City of Windsor Executive Summary, January 2009 Page 1 THE CORPORATION OF THE CITY OF WINDSORPOST CONSTRUCTION AUDIT REPORTON

THE 400 CITY HALL SQUARE EAST BUILDINGPART I OF IIManagement Of The 400 CHS Construction ContractJanuary 2009 EXECUTIVE SUMMARYIn 2001, the Corporation of the City of Windsor (the City) began a process to design andconstruct a building (400 City Hall Square). The purpose of the building was to consolidate theincome security programs of the City of Windsor, the Province of Ontario and the FederalGovernment in one location. The building was substantially completed by 2005, and tenants(although not necessarily all the originally intended tenants) began moving into the building.In 2006, the City Auditors Office undertook a post-construction audit of the processesapproving the project and managing the construction of the building. A postconstruction auditis a standard procedure upon the completion of a major project such as this and is also anindustry Best Practice.A post-construction audit is an independent and objective assessment designed to add value andimprove an organizations project management process. It is a gathering of pertinent facts andevidence in accordance with internationally recognized standards that, when reviewed withintegrity, objectivity and competence, provides a history of what has taken place. Comparingthat history with the applicable Policies and Procedures of the municipality and with industrybest practices provides a basis for recognizing processes that were performed well and forrecognizing areas where improvements are recommended. A post-construction audit is not aPublic Inquiry under the Public Inquiries Act.The post-construction audit of the 400 City Hall Square East building involved extensivediscussions with various members of City Staff and Management responsible for the project,interviews with consultants, the gathering and examination of numerous City documents (fromCouncil reports to Committee meeting minutes to e-mails and memos) as well as reviewing indetail the Citys financial records.In April of 2007, the City Auditors Office completed a draft document representing a summaryof audit work to that date. That work was subject to a significant scope limitation, namely,limited availability to certain records, personnel, and physical properties relevant to theperformance of the necessary audit procedures.In 2008, Administration further assisted the Audit department by providing increased access torecords, personnel, and physical properties to enable Audit to close the information gap createdby the scope limitation. The impact of the new information received has been significant,requiring substantial new audit work to bring the report to completion. In order to accelerate thecompletion of the audit, the Auditor decided to separate the report into two documents, Part I andPart II.Part I will discuss whether the project was delivered on time (as amended), within budget (asamended) and whether the City received what it bargained for. Part II will compare the projectapproval process with the Citys Purchasing By-Law, the Municipal Act and the Common Law,governing the award of the contracts for the building design/construction and for the building fit-ups. 1 1 Fit-ups are defined as building finishes that prepare the building for initial occupancy, including the alteration of space for use in Tenant & common areas. Fit-ups for this project were diverse, ranging from floor & wall coveringsto office furniture and included the fit-up of office space to meet the requirements of different departments, externalagencies and other customers.

City of Windsor Executive Summary, January 2009 Page 2 Summary of Project Staffing, Project Management Methodology & Best Practice: The timing of this project coincided with a period of significant organizational instability withinthe City. In February 2003, the City initiated a corporate wide reorganization, which would havehad a significant impact on maintaining project resources given the deficiency of documentedsupport outlining the roles, responsibilities and resources dedicated to the project. In consideringthe issues of who is accountable for what, it must be noted that between the inception of thisproject and its completion, there had been 3 different Chief Administrative Officers at the City, 3different Heads of Corporate Services, 3 different City Treasurers and 4 different Heads of thePublic Works department. Apart from changes in key personnel, organizationally, responsibilityfor the project shifted from Corporate Services to Public Works, and there were a number of changes in personnel assigned to roles within the Project Management Team, including the roleof project manager. This resulted in gaps in continuity in the project management and in blurredlines of management accountability.Also during this project, a total of 5 City Councillors served, at different times, on a steeringcommittee that provided direction to the project. Three Councillors were part of the Citysselection of the design-build contractor. Two of those Councillors were replaced following ageneral municipal election in November 2003.Using project management best practices as our standard, we have evaluated the activities in thefollowing project life cycles and have reported on those results. Phase I Phase II Phase III Phase IV a) Scope andMethodologyb) ComprehensivePlanning c) Execution/Control d) Project ClosingDefined financial &technical criteria(Business Plan):- Project purpose,Strategic fit,- Objectives,- Identified projectrisks,- Project schedule,- Project budget.Council and Executivecommitment to theproject demonstrated by:- An understanding of the project.Approval of theproject.A final plan whichidentifies:- Project teammembers,Project objectivesand deliverables,- Baseline projectschedule,- Issues register andplan,Projectcommunication plan.Following the projectplan, projectdocumentation signifiesthe monitoring andcontrol of:- Key projectdeliverables,- Management of project Quality,Time, Cost, Risk - Issue resolution,- Change control,- Reporting and,- Communication.Project postmortemconducted:- Collection of issuesthat caused delays,impacted scope, etc.to evaluate &improve process forfuture projects.- Assessmentperformed on projectsuccess at keyintervals to measurehow well the projectmet expectations. It is important to note that the project was undertaken as a design build project and that this wasthe first of its kind for the City. This lack of recent previous experience with similar projectsmay explain why we found that an appropriate and adequate project management system was notput in place to control, track, measure and record progress in relation to project milestones,timelines or critical functions. Such a system would have helped to offset the gap in thecontinuity of key personnel and would have provided a useful tool for accountability purposes.Although the City did retain an outside consultant as an advisor on the project, the

