Report 2015-117 All Recommendation Responses

Report 2015-117: California Department of General Services' Real Estate Services Division: To Better Serve Its Client Agencies, It Needs to Track and Analyze Project Data and Improve Its Management Practices (Release Date: March 2016)

Recommendation for Legislative Action

To improve efficiencies and reduce some costs for less complex and easily repeatable projects, the Legislature should authorize the division to create and implement a pilot program for job order contracting for appropriate projects, including a requirement that the division award contracts to the most qualified responsive bidders. The division should report to the Legislature on its progress within two years of implementing the pilot program, including, at a minimum, information regarding the time and cost savings the pilot program provided the State.

Description of Legislative Action

SB 1366 (McGuire, 2022), until July 1, 2027, would have amended the State Contract Act to authorize the Department of General Services to engage in job order contracting as an alternative procurement procedure for public works projects. The bill would have required the department to establish prescribed procedures, standards, and requirements relating to the bidding for, and award of, contracts. The bill would have restricted such a contract to a maximum initial contract term of 24 months and imposed a maximum contract amount of $10,000,000 in the first term of the contract. The bill would have authorized the department to issue a single extension to each job order contract, up to an additional $5,000,000 and one additional 12-month period. The bill died in the Senate.

Legislative Action Current As-of: December 2022

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Proposed But Not Enacted

Description of Legislative Action

The Legislature has not taken any action to address this specific recommendation.

Legislative Action Current As-of: March 2019

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Recommendation #2 To: General Services, Department of

To ensure long-term efficient and effective delivery of projects, the division, in its planned implementation of its new project management system in July 2017, should ensure that the project management system can centrally track and extract all data regarding project status, including time delays, cost overages, and the reasons for each.

Annual Follow-Up Agency Response From October 2022

Oracle and FI$Cal are finalizing the contract amendment necessary for the state to implement the final configuration of Aconex and usage of the software system.

Estimated Completion Date: August 2023

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2021

Oracle and DGS RESD have completed 70% of the Aconex configuration but the contract amendment between Oracle and Department of FI$Cal is still not in place. The final 30% of the buildout cannot occur until this contract amendment is completed. The 30% remaining includes integration of PeopleSoft financials, administrative training, staff training and implementation. Once the contract amendment is signed, it should take RESD approximately four months to complete the remaining work. Assuming the contract amendment is completed in October 2021, the work will be completed in February 2022.

Estimated Completion Date: February 2022

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2020

Oracle has proposed to replace Prime with another Oracle product called Aconex and this proposal was acceptable to RESD. The Department of FI$Cal will have the contract/amendment with Oracle in place in October 2020. RESD staff have begun configuration build out discussions with Oracle. This build out process shall take several months, followed by administrative training, and finally staff training and implementation. All training will be concluded by the end of December 2021.

Estimated Completion Date: December 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2019

The Department of General Services' Real Estate Services Division (RESD) continues to work with the Department of FI$Cal and Oracle to implement project management software. Initial, and critical, budget modifications and tracking/reporting functionality has been implemented and staff trained. Additional software modules are being investigated with Oracle to supplement shortcomings of both FI$Cal and Prime in order to provide RESD with a complete and integrated project management software solution.

Estimated Completion Date: December 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2018

Oracle Prime implementation is underway. RESD has worked with Oracle and FI$Cal staff for the past 6 months to develop and test functionality. User acceptance testing is complete, train the trainer work has been completed, and training for staff has been scheduled. Additionally, the interface between Prime and PeopleSoft (FI$Cal) has been completed so that project budgets/milestones can be pushed into FI$Cal and expenditure data can be pushed into Prime. All project data is being loaded into the system as well from FI$Cal.

Estimated Completion Date: December 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2017

RESD is in the process of implementing a new project management system that will allow management and staff to more effectively plan, manage, and control projects. The new system will be part of FI$Cal and will include provisions that allow project management to centrally track and extract all relevant data regarding project status, including time delays, cost overages, and the reasons for each.

For the past two years, RESD's Project Management and Development Branch (PMDB) has worked with FI$Cal and a hired consultant (Loadspring) to implement Primavera as the project management system for the branch. PMDB obtained access to 70 licenses of Primavera and had Loadspring configure the system for the branch's use in phases. The first phase was standing up Primavera's Contract Management (PCM) module and training staff, which PMDB has done. However, PMDB was contacted by Oracle and FI$Cal and informed that PCM was going to be phased out by Oracle, and that they were recommending a replacement to FI$Cal (Oracle Prime). Prime was explained to be less expensive, cloud-based, and more agile than PCM. Accordingly, PMDB paused its Primavera implementation and began working with FI$Cal and Oracle to vet Prime. PMDB has been informed that FI$Cal will be moving to Prime in lieu of PCM, and PMDB is planning an aggressive implementation schedule with Oracle for the product to ensure timely use by staff.

Estimated Completion Date: June 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

RESD is in the process of implementing a new project management system that will allow management and staff to more effectively plan, manage, and control projects. The new system (Primavera) is part of FI$Cal and will include provisions that allow project management to centrally track and extract all relevant data regarding project status, including time delays, cost overages, and the reasons for each.

In order to expedite the implementation of the project management system, RESD's Project Management and Development Branch (PMDB) hired a consultant (Loadspring). PMDB obtained access to 70 licenses of Primavera and had Loadspring configure the system for the branch's use in phases. As of January 2017, PMDB has launched the first of two roll-outs of Primavera - six months ahead of the original schedule. The first roll-out involves the Primavera Contract Management (PCM) module, which PMDB will utilize to interact with contractors, manage budgets, track project issues and trends, etc. PMDB will conduct quarterly reviews and report the results annually to DGS' executive management. The second roll-out will involve P6, which is Primavera's resource and scheduling tool. PMDB will launch P6 in July 2017, with the rollout completed in September 2017. PMDB will utilize the system apart from FI$Cal until an interface is developed, which is anticipated to occur in July 2017.

Estimated Completion Date: August 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

RESD is in the process of implementing a new project management system that will allow management and staff to more effectively plan, manage, and control projects. The new system (Primavera) is part of FI$Cal and will include provisions that allow project management to centrally track and extract all relevant data regarding project status, including time delays, cost overages, and the reasons for each.

In order to expedite the implementation of the project management system, RESD's Project Management and Development Branch (PMDB) hired a consultant (Loadspring). DGS obtained access to 70 licenses of Primavera and is having Loadspring configure the system for the branch's use. At present, PMDB anticipates launching Primavera in January 2017 - six months ahead of schedule. PMDB will utilize the system apart from FI$CAL until an interface is developed, which is anticipated to occur in July 2017.

Estimated Completion Date: July 2017
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

RESD plans to implement a new project management system that will allow management and staff to more effectively plan, manage, and control projects. The new system (Primavera) is part of FI$Cal and will include provisions that allow project management to centrally track and extract all relevant data regarding project status, including time delays, cost overages, and the reasons for each. Currently, FI$Cal has scheduled Primavera's statewide implementation for July 2017.

Estimated Completion Date: July 2017
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #3 To: General Services, Department of

To ensure long-term efficient and effective delivery of projects, the division, in its planned implementation of its new project management system in July 2017, should track the reasons that projects are pending to identify its true backlog of projects. In doing so, it should develop a process to follow up on those projects that are pending to ensure that they are not on hold unnecessarily and are appropriately moving forward.

