400 Audit Summary

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Audit Mission Statement:

Internal Audit will support City Council and Municipal Administration in meeting their

legislated responsibilities, in improving the performance of the corporation in the programs and

services it delivers and in ensuring the accountability of local government to the taxpayers.

Internal Audit will bring an independent, objective, professional and value-added approach in

evaluating the economy, efficiency, effectiveness and equity of the results of the corporations

programs and in evaluating the appropriateness and adequacy of risk management procedures

and management controls.

Post Construction Audit ReportOn the 400 City Hall Square East Building

Part I of II

Management Of The 400 CHSConstruction Contract

January 2009

For Audit Committee Discussion


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Table of Contents

EXECUTIVE SUMMARY ....................................................................................................... 1-10

Insert: Management Attachment 1: Management Comments on Executive Summary

Summary of Findings, Recommendations and Management Comments..................................... 12

(Management Attachment 3: Management Comments on the Summary of Findings andRecommendations was incorporated into this Audit section)

Phase I: Project Management Methodology:............................................................. 12Phase II: Comprehensive Planning............................................................................ 14

Phase III: Project Execution and Control................................................................... 20

Phase IV: Project Closing.......................................................................................... 25Right To Audit Clause ................................................................................................ 30

Legal Opinion Memorandum of Agreement............................................................ 31

Main Report ............................................................................................................................. 33-81

1. Preamble to the Main Report .................................................................................................. 34

1.1 History of the 400 CHS Report:...................................................................... 341.1.1 New Information and Audit Report Revisions ..................................... 34

1.1.2 Impact of New Information on the Final Review (Part I and II) .......... 39

2. Objectives, Scope & Methodology......................................................................................... 40

3. The Memorandum of Agreement Main Construction Project ............................................. 41

4. Management of the 400 CHS Construction Contract ............................................................. 42

4.1 About Project Management Methodology...................................................... 42

4.2 Phase I: Project Management Methodology.................................................. 47

4.2.1 Project Sponsorship & Council and Executive Commitment............... 47

4.3 Phase II: Comprehensive Project Planning.................................................... 50

4.3.1 Identification of Project Team Members.............................................. 504.3.2 Project Objectives and Deliverables ..................................................... 57

4.3.3 Identified Project Risks......................................................................... 57

4.3.4 Issues Register and Plan........................................................................ 58

4.4 Phase III: Project Execution and Control....................................................... 59

4.4.1 Project Task Management..................................................................... 59

4.4.2 Communication of the Working Committee and Consultant ............... 624.4.3 Utilization of Automation Tools:.......................................................... 63

4.4.4 Measurement of Productivity:............................................................... 63

4.5 Phase IV: Project Closing.............................................................................. 64

4.5.1 Analysis of Identified Project Deliverables: ......................................... 65

4.6 Right to Audit Clauses in Contracts and Agreements .................................... 81

Audit Report Attachments:

Attachment 1: Reserving the Right to Audit

Attachment 2: Legal Opinion Memorandum of AgreementAttachment 3: June 16, 2008, Administrations Project Closeout Financial Summary

Management Attachments:

Attachment 2: Management Comments on Main ReportAttachment 4: Management Comments on the Legal Opinion

Attachment 5: Highlights of Project Accomplishments and Project Value


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The Corporation of the City of Windsor

Post Construction Audit Report

On the 400 City Hall Square East Building

Part I of II

January 2009

Management Of The 400 CHS

Construction Contract

Executive Summary


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City of Windsor

Executive Summary, January 2009 Page 1

THE CORPORATION OF THE CITY OF WINDSOR

POST CONSTRUCTION AUDIT REPORT

ON THE 400 CITY HALL SQUARE EAST BUILDING

PART I OF II

Management Of The 400 CHS Construction Contract

January 2009

EXECUTIVE SUMMARY

In 2001, the Corporation of the City of Windsor (the City) began a process to design andconstruct a building (400 City Hall Square). The purpose of the building was to consolidate the

income security programs of the City of Windsor, the Province of Ontario and the FederalGovernment in one location. The building was substantially completed by 2005, and tenants(although not necessarily all the originally intended tenants) began moving into the building.

In 2006, the City Auditors Office undertook a post-construction audit of the processesapproving the project and managing the construction of the building. A post-construction auditis a standard procedure upon the completion of a major project such as this and is also anindustry Best Practice.

