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HomeMy WebLinkAboutDTS-07-190 - Audit of Engineering Projects ) R Development & Technical Services Report To: Date of Meeting: Submitted By: Prepared By: Ward(s) Involved: Date of Report: Report No.: Subject: Chair Mayor Zehr and Members of the Audit Committee November 26, 2007 Rob Browning, General Manager DTS Rob Browning, General Manager DTS All November 22, 2007 DTS 07-190 AUDIT OF ENGINEERING PROJECTS RECOMMENDATION: That Council receive this interim report for information. BACKGROUND: Earlier in 2007, Council requested staff to undertake an audit of two engineering projects, namely the Victoria Street reconstruction and the Joseph-Gaukel reconstruction. Concerns expressed included but not limited to cost overruns, project timing and project methodology. It was anticipated that by examining these two projects, the City could improve its performance on capital projects such as these. REPORT: In accordance with the City of Kitchener purchasing policy, MMM Group was retained to conduct a review of the two afore mentioned projects. The consultants have conducted a document review, interviewed staff and one of the consulting firms used on the projects. They have provided the City with an interim draft report of their findings. The report is attached for your review. Staff expects that the final report will be completed in early January, 2008 and the consultants will provide an overview of their findings at the next Audit Committee meeting. FINANCIAL IMPLICATIONS: To be reported with the final report. COMMUNICATIONS: None at this time. CONCLUSION: The interim report is intended as information at this time. It is in draft form and is subject to revision before it is in final form. Rob Browning, General Manager, DTS Grant Murphy, Director, Engineering City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 Table of Contents A. INTROD U CTI ON ................................................................. .......... 2 Appendix A - Chronologie Streets Projects A.1 B a c kg r 0 un d .............................................................................. . . . . . . . . . . . . .. 2 A.2 Sco pe..................................................................................................... .......... 2 A.3 Methodology .................................................................... ............. ...... 3 A.4 History of Joseph/Gaukel Streets Project....................... ....................4 B. A UD IT FOCAL AREAS ................................. B.1 Soil Testing and Methodology ............................ B.2 Consultant Selection .................................... B.3 Project Cost Estimating..........................~ B.4 Site Management................................. B.5 Project Performance Monitoring. B.6 Project Risk Assessment and Mitiga B.7 Other Project Management e C. RECOMMENDATIONS....... .... ....................7 ........................... 9 ........................... 12 ............................................ 12 ........................................ 13 ......................................... 14 .............................................. 14 ictoria treet Project and the Joseph/Gaukel of Kitchener Teleconference Nov. 9,2007 Page 1 of XX City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 A. INTRODUCTION A.1 Background In 2002 and 2003, the City of Kitchener undertook two projects in the City's downtown area: . the Victoria Street project which comprised the upgrading of underground services and reconstruction of the roadway for seve Park Street to King and Park Street from Devon Street to the CN . the conceptual and detailed design and contract administr Entrance. olic tendering esign and tender Both projects were initially awarded to design Consultan process. Consultants were retained oy the City to co packages and provide oversight during construction. Upon commencement of construction, ooth ediately encountered issues related to soil contamination within the pro hrough the later stages, additional project scope was added to ist acts for the reconstruction of neighoouring streets. City staff were d on eral occasions to request council approval for additional funds to increase of services for the Consultants and Contractors. A.2 Scope lated with the scope of these projects, City Staff faced ot limited to schedule and financing. As a result, the ) to undertake an engineering audit using the Victoria e treet projects as examples to identify ooth strengths and ents in the City's engineering project management processes completion. The City's processes were evaluated under four outlined oy the Project Management Institute (PMI). g audit scope specifically examined evidence of the City's processes used