Annual Follow-Up Agency Response From October 2022

While PMDB continues the best practices indicated in prior responses, please see Recommendation #2 for the status of the implementation of the project management software.

Estimated Completion Date: August 2023

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2021

Please see Recommendation #2 for the status of the implementation of the project management software. Until the new system is implemented, the process described in the prior years is being followed. Additionally, the branch is developing a Service Now management tool to assist in tracking the design workload. The Service Now tool is not Department of FI$Cal dependent. The tool will be integrated with the data PeopleSoft already sends to DGS for both project and financial information. The tool will have reporting capability on various project attributes to inform managers and supervisors on project status. It shall also track when milestones are completed on time or report on the number of days a milestone goes beyond its original tracking date and the reason.

Estimated Completion Date: February 2022

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2020

Please see Recommendation #2 for the status of the implementation of the project management software. Until the new system is implemented, the process described in the prior years is being followed.

Estimated Completion Date: December 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2019

Please see Recommendation #2 for the status of the implementation of the project management software. In June 2018, the Project Management and Development Branch (PMDB) centralized the decision making process for all workload assignments. Assignments are made collectively by management and incoming work is centrally tracked. Supervisory staff now meet monthly with rank and file to discuss project schedules and budgets to ensure active management. A policy bulletin and flowchart showing the appropriate assignment of work has also been published. In-house design projects are also tracked centrally, including all projects that are pending projects (with explanation and date of last action).

Estimated Completion Date: December 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2018

Please see Recommendation #2 for the status of Oracle Prime. Prime was developed with an "issue/trends log" specifically for the purposes of tracking projects and ensuring that projects are not "pending active" for lengthy durations.

As of June 2018, all workload assignments are made collectively by management and incoming work is centrally tracked. Supervisory staff now meet monthly with rank and file to discuss project schedules and budgets to ensure active management. A policy bulletin and flowchart showing the appropriate assignment of work has also been published.

For projects designed in-house, managers meet weekly with staff and then managers meet weekly to discuss staff reports. An Architectural and Engineering (A&E) Schedule document compiles the data and tracks pending projects (with reasons for pending). A dashboard has been created to show the data. As these are design schedules, which are separate from project schedules (and thus not appropriate for Prime), this will continue to be managed this way regardless of the Prime implementation.

Estimated Completion Date: December 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2017

While PMDB works on the implementation of Oracle Prime, the branch has implemented stopgap measures intended to better track its backlog of projects. These measures include:

1. Modifying its workload assignments by ensuring that all project requests funnel through the Capital Outlay Program Managers (COPMs) assigned to a program.

2. Eliminating the COPMs ability to directly assign projects to staff persons and transition the assignment function to a committee comprised of the COPMs, PMDB Principle Architects, and the Branch Chief that meets weekly. This has resulted in the Branch being able to eliminate the practice of assigning projects to staff in lieu of noting them as unassigned (backlog).

3. Restructuring the project management section's workload tracking spreadsheet to more accurately capture workload assumptions (with additional data points being added at present).

4. Revising the monthly all-management meeting to include projects in design that are temporarily being managed by PMDB architectural/engineering staff as part of work needing reassignment for more comprehensive tracking.

a. PMDB now tracks: current project workload, work needing reassignment, new project requests, and anticipated future work (tracked as part of the budget process).

Estimated Completion Date: June 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

Estimated Completion Date: August 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

Estimated Completion Date: July 2017
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

Estimated Completion Date: July 2017
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #4 To: General Services, Department of

To ensure long-term efficient and effective delivery of projects, the division, in its planned implementation of its new project management system in July 2017, should, at least annually, use the centrally tracked data to identify common themes in the causes for project delays and cost overages and develop solutions to address these issues. Further, it should report the results of its review to General Services' executive management.

Annual Follow-Up Agency Response From October 2022

Please see Recommendation #2 for the status of the implementation of the project management software.

Estimated Completion Date: August 2023

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2021

Please see Recommendation #2 for the status of the implementation of the project management software as well as the 2021 Annual Response for Recommendation #3.

Estimated Completion Date: February 2022

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2020

Please see Recommendation #2 for the status of the implementation of the project management software. Aconex configuration will include the ability to submit an "issue/trends" specifically for each project. These issues or trends can be analyzed for common items and lessons learned will be applied to current and future projects.

Estimated Completion Date: December 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2019

Please see Recommendation #2 for the status of the implementation of the project management software. All new projects will include an "issue/trends log" specifically for the purposes of tracking projects and ensuring that common issues are addressed for current and future projects. As data is entered and trends identified, they will be analyzed and shared with the Deputy Director and Director.

Estimated Completion Date: December 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2018

Prime was developed with an "issue/trends log" specifically for the purposes of tracking projects and ensuring that common issues are addressed for current and future projects.

Estimated Completion Date: December 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2017

RESD is in the process of implementing a new project management system that will allow management and staff to more effectively plan, manage, and control projects. The new system is part of FI$Cal and will include provisions that allow project management to centrally track data and identify common themes for project delays and cost overages. RESD will also ensure that DGS executive management are kept informed of significant project issues, including the results of its analysis of common themes impacting project timeliness and cost.

While PMDB works on the implementation of Oracle Prime, the branch has implemented measures to identify and remedy project delays/overages. These measures include:

1. PMDB formed a high level workgroup consisting of its largest clients (CHP, DDS, DSH, CalFire, OES, and DMV). The group discusses existing project issues on a bi-monthly basis.

2. PMDB has identified contracting durations (design and construction) as a significant reason for project delays (since project costs are often fixed, delays in contracting triggers escalation which causes overages). PMDB is taking significant steps to eliminate contracting delays, including transitioning design contracting fully to PMDB, establishing a more streamlined method for contracting under GC 14838.5, developing a process to utilize PCC 10122(d) for highly specialized projects, and working with DGS contracts to establish a solicitation schedule/expectations for public works contracts.

3. PMDB has increased the number of supervisory positions within the project management sections and begun divesting existing supervisors of their projects to focus on supervision. This has allowed the branch to institute mandatory monthly project meetings between supervisors and their staff to review cost, scope, and schedule for all projects. These meetings, coupled with the monthly client meetings on their portfolio of projects, helps ensure that project issues/trends are addressed early.

Estimated Completion Date: June 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

RESD is in the process of implementing a new project management system that will allow management and staff to more effectively plan, manage, and control projects. The new system (Primavera) is part of FI$Cal and will include provisions that allow project management to centrally track data and identify common themes for project delays and cost overages. RESD will also ensure that DGS executive management are kept informed of significant project issues, including the results of its analysis of common themes impacting project timeliness and cost.

Estimated Completion Date: August 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

RESD is in the process of implementing a new project management system that will allow management and staff to more effectively plan, manage, and control projects. The new system (Primavera) is part of FI$Cal and will include provisions that allow project management to centrally track data and identify common themes for project delays and cost overages. RESD will also ensure that DGS executive management are kept informed of significant project issues, including the results of its analysis of common themes impacting project timeliness and cost.