A post-construction audit is an independent and objective assessment designed to add value andimprove an organizations project management process. It is a gathering of pertinent facts and

evidence in accordance with internationally recognized standards that, when reviewed withintegrity, objectivity and competence, provides a history of what has taken place. Comparingthat history with the applicable Policies and Procedures of the municipality and with industrybest practices provides a basis for recognizing processes that were performed well and forrecognizing areas where improvements are recommended. A post-construction audit is not aPublic Inquiry under the Public Inquiries Act.

The post-construction audit of the 400 City Hall Square East building involved extensivediscussions with various members of City Staff and Management responsible for the project,interviews with consultants, the gathering and examination of numerous City documents (fromCouncil reports to Committee meeting minutes to e-mails and memos) as well as reviewing in

detail the Citys financial records.

In April of 2007, the City Auditors Office completed a draft document representing a summaryof audit work to that date. That work was subject to a significant scope limitation, namely,limited availability to certain records, personnel, and physical properties relevant to theperformance of the necessary audit procedures.

In 2008, Administration further assisted the Audit department by providing increased access torecords, personnel, and physical properties to enable Audit to close the information gap createdby the scope limitation. The impact of the new information received has been significant,requiring substantial new audit work to bring the report to completion. In order to accelerate the

completion of the audit, the Auditor decided to separate the report into two documents, Part I andPart II.

Part I will discuss whether the project was delivered on time (as amended), within budget (asamended) and whether the City received what it bargained for. Part II will compare the projectapproval process with the Citys Purchasing By-Law, the Municipal Act and the Common Law,governing the award of the contracts for the building design/construction and for the building fit-ups.

1

1 Fit-ups are defined as building finishes that prepare the building for initial occupancy, including the alteration ofspace for use in Tenant & common areas. Fit-ups for this project were diverse, ranging from floor & wall coveringsto office furniture and included the fit-up of office space to meet the requirements of different departments, externalagencies and other customers.


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Summary of Project Staffing, Project Management Methodology & Best Practice:

The timing of this project coincided with a period of significant organizational instability withinthe City. In February 2003, the City initiated a corporate wide reorganization, which would havehad a significant impact on maintaining project resources given the deficiency of documentedsupport outlining the roles, responsibilities and resources dedicated to the project. In considering

the issues of who is accountable for what, it must be noted that between the inception of thisproject and its completion, there had been 3 different Chief Administrative Officers at the City, 3different Heads of Corporate Services, 3 different City Treasurers and 4 different Heads of thePublic Works department. Apart from changes in key personnel, organizationally, responsibilityfor the project shifted from Corporate Services to Public Works, and there were a number ofchanges in personnel assigned to roles within the Project Management Team, including the roleof project manager. This resulted in gaps in continuity in the project management and in blurredlines of management accountability.

Also during this project, a total of 5 City Councillors served, at different times, on a steeringcommittee that provided direction to the project. Three Councillors were part of the Citys

selection of the design-build contractor. Two of those Councillors were replaced following ageneral municipal election in November 2003.

Using project management best practices as our standard, we have evaluated the activities in thefollowing project life cycles and have reported on those results.

Phase I Phase II Phase III Phase IV

a) Scope andMethodology

b) ComprehensivePlanning

c) Execution/Control

d) Project Closing

Defined financial &technical criteria(Business Plan):

- Project purpose,- Strategic fit,- Objectives,- Identified project

risks,- Project schedule,- Project budget.

Council and Executivecommitment to theproject demonstrated by:

- An understanding ofthe project.

- Approval of theproject.

A final plan whichidentifies:

- Project teammembers,

- Project objectivesand deliverables,

- Baseline projectschedule,

- Issues register andplan,

- Projectcommunication plan.

Following the projectplan, projectdocumentation signifiesthe monitoring andcontrol of:

- Key projectdeliverables,

- Management ofproject Quality,Time, Cost, Risk

- Issue resolution,- Change control,- Reporting and,- Communication.

Project post-mortemconducted:

- Collection of issuesthat caused delays,impacted scope, etc.to evaluate &improve process forfuture projects.

- Assessmentperformed on projectsuccess at keyintervals to measurehow well the projectmet expectations.

It is important to note that the project was undertaken as a design build project and that this wasthe first of its kind for the City. This lack of recent previous experience with similar projectsmay explain why we found that an appropriate and adequate project management system was notput in place to control, track, measure and record progress in relation to project milestones,timelines or critical functions. Such a system would have helped to offset the gap in thecontinuity of key personnel and would have provided a useful tool for accountability purposes.

