This Report on Construction Process and Internal Controls Review was on the Agenda of the Feb 5, 2013 meeting of the BoE Audit Committee
FDB Background (excerpt)
At DOE, Facilities Development Branch (FDB) is responsible for all construction and construction related activities for the DOE including: construction, repair and maintenance projects, and architectural and engineering assistance (also called “consultant” or “professional services”). FDB’s budget for fiscal year 2012 was approximately $150 million. FDB performs approximately 200-250 projects per year, most of which are for repairs and maintenance. Projects range in size from repair and maintenance projects costing less than $1000, such as repainting jobs, to the $65 million, 168,000 square foot Ewa Makai Middle School new construction project….For staffing FDB has 66 approved positions and 14 vacancies….
SUMMARY OF FINDINGS
Facilities Development Branch (FDB) has baseline processes and controls that enable FDB to develop, build, and maintain educational facilities for the State of Hawaii Department of Education. However, based on our assessment and comparison to leading industry practices, FDB policies. procedures and controls are outdated. Additionally, policies and procedures are not consistently applied, leading to inefficiencies and weakened internal controls, and increased potential risk of errors and exceptions. FDB management should consider the following recommendations to reevaluate and update its policies, processes, and controls to improve efficiencies in operations, and strengthen the system of internal controls. Each of the findings summarized below are discussed further in the Detailed Report- Observations: Findings and Recommendations section,
The key findings resulting from the process and internal controls review are as follows:
• POLICIES AND PROCEDURES:
FDB's policies and procedures have not been consolidated and updated to reflect current FDB activities and practices since they were adopted in 2005, (FDB adopted the Interim General Conditions issued by the Public Works Section of "DAGS," which was last updated in 1999, at the time DOE assumed education facilities responsibilities,) Comprehensive policies and procedures should be updated to reflect current industry practices, eliminate inconsistencies and conflicts and help guide consistent and effective practices throughout the organization.
• USE OF TECHNOLOGY:
FDB is not effectively leveraging technology to manage construction planning and project management activities. Due to inconsistent use of the project tracking system1 comprehensive management reports to inventory, track, and evaluate projects and performance across the portfolio are not available. In addition the lack of centralized tracking prevented the identification of a complete population of projects for portfolio analysis and sampling purposes for the current state assessment
• DOCUMENTATION AND RETENTION:
FOB does not consistently retain project documents. Policies and procedures do not comprehensively define or provide guidance specifying which project documents Project Coordinators should retain; how documents should be retained, or the required retention periods, Because project documents were not consistently retained or filed, complete sets of project documents were not available for review. As a result the current state assessment team was unable to complete planned testing procedures across a sufficient sample size in order to conclude on the operational effectiveness of internal controls.
Agenda: STATE OF HAWAII BOARD OF EDUCATION AUDIT COMMITTEE Feb 5, 2013
FULL TEXT AUDIT: DoE Construction Process and Internal Controls Review—Summary Report April 4, 2012 (Discussed Feb 5, 2013)