A Compilation of Audits of the City’s Oversight of Construction Management Consultants

Audit Report In Brief

Given the amount of taxpayer money spent on capital construction projects—$9.1 billion in Fiscal Year 2011 and $8.4 billion  in Fiscal Year 2012—the Comptroller’s Office has dedicated a portion of the resources of the Audit Bureau to conduct audits that examine the way that City agencies carry out construction and engineering work.  One topic that the Audit Bureau examined was the effort by City entities to monitor construction management consultants to ensure that capital projects were completed in a timely manner and within budgeted amounts. Various City entities, such as corporations, authorities, and agencies are involved in overseeing the construction and management of capital projects.

Construction project management is the discipline of planning, organizing, securing and managing resources to bring about the successful completion of specific project goals and objectives. City entities carry out construction project management by using either in-house staff or by employing private construction management consultants.  Private consultants are employed in cases where specialized experience is required or when entities lack sufficient personnel.

Audits conducted by the engineering audit division of the Comptroller’s Office between Fiscal Years 2011 and 2012 have documented deficiencies in the oversight of capital construction work by four City entities—the Economic Development Corporation, the New York City Housing Authority, the Department of Parks and Recreation, and the Department of Sanitation.

Report Findings and Conclusion

For this compilation report we reviewed the results of four audit reports that examined whether the City was effectively monitoring construction management consultants and ensuring that capital construction projects were completed in a timely and cost effective manner.

Based on our evaluation, we conclude that deficiencies and problems with overseeing the work of construction management consultants and failing to complete projects on time resulted in the expenditure of $22.13 million in additional construction management consultant costs.   Furthermore, deficient oversight led to $3.3 million in inappropriate and questionable payments to a consultant, and $8.25 million in monetary penalties for failure to complete certain projects on-time.

Report Recommendations

To address these issues we make 19 recommendations for improvement, including:

• Ensure that capital projects are completed and closed out within their originally scheduled timeframes and original contract and contingency amounts.
• Take appropriate steps to identify and mitigate problems that cause project delays and cost overruns and develop specific plans to do so.
• Ensure that progress schedules are submitted, approved, and regularly updated.
• Promulgate uniform standards for assigning in-house personnel to oversee construction management consultants.
• Compile standard written procedures for overseeing projects that are managed by construction management consultants.
• Seek recoupment for payments made to construction managers if any project and close-out delays are attributable to construction management consultants.
• Establish a management system to monitor the work of construction management consultants.
• Develop procedures to identify and remediate environmental hazards before commencing project work.
• Require that construction management consultants produce evidence to substantiate the reasonableness of work hours expended by their personnel.