Continuing the goal of posting source information here in yourCT.com, I post today a few excerpts of the PWC report, as well as links to the original document.
There’s some interesting thigns here. The first read I took, centered on school construction and capital budget process. In many respects the cdument serves as a good overview of what Norwalk’s process is, so I quote form the report below:
The capital project planning process is complicated in that it falls between the City and the Board of Education. As such, the
term “capital program organization†is used to describe the collection of participants in the program, even though no formal
organization exists. The City finances the project, while the Board is the customer of the final product; therefore, for very
legitimate reasons, both organizations are represented in the planning process.
6.4.3 Apart from the capital projects, as set out in the Capital Budget, smaller school facility projects are paid for under the
Construction Services line in the Operating Budget. These projects, the majority of which are undertaken during the summer
vacation, are managed exclusively by the Board of Education.
6.4.4 The two types of project are generally distinguished by estimated cost. If the project is estimated at more than $20,000, then it will be classified as a capital project. This definition is somewhat arbitrary, because guidelines surrounding the aggregation or disaggregation of work items to create a capital project are not clearly laid out.
The consultants recognized that the process is not the most efficient one, and so made a recommendation:
6.4.6 We have considered a number of organizational changes that would address the organizational capacity issue, which are
summarized in the following table. All of them envisage a new role, a Director of Capital Projects (DCP) or similar, which
would have sole responsibility for the development, design, and implementation of each project. It was not part of this study’s
scope to develop detailed organizational templates or job descriptions; therefore, we focus on a high-level discussion of the
pros and cons of a number of different reporting structures for the DCP.
6.4.7 There is also the possibility that the Public Works Department might play a more central role in terms of monitoring and
coordinating the Board of Education’s capital projects, as it once did. In a similar way, this may be an opportunity for the City
to consider the introduction of a Citywide organization to oversee the delivery of capital projects. (Both cases are included in
the table below for completeness.)
As backgroudn for their recommendations, tehy focused on the wolfpit school.
8.5.3 The “Summary of Pending Change Orders†(which follows) shows that, as of May 14, 2001, pending change orders on the
West Rocks project totaled $979,619, approximately 25 percent of the original contract amount. Of these, $929,867 was
classified as “Outside Project Scope,†while $49,752 was classified as “Unforeseen Conditions.†Since May 2001, other
changes have been issued, resulting in a total of $1,363,895 of changes, or around 36 percent of the original contract. A 36
percent increase in change orders to a contract of this size and nature indicates potentially significant issues in management
execution and control.
And then they listed out the expenses for the Wolfpit school and made some serious recommendations:
8.5.4 The West Rocks contract has been used to perform miscellaneous work not related to the intended scope. Some work should
have been included within the original scope, but has now become a “discovery†that must be addressed. Other work is not
related to the stated intent of the contract, which addressed code compliance issues. The cost of the change work added to the
existing contract is likely to be significantly higher than that budgeted.
8.5.5 While the architect and owner’s representative review change orders and quotations, the review should include the preparation
of an independent estimate by the architect or construction manager in advance of receipt of the contractor’s quotation. This step was not evident in the change orders examined. The review of the contractor’s estimate is not sufficient to ensure the
complete and reliable understanding of the changed work, as well as its secondary impacts.
8.5.6 The Land Use and Building Management Committee reviews and approves proposed changes, as presented by the owner’s
representative and architect at the scheduled periodic meetings. This process is consistent with the City’s procedures, and we
take no exception. However, the report used to review the status of the contract and present proposed changes does not show
the current status of the contract. Further, the relationship between the RFPs, the change orders, and the pending change orders
was not consistently shown in this document. Therefore, there is no reliable means for determining the cost status and progress
of a project, which is essential for gauging the performance of the contractor and the financial standing of the contract.
Comprehensive reports in a standard format should be periodically produced and circulated to all responsible parties.
Requiring that this essential information be petitioned for is not an acceptable practice. This information must be routinely
circulated and understood.