during th ctoria and/or Joseph/Gaukel Street projects (not including Phases 3 and 4 - Cleanup a 44 Gaukel Street and the Environmental Risk Management). In particular, the audits will focus on the following areas: . Soil testing and methodology for identification of hazardous and non- hazardous materials . Proj ect management o Consultant selection o Project cost estimating Page 2 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 o Project risk assessment and mitigation o Site management o Project monitoring It should oe noted that a detailed forensic audit and root cause analyses for the two projects is oeyond the scope of this assignment. A.3 Methodology Early in the work program, it was identified that City staff w aoout either projects were no longer employed oy the Cit had knowledge of the Joseph/Gaukel Street project, howev in the final construction phase (Phase 3) of the projec ledgeaole of City staff oeen involved Standard auditing methodology was used to determine the strengths and improvement in the City's project management processes. These interviewing staff and evaluation of availaole project documentatio In order complete gaps in project knowled Managers from each proj ect prime consul turnover, only the Project Manager fr availaole to corrooorate some aspect conducted on the Victoria Street proje Consultant (McCormick Rankin) the Cit s of the respective Project ted. Again due to staff aukel prime consultant was o interviews were aole to oe e proj ect managers from ooth the e no longer availaole. There was limited underst Victoria Street project. used on the Joseph/ Gauke could oe ootained from the processes used on the , the directed the audit oe focused on the processes s Proj ect. . 2007, a project kick-off meeting was held at the City offices. approach MMM would take in completing the assignment was As part of the kick-off meeting, initial interviews with City staff on the City's processes were conducted. The following City re in attendance: Roo Browning o Grant Murphy, P. Eng. o Steve Allen, P. Eng. o Jim Oakley, C.E.T. o Jim Ellerman, C.E.T. o Greg McTaggart, C.Tech. . With assistance from City staff, MMM has ootained and reviewed various documents retrieved from the City's project files. These documents were used to Page 3 of XX City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 develop a high-level chronology of the project's lifecycle. Appendix' A' contains the two project chronologies. . A generic project management process outline was developed to guide the audit process (Appendix B). The audit was to ultimately seek oojective evidence of the processes used oy the City under the following four areas: o Planning o Execution o Controlling o Close out . Due to the limited numoer of staff associated with the p City staff were conducted to ootain insight in the City policies on Nov. 9, 2007 (Appendix C). The followi o Roo Browning o Grant Murphy, P. Eng. o Steve Allen, P. Eng. o Jim Oakley, C.E.T. o Jim Ellerman, C.E.T. o Eric Saunderson, ?? o Kathleen Reinert . Interview with the City's Duane Litner of MTE w procedures as it relate Joseph/Gaukel Streets Project, Mr. to investigate the City's practices and nsultant on Nov. 16,2007. A.4 History of Josep s Project Victoria Park Entr In May 2002, Green the Gaukel/ Co Victoria 2002 w. (GS eon (GSP) was part of the creation of a Master Plan for Integral to the Master Plan was the development of the e first planning documents were identified in the Septemoer conceptual design and fee estimate from Green Scheel Pidgeon Streetscape and Victoria Park Entrance. 02, the City approved the Ontario Super Build Millennium Partnership lch identified the Gaukel/ Young Street Axis as one of the projects to use In Novemoer 2003, as part of an open tendering process, there was a formal response to the expression of interest E03-058 from GSP for the Victoria Park Entrance. On April 26, 2004, there was an agreement signed oetween GSP (with MTE as a Suoconsultant) and the City for the Conceptual design, detailed design and construction services for the Victoria Park Entrance. As part of that agreement, MTE was to addresss Page 4 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 any potential issues of soil contamination for the Victoria Park Entrance. The Agreement contained a detailed schedule that included the pre-design phase to oegin in mid- Nov. 2005, preliminary design completion oy early Peo. 2005, award of contract in end of April 2005, oeginning of construction oeginning of May 2006. Scope Change Aoout the time when GSP signed the agreement, MTE determined that there was more contamination then previously thought in the area of the Park entr GSP's understanding of the issues associated soil contamination was limited an ame reliant on