Estimated Completion Date: July 2017
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

RESD plans to implement a new project management system that will allow management and staff to more effectively plan, manage, and control projects. The new system (Primavera) is part of FI$Cal and will include provisions that allow project management to centrally track data and identify common themes for project delays and cost overages. RESD will also ensure that DGS executive management are kept informed of significant project issues, including the results of its analysis of common themes impacting project timeliness and cost. Currently, FI$Cal has scheduled Primavera's statewide implementation for July 2017.

Estimated Completion Date: July 2017
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #5 To: General Services, Department of

Until the division implements its planned project management system, it should, by September 2016, develop a process to, at a minimum, identify project status and reasons for project delays as well as cost overages. Using these data, the division should modify its project management processes to ensure the efficient and effective delivery of projects.

Annual Follow-Up Agency Response From October 2018

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From November 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

RESD's Project Management and Development Branch (PMDB) reviewed options to implement an interim solution via an Excel spreadsheet. However, given the complexity of its projects, PMDB determined that an interim solution would only be partially effective in capturing the data necessary to appropriately track projects. Therefore, as discussed under Recommendations # 2, 3 and 4, PMDB determined that a better option would be to expedite the implementation of the new project management system (Primavera). PMDB has launched Primavera in January 2017, six months ahead of the July 2017 FI$Cal launch discussed in the state auditor's report.

Response Date: May 2017

California State Auditor's Assessment of 1-Year Status: Will Not Implement

In following-up with General Services, we learned that it did not in fact launch Primavera in January 2017; rather, it conducted training for Primavera in January 2017 and rolled the actual software out to users in April 2017. Further, General Services indicated that the report it needs for division-wide project management will not be complete until June 2017. We will continue to follow-up on the division's progress in implementing Primavera through recommendation number 4.

6-Month Agency Response

RESD's Project Management and Development Branch (PMDB) reviewed options to implement an interim solution via an Excel spreadsheet. However, given the complexity of its projects, PMDB determined that an interim solution would only be partially effective in capturing the data necessary to appropriately track projects. Therefore, as discussed under Recommendations # 2, 3 and 4, PMDB determined that a better option would be to expedite the implementation of the new project management system (Primavera). PMDB is currently on track to launch Primavera in January 2017, six months ahead of the July 2017 FI$Cal launch discussed in the state auditor's report.

Estimated Completion Date: January 2017
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Will Not Implement

As indicated in the division's response to this recommendation, it has decided not to implement this recommendation and instead wait until the implementation of Primavera to track project status and reasons for project delays.

60-Day Agency Response

By September 30, 2016, RESD will implement an interim system that allows the identification of project status and reasons for project delays as well as cost overages. As part of this system, a management reporting component will be implemented that allows common themes in the causes for project delays and cost overages to be identified and addressed in a timely manner.

Estimated Completion Date: September 2016
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #6 To: General Services, Department of

The division should develop and implement a process for preparing reasonable time frames and cost estimates for its projects within the building management branch. To better inform the development of this process, the division should evaluate the branch's structure, which should include a staffing analysis, to determine whether it is effectively organized and whether it should add cost estimator positions.

Annual Follow-Up Agency Response From October 2020

As of June 2018, the Facilities Management Division (FMD) has evaluated its structure and developed and implemented a Project Intake Committee (PIC) process for prioritizing projects and is using SAGE software to develop cost estimates for its projects within the FMD Direct Construction Unit (DCU). FMD evaluated its structure and completed a staffing analysis. It was determined that additional cost estimator classifications are not necessary at this time. FMD established statewide Architectural and Engineering (A&E) Firms on Retainer Contracts and are utilizing them to develop scope of work (SOW) and cost estimates for projects proposed for completion within 1-5 years. Depending on the project complexity, the A&E Contracts can be completed between 3-12 months and define the full scope, schedule and cost of the project. Once funding has been secured for the project, it can be sent for competitive bidding and award. DGS believes that it has materially implemented the recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2019

Completion Date: June 2018

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

As we indicated in our previous assessment of DGS's annual response to this recommendation, although DGS documented its project intake process in its project management plan, which is dated December 2016, that plan lacks a process for formally estimating costs or time frames as we recommended. We stated that DGS will need to develop and implement such a process in order to fully implement this recommendation. In its most recent response, DGS did not provide documentation demonstrating it had established such a process. Further, DGS also did not provide evidence of its staffing analysis referenced in its current response. Until it addresses these shortcomings, we will continue to report this recommendation as partially implemented.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From October 2018

As of June 2018, the Facilities Management Division (FMD) has evaluated its structure and developed and implemented a Project Intake Committee (PIC) process for preparing reasonable time frames and is using SAGE software to develop cost estimates for its projects within the Direct Construction Unit (DCU) and FMD. FMD evaluated its structure and completed a staffing analysis. It was determined that the cost estimator classifications are not necessary.

Completion Date: June 2018

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2017

To improve the efficiency and effectiveness of its real estate operations, DGS has reorganized its real estate operations. In part, the extensive reorganization created two divisions: (1) a new Facility Management Division (FMD) that primarily includes the facility maintenance and direct construction functions and activities that were previously performed by the Building and Property Management branch and the Direct Construction Unit (DCU), respectively; and, (2) a new RESD with extensive revisions to the previous organizational structure including consolidating all real estate broker functions under the Asset Management Branch.

As a major step in improving DGS' management of the repair and maintenance of state-owned buildings, FMD engaged a project management/construction management (PM/CM) firm which provided professional architectural, engineering, and program management services. The consultant assisted FMD in upgrading its standards, systems, and processes for the overall management of its statewide portfolio of buildings.

A new Project Management Process (PMP) was developed, which allows DCU to track projects effectively. In addition, DCU also implemented a new estimating software program (Sage Estimating Software). The new process allows the Asset Management Branch, Sustainability, and ADA teams to better coordinate efforts on related projects.

FMD created and implemented its own Architecture and Engineering (A&E) contracts that now provide design, scope and management services to better serve its customers.

On the construction management front, the PM/CM consultant has completed providing project scopes, schedules and cost estimates while FMD develops its own internal estimating and scheduling capacity over the next few years. The contractor and FMD have created a process for evaluating, identified building needs, estimating costs, authorizing funding for projects, and scheduling project work. This project intake process is documented in the PMP.

Estimated Completion Date: June 2018

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

As we indicated in our assessment of DGS's one-year response to this recommendation, although DGS documented its project intake process in its project management plan, which is dated December 2016, that plan lacks a process for formally estimating costs or time frames as we recommended. We stated that DGS will need to develop and implement such a process in order to fully implement this recommendation. In its most recent response, DGS did not provide an updated project management plan, nor did it respond to our request that it point us to where in its project management plan this process is described. As a result, we will continue to report this recommendation as not fully implemented.

1-Year Agency Response

To improve the efficiency and effectiveness of its real estate operations, DGS has reorganized its real estate operations. In part, the extensive reorganization created two divisions:

(1) a new Facility Management Division (FMD) that primarily includes the facility maintenance and direct construction functions and activities that were previously performed by the Building and Property Management branch and the Direct Construction Unit, respectively; and,

(2) a new RESD with extensive revisions to the previous organizational structure including consolidating all real estate broker functions under the Asset Management Branch.