Although the City did retain an outside consultant as an advisor on the project, the consultantsrole was limited in scope and was certainly not that of project manager. Because it did notinstitute a project management system appropriate to, and adequate for a project of thiscomplexity and magnitude the City did not employ best practices in managing the project.


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Summary of the Project Financial Findings of the Review:

The audit review measured the financial successes of the 400 CHS project in two ways, (A)Project Management Financial Performance How well the project team met its mandate todeliver the project within the total (revised) project budget and, (B) Project Financial PlanningPerformance The adequacy of the original budget: Scope and Planning.

Summary of the Evaluation of Construction Work Deliverables:

While it is important that the project be completed within or close to budget, it is alsoimportant to know what the project is, with sufficient particularity to be able to determinewhether the City received all of what it paid for.

In assessing the adequacy of project planning and implementation, we examined whetheradequately specific and measurable deliverables of the projects construction had been set out inthe contracting documents. We found a detailed project agreement, but the deliverables in the

agreement were at a very basic descriptive level, with no stand-alone and clear definition of theconstruction requirements of the owner (City). The requirements of the owner were merelyincorporated by reference to the language of five separate document sources: the two stages ofthe RFP, the proposals submitted, written submissions and four (4) document packages ofanswers to questions. These documents are not, in themselves, clear or consistent as to what,specifically and finally, the City had required the contractor to construct, leaving a lot of roomfor the exercise of discretion on the part of the contractor as to what to build and how to build it.This lack of specificity makes it difficult to determine whether the City received what itbargained for when what it bargained for is not specified in the written construction agreement,and when that written agreement states that it is the entire agreement between the parties.

The Citys Legal division advised Administration, providing specific and strong examples assupport, that the present circumstances leave the City in an ambiguous legal position. Theresults of the audit suggest that Administration moved forward with the project despite thatadvice, and without ever resolving the contractual terms that created that ambiguity.

Audit found it difficult, and in some cases we were unable to identify, specific and measurableproject deliverables which to evaluate in the audit. It was difficult to determine what the Cityhad negotiated for, given the ambiguously stated requirements within the various documents.For example, the RFP included words such as, a need for, it is preferred, suggests,provide up to. Incorporating such language into the written agreement did nothing to improveits specificity.

Ultimately, we based our determination of the project deliverables on what we could ascertainfrom those five sources of documents and the management representations made to Council byAdministration in the Council report documentation. Where noted, our evaluation ofconstruction work deliverables are not based on what the City negotiated for, but on the valuesreported to Council in Council Report 8652 September 2002.

The Root Cause of Project Issues and Successes:

The lack of best practices employed in managing the project, inadequate project staffing and

issues of planning, budgeting & contracting, led to an environment of reactive projectmanagement. In order to complete the project and address project risk and issues, additionalfunding beyond the original Council approval was required.

Within the reactive project management environment, the project team identified additionalbudget needs and sought funding approvals to carry the project through to completion. As aresult, the project was completed largely on time and within a reasonable variation from the totalapproved budget.


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Actual Budget

Variance

Unfavourable

/ (Favourable) % C

Project Management Performance of the Total Approved Budget:

1 TOTAL PROJECT COSTS 32,034,342$ 31,347,970$ 686,372$ 2.19 %

2 Construction Costs - Guaranteed Price 23,367,173$ 23,383,061$ (15,888)$ (0.07) %

3 Additional Approvals 1,636,185$

4 Enhancements 374,828$

Project Planning Performance: Scoping the City's Needs and Requirements Prior to Seeking Council Approv

5 Gross Variance Before Additional Funding 30,490,290$ 27,311,957$ 3,178,333$ 11.64 %

6 Fit Up Costs (City)(1)

5,650,600$ 3,857,645$ 1,792,955$ 46.48 %

Fit Up Costs (HRDC)(2)

1,734,280$ 1,628,625$ 105,655$ 6.49 %

7 Sale of Social Services Sites -$ (871,500)$ 871,500$

8 General & Administration 646,668$ -$ 646,668$

9 Temporary Financing(3)

1,062,882$ 724,783$ 338,099$ 46.65 %

10 District Energy Approval 1,544,052$ 2,025,000$ (480,948)$ (23.75) %

Executive Summary of Project Financial Results

The audit concluded with 10 key financial findings, illustrated in the chart below:

(1) Calculations for Budget Fit Up Costs (City): Original budget $2,271,460 + Additional approved budget $1,636,185 less the Architect

(2) Fit Up Costs (HRDC): Not planned in original budget, $1,734,280 = actual expenses, $1,628,625 = actual recoveries.