MTE's expertise to deal with those issues. As such, MTE oe e prime Consultant and GSP oecame the Suoconsultant. In May 2004, C concu with the recommendation oy the DTS Engineering Division that MTE hener e ter into agreement to: This Agreement was e work oy the City. MTE c the City. 1) facilitate removal/ remediation of existing soils th oy coal tar within a 200 m long corridor at extending into park entrance feature; e to oe impacted f way, and mayoe 2) MTE to oe prime engineering Co design, construction for 2005 Ga to Water St., and ate a seamless pre-design, eph Street from Queen Street 3) DTS Engineering engineering fee with nd Purchasing negotiate a suitaole witho competitive oid and without a firm scope of ced work without an agreement or purchase order from In P e oruary the proj ec Ci . oped a detailed scope and cost estimation of $10.82M for al request from the City which included the following: oseph & Gaukel Street Reconstruction, Joseph Street tlon - Water to RR Tracks) g ( Joseph & Gaukel Sts., Joseph - Water to RR Tracks) Park Entrance ination Remediation (Joseph & Gaukel St. intersection) In June 9, 2005, MTE and the City enter into several agreements for the civil work, Streetscaping, and Soil Remediation for Joseph St. from Queen St. to Victoria & Westerly, Gaukel St. from Joseph St. to King St., Prancis St. from Joseph St. to Charles St. and Richmond Ave. from Joseph St. to Victoria Park. Due to the legal issues associated with 44 Gaukel Street, the contamination of surrounding area at the Park Entrance could not oe fully explored. Hence this portion of Page 5 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 the project was put on hold. On August 24, 2005, MTE and the City enter into an additional agreement for the extension of Engineering services for the Design and Contract Administration for: Francis Street Reconstruction, Joseph St. to Charles St; Joseph St. Reconstruction ,Water St. to North of Victoria St. South; and Richmond St. Reconstruction, Joseph St. to end. In January 2006, the legal issues associated with 44 Gaukel Street were resolved and in July 2006, the City was aole to take ownership of the land for further soil. estigation and cleanup was undertaken and will oe completed oy the end of Dece 2007. On April 18, 2006, the area around the Park Entrance was fully explore spect to contamination and additional Agreements with MTE were exercis orks, Contamination cleanup and Landscaping & streetscaping for foil Joseph St. from Queen St. to Victoria St. Gaukel St. from Joseph St. to King St. Francis St. from Joseph St. to Charles St. Richmond Ave. from Joseph St. to Vi These agreements did not include the cleanup a The contracts for all the work for Phases 1 Throughout the project, several cost upda These were provided when there was post-tender to incorporate the contractor' complete. Taole 1 shows vario imates project. The total costs for Ph nd 2 wer 44 Gaukel Street (Phase 3). leted oy the end of 2006. oy the Consultant to the City. e, prior to tendering the project, rid when Phase 1 of the project was ere performed at various stages of the 2.75 M + $11.34M == $14.1 M. Table 1: Consultant's Date Scope Feo. 8, 2005 Civ Reco h & Gaukel Street oseph Street Reconstruction - o ssed Victoria St. to the RR Gaukel St. from Joseph to King St.) ping ( Joseph & Gaukel Sts., Joseph - ter to RR Tracks) toria Park Entrance Contamination Remediation (Joseph & Gaukel St. intersection) Total Cost Estimate $10.82M ( construction estimated $9.64M) May 3, 2005 Added Francis Street to aoove estimate and $10.99M (construction staged the works into three stages. est. $9.64M) Jan. 24,2007 Joseph St. from RR Tracks to Queen Street Francis St. from Joseph St. to Charles St. Richmond St. from Joseph St. to Victoria Park Page 6 of xx Phase 1 - $2.75M (Joseph St. from Water St. to RR Tracks) City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 Date Scope Total Cost Estimate Gaukel St. from Joseph St. to King St. Phase 2 - $11.34 M (Joseph St. from Water St. to Queen St.) total $14.1M. At this point the Joseph/Gaukel project ha suosurface investigation was suosequently co extent of the coal tar contamination was :b m, which was found to oe 3m deeper t volumes of non-hazadous material and n the costs of disposal of the additi I excav non-hazardous and hazardous .als could 0 ear 44 Gaukel Street. A 2006 at which time the e to a depth of approximately 7 Imation and hence increased the s material. This in turn increased soil. At this time, the actual volumes of more accurately assessed. Relationship of Canada Post (44 Gaukel Street) Legal Action on Jos Work Program With consideration to the ongoing litigation case, the Joseph/Gauke at the west end of the project limits in an area that was not expec