THE REPORT OF FINDINGS OF THE $42 MILLION UTB-TSC COST OVERRUNS

(Ed's. note: In a previous post we gave a synopsis of the way that UTB-TSC President Juliet Garcia's administration had gone $42 million over budget on the $68 million bond issue approved by the voters in November 2004. As of November 2009, the cost stood at$109.8 million. In this post we will give the most pertinent findings and recommendations of the actual report presented to the TSC board on Thursday. The report was prepared by the Spire Consulting Group of Austin, Texas.)

By Juan Montoya

EXECUTIVE SUMMARY:
"The board program that initiated the project contemplated in its report resulted in a substantial effort for which UTB-TSC may not have been fully prepared. Programs of this size require a certain level of planning, processes, procedures and documentation managed by a sufficiently staffed team consisting of experienced team members. UTB-TSC did manage this program to completion but the results were not optimal and may not have met eht expectations of the board, staff or community."

"The cost of the bond program significantly exceeded original budget allocations. Based on interviews with individuals involved with the board projects and reviews of the program related documents we believe that the following factors contributed to the porgram's overall performance:
*Program planning and execution processes and procedures were not documented to a level commensurate with the program.
*The number of staff assigned to the program was insufficient.
*Staff assigned to manage certain aspects of the program may not have been sufficiently qualified.
*Scope, schedule and budget controls were insufficient.

REPORT OF FINDINGS:

"It does not appear that the scope of the program was significantly reduced between the failure of the $100 million bond issuance and the approval of the $68 million bond issuance. We would expect to see significant reductions in scope with a $32 million reduction in finding. In addition, the scope of several projects appears to have increased significantly over time resulting in longer project durations and increased project costs. This would indicate that there were issues with scope control. It does not appear that there were scope controls in place to mitigate excessive scope creep. As a result, the scope of the projects and their costs increased in time.
"Furthermore, certain program planning activities and/or program planning documentation doe snot appear to have been produced. Examples of these include a program management plan, quality management plan, human resources plan, risk management plan and procurement plan. UTB/TSC appears to have relied heavily on its project management (PM) contractors during the scoping and planning phases as it is expected.

Program Budgeting
"(Despite the reduction of bond money from $100 to $68 million, the) original building specifications based on the $100 million bond value do not appear to have been adjusted enough to reduce the cost by $32 million. Therefore, the projects appear to have been planned outside the budget from the beginning. As a result of this and other factors, all of the board projects were significantly over budget...by a total of $41,855,122.

"In order to meet the increased budgets, additional funding was pulled from various sources including the maintenance notes, refinancing revenue, student fees and interest earnings.

"Bond sources included the original TSC $68 million bond and the REK Student Revenue Bond for the $13.5 million. In anticipation of receiving $1.7 million in donations, TSC borrowed from its existing budget with the understanding that it would be paid back upon receipt of those donations. However, if these donations do not come in then TSC will have to draw from other funding sources. In addition, the $5 million originally allocated for the Biomedical Research facility was allocated because UTB was authorized to build a biomedical research facility.

Program Staffing
"Organization charts were produced for 2008 and 2010 but a detailed staffing plan for the program does not appear to have been developed. The program appears to have initially been staffed with staff members who may not have had experience managing large construction programs.

Program Level Reporting
"Program level reporting is a primary source of information for the owner team to identify potential risks and issues during the course of the program. Typically, on a program of this size, the owner establishes certain reporting requirements especially around issues, quality, costs and schedule-related issues.
"Notably, the project reports that were provided to UTB-TSC were monthly or quarterly snapshots of each project (not the program as a whole) and did not contain trending information. UTB-TSC does not appear to have had a single source of information related to how its program budget, cost contingencies and schedule data was changing over time. Having this view of its data can enhance as owner's ability to identify potential issues and make fully informed decisions to mitigate them.
'Furthermore, at the time this report was generated, UTB-TSC had not received a final cost report from its project manager contractor. Therefore, the actual project costs are still unknown."

Payment Application Review Processes
"During the program, contractors submitted their payment applications to (PM, Broaddus) who submitted them to TSC who issued payment. TSC did not perform reviews of Broaddus's payment applications early in the program but may have later in the program. Furthermore, TSC did not perform validations of the costs to determine whether they were allowed by the contract or engage an independent third-part auditor to perform a similar function on a periodic basis.
"In addition, it does not appear that the Board received program level cost to date and cost to complete information in one package. Project budget information was tracked and reported in various reports but this information was not compiled to illustrate a global picture of the program's performance. It appears that funds were removed from various sources to compensate for continually increasing project costs but there is little documentation explaining the reasoning behind these allocations.
"Finally, payment review and issuance processes and procedures do not appear to be thoroughly documented. Defining these can help ensure that payments are processed consistently and issued in the correct amounts."

Program Schedule Management
"...Spire has not seen evidence that an integrated program level existed."

Quality Assurance/Quality Control
"TSC did not have documented  Quality Assurance/Quality Control processes or personnel prior to hiring a QA/QC manager in 2008. (Construction of the projects started in September 2005, three years earlier.)  QA/QC processes implemented by the QA/QC manager appear to have been performed in a manner consistent with industry standards. However, there was little document control during the program. The QA/QC manager documented issues via email and QA/QC records are on his computer, not in a central record repository. Further, the QA/QC processes were not documented for future use."
(The record indicates that the UTB-TSC administration named Veronica Mendez as vice-president for Planning and Construction, to whom the PM reported. Mendez's qualifications for the overseeing of the multi-million dollar projects is that she has a Bachelor of Arts degree in Applied Sciences. She was formerly secretary for Wayne Moore, a vice-president for Administration, and later vice-president for Partnership Affairs. She no longer holds that position).

Program Close-Out Processes
"...(TSC has not yet received a close-out or audit from its PM. Without these reports, TSC has limited visibility into the performance of its program and may not know the actual costs of the program. (We) recommend obtaining and reviewing these reports in order to obtain a better understanding of its final program performance."