As a major step in improving DGS' management of the repair and maintenance of state-owned buildings, FMD engaged a project management/construction management (PM/CM) firm which is providing professional architectural, engineering, and program management services. The consultant is assisting FMD in upgrading its standards, systems, and processes for the overall management of its statewide portfolio of buildings.

FMD is also working with the PM/CM and a retired annuitant with extensive organizational design experience to evaluate the specific field support and administrative services required to fully achieve FMD's mission. The team is developing workload tracking systems (on contracting, hiring, service requests, and maintenance and operations activities) that will be in place by September 2017. These systems will help us to correctly match workload with staff.

On the construction management front, the PM/CM consultant is providing project scopes, schedules and cost estimates while FMD works to develop its own internal estimating and scheduling capacity over the next few years. The contractor and FMD have created a process for evaluating identified building needs, estimating costs, authorizing funding for projects, and scheduling project work. This project intake process is documented in the Project Management Plan.

Estimated Completion Date: September 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Partially Implemented

Although DGS documented its project intake process in its project management plan, that plan lacks a process for formally estimating costs or time frames as we recommended. DGS will need to develop and implement such a process in order to fully implement this recommendation.

6-Month Agency Response

To improve the efficiency and effectiveness of its real estate operations, DGS has reorganized its real estate operations. In part, the extensive reorganization created two divisions: (1) a new Facility Management Division (FMD) that primarily includes the facility maintenance and direct construction functions and activities that were previously performed by the Building and Property Management branch and the Direct Construction Unit, respectively; and, (2) a new RESD with extensive revisions to the previous organizational structure including consolidating all real estate broker functions under the Asset Management Branch.

As a major step in improving DGS' management of the repair and maintenance of state-owned buildings, FMD has entered into a long-term contract with a project management/construction management firm. In brief, the contractor will provide professional architectural, engineering and program management services as needed to assist FMD in successfully upgrading its statewide standards, systems and processes for the repair and maintenance of state-owned buildings. The implementation of this contract will fully address the state auditor's concerns with the adequacy of DGS' project management processes and systems, including those involving the preparation of reasonable project time frames and cost estimates. By September 2017, the contractor is expected to have a comprehensive system in place to accomplish its contractual responsibilities.

Estimated Completion Date: September 2017
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

In February 2016, DGS began the process of reorganizing RESD to improve the efficiency and effectiveness of its real estate operations. In part, the extensive reorganization created two divisions: (1) a new Facility Management Division (FMD) that primarily includes the facility maintenance and direct construction functions and activities that were previously performed by the Building and Property Management branch and the Direct Construction Unit, respectively; and, (2) a new RESD with extensive revisions to the previous organizational structure including consolidating all real estate broker functions under the Asset Management Branch.

By September 2016, as recommended by the state auditor, FMD plans to develop a new process for preparing time frame and cost estimates for its projects, including, if deemed necessary, the use of department estimating staff.

Estimated Completion Date: September 2016
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #7 To: General Services, Department of

To ensure that client agencies are paying equitable rates, by December 2016 General Services should develop and implement a strategy for allocating its administrative costs equally among all the projects it completes for client agencies, including those portions outsourced to private firms.

Annual Follow-Up Agency Response From October 2020

As previously reported, in 2016 PMDB reviewed the amount of overhead related to contracts. Specifically, the costs for OBAS (contracts), OLS (legal), OFS (accounting), RESD Executive (review/signature). The associated costs were sequestered from the hourly rate and are charged via a percentage fee (1%, capped at $1 million for large projects). This fee is charged against contracted amounts and is not applied when there are no contracts (which is incredibly rare - almost every project involves some amount of contracted services). DGS believes that it has materially implemented the recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2019

As previously reported, in 2016 PMDB reviewed the amount of overhead related to contracts. Specifically, the costs for OBAS (contracts), OLS (legal), OFS (accounting), RESD Executive (review/signature). The associated costs were sequestered from the hourly rate and are charged via a percentage fee (1%, capped at $1 million for large projects). This fee is charged against contracted amounts, and is not applied when there are no contracts (which is incredibly rare - almost every project involves some amount of contracted services). DGS believes that it has materially implemented the recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

General Services did not provide any new documentation or information regarding its implementation of this recommendation. In its previous response, General Services provided a spreadsheet displaying how it arrived at a 1 percent contract administration fee for external contracts entered into for projects; however, it has not yet conducted an analysis demonstrating that, by charging this fee, administrative costs are now equitably distributed among all of the projects it completes for client agencies, including those portions outsourced to private firms. Until such an analysis is completed, we will continue to assess this recommendation as partially implemented.

Annual Follow-Up Agency Response From October 2018

As previously reported, in 2016 PMDB reviewed the amount of overhead related to contracts. Specifically, the costs for OBAS (contracts), OLS (legal), OFS (accounting), RESD Executive (review/signature). The associated costs were sequestered from the hourly rate and are charged via a percentage fee (1%, capped at $1 million for large projects). This fee is charged against contracted amounts, and is not applied when there are no contracts (which is incredibly rare - almost every project involves some amount of contracted services).

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

As reported in our previous assessment of the status of this recommendation, although DGS provided us with further explanation regarding how it arrived at the 1 percent contract administration fee, it did not provide us with an analysis demonstrating that, by charging this fee, administrative costs are now equitably distributed among all of the projects it completes for client agencies, including those portions outsourced to private firms. Until such an analysis is completed, we will continue to assess this recommendation as partially implemented.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2017

Beginning in FY 16-17, RESD's Project Management and Development Branch (PMDB) will charge a 1 percent Contract Administration Fee for all external contracts entered into for projects. In brief, to arrive at the 1 percent fee, PMDB identified the total amount paid to support those programs within DGS that work on PMDB contracts such as legal review and contract services. PMDB then estimated the percent of the services that directly supports its contracts to arrive at a contract administration cost to recover. Using historical averages, recent trends, and estimates for current year work, PMDB then estimated the total amount of externally contracted services the branch will likely enter into during the fiscal year.

In PMDB's evaluation of this methodology, by implementing the fee, the portion of PMDB's overhead fees specifically related to contracting out have been separated from its rate and applied only to those projects where consultants are utilized. Because of this separation, clients whose projects are designed in-house by DGS are not charged at all for overhead related to contracting for design services. The contracting overhead for the construction portion of the work, special consultants retained, CEQA, hazardous materials testing/abatement, etc. would still be charged to the project. Because the remaining administrative charges, such as non-billable management time, are included in PMDB's hourly rate, larger projects where more support is needed bear more of the overall cost burden than would smaller projects. PMDB's assessment of recently fee'd projects is that this structure is entirely equitable and level sets administrative fees across projects.

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Although DGS provided us with further explanation regarding how it arrived at the 1 percent contract administration fee, it did not provide us with an analysis demonstrating that, by charging this fee, administrative costs are now equitably distributed among all of the projects it completes for client agencies, including those portions outsourced to private firms. Until such an analysis is completed, we will continue to assess this recommendation as partially implemented.

Auditee did not substantiate its claim of full implementation

1-Year Agency Response

Completion Date: July 2016
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Partially Implemented

Although General Services provided a spreadsheet displaying how it arrived at a 1 percent contract administration fee for external contracts entered into for projects, it has not yet conducted an analysis demonstrating that, by charging this fee, administrative costs are now equitably distributed among all of the projects it completes for client agencies, including those portions outsourced to private firms. Until such an analysis is completed, we will continue to assess this recommendation as partially implemented.

