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Our February 2014 audit report included two recommendations, one regarding the data center relocation project budget and the other regarding the project schedule. The Director of the Division of IT agreed with our recommendations and outlined actions to address them. As part of this audit, we followed up on these recommendations and determined that the budget recommendation can be closed but that the schedule recommendation remains open. The results of our follow-up work are below.
In our February 2014 audit report, we recommended that the Director of the Division of IT reevaluate the data center relocation budget, taking into consideration the design changes that have occurred, and implement a process for updating the budget as additional cost information is available. We further recommended that the updated budget clearly separate build-out and operations expenses to allow for separate tracking and monitoring through the duration of the project.
The overall budget remains $201.5 million, as this was the funding amount approved by the Board of Governors. We found that the tracking and monitoring of this budget has improved since our initial report and that figures have been adjusted to reflect updated information regarding actual costs. As a result of actions taken, we are closing this recommendation. We will continue to monitor the budget to ensure appropriate tracking and monitoring through the build-out phase of the project.
Initially, the Management Division was responsible for maintaining the Master Tracker, a document that consolidates all projected expenses to be charged against the total $201.5 million 10-year budget, including design and construction, transition and migration, and operations expenses. Responsibility for this tracker transitioned to the Division of IT, and expenses have been updated to reflect the design changes and the new cost information that has become available, such as the actual cost of the contract with the general contractor and the price of the increased lease space. As of the end of our fieldwork, the Master Tracker showed that both the overall data center relocation project and the design and construction component were under budget.
In addition to the Board's Master Tracker, FRB Richmond is maintaining a project cost estimate tracker to monitor spending toward its allotted build-out budget. This document contains current build-out expenses, including FRB Richmond's project management fees and prepurchased equipment, design and contract administration fees, general contractor fees, commissioning costs, and change order costs. The Board's Management Division also maintains its own tracking of build-out costs and uses data from FRB Richmond to assist in this tracking.
By delegating responsibility for the Master Tracker to the Division of IT, the Management Division's responsibility is reduced to monitoring only costs toward the build-out budget, which is the sole portion of the budget that the Management Division is responsible for meeting. Further, we found that, separate from the $201.5 million operating budget, the Board also approved a $34.8 million multiyear capital budget. Ten years of depreciation on this $34.8 million flows into and is included as part of the $201.5 million operating budget.
While expense tracking has improved and the Board was under budget at the close of our fieldwork, we noted that change orders have increased expenses and may continue to do so. We found that the project is following an appropriate change order and procurement process, including reviews, approvals, and tracking; however, future change orders will continue to increase expenses and could bring the project over budget.
In our February 2014 audit report, we recommended that the Director of the Division of IT continue to closely monitor data center relocation project schedule risks and identify and analyze possible approaches for responding to potential delays that could affect the Martin Building renovation project.
We observed that the Division of IT has taken steps to monitor the timeline closely and to update the Chief Operating Officer to ensure that interdependencies are known and mitigated; however, we are keeping our recommendation open while the project remains active.
The Chief Operating Officer is provided with a Capital Construction Update report every other month, which contains updates on the Martin Building renovation and the 1801 K Street, New York Avenue, and data center relocation projects. This report contains a timeline that compares all four projects and makes specific note of the six-month overlap between the start of the Martin Building construction and the end of the data center relocation.
Despite the enhanced monitoring and progress reporting in place, we remain concerned about the timeline due to (1) the six-month overlap and (2) construction delays that have occurred. The original closeout date for the construction phase was July 14, 2014. However, in March 2014, this date was pushed back to November 2014 due to permitting delays with the Maryland Department of the Environment. In June 2014, the closeout date was delayed to December 2014 due to vendor issues with the chiller equipment. According to Board project management, the overall project schedule still has a projected December 2015 completion date despite these delays because project management had built slack time into subsequent phases of the project. However, project management has noted that further delays could jeopardize this completion date. Such delays could impact the Martin Building renovation project schedule and could also increase costs for the data center relocation project. The Board should continue to closely monitor the status of the timeline as the project continues.