Board Report: 2014-AE-B-007 March 31, 2014
The Martin Building project team did not maintain supporting documentation for its conceptual construction cost estimate, which appears to violate the Board’s Records Policy and Procedures Manual. Further, this lack of documentation is not in accordance with the GAO Cost Estimating and Assessment Guide and GSA P-120, which are considered industry best practices. Documentation needed to be assembled in response to this audit and support was not available for several line items of the conceptual construction cost estimate. The project team informed us that this documentation had not been maintained in an official folder because of the length of time the project has been ongoing, as well as turnover within the project team over the years. As a result, our efforts to validate the accuracy and completeness of certain line items in the conceptual construction cost estimate were hampered, and documentation was not readily available for the project team to ensure effective cost management and future estimating practices and to fully support the estimate presented to the CBA in September 2012.
The project team did not have supporting documentation for the Board’s $179.9 million conceptual construction cost estimate readily available for our review and had to assemble it over a period of four weeks. The Board’s Records Policy and Procedure Manual states that records must be filed in a way that makes them easily retrievable and available to staff members who need to use the information to conduct Board business.14 The Board also has established policies and procedures for recordkeeping that include records classification definitions and records storage and retention requirements. The GAO Cost Estimating and Assessment Guide states that well-documented cost estimates are considered a best practice for several reasons, for example, because they facilitate cost estimate validation and analysis of changes in program costs. In addition, GSA P-120 states that the maintenance of an official file provides a standardized historical database and library for cost estimates that can be used for cost management and future cost-estimating practices.
Members of the project team stated that they had not maintained an official centralized folder containing historical cost documentation associated with the estimates but had begun gathering this information around the time we initiated our audit. The project team also indicated that the information was not readily available because the project has spanned 11 years, with significant scope changes that resulted in the preparation of multiple estimates. In addition, the considerable turnover in the project team during this time frame contributed to recordkeeping issues. The lack of supporting documentation hampered our efforts to validate the accuracy and completeness of certain line items in the construction cost estimate. Further, the project team’s cost management and future cost-estimating practices may be impaired if supporting documentation is not readily available.
Documentation in support of a decision that resulted in a significant difference in the conceptual cost estimate was not maintained. The project team lowered the Martin Building renovation component of the construction cost estimate by $32.2 million (30 percent) to reflect the lower cost of nonphased construction. We noted that the 2004 estimate URS supplied to the Board specifically for the Martin Building renovation was reduced by only 24 percent to reflect this same change in renovation approach. A reduction of 24 percent would equate to a reduction of $25.8 million in the estimate, or $6.4 million less than the project team’s reduction. A note on one line of the conceptual construction cost estimate indicated that a former project team member surveyed several A/E firms regarding the relative costs of a phased and a nonphased approach. This note stated that based on this research, a nonphased approach would reduce construction costs by 30 percent. The only documentation provided in support of this decision was a 2010 e-mail from KCCT stating that the cost estimate could be reduced by 20 to 30 percent. Other documentation, including records of feedback from the other firms, major assumptions made, specific percentages discussed, or other rationale supporting the choice of a 30 percent reduction over the 24 percent used in the URS study, was not provided to us.
We identified certain line items in the conceptual estimate that did not include supporting documentation. As an example, the conceptual construction cost estimate indicated that $8.0 million for wall systems was based primarily on RSMeans data and similar past projects at the Board. However, supporting documentation for this line item was limited to a range of RSMeans unit pricing data. Other information for this calculation, such as the square footage per office and the specific unit price, as well as contemporaneous documentation to support the pricing data, was not provided. In addition, “similar past projects at the Board” were not identified and documentation, including the projects’ actual cost information, was not provided. In another example, line items totaling $3.0 million for remodeling the mechanical shop and renovations to the fitness center, credit union, and health unit had supporting documentation consisting of notes stating that costs were based on similar projects; however, the actual projects were not identified, and the related cost information and calculation documentation were not provided.
The support for these line items was not maintained in accordance with the Board’s Records Policy and Procedure Manual and was inconsistent with the best practices outlined in the GAO Cost Estimating and Assessment Guide. In addition, GSA P-120 requires maintenance of documentation to establish a standardized historical database and library for cost estimates that can be used for cost management and future cost estimating practices. GSA P-120 also indicates that the estimate should completely and accurately represent design features and quantities. We were informed that the lack of supporting documentation was due to the length of time the project has been ongoing and the turnover within the project team.
The Board also has established policies and procedures for recordkeeping that include records classification definitions and records storage and retention requirements. The lack of supporting documentation hampered our efforts to validate the accuracy and completeness of these aspects of the construction cost estimate. Further, the project team does not have information readily available for cost management and future cost-estimating practices, and documentation is not available to fully support the conceptual estimate presented to the CBA in September 2012.
The Board has submitted a purchase request for software that provides collaboration, project management, and information management applications specifically for the architect, engineering, design, and construction business sector. The project team expects this software will be fully implemented in 2014. In addition, the project team informed us that the assistant project manager is currently maintaining files initiated by the former project manager to fulfill contracting officer technical representative and project recordkeeping responsibilities.
An official file provides a historical database and library for cost estimates that can be used for cost management and future cost-estimating efforts. In addition, it provides information that supports decisions made by the project team—information that may be needed by auditors or others. The lack of documentation retained by past members of the project team resulted in the need for the current project team to assemble the documentation that supported the estimate that was presented to the CBA in September 2012; it also impeded our assessment of the cost estimate and may hinder the current project team’s ability to support project decisions.
We recommend that the Director of the Management Division
In its response, management stated the following:
The Management Division concurs with the finding and has resolved issues related to the centralized filing system for the project. Baseline cost estimates include citations cataloguing resources used to prepare the estimates, and all resource documents are captured and are available in the new project file management system. This product was purchased, installed, and in use prior to the issuance of this report.
Prior to the initiation of the audit, leadership within the Management Division had established a working group consisting of Facilities and Budget and Administration staff whose task was to review and consolidate, as necessary, a historical file of all of the factors and decision-making that had led to the pre-programming conceptual cost estimate. It was known that this type of file was essential for enabling the project team to reflect back on cost elements and values as new information became available. The responsibility to maintain supporting documentation is assigned to the Chief Project Manager who is a seasoned senior registered architect with considerable experience in managing large and complex construction projects.
Management’s full response is included as appendix D.
We believe that the actions described by the Management Division are responsive to our recommendation. The project team provided documentation of a purchase request for the project file management system during our audit, and we included this information in our report. We plan to follow up on the installation and usage of this system to ensure that the recommendation is fully addressed.