Further investigation within the right-of-way near 44 Gaukel of the contamination limits could not oe completed Therefore, no further investigation work was completed around January 2006. B. e areas of focus of the engineering audit. It discusses ortunities for improvement in the City's project B.1 . ity has recently mandated that prior to undertaking any infrastructure pr ect, a geotechnical/ geoenvironmental investigation must oe performed to assess if any environmental risks are present. . Geotechnical investigations were completed in advance of environmental investigations and the results of the former were considered during the planning of the environmental investigations. Page 7 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 . The Phase I and II Environmental Site Assessments were completed to CSA standards and included ooth test pits, ooreholes and monitoring wells as a means to investigate the suosurface conditions. . A Conceptual Site Model indicating the inferred thickness of soil strata, ground water depths and extent of contamination was prepared oased on availaole data to plan the work. The Conceptual Site Model was suosequently used to prepare estimates of volumes of contaminated material. o . A Remedial Action Plan was prepared to identify the approach fo the contaminated materials. . Sampling procedures were conducted in accordance with Environment (MOE) protocols. Collected samples were s accredited to complete the analyses. . The environmental work was overseen oy a Qualifi MOE). . A site inspector was assigned to the proj assessment of site conditions including t Weighoills and/or manifests were mo destination of contaminated mater. to perform regular of representative samples. ed to track the source and from the site. the project to discuss progress, ence appeared to occur at critical . . Regular site meetings took proolems and schedule. decision points. Planning t that a soil and ground water sampling program oe suomissions to confirm that the sampling density is h the heterogeneity of the materials oeing assessed (i.e., the ous the material, the more sampling points may oe required). uld include in their contract documents that: ironmental work oe supervised oy a Qualified Person as defined oy MOE. . ampling procedures oe in accordance with MOE sampling protocols. . Environmental work oe completed in accordance with CSA and Ontario Regulation 153/04 requirements. . The City should request that soil and ground water assessments oe completed up to 16 to 24 months in advance of project initiation to permit a rooust assessment of soil and ground water management options including the use of risk assessment procedures. . Page 8 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 . The City should request that a Materials Management Plan oe prepared that identifies the types of contaminated materials (non-hazardous and hazardous) expected to oe encountered and their specific handling and disposal requirements. . The City should carry separate contingencies for volumes of materials to oe handled and costs associated with management/disposal of the identified materials. The amount of contingency should reflect the degree of uncertainty in each item. Strengths to include Execution . No recommendations. Controlling . The City should formalize reporting requirements distrioution. . The City should formalize the Agenda ite specifically environmental and health & safe Closeout . The City should consider contaminated sites and used projects. . The City should formaliz report(s) as a deliveraol s Learned protocol for e planning process of future t to provide an Environmental Closure with an environmental component. B.2 Consultant Sele..c . procurement document entitled "Policies and Procedures Selection of Professional Services/Consultants" dated (the "Policy"). The Policy was followed during selection of or ooth the Joseph/Gaukel and Victoria projects. A copy of the a issued as part of Expression of Interest EOO-091 (Victoria Street) out 03-058 (Joseph/Gaukel Street). . ity's Municipal Code pertaining to the Selection of Professional Services/ Consultants (Chapter 170) is clear and well documented. This was followed for ooth the Joseph/Gaukel Streets and Victoria Street Projects. . The City utilizes an evaluation committee and process to shortlist qualified Consultants and negotiates a final contract, all in accordance with the City's Policy. . The City estaolishes Consultant evaluation criteria oefore opening of tenders. . The City uses previous Consultant experience in the evaluation or proposals. Page 9 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 . The City acknowledges the need for Quality Assurance which was referenced in the EOI documents for the Victoria and Joseph/Gaukel