Auditee did not substantiate its claim of full implementation

6-Month Agency Response

Completion Date: July 2016
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Auditee did not substantiate its claim of full implementation

60-Day Agency Response

By December 2016, DGS will complete an analysis of the effect of allocating administrative costs to RESD's architectural and engineering and construction contracts. The results of that analysis will, in part, inform any strategy or decision related to administrative costs.

Estimated Completion Date: December 2016
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #8 To: General Services, Department of

To ensure that the project management branch charges its client agencies a competitive hourly rate, by December 2016 and every two years thereafter, the division should conduct a rate analysis that fully accounts for differences between the project management branch's rate and private firms' rates. If it finds that the rates are not competitive, the division should identify and implement strategies to ensure that the project management branch's rates are as competitive as they can be with those of its private firm counterparts. Further, the division should explore and implement any other reasonable methods to ensure that it is delivering projects as cost effectively as possible.

Annual Follow-Up Agency Response From October 2020

While PMDB is unable to control the most significant portion of its costs (staff salary rates), PMDB has nonetheless periodically compared its rates to recently contracted rates for similar services (project management and design). In each review, PMDB's rates were in keeping with the industry.

As part of its commitment to ensure that DGS' project management branch charges its client agencies a competitive hourly rate, DGS will continue to periodically evaluate and compare its rates with those of appropriate private firms. From DGS' perspective, it has materially implemented this recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Annual Follow-Up Agency Response From October 2019

From DGS' perspective, it has materially implemented this recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Annual Follow-Up Agency Response From October 2018

In 2017, the Project Management and Development Branch (PMDB) reviewed the then-recently contracted rates for both Architectural and Engineering (A&E) and Project Management (PM) firms for two new Sacramento office buildings. For PM, DGS' rate was 1.1% higher than the Contract Management (CM) firm and 9.5% lower for A&E. In 2018, using the architectural retainer contract with HGA Architects as a reference point, PMDB architectural fees were 1.3% higher, engineering fees were 3.71% higher, and PM fees were 2.2% higher. As PMDB did not materially raise rates from 2017 to 2018, these percentage differences for A&E showcase the volatility of industry rates.

Utilizing its 2016/17 Budget as a baseline, PMDB determined that its own overhead (including administrative support) and that of RESD (division) represents approximately 8.8% of its total budget. Further, PMDB pays for approximately 14.4% of DGS' total distributed overhead costs (non-billable functions within DGS, such as costs associated with Legislative Affairs, Communications, IT, DGS Executive Office, etc.). The department believes that these percentages are reasonable.

Given these factors, PMDB believes that it has materially implemented the recommendation.

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Since its one-year response, DGS has only provided us with additional explanation as to why it believes it is restricted in the actions it can take to adjust its rates based on a comparison with private firms' rates. This additional explanation does not address our recommendation that the division conduct a rate analysis that fully accounts for differences between the project management branch's hourly rate and private firms' rates. Further, the division did not provide evidence demonstrating that it has identified and implemented any strategies to ensure that the project management branch's rates are as competitive as they can be. Until the division addresses these shortcomings, we will continue to report this recommendation as partially implemented.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2017

For its one-year response, the Project Management and Development Branch (PMDB) conducted a follow-up analysis of its hourly rates by reviewing the recently contracted rates for both A&E and PM firms for two new Sacramento office buildings, using the same methodology. For PM, DGS' rate was 1.1% higher than the CM firm and 9.5% lower for A&E.

As recommended by the California State Auditor, PMDB further reviewed its administrative and overhead costs compared to a sampling of private sector firms that the branch does business with. However, this proved to only have minimal utility as the basis for costs (percentages of fees for profit, overhead, contingency, etc.) are not published by these firms. In terms of rates structure, PMDB generally follows the model of private sector firms except that most firms have a far more delineated number of positions and use a tiered rate structure. Mimicking this structure in PMDB would require the establishment of additional civil service classifications, which is impractical. PMDB is in the process of reviewing whether a tiered rate structure is possible, but preliminary analysis indicates that it would be impractical due to civil service hiring and termination restrictions (impacts to costs on a per project basis are also proving very difficult to predict). A key difference between PMDB and private sector firms is the ability of the latter to right-size the workforce based upon market conditions.

Based upon its 2016/17 Budget, PMDB determined that its own overhead (including administrative support) and that of RESD (division) represents approximately 8.8% of its total budget. Further PMDB pays for approximately 14.4% of DGS' total distributed overhead costs (non-billable functions within DGS, such as costs associated with Legislative Affairs, Communications, IT, DGS Executive Office, etc.). The department believes that these percentages are reasonable.

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

1-Year Agency Response

For its one-year response, PMDB conducted a follow-up analysis of its hourly rates by reviewing the recently contracted rates for both A&E and PM firms for two new Sacramento office buildings, using the same methodology. For PM, DGS' rate was 1.1% higher than the PM firm and 9.5% lower for A&E.

PMDB reviewed its admin/overhead costs. Management within PMDB are almost all partially billable, which follows the model of private sector firms and reduces their overhead impact. PMDB runs a small internal admin unit (PMDB's current budget share of divisional and its own overhead is approximately 8.8% of its total budget), comprised of direct purchasing/contracting, invoicing, and budgetary support. The department's overall distributed admin costs (i.e. Admin Division, Executive Office, etc.) is outside control of RESD, though DGS' position is that these costs are reasonable and reasonably distributed amongst revenue generating programs (PMDB pays for approximately 14.4% of DGS' total distributed admin costs).

DGS operates on a fee for service/cost recovery model, having almost no discretion in setting rates. The amount to recover is divided by the total number of billable hours to get the necessary rate. Decreasing the rate would require: (1) reducing overhead costs, the majority of which are outside of PMDB's control; (2) add billable staff, which is only possible when there are a sufficient number of projects to sustain the larger workforce; or, (3) make traditionally non-billable staff bill their time to projects they are indirectly supporting, which would result in lower rates, but higher overall project costs, especially for smaller dollar figure projects. The department is restricted in the actions it can take to adjust its rates based on a comparison with private firms' rates. That said, PMDB is actively reviewing its staffing ratio to projects and will be hiring additional billable staff which will reduce its rates in the future.

Completion Date: December 2016
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Partially Implemented

Auditee did not substantiate its claim of full implementation

6-Month Agency Response

Recently, RESD's Project Management and Development Branch (PMDB) conducted an analysis of its hourly rate compared to rates charged by private Architectural and Engineering (A&E) firms that DGS has on retainer contracts. For the analysis, PMDB identified the roles in those contracts that were comparable to its A&E staff and those that were comparable to its project management staff. The comparable positions' rates were then averaged and compared to PMDB's hourly rate ($178 for FY 2016-17).

PMDB's analysis showed that its rate is competitive with project management rates, i.e., PMDB's rate was only 4.6% higher than the private firms' average hourly rate. For A&E services, PMDB estimates that its rate is 14.7% higher than the private firms' average hourly rate, which is not unexpected or unreasonable considering the state's cost recovery model discussed below.

