Replacing Single Door at BOE Headquarters Would Cost $17,000, State Agency Estimates

Replacing a single door to a file room at the State Board of Equalization headquarters would cost $17,000 ($3,000 for the labor and materials, plus $14,000 for project management, architectural work, construction inspection, and plan review by two different state agencies), according to a division of the California Department of General Services.

A state audit released March 15 notes that the door was never replaced, as the BOE “chose to forgo this project because of the high cost estimate.”

The Sacramento Bee noted that the figures released by the auditor “highlight how California’s state bureaucracy pumps up the cost of even the most simple projects.”

The audit found that the Real Estate Services Division within the Department of General Services is doing a poor job of tracking and analyzing data related to construction projects, and needs to improve its management practices.

“Our audit revealed that the division exceeded the initial time frames it established for the majority of the projects we reviewed,” the auditor reported. “Specifically, of the 25 projects we reviewed, which were active between January 1, 2011, and June 30, 2015, we identified 17 for which the division exceeded estimated time frames and an additional four for which it did not establish time frames. When we interviewed division staff and reviewed available project documentation, we noted that in some cases, the division may have been able to prevent certain project delays. For example, we noted that in seven of the projects we reviewed, the project management branch overlooked key features in the projects’ planning or design.”

The auditor’s review of the division’s planning and completion of construction projects also revealed:

Project costs frequently exceeded the division’s initial estimates, and the division did not always prepare cost estimates. In the example with the largest difference, the auditor found that the division spent roughly $115 million more than its initial estimate of about $118 million for the construction of a veterans home in West Los Angeles. The cost overage was primarily due to changes in the project’s scope requested by the client agency, the auditor found.

The division does not centrally track and analyze data for its projects to identify reasons for project delays and cost overages.The hourly rate charged by the division’s Project Management and Development Branch is $182 per hour, which is $46 an hour more than the average hourly rate of 26 private firms that conduct similar work for the state.The division has not developed adequate goals or meaningful metrics by which to measure its progress in delivering projects on time and within budgeted cost estimates.Staff training for the division’s two largest branches is “largely inadequate and infrequent.”

The Real Estate Services Division controls 58 buildings statewide. The division provides various real estate and property management services for most state departments and agencies, including maintaining state buildings, managing and designing various construction projects, performing construction inspections, and providing construction services deemed to be of an urgent nature.

State agencies impacted by the division’s work were contacted by the auditor and asked whether they have concerns. “Several expressed that they had concerns about both the time frames and the costs of their projects,” the auditor reported. “Further, five of the client agencies reported that their operations were adversely affected because of these delays or cost overages. For example, the California Department of Transportation reported that the project management branch’s renovation of one of its existing buildings, which took two years longer to complete than originally estimated, affected employee morale, increased rental costs, and created additional workload for its headquarters’ administrative staff.” (Sources: California State Auditor Report 2015-117, March 15; The Sacramento Bee, March 16.)

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