(3) Temporary Financing: The variance reported in Chart B (C) pg. 74 includes Administrations pending adjustment for $ 527,852. Thethe difference between the original budgeted financing costs and the actual financing expenditures in project 7017031 and project 706

(4) For a detailed explanation of the 10 financial findings, refer to Chart B Pg. 74-75.


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A: Project Management Performance of the Total Approved Budget

(1) Project Management delivered the total project1 at $686,372 over the revised budget.This represents 2% of the total approved budget, which we acknowledge as a satisfactoryperformance by the project team.

(2) Project Management successfully delivered the 400 CHS Building (Main Contract), righton target at $15,888 under budget.

(3) Project Management faced a number of significant challenges during the constructionphase of the project. These challenges, which were inherited by the Project ManagementTeam, were a result of project scope and planning issues leading to budgetingdeficiencies. The Project Management Team adequately addressed the resultant riskevents by seeking support and additional approvals from the Steering Committee andCouncil for an incremental total of $1,636,185.

(4) In addition to completing the planned work of the 400 CHS project, Project Management

took on and successfully delivered the additional tasks of completing enhancementsrequested by the other City departments that would become tenants in the new facility.These enhancements cost $374,828.

B: Project Financial Scope and Planning Performance

(5) The gross project cost approved by Council in CR 771/2002 was $28,186,957 (not$27,311,957 as shown in CR 771/2002). If the Social Services sites are eventually soldfor the $875,000, the budget originally assumed as the selling price, the project will havecost approximately $3,178,3332 (or 12%) more than was originally approved by Council.

To the extent that the proceeds from any sale of these sites are reduced by marketconditions, or are not received at all, the cost is increased by that amount. This ignoresthe time value of money: the fact that any sale proceeds received some years after thecompletion of the project will be of less value than the same amount of money receivedbefore the completion of the project.

The project variance from budget is a result of a number of factors, such as issues inproject planning & administration and Steering Committee and Council approvedincreases to the project scope. Some of the scope changes were a result of desiredenhancements; others were essential, such as security enhancements for desk sideinterviewing and enhanced building security that would have been difficult to identify

given the low level of dedicated staff resources assigned to the project.

(6) The City did not scope out / develop specifications for building Fit-Ups for the part of thespace being occupied by the City. As a result, planning for fit-up space was completedusing financial estimates for fit up price per square foot provided by Public WorksGovernment Services Canada (PWGSC). The budget was for $27.87 / sq. ft., but theactual cost incurred was $50.82 / sq. ft, close to double the initial estimate. The resultwas a negative budget variance of $1,792,955 or 47% over budget.

Additionally, a non-budgeted charge of $1,628,624.77 for the estimated cost to fit-up the

space occupied by HRDC, as per the lease terms, was insufficient to cover the actual cost,which was $1,734,280.39. The difference of $105,655.62 is non-recoverable, and was6.49% over budget.

1 The total project includes the building (together with the specified parking spaces) in one contract, plus additionalcontracts (such as HRDC fit-ups and external consultants), as well as the fit-ups for the City of Windsor (fit-up of

office spaces, common areas, interview / meeting rooms, relocation expenses and building security), less thebudgeted value for the sale of certain City of Windsor Social Services buildings.

2 Includes $3,500 in advertisement costs for the sale of the sites, incurred to date.


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(7) Council is expected to review and make decisions on large volumes of information eachweek. Council is highly reliant on Administration to ensure that its presentations toCouncil are clear, and provide full disclosure of the risks that Council should be aware ofprior to making a final decision.

The original project budget approved by Council (CR 771/2002) contained a provision

for revenue of $875,000 from the future sale of certain City of Windsor Social Servicessites. This revenue was deducted from the total estimated expenditures, in the projectbudget presented to Council for approval, and Council approved it as presented. To date,these properties have not been sold, and therefore, the revenue has not been received,even though all of the budgeted expenditures have been incurred. There is the risk that ifand when these properties are sold, the recovery may be considerably less than budgeted,or may be allocated to another project or to general revenue, or that Council may chooseto retain rather than sell the properties and use them for another purpose.

The result of this project budgeting practice of including contingent, unrealized revenuesto reduce apparent project costs is a non-transparent transition from the recommended

budget presented to Council by Administration to the actual Council resolution. Forexample, by including the anticipated project revenue from the sale of these two assetswithin CR 771/2002, the actual total expenditure of this project approved by Council was$28,186,957. This is not clear in resolution 771/2002 which states . with the totalproject cost not to exceed $27,311,957 plus applicable taxes.

