Construction contract administration, Montana Department of Transportation : performance audit report

48 Pages·1998·1.1 MB·English

by  Montana. Legislature. Legislative Audit Division

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.
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MONTANA
STATE LIBRARY
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Direct comments/inquiries to:
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Room 135, State Capitol
PO Box 201705
MT
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MONTANASTATELIBRARY
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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[phone] FAX [phone] 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