AUDIT OF GENERAL SERVICES

CONSTRUCTION OF THE

EAST LAKE LIBRARY

Karleen F. De Blaker

Clerk of the Circuit Court

Ex officio County Auditor

Robert W. Melton, CPA, CIA, CFE

Chief Deputy Director

Prepared by: Supervised by:

Bart H. Siegel, CPA, CFE, CFP, CGFM Ronald M. Peters, CIA, CISA

Internal Auditor Senior Internal Auditor

NOVEMBER 9, 2000

REPORT NO. 2000-13

AUDIT OF GENERAL SERVICES

CONSTRUCTION OF THE

EAST LAKE LIBRARY

TABLE OF CONTENTS

PAGE

EXECUTIVE SUMMARY 1

INTRODUCTION 2

OPPORTUNITIES FOR IMPROVEMENT 3

APPENDIX 13

EXECUTIVE SUMMARY

Scope and Methodology

The purpose of this audit was to: 1) determine if the terms of the Bandes Construction Management Agreement for the East Lake Library were complied with, 2) evaluate the effectiveness of Bandes and General Services contract oversight process, and 3) determine compliance with any applicable laws.

The scope of this audit included a review of the contract and related documents to include bonds, insurance coverage, and other deliverables that were required by the contract. We tested to determine if contractor payments and reimbursements were in compliance with the terms of the agreement and whether supporting documentation was adequate. Project oversight activities were analyzed, and any applicable laws were tested for compliance. The audit period was from May 19, 1998, through December 31, 1999. We performed such other audit procedures as we considered necessary in the circumstances.

Overall Conclusion

We have concluded that the Pinellas County Department of General Services (GS) oversight of the construction of the East Lake Community Library was adequate. The Construction Manager (CM) was in general compliance with the Contract requirements, and no violations of law were found. However, our audit disclosed opportunities for improvement. Those opportunities are presented in this report.

Background

GS administered the "Agreement for Construction Management Services" with Bandes Construction Company, Inc. for the construction of the East Lake Library. The Construction Management Services contract addresses both the "Design Phase" and the "Construction Phase" of the project. In the Design Phase, the CM was to provide value engineering services, review construction documents, assist and meet with the Design Professional (DP) and Program Consultant during the various design phases, prepare cost estimates and assist the DP in obtaining various permits. In the Construction Phase, the CM was to provide all management supervision, financing, labor, materials, tools, fuel, supplies, utilities, equipment and services of every kind and type necessary to diligently, timely and fully perform and complete the work in a good and workmanlike manner. The DP, CM, and GS, together, performed a value engineering and construction analysis and determined a Guaranteed Maximum Price for construction services of a not-to-exceed amount of $466,622. The fixed management fee was $57,500.

Our audit disclosed certain policies, procedures, and practices that could be improved. Our audit was neither designed nor intended to be a detailed study of every relevant system, procedure or transaction. Accordingly, the opportunities for improvement presented in this report may not be all-inclusive of areas where improvement may be needed.

1. Changes That Affect Reliability Were Made to Previously Approved Documents Present in the Applications for Payment Package.

B. For two Applications for Payment, the "Architect's Certificate For Payment", "Amount Certified" was substantially less than the payment authorized by GS. The discrepancy was caused by changes made to the CM's SOV. Having the DP certify the payment amount is a key internal control for the confirmation that the construction work was completed as stated by the CM. If this independent certification is not present, the risk of inappropriate payments is increased.

2. GS's Application for Payment Review and Approval Process Needs Improvement.