Internal Audit Report. CDA Monitoring Process TxDOT Audit Office

Transcription

1 Internal Audit Report CDA Monitoring Process TxDOT Audit Office

2 Objective Evaluate the key monitoring responsibilities and oversight to ensure adequate coverage is provided; distribution of exception reporting/evaluations and determination of implementing of action plans/remediation. Opinion Based on the audit scope areas reviewed, control mechanisms are effective and substantially address risk factors and exposures considered significant relative to impacting operational execution and regulatory compliance. The organization's system of internal controls provides reasonable assurance that key goals and objectives will be achieved despite control gap corrections and improvement opportunities identified. Control gap corrections and improvement opportunities identified have the potential to negatively impact the achievement of the organization's business/control objectives. Management concurs with the above finding and prepared management action plan to address deficiencies. Internal Environment The General Engineering Consultant (GEC) was established between TxDOT and CH2M Hill (Consultant) to manage and monitor delivery for the design/build and maintenance of the Grand Parkway project. CH2M Hill is responsible for overseeing the developer s design, construction, public involvement, third party stakeholder interaction, and operation & maintenance program. They achieve this by monitoring, auditing, reviewing, commenting, and reporting on the developer to TxDOT employees. Four TxDOT employees have been put on site to work with the consultants. Another consultant, Atkins, has also been hired to work with TxDOT to help with the management of Right of Way parcel packages. Atkins work and results of their work has been actively monitored by TxDOT during the design/build phase of the project. Summary Results Finding Scope Area Evidence 1 Vendor Management TxDOT does not have a documented process of its monitoring activities to provide assurance that the consultant (CH2M Hill) is fulfilling its contractual duties August 28,

3 Audit Scope The audit was performed by Azana Headspeth, Roy Jarbeaux, Keith Laird, Yania Munro and Jill Emery (Engagement Lead). The audit was conducted during the period from June 3 to August 13, The scope included evaluating whether TxDOT and CH2M Hill had sufficient monitoring measures to determine that key tasks related to traffic control set up, equipment inspection, and quality assurance of materials and product were being performed by Zachry-Odebrecht Parkway Builders (ZOPB, the developer). The scope also included evaluating whether TxDOT and Atkins had sufficient monitoring measures to ensure ZOPB is performing the ROW responsibilities as set out in the PMP and the Atkins Consulting Contract. Methodology The methodology(s) used to complete the objectives of this audit included reviewing and performing the following: documents pertaining to the project, such as: o Comprehensive Development Agreement o Project Management Plan how the project will be built) o Project Implementation Plan o Contract for Engineering Services o TxDOT Right of Way Manual o Texas Administrative Code Title 43, Chapter 21 meeting rosters to identify how often TxDOT attended a sample of transmittal s to verify delivery to TxDOT discussion and issue logs to determine tracking and resolution Background This report is prepared for the Transportation Commission, TxDOT Administration and Management. The report presents the results of the CDA Monitoring Process Audit which was conducted as part of the Fiscal Year 2013 Audit Plan. State Highway 99 (the Grand Parkway) is a proposed 180 mile highway crossing through seven counties within the Houston District. The GEC project includes three segments of the Grand Parkway from U.S. 290 to U.S. 59 (37.4 miles) for design/build and maintenance and was awarded to ZOPB. CH2M Hill consultants were hired to monitor the activities and progress of ZOPB in order to supplement TxDOT resources. CH2M Hill advises TxDOT of events that have a significant impact causing problems, delays, or material adverse conditions to the project. In addition, another consultant, Atkins, was hired to help TxDOT with Right of Way parcel packages. This consultant reviews the parcel packages and advises TxDOT on whether the parcel package should be approved. Only TxDOT can approve a parcel package. Both consultants have been monitoring ZOPB activities throughout the design/build phase. Atkins has been reviewing parcel packages submitted for approval by ZOPB, including rejecting those that do not meet requirements. Similarly, CH2M Hill has been monitoring ZOPB activities related to traffic control set up, equipment inspections, and quality assurance of materials and product during the design/build phase of this project. Activities August 28,

