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Performance Audit of Capital Budget Processes. Proposed Final Report February 8, 2005 Joint Legislative Audit and Review Committee Karen Barrett & Isabel Mu ñ oz-Col ó n. Small State Facility Projects $2 billion 17% of total. Major State Facility Projects $4 billion 30% of total.

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performance audit of capital budget processes

Performance Audit of Capital Budget Processes

Proposed Final Report

February 8, 2005

Joint Legislative Audit and Review Committee

Karen Barrett & Isabel Muñoz-Colón

audit background

Small State Facility Projects

$2 billion

17% of total

Major State Facility Projects

$4 billion

30% of total

Audit Background

$12 Billion in Capital Spending Between 1995 and 2004

Other Capital Budget Programs

$6 billion

53% of total

(primarily grants and loans to support local government projects)

assess strength of state s capital budget processes
Assess Strength of State’s Capital Budget Processes

Study Conclusions in Brief:

OFM is not well positioned for front- end project review. Improvement depends on greater clarity about the Capital Division’s role, priorities and resources.

oversight activities at ofm
Oversight Activities at OFM

Assessment:OFM spends time further on the cost continuum with agencies at points where the greatest opportunity to influencemajor projects has passed.

Why? It is a result of OFM’s workloadcompared to the Capital Division’s resources(2-3 analysts).

The biggest driving factors are:

  • Allotments (agency spending plans)
  • Information Systems.
workload vs resources allotments
Workload vs. Resources: Allotments

OFM’s activities are heavily weighted toward managing construction allotments; also challenged to execute requisite work efficiently.

Contributing Factors:

  • Lack of benchmarks, procedures, and historical performance information;
  • Review time is increasing; and
  • Reliance on allotments to learn about major projects.
workload vs resources information systems
Workload vs. Resources: Information Systems

Weak management information systems make project analysis more time consuming and do not support investment oversight well.

Contributing Factors:

  • Data does not readily support evaluation of agency proposed budgets and performance.
  • Key benchmark data, costs, and space standards are not kept current.
  • OFM lacks internal procedures to guide new analysts through advancing projects.

See Appendix 8, pg. 71

jlarc tools to manage workload
JLARC Tools to Manage Workload

Portfolio of Major Projects (200+)

  • Gives analysts a way to manage projects through a multi-year capital process.

Project Performance Indicators & Benchmarks

  • Gives analysts a way to focus their work and know when projects are ready to proceed.

OFM could refine these tools to monitor performance and identify problem areas on a statewide basis.

See Figure 6 & 7 on pgs. 24-25

jlarc recommendation
JLARC Recommendation:

OFM should develop a plan in consultation with fiscal committees and agency capital officers to address weaknesses in oversight outlined in this report.

The plan should address the following issues:

  • Aligning resources to program workload;
  • Identifying and institutionalizing procedures and best practices;
  • Creating easily accessible, reliable information systems;
  • Developing statewide performance measures for capital projects; and
  • Evaluating projects earlier in the planning phases.
agency response
Agency Response:

The Office of Financial Management Concurs

  • Next Steps?
    • April 2005 – Progress on improvement plans developed with legislative fiscal committees.
    • January 2006 – Present and discuss finished plan