As recommended by the state auditor, PMDB will continue to periodically (at least every two years) evaluate and compare its A&E and project management rates to the private sector. However, based on state policy and practice, DGS is limited to setting rates based on a cost recovery model. That is, DGS sets its hourly rate based on its cost to perform the work, and this cost is largely determined by the salaries established through collective bargaining. Therefore, the department is restricted in the actions it can take to adjust its rates based on a comparison with private firms' rates.

Completion Date: August 2016
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Partially Implemented

We disagree with the division's assessment that it has fully implemented this recommendation. Specifically, our recommendation is that the division conduct a rate analysis that fully accounts for differences between the project management branch's hourly rate and private firms' rates. However, the analysis that the division provided only assessed the hourly rates for A&E staff and project director positions, and did not include an assessment of its administrative and overhead costs that contribute to its higher hourly rate. Further, the analysis does not fully explain the reasons that the project management branch's hourly rate remains higher than those of private firms providing similar services. Finally, the division did not provide evidence demonstrating that it has identified and implemented any strategies to ensure that the project management branch's rates are as competitive as they can be. Until the division addresses these shortcomings, we will continue to report this recommendation as partially implemented.

Auditee did not substantiate its claim of full implementation

60-Day Agency Response

Recently, RESD began the process of collecting private sector consultant rates for use in the recommended analysis. By December 2016, RESD will compile the private sector rates and evaluate and compare them to its own rate.

In addition, by December 2016, RESD will obtain the data needed to perform a comparison of project management branch staffing and consulting costs on a given project relative to the total construction costs for that project. Using the computed proportion of costs, RESD will compare those costs against applicable private sector expected costs for a similar project. Based on the results of that analysis, RESD will explore and implement reasonable and applicable methods to ensure that it delivers projects as cost effectively as possible.

Estimated Completion Date: December 2016
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #9 To: General Services, Department of

To improve its communication with client agencies, the division should ensure that project managers are using consistent procedures by providing specific expectations related to communicating and documenting time delays, cost changes, and change orders, at a minimum.

Annual Follow-Up Agency Response From October 2018

As of January 2018, the Project Management and Development Branch (PMDB) reorganized its program management functions, shifting the direct management of client programs to the supervisory level where it is more appropriate. This enabled management in the branch to provide oversight across client programs for consistency/standardization, and to focus on critical areas of impact for project operations (sustainability, schedules, estimations, training, policy/standards, and design).

PMDB has developed a Project Management Plan (PMP), with a corresponding policy bulletin, requiring that a Plan be developed and signed for every project - with the policies contained within retroactively applying to existing projects. The PMP template was shared and vetted with the largest client departments and with the Department of Finance (DOF).

Completion Date: January 2018

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

The division provided its Project Management Plan and policy bulletin that include procedures for project managers and other key project staff to follow when communicating critical information, such as time delays and cost changes, to client agencies. The division provided examples of its use of these plans for certain departments. Thus, we consider this recommendation fully implemented.

Annual Follow-Up Agency Response From November 2017

The Project Management and Development Branch (PMDB) has restructured the branch's management responsibilities to ensure that each Capital Outlay Program Manager (COPM) and Principal Architect (PA) oversees a branch-wide function, in an effort to ensure that each section within PMDB is working collaboratively and enabling greater consistency across the branch. This includes an assignment to oversee standards and policy, with one COPM and one PA being assigned this function for project management and architecture/engineering respectively.

While PMDB has made significant progress in updating its policy and procedure manuals, despite having to shift focus to addressing a tremendous number of retirements, an influx of new work, work transitioning from design to construction (which increases the number of hours needed to manage), and the implementation of FI$Cal.

In order to fully address this finding, and ensure that communication expectations with clients, and project roles and responsibilities are clearly delineated, PMDB has developed a Project Management Plan (PMP) that will be issued (and signed) for every project - with the policies contained within retroactively applying to existing projects. The PMP has been drafted by PMDB management and shared with the branch's largest clients for feedback. Feedback and subsequent revisions will be completed by January 2018.

Estimated Completion Date: January 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

The Project Management and Development Branch plans to update its policy and procedure manual to provide additional guidelines addressing expectations for project managers to communicate significant issues to clients in a timely manner. As part of this effort, a staff member has been dedicated to completing the update, which is expected by December 2017.

PMDB has made significant progress in updating its policy and procedure manuals. However, due to additional retirements and staff departures (2 of 8 Project Director III's and 5 Project Director I/II's), as well as the implementation of FI$Cal and Primavera, PMDB's focus has had to shift to addressing the documentation and training for those programs and workload issues related to handling the influx of new work. PMDB will need to delay finalization of the manuals until December 2017.

Estimated Completion Date: December 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

Estimated Completion Date: December 2016
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

By July 2016, RESD plans to update its policy manual to provide additional guidelines addressing expectations for project managers to communicate significant project issues to clients in a timely manner. As part of this process, the division has begun an evaluation of existing communication policies as well as gathering data on best practices in client communications.

Estimated Completion Date: July 2016
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #10 To: General Services, Department of

To improve its communication with client agencies, the division should develop a process for providing periodic detailed bills and invoices to client agencies clearly describing the work for which it is charging.

Annual Follow-Up Agency Response From October 2022

Please see Recommendation #2 for the status of the implementation of the project management software.

Estimated Completion Date: August 2023

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2021

Please see Recommendation #2 for the status of the implementation of the project management software. Upon implementation, clients will have the ability to see all FI$Cal expenditure data, in real time. PMDB continues to provide expenditure data to clients as part of its monthly meetings and as requested by the client.

Estimated Completion Date: February 2022

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2020

Estimated Completion Date: December 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2019

Please see Recommendation #2 for the status of the implementation of the project management software. Upon implementation, clients will have the ability to see all FI$Cal expenditure data, in real time. Since 2016, PMDB has been providing expenditure data to clients as part of its monthly meetings. Upon full implementation of its project management software, client agencies will be able to see all FI$Cal expenditure data in real time.

Estimated Completion Date: December 2021

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2018

As an interim measure, PMDB has been providing expenditure data to clients as part of monthly meetings.

Estimated Completion Date: December 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2017

RESD is in the process of implementing a new project management system that will interface with FI$Cal and allow management and staff to more effectively plan, manage, and control projects. Once the system is fully operational, integrated with FI$Cal, and reports can be run, PMDB's management will ensure that a detailed cost report is provided to clients at the completion of each phase of work. In the interim, PMDB staff have continued meeting with clients on a monthly basis to update them on project details, including project status and cost information. FI$Cal Reports, detailing project funding and expenditures by task, are provided to clients at these meetings.

Estimated Completion Date: June 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

RESD is in the process of implementing a new project management system (Primavera) that will interface with FI$Cal and allow management and staff to more effectively plan, manage, and control projects. The interface with FI$Cal is anticipated to occur in July 2017. Once FI$Cal is fully online and reports can be run (anticipated to be Spring 2017), PMDB's management will ensure that a detailed cost report is provided to clients at the completion of each phase of work. In the interim, PMDB staff will continue meeting with clients on a monthly basis to update them on project details, including project status and cost information.