(8) The project incurred additional expenses totalling $646,668 not included in the originalbudget request. The nature of the expenditures is related to General & Administrationcosts such as permits, hoarding charges, advertising and moving. It is suggested thatthrough more detailed project planning, some of these expenses might have been foreseenand budgeting accuracy might have been improved.

(9) The City has incurred financing (interest) charges on the un-funded balance (over-expenditures for which specific financing had not yet been approved by Council)remaining in the project. Administration has sought Council approval to finance thebalance of the project costs through alternate resources in order to stop the interestotherwise payable from growing. In the project close out report of June 16, 2008,Administration approached Council with the recommendation, THAT Project #7067031 Post Construction Financing costs (net of the eventual proceeds of sale for the formerSocial Services facilities) BE FUNDED from the Debt Reduction Fund in 2010. Thetemporary financing variance, as shown in the PeopleSoft financial system records atDecember 31, 2007 was $338,099.

(10) The City District Energy Project # 7051012, (Approved in the 2005 Capital Budget)which is linked to1 the 400 CHS project, was delivered under budget by 24%, a saving of$480,948.

1 The City of Windsor advised all proponents that heating and cooling for the 400 CHS building would be suppliedby District Energy, and therefore they were to exclude capital costs for the related equipment from their submission.

City Council later formally approved the use of District Energy to service the building and budgeted for this cost inthe 2005 Capital budget. Administration advised council in the June 16, 2008 project closeout report, Therefore, in order to capture the full costs of the project, the District Energy expenditure need to be included as anintegral part of the project.


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The audit evaluated 5 project deliverables, illustrated in the chart below:

Executive Summary of Project Deliverable Result

Original

Actual Variance Success / Issue

1 Deadline for SubstantialCompletion

November 15, 2004 changedto undefined with fit-up

scope changes

September 6, 2005 Nil Issue

2 Parking Requirements 435 399 (36) Success

3 Building Size (Sq. Ft.) 154,304 154,955 651 Success

4 As Built Drawings

Due promptly followingsubstantial completion, prior to

release of holdback

Date Received byCity Unknown

Success

5 Parking Lot Construction(Former Police Site) Basic, defined as;Landscaping, Curbing,Lighting, Pavement and

Surface Parking

Amended by City Success


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(1) The project was delivered substantially complete approximately 9.5 months after thedelivery date stipulated in the MOA. The delivery date was changed to an undefineddate, when the City expanded the scope of the project contract to include fit-up services.

- On August 30, 2004 Council approved an alternate approach to procuring the fit-upservices for the 400 CHS building that expanded the scope of the base building

construction contract to include fit-up services.

- Administration reported the alternate approach would expedite completion of the totalproject (base construction and fit-ups). However, Administration did not define therevised project completion date that would have resulted from the change orders putinto place to complete the fit-up services.

- The completion date of the base building construction was moved to March 18, 2005(4 month delay) as a result of lost time due to rain days and issues with the discoveryof the fibre optic cable on the construction site. (Specific time delay for each issue,rain or cable, was not specified)

- Project Management estimated a six-week (1.5 month) delay due to thereconfiguration of Social Services tenant space and the relocation of purchasing &planning.

- We were able to identify a number of issues and events that caused approximately 5.5months in delays to the project timeline. However, because the project timeline wasrevised to a non-specific completion date, we could not measure and report as towhether the project was delivered on time versus a specific approved or contractedtarget date.

(2) And (5)The parking requirements for the 400 CHS Main Building were met. We were satisfiedthat the variance shortage of (15) in approved versus actual parking spaces at the 400CHS facility are acceptable due to appropriate management decisions such as, allotmentsfor the increase in accessibility parking and the widening of the access to the exit-ramp.

The completed structure for parking on the former Police site was delivered short by (21)parking spaces. Administration has commented that the site change is a result of varioussignificant plan changes approved at the Steering Committee level such as,

- The installation of a gravel parking lot where the contract called for a paved lot.

- The installation of asphalt sidewalks.- The landscaping that was not put into place.- The deconstruction of the gravel lot to install a paved lot.

We remain unclear as to how this data explains the significant variance of (21) parkingspaces delivered versus approved at the former Police site parking lot.

(3) The building size delivered was 651 sq. ft. larger than reported to Council.

(4) On January 29, 2009, we were able to confirm the City of Windsor has possession of theas built drawings. Stipulated as an express requirement of the written agreement, as-built drawings were due promptly following substantial completion, prior to release ofthe normal holdback.