Street projects. . The City procurement Policy includes a requirement for staff to complete a consultant performance evaluation at the completion of the assignment. Opportunities for Improvement . The City should descrioe in more detail within their EOI documents their expectations of the Consultant with respect to the type of projec services to oe delivered. This should include a clear set of define the Consultant over the project life cycle. The EOI documents for the Joseph/Gaukel and Victoria provide sufficient detail to identify the City's req interpretation up to the consultant. The EOI Ian services was limited to: · .. ... coordinate all related projec · .. ... coordinate all aspects... q . The City should clearly identify th Consultant during the course of the p Victoria Streets EOI documents d Quality oojectives. Furthermo ity oojectives as criteria in the coring uirements expected of the er the Joseph/Gaukel nor to Proponents as to the City's, wish to consider using Quality o sals. . The City should clear ify deliveraoles expected at the time of suomission of Consultant prop sepa and distinct from deliveraoles expected over the course of deliver.~oject. uch deliveraoles could include: Mo g and Reporting requirement (i.e. Progress reports that chedule, oudget, issues, and risk management) tion of the project elements that are required to oe o led and how they are expected to oe controlled. e roles and responsioilities for all participants (i.e. the City, the Consultant and the Contractor) should oe clearly identified in the Expression of Interest. · Identification of schedule management. · Identification of the risks associated with the project and an on- going risk assessment throughout the process. · A Project closure file to oe turned over to the City at the end of the project with the City to identify the documentation requirements. . The City should clearly identify the roles and responsioilities of the City versus that of the Consultant during the various phases of the project. Page 10 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 . The City should develop an overall procurement plan for capital projects oefore commencing procurement. On the Joseph/Gaukel project, significant additional design and construction services scope of work was sole sourced and direct awarded without the oenefit of a competitive tendering process or a clearly defined scope as developed oy the City. . The City should consider descrioing the evaluation criteria and process to oe used to evaluate proposals, or confirm it will oe using the process outlined in the Feoruary 1, 1986 Policy in all EOI documents. It recomme that the evaluation process is documented for each proponent. If the pr utlined in the Feoruary 1, 1986 Policy is used, it is recommended that th e higher weighting for the Consultant's processes and procedure ad of high reliance of the experience of a single project manager. . The City should consider adjusting the current m cited in the Policy for consultant suomissi appropriately reflect project complexity. . The City's should consider clarifying t nt Policy with respect to the process followed after shortlisting of c e Policy is not clear as to whether consultants are to suo. il als oased on a more detailed scope of work provided oy the er the are shortlisted, or on the original scope of work specified in he EO ed that the only material difference oetween the EOI suomis . n require and the detailed written proposal after oeing shortlisted is the posal (Se tion 5( c)4). . clear Identifying in the EOI document the evaluation the EOI evaluation process, separate and distinct from .on process after shortlisting. . o plexity warrants it, the City may wish to consider: ifying their current procurement practice to request the tailed scope of work along with their proposed fees oy Consultants at the time of suomission of the EOI. Using an EOI/Pre-qualification process to shortlist experienced Consultants oefore issuing a final RFP and detailed scope of services to select a Consultant. · U sing a "two envelope" procurement process for Consultants comprising separate Technical and Pricing suomissions. This process would still allow the City to oojectively evaluate the Consultant's related project experience and detailed work plan oefore opening the pricing envelope. Page 11 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 . The City should clarify in their current procurement Policy how the consultant's performance evaluation (Section F) may oe potentially used during consultant selection on future projects. B.3 Project Cost Estimating Strengths . The City develops a 10-year plan to estimate the costs of infra oased on previous project estimates. This is a good roadmap for t cking can oe development