Estimated Completion Date: July 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

RESD is in the process of implementing a new project management system (Primavera) that will interface with FI$Cal and allow management and staff to more effectively plan, manage, and control projects. The interface with FI$Cal is anticipated to occur in July 2017. Once FI$CAL is fully online and reports can be run, RESD's Project Management and Development Branch's (PMDB) management will ensure that a detailed cost report is provided to clients at the completion of each phase of work. In the interim, PMDB staff will continue meeting with clients on a monthly basis to update them on project details, including project status and cost information.

Estimated Completion Date: July 2017
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

By July 2016, RESD will implement policies and procedures which ensure that clients are provided detailed project and cost information on a more routine basis. At a minimum, RESD will provide the client with a cost report at the completion of each phase of work, which includes a detailed comparison of budgeted and expended financial resources.

Estimated Completion Date: July 2016
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #11 To: General Services, Department of

To effectively evaluate the performance of its branches in delivering projects, the division should develop meaningful goals and objectives and a method of measuring its success in achieving them as part of its strategic plan that is focused on ensuring that projects are delivered on time and within budgeted cost estimates.

Annual Follow-Up Agency Response From October 2018

In 2016, DGS transitioned to a 1-year strategic plan that emphasized short duration goals with specific, measurable impact. In 2017, the Project Management and Development Branch (PMDB) focused on shortening the Architectural and Engineering (A&E) contracting process by nearly half (contracting for design services can take longer than design for small projects). In 2018, PMDB focused on three goals designed to ensure projects are delivered timely. First, PMDB has reengineered the delegation process to align with statute and streamline the process. This allows for a greater number of projects to be delegated (which is an overall benefit to the state in reducing deferred maintenance backlogs), but also helps alleviate PMDB from having an abundance of small projects that consume staff resources. This frees up the branch to focus on the medium to larger projects and ensure that they are completed timely. PMDB is also working on a CEQA risk analysis tool to ensure that there is a standard and risk-based approach taken for CEQA for all projects (CEQA is the single greatest schedule driver for projects). Beyond consistency, this helps minimize adverse CEQA impacts to projects. Finally, PMDB is working on a more defined process for Budget Packages to ensure that Capital Outlay projects are initially scoped effectively, to ensure that there is an appropriate baseline against which to measure projects' success or failure. In 2019, PMDB is focusing on design standards in REVIT (in-house design) to streamline design durations and scope for work standardization for professional services contracts to speed that process and reduce fees due to over scoping.

Completion Date: December 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

In our previous assessment of this recommendation, we concluded that DGS indicated that it does not plan to establish a more traditional framework as part of its strategic plan, in which it sets broader goals and methods of how it will measure its success in achieving those goals. We stated that this approach does not address our concern as we specifically recommended that the division develop meaningful goals and objectives, including a method of measuring success, focused on ensuring projects are delivered on time and within budgeted cost estimates. In its current response, DGS does not address how its current strategic plan has addressed our concerns. Instead, it describes activities the division is undertaking, which do not address our recommendation. Further, it did not provide any evidence demonstrating these activities are indeed occurring.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2017

In 2016, DGS transitioned to an annual strategic plan, rather than a two, three, or five year plan. This plan is governed by 5 themes, called "Strategic Direction," which are areas of emphasis that drive DGS goal establishment. These themes are: Data-Informed, Collaborative, Effective, Consultative, and Sustainable. DGS has chosen not to establish a more traditional frame work (such as a goal of "ensuring that 80% projects are completed on schedule," and then objectives under that goal delineating how that goal will be achieved).

However, this has not prevented DGS from annually including efficiency goals in its plan that would be the equivalent of objectives (while the terminology and structure used in the audit and DGS' actual Strategic Plan process differs, the result is the same).

In the 2017 plan, PMDB put forward an efficiency goal of soliciting and executing 80% of Architectural and Engineering (A&E) contracts within 4.5 months (in contrast to the 6-8 months at present). This goal targets the contracting timeframes for design, which represent a significant schedule driver for projects and would drastically reduce overall project time and lower costs (by reducing escalation amounts).

The DGS 2018 plan will likewise have an efficiency or cost-driven goal for its projects.

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

DGS indicates that it does not plan to establish a more traditional framework as part of its strategic plan, in which it sets broader goals and methods of how it will measure its success in achieving those goals. This approach does not address our concern as we specifically recommended that the division develop meaningful goals and objectives, including a method of measuring success, focused on ensuring projects are delivered on time and within budgeted cost estimates. Instead, DGS reiterates the same concept from its one-year response by stating that it will annually include efficiency goals in its plan, and points to the same, single limited goal related to executing architectural and engineering contracts, which does not address our recommendation.

1-Year Agency Response

For the 2016 Strategic Plan, DGS implemented a plan that had every division submit goals, which were then defined by critical path steps and monitored monthly. This process is continued for 2017, with PMDB putting forward an efficiency goal of soliciting and executing 80% of Architectural and Engineering (A&E) contracts within 4.5 months (in contrast to the 6-8 months at present). This goal, in conjunction with other efforts to expedite the issuing of Task Orders against retainer contracts and to eliminate the amendment process between project phases for A&E contracts, would drastically reduce overall project time and lower costs (by reducing escalation amounts).

Estimated Completion Date: December 2017
Response Date: May 2017

California State Auditor's Assessment of 1-Year Status: Pending

Although it indicated in its response that PMDB is putting forward an efficiency goal related to executing architectural and engineering contracts, this does not address our concern. We specifically recommended that the division develop meaningful goals and objectives, including a method of measuring success, focused on ensuring projects are delivered on time and within budgeted cost estimates. The single, limited goal the division directed us to does not address that recommendation. The division will need to develop specific and measurable goals aimed at efficient project delivery in order for us assess this recommendation as fully implemented.

6-Month Agency Response

As part of 2017 DGS Strategic Plan, RESD and FMD will include goals that are focused on increased efficiency in their operations. The strategic planning process includes a monitoring and reporting process to track the entities success in achieving its goals. The 2017 planning process is in its early stages but it is expected that the new goals will be developed by December 31, 2016.

Estimated Completion Date: December 2016
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

Recently, DGS developed its 2016 Strategic Plan that includes a theme addressing efficiency, which is defined as doing what we do better, faster and cheaper. The plan includes a goal for RESD to implement a pilot construction management project with its soft costs reduced to 20 percent of overall construction costs. Soft costs represent those costs incurred in designing, inspecting and managing a capital outlay project.

By September 30, 2016, RESD and FMD will also develop additional efficiency goals that are focused on ensuring that projects are delivered on time and within budgeted cost estimates. A monitoring and reporting process will also be implemented to track the entities success in achieving the goals.

Estimated Completion Date: September 2016
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #12 To: General Services, Department of

To ensure that its project management staff are adequately trained and have the information necessary to deliver projects as efficiently and effectively as possible, the division should conduct a comprehensive survey every other year of all of its client agencies to inform necessary improvements to its processes and training program and, in the interest of transparency, make the survey results public.

Annual Follow-Up Agency Response From October 2018

As previously reported, the Project Management and Development Branch (PMDB) established a bi-monthly workgroup of Branch Chief level or higher representatives from its major clients (CHP, DMV, OES, DDS, DSH, and CalFire).

