2008-01-AU Limited Scope Performance Audit Report Department of Public Works CIP Contract Change Orders and Supplements for FY 2006-2007

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relating to professional services contract supplements and construction contract change orders for capital improvement projects in progress during FY 2006 -2007. Specifically, the audit team reviewed Type "C "i professional services and construction contracts for which contract supplements and change orders totaled greater than + or - 10% of original contract values (or outside the accepted industry standard). As a result, of the 16 professional services contracts in progress during FY 2006 -2007, the audit team reviewed 14 contracts and 26 related supplements, and of the 60 construction contracts in progress during FY 2006 -2007, the audit team reviewed 14 contracts and 51 related change orders. Please see Appendix for: Table 1. 1, Audit Population — Active CIP Type "C" Contracts FY 2006 -2007. • For the 16 professional services contracts active during FY 2006 -2007, the aggregate cost of supplements issued to date represent a 90% increase over original contract amounts. • For the 60 construction contracts active during the FY 2006 -2007, change orders issued to date range from -6% to +114% of original contract amounts. Please see Appendix for: Table 1.2, Audit Sample — FY 2006 -2007 Professional Services Contracts and Supplements Greater Than + or —10% • Of the 14 professional services contracts in our audit sample, 5 contracts or 36% include supplements issued to date that have exceeded original contract amounts by more than 100 %. Please see Appendix for: Table 1.3, Audit Sample — FY 2006 -2007 Construction Contracts and Change Orders Greater Than + or —10% Of the 14 construction contracts in our audit sample, only one contract includes change orders issued to date that in the aggregate exceed the original contract amount by more than 100 %, with reinstated deductives accounting for a significant portion of these change orders. Audit Objectives 1. Determine reasons for professional services contract supplements and construction contract change orders. ' Type "C" refers to the letter designation preceding contract numbers in the County's FRESH accounting system. The "C" designation represents contracts issued subsequent to conversion to FRESH. The "R" designation indicates purchase orders rather than construction - related contracts. The "X" designation indicates contracts for which information transferred to FRESH from the County's previous accounting system was insufficient to allow the auditors to readily discern whether entries relate to original contracts, contract supplements or change orders. Therefore, auditors included only Type "C" contracts in the audit population. 11