Council adopts enhanced oversight for County’s high-risk capital projects

March 1, 2010

Summary

Increased accountability to ensure projects are completed on time and within budget

Story

Increased ability to identify high-risk capital projects, greater scrutiny of major construction projects, and enhanced accountability of government spending are all elements of legislation unanimously adopted today by the Metropolitan King County Council.

“In this time of diminished resources for state and local governments, we must heighten our oversight of high-risk capital projects,” said Council Chair Bob Ferguson, prime sponsor of the legislation. “This legislation will protect taxpayer dollars and ensure greater scrutiny of these important projects.”

“It's clear that King County can do a better job of planning and constructing our capital projects. Enhanced Council oversight of those projects will help make sure that there is accountability,” said Councilmember Reagan Dunn. “We will no longer give a blank check to project managers in big, high-risk projects. This legislation provides for check-in points where the Council can say no if the project isn't working out.”

“This legislation will allow us to apply the lessons we’ve learned from past high-risk capital projects to protect taxpayer funds,” said Larry Phillips. “With this increased oversight, the public can be assured we are watching out for their best interests.”

The legislation addresses concerns about oversight of capital projects raised by the Washington State Auditor in a report released last summer. The State Auditor’s report highlighted that the County had room to improve its safeguards over construction management and management of cash and assets.

In response, the Council approved a motion directing that legislation be considered to address the auditor’s concerns. Today’s ordinance is the outcome of that directive, and the result of a collaborative effort involving both Executive Dow Constantine and the Council.

“Accountability and oversight are the key ingredients to ensuring a project is finished on time and on budget,” said Council Vice Chair Jane Hague. “The legislation we passed today means King County will start doing a better job in both of those areas.”

“The public wants and needs transparency to assure their tax dollars are being spent as efficiently as possible,” said Councilmember Kathy Lambert, vice chair of the Council’s Budget and Fiscal Management Committee. “Complex projects demand many interim decisions and adjustments that the Council should be making in the context of budgeting and providing the best service to the citizens.”

The legislation categorizes capital projects that are determined to be at greater risk of going over schedule or over budget as high-risk. For example, high-risk projects may include those that have a total cost of over $10 million and are determined to be high-risk by a joint Council-Executive advisory group. The legislation accomplishes greater oversight of these high-risk projects through various means, including the following:

• Funding requirements will be tied to three project phases, including (1) preliminary design, (2) design, and (3) construction. In the past, capital projects have received an initial appropriation that could cover the entire project.
• An independent tool created by the County Auditor will be used to help assess which projects should be high-risk, and independent risk assessments are required of those projects.
• Added requirements will better allow the County to evaluate whether the projects are on target with tasks and spending.

Additionally, the legislation standardizes information submitted with all capital project appropriation requests to hold the projects accountable to their planned scopes, schedules, and budgets.

“These provisions for high-risk projects are one element of a fundamental reshaping of the way King County manages capital projects – part of the culture change we are creating at the County,” said Executive Dow Constantine. “Our managers must set a baseline before moving into detailed design and construction, they must report performance against that baseline and share the news across all branches of government, and they must use this information to inform prompt corrective action. I look forward to working with the Council as we make delivery of capital projects more transparent and accountable to the taxpayers and ratepayers.”

“This ordinance will give the Council an important tool to work with project managers and the Executive’s office to ensure that high risk capital projects are managed in the most efficient manner,” said Councilmember Larry Gossett.

The legislation also directs the King County Auditor’s Office to conduct a two-year review of the new requirements, to ensure that the legislation is achieving the desired objective.

Many of the strategies for improved oversight incorporated into the ordinance come from a PMA Consultants report on capital projects oversight that was commissioned by the Council in 2007.