We were unable to confirm the date the as-built drawings were received by the City ofWindsor. We have recommended that in future construction contracts, that as-builtdrawings continue to be stated as an owners requirement and that Management ensuresthey are received as was planned in the contract agreement.


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In conclusion, the audit has provided 22 key findings and 19 recommendations for the

improvement of transparency, accountability and control of project management for the

City of Windsor. The audit also evaluates 10 key financial findings and 5 key deliverables.

The documentation and interviews show:

a) The Project Management Team brought in the project with a variance of $686,372, whichwas 2% over the total approved budget. This represents a satisfactory performance indelivering the project within the approved budget. To the extent that differences betweenbudget and actual expenditures were avoidable, the difference is explained not byoverspending but by an error in under-budgeting.

b) The project planning and execution were weakened by a failure to assign sufficient,knowledgeable staff resources to be dedicated to, and thus, responsible for the project. Thefrequent turnover of City staff assigned to the project resulted in a continuity gap in staffing,which created a climate lacking individual commitment to the project. Without such

commitment, and with continuing, chronic staff turnover, there was no clear assignment ofaccountability for the project.

In many situations, the City established and set-up plans that we observed to be consistentwith best practices, but then, did not follow through on the processes, maintain the processesand / or apply dedicated resources to ensure the processes were managed as planned. Wehave recommended that the City adopt a corporate standard upon which project managementis based in order to establish corporate controls to ensure that projects are conducted in adisciplined, well-managed and consistent manner promoting the delivery of a quality projectthat will be completed on time, within budget and in accordance with the carefully definedproject specifications.

c) There is a concern that a certain level of opacity and confusion has been built into the Citysbudget presentation process, where project cost estimates were presented to Councilcontaining a potential, but as yet hypothetical revenue offset within the project expenses.This inappropriate method of showing costs resulted in an un-funded project balance thatincurred interest costs that accrued until Administration approached Council to requestalternate funding support in the project closeout. We have recommended that this standardpractice of the project budget presentation process be discontinued, in order to improvetransparency and reduce cost.

d) Based on the advice to the City of Windsor, from the External Legal Counsel working on thefile Andrew Roman of Miller Thomson LLP. (Attachment 2: Legal Opinion Memorandum of Agreement)

Typically, public bodies use an execution strategy called design/bid/build under which theowner prepares complete drawings and specifications and obtains a fixed price for the Projectthrough competitive lump sum bidding. Here, the owner, the City, selected a design/buildexecution strategy which, by its very nature, means that complete drawings and specificationsdo not exist before construction begins. Instead, the design/build contract includes anOwners Statement of Requirements which, if properly drafted, describes the requirements

of the owner in a manner that is both clear and measurable often with preliminary leveldrawings and outline specifications. The design/builder uses the Owners Statement ofRequirements to complete the design and then build the Project. Here, the design/buildcontract incorporated, as Schedule B, the Owners Statement of Requirements. Instead ofclearly articulating the requirements of the City on a stand-alone basis in terms that aremeasurable this statement merely refers to five other documents: two stages of the RFP, theproposals submitted, written submissions and answers to questions. This incorporation byreference is untidy and inconvenient, but might not be inherently wrong if the documentsbeing incorporated were consistent, clear and sufficiently detailed as to constitute a properOwners Statement of Requirements. However, the documents in question do not meet thattest, but are problematic, for several reasons.

We have recommended that Administration develop a policy dealing with bothdesign/bid/build and design/build contracting practices. We have recommended that, where


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E ti S J 2009 P 10

design/build is being used, the requirements of the City that are incorporated into anycontract should be clear and measurable. Because design/build involves the design/builderengaging in both design and construction, the RFP stage will necessarily communicate theCitys needs rather broadly, seeking creative solutions from the design/builders competing forthe work. However, the contract to be entered between the City and the successfuldesign/builder should incorporate a clear and measurable statement of the Citys

requirements, not merely repeat and incorporate the various RFP process documents whichillustrate a process, not its outcome. If there are any disparities or inconsistencies between aproponents RFP responses and the Citys requirements, these should be resolved prior to theexecution of the written agreement. Once they have been resolved, there is no reason toinclude either stage of the RFP in the written agreement, which is the entire agreementbetween the parties. Where the Citys requirements are not clear and measurable, there is agap between what the design/builder believes is required and what the City expects. That gapusually leads to controversy, if not litigation.

Documents

400 Audit Summary