Report 2015-117 Recommendation 11 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 #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.

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.

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.

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).

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.

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.

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

All Recommendations in 2015-117

Agency responses received are posted verbatim.