At the inaugural meeting, PMDB proposed either a structured, electronic client survey or an annual focus group approach to capturing client feedback. When discussed, the clients unanimously requested that PMDB avoid surveys and focus groups given the complexity and inherent duration of construction projects (multiple years, broken up into phases that involve different teams of DGS staff, etc.). The clients requested that the existing monthly meetings and this bi-monthly workgroup be the forum where client feedback is captured and trends/issues are collaboratively solutioned.

Given that this workgroup is established and project trends/issues will be discussed at each meeting, PMDB considers this recommendation fully implemented.

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Although the division's decision to establish bi-monthly work groups of only its major clients may be helpful, this approach does not implement our recommendation that it survey all of its client agencies to inform necessary improvements to its processes and training program. Further, without a survey of all of its client agencies, the division will not implement the portion of our recommendation that, in the interest of transparency, it make the survey results public.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From November 2017

The Project Management and Development Branch (PMDB) established a bi-monthly workgroup of Branch Chief level or higher representatives from its major clients (CHP, DMV, OES, DDS, DSH, and CalFire) with a fourfold purpose: 1) proactively vet policy/procedure changes to get client feedback prior to implementation, 2) provide a venue where client feedback on projects and PMDB staff can confidentially be discussed, 3) discuss best practices and lessons learned, and 4) proactively discuss future workload and what counsel/advice PMDB could provide clients in their planning.

In the inaugural meeting, PMDB proposed either a structured, electronic client survey or an annual focus group approach to capturing client feedback. When discussed, the clients unanimously requested that PMDB avoid surveys and focus groups given the complexity and inherent duration of construction projects (multiple years, broken up into phases that involve different teams of DGS staff, etc). The clients requested that the existing monthly meetings and this bi-monthly workgroup be the forum where client feedback is captured and trends/issues collaboratively solutioned.

Given that this workgroup is established and project trends/issues will be discussed at each meeting, PMDB considers this recommendation fully implemented.

Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

Auditee did not substantiate its claim of full implementation

1-Year Agency Response

In consultation with subject matter experts located in DGS' Office of Strategic Planning, Policy & Research, RESD is actively developing and implementing a comprehensive client survey process. Currently, an implementation plan is being developed for the survey (proposed recipients, distribution method and frequency, and report out standards). The results of the survey will be published on DGS' website and applied to training program curriculum.

Estimated Completion Date: December 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

Estimated Completion Date: December 2017
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

In consultation with subject matter experts located in DGS' Office of Strategic Planning, Policy & Research, RESD will develop and implement a comprehensive client survey process which will routinely survey clients of each of its construction management projects. The planning for this process is in its early stages. The results of the survey will be published on DGS' website and applied to training program curriculum.

Estimated Completion Date: December 2017
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #13 To: General Services, Department of

To ensure that its project management staff are adequately trained and have the information necessary to deliver projects as efficiently and effectively as possible, the division should develop and implement by December 2016 a periodic training program for staff within its project management and building management branches. This training program should include updated information that reflects any processes it revises based on its review of critical project status data and its progress toward meeting its goals.

Annual Follow-Up Agency Response From October 2018

A Capital Outlay Project Manager (COPM) has been specifically assigned to develop and implement a training program. As of July 2018, a training plan was developed and mandatory internal training has begun.

The training program requires all technical staff to attend bi-monthly training on various topics. Core training classes this fiscal year are on topics related to Branch policies, procedures, and operations.

Further, as of July 2018, the Facilities Management Division (FMD) developed and implemented an annual training program for staff within its building management branches. This training program includes a skills assessment, engineer training, and a certification program in accordance with current industry standards.

Completion Date: July 2018

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

The division provided evidence of its new training program, the schedule for when it has--or plans to deliver--the training, as well as a description of the topics that are covered in the training program. Thus, we consider this recommendation fully implemented.

Annual Follow-Up Agency Response From November 2017

The Project Management and Development Branch's (PMDB) immediate focus has been to orient and provide on the job training for new staff. Completion date is anticipated by July 2018.

PMDB has taken the following steps to ensure relevant project training is occurring throughout the branch: (1) Implemented quarterly all-staff meetings to ensure consistent communication of new policies, procedures, and initiatives; (2) Instituted Lunch-and-Learn meetings where vendors/consultants are brought in to present on relevant product requirements; (3) Established Project Management Forums, which meet every other week; (4) Purchased DBIA training credits for staff working on Design-Build projects; and, (5) Worked with Western Council of Construction Consumers, and identified construction management classes at UC Davis and are currently prioritizing attendance based upon need.

FMD's project management/construction management firm is assessing training needs and developing training plans to ensure uniform standards of operation for FMD's engineering, custodial, and building management responsibilities. The training plan will ensure that staff is prepared to fully utilize the computerized maintenance management system (Maximo) and the new project management system. FMD's new Training and Compliance Manager will work closely with the contractor to develop/manage our training program and ensure that our policies, procedures, and practices are being followed.

FMD is now utilizing a training system (Learning Management System) to track and provide training for its employees and is also using an online training library (Click Safety) to provide timely training. Due to specialized training for engineers and electricians, FMD is currently seeking training opportunities for those classifications. Further, FMD is working with the Department of Labor, CalHR and the Governor's Office to craft a comprehensive apprenticeship/training program for custodians, engineers and electricians.

Estimated Completion Date: July 2018

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

In August 2016, DGS hired a Project Director III (Retired Annuitant) to update existing training materials and develop new modules to create a comprehensive training program for project directors within RESD. In the immediate term, DGS is focusing on modules related to contracting and communication (ex: project status and financials). It is anticipated that the updated training program will be completed by December 2017.

As discussed under Recommendation Six, FMD engaged a project management/construction management firm that is assessing training needs and developing training plans to ensure uniform standards of operation for FMD's engineering, custodial, and building management responsibilities. The training plan will also ensure that FMD staff is prepared to fully utilize the expanded computerized maintenance management system (Maximo) and the new project management system. Additionally, FMD hired a new Training and Compliance Manager to work closely with the contractor to develop and manage our training program and ensure that our policies, procedures, and practices are being followed.

Estimated Completion Date: December 2017
Response Date: March 2017

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

In August, DGS hired a Project Director III (Retired Annuitant) to update existing training materials and develop new modules to create a comprehensive training program for project directors within RESD. In the immediate term, DGS is focusing on modules related to contracting and communication (ex: project status and financials). It is anticipated that the updated training program will be completed by August 2017.

As discussed under Recommendation # 6, FMD has entered into a long-term contract with a project management/construction management firm. In brief, the contractor will provide professional architectural, engineering and program management services as needed to assist FMD in successfully upgrading its statewide standards, systems and processes for the repair and maintenance of state-owned buildings. The contract provides for the development of training plans to ensure that FMD staff knows how to utilize the new or expanded technology tools being developed to ensure effective project management. The training program should be in place by next summer.

Estimated Completion Date: August 2017
Response Date: September 2016

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

By December 2016, DGS will develop and implement a training program for project management and building management staff. The training will address subject matters that assist in ensuring that staff is trained in a timely manner on the knowledge, skills and abilities needed to deliver projects as efficiently and effectively as possible.

Estimated Completion Date: December 2016
Response Date: May 2016

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2015-117

Agency responses received are posted verbatim.