Construction contract administration, Montana Department of Transportation : performance audit report PDF
Preview Construction contract administration, Montana Department of Transportation : performance audit report
Montana. 1-1524c.c64a LDeigviissliaontive Aud i t 1998 Construction contract administration* Montana Department Legislative Audit Division State of Montana Report to the Legislature March 1998 Performance Audit Report Construction Contract Administration Montana Department of Transportation This report contains information on the controls related to the Construction Contract Administration process for highway construction projects. Recom- mendations in this report address improving process efficiency. s coLLrcr;ON MONTANA STATE LIBRARY HHHrn-rEiN?A.,15MEO"NeTtAhNAAVE £ Direct comments/inquiries to: Legislative Audit Division Room 135, State Capitol PO Box 201705 MT 97P-05 Helena 59620-1705 MONTANASTATELIBRARY mini 3 0864 0014 0101 PERFORMANCE AUDITS Performance audits conducted by the Legislative Audit Division are designed to assess state government operations. From the audit work, a determination is made as to whether agencies and programs are accomplishing their purposes, and whether they can do so with greater efficiency and economy. In performing the audit work, the audit staffuses audit standards set forth by the United States General Accounting Office. Members ofthe performance audit staffhold degrees in disciplines appropriate to the audit process. Areas ofexpertise include business and public administration, statistics, economics, computer science, and engineering. Performance audits are performed at the request ofthe Legislative Audit Committee which is a bicameral and bipartisan standing committee ofthe Montana Legislature. The committee consists ofsix members ofthe Senate and six members ofthe House ofRepresentatives. MEMBERS OF THE LEGISLATIVE AUDIT COMMITTEE Senator Linda Nelson, Chair Representative Bruce Simon, Vice Chair Senator Sue Bartlett Representative Beverly Barnhart Senator Reiny Jabs Representative Ernest Bergsagel Senator Tom Keating Representative A. R. "Toni" Hagener Senator Ken Miller Representative Bob Keenan Senator (vacant) Representative Robert Pavlovich LEGISLATIVE AUDIT DIVISION ScottA. Seacat, LegislativeAuditor Deputy LegislativeAuditors: John W. Northey, Legal Counsel Jim Pellegrini, Performance Audit & Tori Hunthausen, IT Operations Manager James Gillett, Financial-ComplianceAudit March 1998 The Legislative Audit Committee ofthe Montana State Legislature: This is our performance audit ofthe Construction Contract Administration process administered by the Montana Department ofTransportation. This report contains information on potential audit areas and recommendations for improving the process. Responses from the Department ofTransportation are contained at the end ofthe report. We wish to express our appreciation to the staffofthe Construction Bureau and the districts for their cooperation and assistance. Respectfully submitted, Scott A. Seacat ^^^^_y Legislative Auditor Room 135, StateCapitol Building PO Box201705 Helena, MT59620-1705 Phone(406)444-3122 FAX (406)444-9784 E-Mail [email protected] Digitized by the Internet Archive in 2010 with funding from Montana State Library http://www.archive.org/details/constructioncont1998mont Legislative Audit Division Performance Audit Construction Contract Administration Montana Department of Transportation Members ofthe audit staff involved in this audit were Angie Grove. Joe F. Murray, and Jim Nelson. 1 Table of Contents List of Figures iii Appointed and Administrative Officials iv Report Summary S- Chapter I - Introduction Introduction 1 Audit Objectives 1 Audit Scope and Methodology 1 Issues for Further Study 2 Maintenance versus Construction 3 Preconstruction Process 3 Computer Systems 3 Report Organization 4 Chapter II - Background Introduction 5 Highway Construction Contract Administration 5 Types ofConstruction Projects 7 Department CCA Organization 7 Helena Construction Bureau 8 Transportation Districts 9 Transportation Commission 11 Federal Highway Administration (FHWA) 12 Chapter III - Management Introduction 13 Controls Over the CCA Process Controls Over Measurement and Payments ofContract Quantities 13 Field and District StaffResponsibilities 13 Construction Bureau Duties 14 Conclusion: Controls CherMeasurement and Payment are in Place 14 Are Methods in Place to Ensure Projects Meet Standards? 15 District Quality Control Measures 15 Construction Bureau Quality Control Measures 15 Conclusion: Quality Control Procedures are in Place 16 Page i Table of Contents Areas Where Controls Could be Strengthened 16 Evaluations ofManagement Staff 16 Field Office Manual 17 Summary 17 Chapter IV - CCA Project Introduction 19 Management Documentation Requirements 19 Partnering Process 20 Change Order Procedures 21 Chapter V - CCA Process Introduction 23 and Organization Alternative Approaches to CCA 23 Other Contracting Systems 23 MDT Assumes Potential Liability 24 CCA Approach Should Correlate to Project Risks 24 Overall Management Decisions Needed 25 The Current Role ofthe Construction Bureau 25 Does the Bureau Have Authority to Complete Their Functions? 25 Organizational Structure Should Conform to CCA System in Place 26 Agency Response Department ofTransportation 31 Page ii List of Figures Figure Contractor Construction Payments I Fiscal Years 1993 through 1997 6 MDT Figure 2 Organizational Structure of Construction Staff 8 Figure 3 Montana Transportation Districts 10 Page iii Appointed and Administrative Officials Transportation Commission
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