PMOC Report problems with budget and schedule contingencies
Summary of problems since May 2013
Some comments from a retired financial economist on the PMOC November 2013 report:
"The budget contingencies remain largely unchanged (based on my memory). But the reason for the lack of change is that SFMTA hasn’t submitted any real budget data to the Feds since the end of May. Hence, the only changes the Feds appear to have made in their estimates of the contingency is based on the variance between the actual size of new contracts let and what had been the pre-contract estimate. As noted in previous PMOC reports, the Feds question the veracity of SFMTA’s budget/cost reporting and accounting system for this project. SFMTA in turn is blaming the software system (purchased from outside vendor) for the problem or at least part of it. In my days [as a financial economist], if I were to see a corporation do this I would raise red flags."
See more at November 2013 Risk Management.
SFMTA didn't release the September or October PMOC reports. Reports obtained from FTA can be found here.
PMOC report May 2013
TOP ISSUES AND RECOMMENDATIONS, page 3/56:
- The final construction contract to build three stations, track, and systems will be awarded with NTP in early June 2013. The lowest bid for Contract 1300 was approximately $120 million over the Engineer’s Estimate. This will reduce the project contingency to only $67 million, significantly below the required level of $160 million.
- The current project schedule reflects 4.7 months of contingency, which is below the minimum agreed to Schedule Contingency level of 10 months.
PMOC report June 2013
TOP ISSUES AND RECOMMENDATIONS, page 3/55:
- The final construction contract to build three stations, track, and systems was awarded in May 2013. The lowest bid for Contract 1300 was approximately $120 million over the Engineer’s Estimate. This reduced the project contingency approximately $120 million, which is well below the recommended level of $160 million. On April 26, 2011, SFMTA obtained a commitment from the San Francisco County Transportation Authority (SFCTA) for $150 million of (State) Regional Improvement Program funds to the project, to be accessed in the event project costs increase above $1.5783 billion.
- The current project schedule reflects 4.7 months of contingency, which is below the minimum agreed to Schedule Contingency level of 10.0 months. SFMTA submitted a “Contingency Management – Schedule 2012 Update” on May 22, 2013. The Project Management Oversight Contractor (PMOC) cannot yet recommend that the Federal Transit Administration (FTA) accept any modification to schedule contingency minimum levels based on the documentation provided. The CSP is working to provide justification for the reduction in schedule contingency.
PMOC report July 2013
TOP ISSUES AND RECOMMENDATIONS page, 3/46:
- The monthly cost report prepared by the CSP was found to have numerous unexplained changes this month. The Project Management Oversight Contractor (PMOC) has notified CSP to make corrections and provide details for cost changes to the following items: Form B credit, Public Art, Utilities, Preliminary Engineering, Final Design, and Project Management.
- It is important that the CSP team highlight and identify changes from the previous cost report. This maintains a project cost narrative throughout the term of the project. The Federal Transit Administration (FTA) requires that project monthly cost reports be produced in the FTA standard cost category (SCC) format to allow comparisons to be made to assigned budget amounts and to show changes to these cost codes as the project develops through to completion. This could not be done with the recent changes made to the cost report.
- The current project schedule reflects 4.8 months of contingency, which is below the minimum agreed to Schedule Contingency level of 8.0 months. SFMTA submitted a “Contingency Management – Schedule 2012 Update” on May 22, 2013. The PMOC cannot yet recommend that FTA accept any modification to schedule contingency minimum levels Mini-Monthly Report July 2013 SFMTA Railway Capital Projects Page ES-iii based on the documentation provided. The CSP is working to provide justification for the reduction in schedule contingency.
- The PMOC cannot compare the latest Master Project Schedule (MPS) to the previous month. There have been numerous revisions to the milestones, buffer float, and critical path for the project without explanation or justification provided by the project. The intent of the MPS is to reflect the summary activities for each of the construction contracts. The PMOC is working with the CSP to address this concern.
PMOC report August 2013
TOP ISSUES AND RECOMMENDATIONS, page 3/29:
- The June summary cost report prepared by the CSP was found to have numerous unexplained changes, and no summary cost report was provided for July. The Project Management Oversight Contractor (PMOC) and the CSP have agreed to revise the format of the cost summary spreadsheet and provide details for cost changes to the following items: Form B credit, Public Art, Utilities, Preliminary Engineering (PE), Final Design (FD), and Project Management.
- It is important that the CSP team highlight and identify changes from the previous cost report. This maintains a project cost narrative throughout the term of the project. The Federal Transit Administration (FTA) requires that project monthly cost reports be produced in the FTA standard cost category (SCC) format to allow comparisons to be made to assigned budget amounts and to show changes to these cost codes as the project develops through to completion. This could not be done with the recent changes made to the cost report.
- At this point in time, it is nearly impossible to compare the latest schedule to the previous months. There have been numerous revisions to the Master Project Schedule (MPS), including additions and deletions to milestones, buffer float activities, and the contract Mini-Monthly Report August 2013 SFMTA Railway Capital Projects Page ES-iii schedules. The intent of the MPS was to reflect the summary activities for each of the construction contracts, and therefore, reflect an overall critical path for the project.
- The current project schedule reflects 4.8 months of contingency, which is below the minimum agreed to Schedule Contingency level of 8.0 months. SFMTA submitted a “Contingency Management – Schedule 2012 Update” on May 22, 2013. The PMOC cannot yet recommend that FTA accept any modification to schedule contingency minimum levels based on the documentation provided. The CSP is working to provide justification for the reduction in schedule contingency.
PMOC report September 2013 — Not released by SFMTA
As of January 23, 2014.
September 2013 Comprehensive Report obtained from FTA, Jan 30, 2014.
PMOC report October 2013 — Not released by SFMTA
As of January 23, 2014.
October 2013 Mini-Monthly Report obtained from FTA, Jan 30, 2014.
PMOC November 2013 report
TOP ISSUES AND RECOMMENDATIONS, page 3/29:
- The recent monthly cost reports prepared by the CSP were found to have numerous unexplained changes. SFMTA is having problems with the reporting coming out of the EcoSys Enterprise Planning and Controls (EPC) database, which is affecting the cost reporting for the CSP. The Project Management Oversight Contractor (PMOC) has notified CSP to make corrections and provide details for cost changes. As of December 5, the PMOC had not received the Cost Reporting Summary sheet.
- It is important that the CSP team highlight and identify changes from the previous cost report. This maintains a project cost narrative throughout the term of the project. The Federal Transit Administration (FTA) requires that project monthly cost reports be produced in the FTA standard cost category (SCC) format to allow comparisons to be made to assigned budget amounts and to show changes to these cost codes as the project develops through to Mini-Monthly Report November 2013 SFMTA Railway Capital Projects Page ES-iii completion. This could not be done with the recent changes made to the cost report and the previously stated issues with the EcoSys EPC database.
- In October 2013, the CSP submitted the Draft Contingency Management – Schedule Update, which proposed changes to the schedule contingency minimum levels based on a recent risk assessment performed by the Central Subway team. The team used risk-based software, which employs the Monte Carlo method, to perform a probability analysis on the Project’s Summary Schedule. At this time, the PMOC cannot recommend that FTA accept any modification to schedule contingency minimum levels. The PMOC recommends that the CSP incorporate the Contract 1300 Baseline Schedule as soon as it is approved. At that time, the PMOC recommends that the CSP incorporate the remaining high level schedule risks on the Project Risk Register into a new risk assessment.
- The current project schedule reflects 4.8 months of contingency, which is below the minimum agreed to schedule contingency level of 8.0 months.