8.5.7 These factors emphasize the need for providing experienced management, supervision, appropriate reports, and reliably
executed procedures on the upcoming capital program.
Scope Definition
8.5.8 A problem exists with the definition of the scope of the project and with controlling this scope throughout design
development and during construction. In this case, it appears that the scope did not fully address the work that was likely to be
encountered. Examples include the discovery of the wood framing supporting the ceiling and the presence of asbestos. A more
thorough investigation of existing structures would have found readily discernible features (the wood framing) and easily
anticipated problems (asbestos-bearing materials). Likewise, coordination with the users of the facility is required to recognize
the constraints on construction, which will typically have large impacts on construction costs.
And where Corda says there was nothing of value from this report, it may because of this bit observation about the lack of standard financial oversight:
9.2 Evaluate the ability of cost reports to identify shortcomings to management for timely action
9.2.1 The District does not provide a comprehensive accounting for the cumulative contract status for construction projects. The
Board of Education’s Director of Finance inputs the monthly invoice/cost information into the “MUNIS†database, which
tracks essential contract cost data. However, no periodic distribution of reports is made. No construction budget/cost reports
are provided by the Board to either the Common Council or the City Finance Department, unless specifically requested.
9.2.2 While various reports are assembled to show the cumulative status of pending change orders, no current report was found that detailed the current contract amount in terms of the original contract amount, the executed changes, and the pending changes.
Only one report showing this vital information was found, and it was a memorandum from the City’s assigned liaison on 27
September 2000—more than a year ago. While this report also detailed the original funding and special appropriations,
deducted encumbrances devoted to other efforts for this project, and clearly demonstrated the remaining “free balanceâ€
funding, it was a unique report, made in response to a specific request. Management should require that similar reports be
standardized in format and circulated on a periodic basis to a set distribution list. In this case, this report should preface any
materials previewed by the Land Use and Building Management Committee in advance of its meeting.
9.2.3 The reports prepared by the OR for the Land Use and Building Management Committee meeting provide a very detailed
description of activities at the site, indicating that either (1) the report is prepared for use in the field and is used at the meeting only to provide an efficient vehicle for discussion or (2) the report reflects the Land Use and Building Management
Committee’s wishes to be highly involved at this level.
In the first instance, the report should be replaced with a new, comprehensive, and standardized report that clearly shows
the cost and schedule status of the project. The detailed narrative could be an attachment. Without a summary report
focusing on the “big picture,†the committee’s focus can be easily subverted to micromanage details, while the overall
direction of the project is unclear.
If the report reflects the Land Use and Building Management Committee’s actual or perceived need to be actively
engaged at this level of detail, then the organization needs to redefine missions and protocols.
9.2.4 None of the reports provided any means for reviewing the status of the work relative to the schedule. Neither a simple table
indicating the original start dates, milestones, and completion dates in comparison with the actual performance nor a simple bar
chart portraying these events graphically was found in any of the meeting updates or other materials. The contractor had
prepared a reasonably detailed schedule at the beginning of the contract, which was reviewed by the architect and OR;
however, no updates were found, and the schedule seems to have been replaced by a narrative supplied by the contractor,
which only outlines the work and progress of the project.
9.2.5 While the OR reports mention incidents and problems that were encountered in construction, a standardized format for
construction reporting should be included to provide a cumulative assessment of the status of quality control on the project.
How can we accept anything that Corda says, when he rejects such integrity related recommendations such as this:
The Norwalk Public Schools’ “Policies, Regulations, Bylaws†do not require audits of project expenditures and procedural
compliance. Audits are normally implemented by management to ensure that departments and functional areas comply with
the requirements mandated by procedures and/or statutes and that expenditures are consistent with contractual terms and
District policies. We recommend that the City and School Department require an appropriate level of auditing to be performed
on a periodic basis.
Link To The Report:
BOE PricewaterhouseCoopers Report
