internal audit review for small projects cyndi fout project services director october 26, 2009

Internal Audit Review For Small Projects

Cyndi FoutProject Services Director

October 26, 2009

2

Internal Audit Review

• Small Construction Projects Under $50K– March/April 2009– 22 projects were selected– Assess the effectiveness of:

• Internal Controls• University Policies and Procedures• Applicable laws and regulations

3


Improvement Area’s Identified1. Oversight of Contractor Selection2. Project Scope & Estimate Documentation3. Project Scope & Estimate Approvals4. Transferring Project Funds5. Single Projects Conducted as Multiple

Projects6. Prevailing Wage7. Administrative Fees

4


• Oversight of Contractor Selection– Findings

• Management does not formally monitor contractor selections or analyze which contractors a particular project manager may routinely use

– Recommendation• Establish procedures and controls to better monitor

the selection of contractors for small projects that are not required to be competitively bid

5


• Oversight of Contractor Selection (cont’d)– Management Response

• Query in NetLink will be developed that will summarize the number of contracts held by each vendor by PM for improved monitoring of the work allocations

– Summary reports with drill down capabilities to be developed by end of year

– MBE/EDGE information will be included

• Reviewed monthly by FDC Leadership

6


• Project Scope & Estimate Documentation– Findings

• 1 project did not have a documented project scope to support project estimate

• 1 project did not have an initial cost estimate documented

• 2 projects final costs were not reasonably reflective of the original estimate and no information was documented to explain the discrepancies

7


• Project Scope & Estimate Documentation (cont’d)– Recommendation

• Strengthen procedures and controls to ensure that all projects have documented scopes, cost estimates, and explanations if the estimates are not reasonably accurate

– Management Response• Review in Project Delivery Training

– Initiate/Plan the Project Training in September

Internal Audit

If the original project budget was $10,000 and there is an increase of $500 to bring the new total project cost to $10,500, which the customer is required to fund, what do you need to do?– Document

• Cost estimate template with explanation

– Obtain customer approval• Email

– Save in project file as either a PDF or hard copy– Has to include chartfield information

• Revised estimate letter or cost estimate template– Place customer approval in project file (electronic or hard copy)

In the above scenario if the increase was $2,000 what else would you need to do?– FIPA

Internal Audit

The original project scope that was submitted on the project intake request was to renovate a room in “Bldg A” into lab space. An estimate letter was completed, approved by the customer, and A/E selected. During the design phase it was determined that it would be more beneficial to renovate a room in “Bldg B”. No increase in cost. What steps need to be completed?– Customer Approval of revised scope– Revise scope provided to Teresa to update NetLink– Documentation placed in project file

10


• Project Scope and Estimate Approvals– Findings:

• 1 project did not have documentation to support management approval of the initial project scope and cost estimate

• 10 projects did not have documentation to support the project users acceptance of the initial project scopes and cost estimates

– Recommendations• Strengthen procedures and controls to ensure that all project

scopes and cost estimates are approved and accepted by both FOD mgmt and customer

11


• Project Scope and Estimate Approvals (cont’d)


– Initiate/Plan the Project training in September

12


How do customers approve projects?– Estimate Letters– Emails (OSUMC)

13


• Transferring Project Funds– Findings:

• 2 projects did not have funding transferred prior to work being performed and billed

– Recommendations• Strengthen procedures and controls to ensure

project funding is received prior to work commencing


– Initiate/Plan the Project Training in September

14


How can you tell if funds have been transferred in NetLink?

What funding sources do not require funds to be transferred prior to expenses?– Bonds– OSUMC– Student Life (if we use their plant fund)– OSURF Grants– State Funds

If a project was funded with one of the above funding sources would an IFA be required?

15


Should the PM send a purchase request to the Contracts Administrator without funds being transferred if the customer is funding the project with general funds?– No

with development funds?– No

with OSURF grant funds?– Yes …..

• verify with CA that they have rec’d a purchase order

with department grant funds?– No

Should the CA approve a purchase request without funds being transferred for any of the above scenarios?

16


• Single Projects Conducted as Multiple Projects– Findings:

• 4 individual projects that were created and conducted at the same time and location as another similar project already in progress

– Recommendations• Strengthen procedures and controls to ensure that

new work requests are processed through the change order process rather than initiating a new project when an existing project is already in progress

17


• Single Projects Conducted as Multiple Projects (cont’d)– Management Response

• Implement parameters by which these scenarios will be monitored in the future

– If work is being requested by the same customer, in the same building and same relative time frame the projects will be combined

– This will be monitored through Project Services Group during the Project Intake Process (Diane) and Project Approval (Teresa)

If projects are identified they will be given to the DoP for review and decision on path forward

18


If you have received 2 projects within a few weeks of each other that were requested by the same customer and in the same building what should you do?

– Determine if work is going to start and complete fairly close together

• Yes – combine them• No – they can be completed separately

– Unsure….discuss with your DoP

19


• Prevailing Wage (PW)– Findings:

• 2 instances where projects exceed the PW threshold with no supporting documentation maintained to attest to the payment of PW

• 1 instance where a single project exceed the PW threshold but was split into 3 individual projects with documentation supporting the payment of PW for only 1 of the 3 projects.

– Recommendations:• Strengthen procedures and controls to ensure

documentation verifying the payment of PW

20


• Prevailing Wage (PW) cont’d– Management Response

• Review PW limits during Project Delivery Training– Procure Construction Services training in August

21


What are the current PW Thresholds?– Renovation $22,166– New Construction$73,891

PW thresholds are based on _______ cost• Total Project

What do you need to do if your original project cost was $20,000 and an unforeseen condition causes an increase of $5,100 to the total project cost (revised total project cost is $25,100)?

Obtain revised quote from contractors to include pw on original and change order work– FIPA (10% increase)– Customer approval

• Revised estimate letter• Email

– Documentation in project file

22


7. Administrative Fees– Findings:

• 2 projects did not appear to have the appropriate administrative fees assessed

– Recommendations• Strengthen procedures and controls to ensure that all

administrative fees are properly assessed for each construction project

– Management Response• Project Accounting will recalculate/audit fees at project

closeout to insure appropriate fees have been charged• Review in Project Delivery Training

23


• Summary– Make sure you are placing documentation in

the file for project estimates, scopes, approvals and changes

– Convert emails to PDF’s if needed– Don’t break up projects– Spread the work among multiple vendors– Verify funds are transferred prior to

procurement activities– Know the PW thresholds – get revised quotes

if needed

24


internal audit review for small projects cyndi fout project services director october 26, 2009

Documents

project estimate

project training

documented project scope

project funds

original project scope

original project budget

project file electronic

particular project manager