4 they have monitored include reviewing design issues and tracking deliverables related to those areas. We conducted this performance audit in accordance with Generally Accepted Government Auditing Standards and in conformance with the International Standards for the Professional Practice of Internal Auditing. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. A defined set of control objectives was utilized to focus on operational and regulatory goals for the identified scope areas. Our audit opinion is an assessment of the health of the overall control environment based on (1) the effectiveness of the enterprise risk management activities throughout the audit period and (2) the degree to which the defined control objectives were being met. Our audit opinion is not a guarantee against operational sub-optimization or regulatory non-compliance, particularly in areas not included in the scope of this audit. August 28,

5 Detailed Findings and Management Action Plans (MAP) Finding No. 1: No Documented Process to Monitor CH2M Hill Condition TxDOT does not have a documented process to monitor and assure that the consultant (CH2M Hill) is fulfilling its contractual duties such as processes related to traffic control, equipment inspection, and quality assurance. Documenting the required steps TxDOT needs to monitor CH2M Hill gives management the transparency and confidence that consistent and reliable operations are on-going. Effect/Potential Impact Without a defined and documented monitoring process, future issues may not be communicated to TxDOT and there may be no clear method to manage the issue with all relevant parties being impacted. Criteria & Cause Monitoring the consultant s activities is an essential part of assisting management in assuring that internal controls are operating effectively. The Project Implementation Plan addresses in detail the processes, procedures, and tools to be used to carry out CH2M Hill s scope of services, but does not outline TxDOT s role in monitoring the consultant. Evidence A review of the Contract for Engineering Services (CES) and Work Authorization No. 1 for the CES was conducted to ascertain the roles and responsibilities of TxDOT and CH2M Hill. There was no evidence found that defined TxDOT s monitoring of CH2M Hill in either document; therefore, the audit team did a review of the following: Request for Deviation and Nonconformance issue logs meeting rosters to ascertain TxDOT s attendance transmittal s to verify TxDOT notification inquiry and interview of key personnel In these documents, auditors were able to confirm that CH2M Hill is monitoring the developer and that TxDOT was aware of issues and current status of the project, but there is no evidence that TxDOT has defined a process to monitor traffic control, equipment inspection, and quality assurance. Management Action Plan (MAP): MAP Owner: Eddie Sanchez, P.E., Strategic Projects Office, Houston Office Director MAP SPO management has a defined system in place through the GEC s Project Implementation Plan (PIP) for workflow generated by the GEC (acting as an extension of TxDOT staff) and submitted for review, concurrence, or approval by TxDOT. The PIP was prepared specifically for the Grand Parkway delivery and meets the GEC s contractual August 28,

6 obligations as well as addressing project specific nuances of the Developer s Project Management Plan (PMP). The PIP includes, for example; TxDOT s review and approval of the GEC s weekly activities, TxDOT s review and signature of RFD s, TxDOT s review and signature on all formal correspondence with the Developer, TxDOT s review and approval of the GEC s monthly invoices, and monthly project reports. To further address the findings of this Audit and add clarity of TxDOT s monitoring and documentation requirements, SPO management is prepared to initiate the development of a new section of the PIP that consolidates TxDOT staff interaction with GEC staff, which is currently covered across the numerous sections of the PIP. This new section of the PIP will focus on documenting TxDOT s key tasks in monitoring and documenting its interaction with the GEC consultant. In the interim, SPO will continue forwarding to Document Controls for recordation all formal correspondence between TxDOT/GPTC and the GEC consultant. Completion Date: October 15, 2013 August 28,

7 Summary Results Based on Enterprise Risk Management Framework Closing Comments The results of this audit were discussed with the Special Projects Division (SPD) Director, SPD Right of Way Director, and Special Projects Office Director Houston. The audit team appreciates the assistance and cooperation received from the Special Projects Office and CH2M Hill contacted during this audit. August 28,