consultantsrole was limited in scope and was certainly not that of project manager. Because it did notinstitute a project management system appropriate to, and adequate for a project of thiscomplexity and magnitude the City did not employ best practices in managing the project.

City of Windsor Executive Summary, January 2009 Page 3 Summary of the Project Financial Findings of the Review: The audit review measured the financial successes of the 400 CHS project in two ways, (A)Project Management Financial Performance How well the project team met its mandate todeliver the project within the total (revised) project budget and, (B) Project Financial PlanningPerformance The adequacy of the original budget: Scope and Planning. Summary of the Evaluation of Construction Work Deliverables: While it is important that the project be completed within or close to budget, it is alsoimportant to know what the project is, with sufficient particularity to be able to determinewhether the City received all of what it paid for.In assessing the adequacy of project planning and implementation, we examined whetheradequately specific and measurable deliverables of the projects construction had been set out inthe contracting documents. We found a detailed project agreement, but the deliverables in theagreement were at a very basic descriptive level, with no stand-alone and clear definition of theconstruction requirements of the owner (City). The requirements of the owner were merelyincorporated by reference to the language of five separate document sources: the two stages of the RFP, the proposals submitted, written submissions and four (4) document packages of answers to questions. These documents are not, in themselves, clear or consistent as to what,specifically and finally, the City

had required the contractor to construct, leaving a lot of roomfor the exercise of discretion on the part of the contractor as to what to build and how to build it.This lack of specificity makes it difficult to determine whether the City received what itbargained for when what it bargained for is not specified in the written construction agreement,and when that written agreement states that it is the entire agreement between the parties.The Citys Legal division advised Administration, providing specific and strong examples assupport, that the present circumstances leave the City in an ambiguous legal position. Theresults of the audit suggest that Administration moved forward with the project despite thatadvice, and without ever resolving the contractual terms that created that ambiguity.Audit found it difficult, and in some cases we were unable to identify, specific and measurableproject deliverables which to evaluate in the audit. It was difficult to determine what the Cityhad negotiated for, given the ambiguously stated requirements within the various documents.For example, the RFP included words such as, a need for, it is preferred, suggests,provide up to. Incorporating such language into the written agreement did nothing to improveits specificity.Ultimately, we based our determination of the project deliverables on what we could ascertainfrom those five sources of documents and the management representations made to Council byAdministration in the Council report documentation. Where noted, our evaluation of construction work deliverables are not based on what the City negotiated for, but on the valuesreported to Council in Council Report 8652 September 2002. The Root Cause of Project Issues and Successes:http://htmlimg2.scribdassets.com/7sx4r1269s8son8/images/8-8f643238a1.png The lack of best practices employed in managing the project, inadequate project staffing andissues of planning, budgeting & contracting, led to an environment of reactive projectmanagement. In order to complete the project and address project risk and issues, additionalfunding beyond the original Council approval was required.Within the reactive project management environment, the project team identified additionalbudget needs and sought funding approvals to carry the project through to completion. As aresult, the project was completed largely on time and within a reasonable variation from the totalapproved budget.