contractual schedule re uirements, the Port will implement enforcement consistent with the project specifications.  Additional Action: 5.d Review industry best management ractices for s ecif in and im lementin schedule enforcement.  5.e Im lement an im rovements identified in item 5.d.  5.f Provide training to CM, CA, PCS and PMG on revised procedures.
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           3/15/08    4/4/08   4/4/08      6/5/08    7/31/08   8/1/08
Ma 30thand nd June 2 .            Complete    Com lete.   Com lete.             Training course and content in
SAO RECOMMENDATION PORT RESPONSE ACTION STEPS   
 
ACCOUNTABILITY ESTIMATED STATUS/  COMPLETIONREMARKS
6. We recommend that the Port The Port concurs that chan e The Port immediatel ceased an informal PMEC immediatel order negotiations should be method of resolving change order method of rye cseolavsine i tcs hinafnorem oalr der based on all relevant factors, differences. differences, and that the Port includin formal schedule, sco e, improve its cohna rnge order means, methods, pricing, and I6m.am  ePdoirattset aAffc tiwoans:  notified that this practice operational considerations. idnoclcuudmee tnhtaatt idetaeilqs uoirf ecmhaenntse t oo rder Imrovements to standard is no lon ermitted. er ne otiations must be based on rocedures that are underwa will discussions of scope/means and emphasize change order be negotiations summary must6.b A methods/pricing differences. documentation trainin , includinhc a erofeb AC ad anM  C abd weveeir ee executed b thnaeo drrec nab a focus on the above factors. Port.  Additional Action: 6.c All change order negotiations will be fully documented.  6.d Change order documentation will be improved as outlined in Recommendations 1, 3, 4 and 5.  6.e Port management will provide interim uidance until revised rocesses and rocedures are ut in lace.  7. We recommend that [the Port] The Port will undertake additional Usin a statistical sam lin methodolo , Internal Audit Internal Audit will review Port construction Manager 9   
    1/24/08   1/24/08     6/5/08        6/5/08
8/31/08  
develo ment. Construction and Contract Mana ement training scheduled for Ma 30thand nd June 2 .     Complete.   Com lete.