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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 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

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  1. Performance Audit of Capital Budget Processes Proposed Final Report February 8, 2005 Joint Legislative Audit and Review Committee Karen Barrett & Isabel Muñoz-Colón

  2. 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)

  3. 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.

  4. 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.

  5. 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.

  6. 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

  7. 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

  8. 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.

  9. 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

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