plan. ndard engineering Opportunities for Improvement . The City should develop project cost estimates t compared in addition to the costs associated w. The estimation factor for the cost estimates estimates nomenclature. . The City should consider developing In ct oudgets using parametric estimates or other means to esta ni . ct costs, including appropriate levels of contingency. This i n wo oe used oy the Consultant and City to track and report 0 projec ances on a regular oasis during the course of the project. . The City should c proj ect status co early warning of co menting a system of formal and regular internal r management. This process would provide an . estaolishing guidelines identifying an "Alert" condition anagement must oe consulted when costs or other issues s exceeding the forecast. This should oe oased on the invoices t, trends of the costs, communication of risks oy the Consultant e y should ensure that there is regular reporting to Council when there are ne estimates for various phases of the work. B.4 Site Management Strengths Page 12 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 . The City requires the Consultant to provide full time resident inspections to oe performed during construction to facilitate Contractor/ Consultant communications. . The City regularly attends Construction Meetings with the Consultant and Contractor. This is a valuaole tool to monitor the progress and the management of the project. Opportunities for Improvement Strengths . No recommendations. B.5 Project Performance Monitoring . The City has staff meetings with the C.i communication among various project ma . The City uses purchase orders to control 10% over the actual amount of t h proj ect manager assess the in inst t ensure that there are enoug funds ount oilled to the City up to The process requires that the amount of the purchase order to e InVOIce. . The City requires the 0 regular progress p . agement and scope change control process in place for o consider developing a uniform reporting process to oe used to edule, costs, quality, and risks for all projects to senior management. y should consider additional controls and monitoring processes to ensure ore than the project manager is responsiole for large, complex projects. . The City should consider having their project managers undertake regular trend analyses where warranted on complex projects. This process examines project results over time in order to detect improvements or deterioration in project performance (cost, schedule, quality). Page 13 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 . The City should consider having their project managers undertake variance analyses where warranted on complex projects. This process examines actual project results against planned results (cost, schedule, quality). . The City should consider using more formalized schedules (i.e Primavera, MS Project) on projects that warrant it in order to plan, monitor and manage the various elements of the work. Strengths . The City should consider incorporating risk manage on future projects commensurate with the project's the Victoria Street or Joseph/Gaukel Str management and assessment during executio onitoring ity. Neither mplemented risk B.6 Project Risk Assessment and Mitigation Opportunities for Improvement B.7 Other Project Management Processe . system estaolished for City projects o . r conducting a Lessons Learned (LL) processes at the end This process is a valuaole tool to identify current as that would require improvement. The process should of all the parties including the City. The results of the LL ocumented so that experiential knowledge can oe transferred ases of the current or future projects. This type of record will oe f future staff turnover. c. . Both the Victoria Street and Joseph/Gaukel Street projects should oe used in a Lessons Learned process in order that experiential knowledge gained oy the respective project teams can oe passed on to the oenefit of other projects. . A risk assessment and analysis should oe planned well in advance of future project construction so that major surprises can oe minimized and avoided. This may involve advanced geotechnical investigations. Page 14 of xx City of Kitchener Engineering Audit: Victoria Street and Joseph/Gaukel Streets Projects Project No. 19-07032 . U sing a master schedule, the City should plan and incorporate in all future environmental projects sufficient time for the completion of advanced investigations to assess potential for soil contamination. Page 15 of XX Appendix A Chronologies: Victoria Street Project & Joseph/ Gaukel Streets Pro. ec Page Al Appendix B Project Management Processes Page B 1 Appendix C Notes from Teleconference with City of Kitch November 9, 2007 Page C 1