Sunday, March 6, 2011

Beware of Change Orders Outside Project Scope

The Washington State Auditor's Office issued findings against the City of Bremerton (WA) for the following issues during a $2.35 million construction project at Memorial Plaza:
  • Change Orders Outside of Project Scope: The City approved 19 change orders (totaling $584,970) that the Auditor found to be outside the scope of the original project, and so should have been bid separately. The bulk of the costs of the change orders were related to adding a restroom, which City employees did not realize was outside the project's original scope. Employees "also believed they could achieve cost savings by using the same vendor who was already working on the Memorial Plaza project."
  • Sole-Source Purchase: The City's Project Manager incorrectly declared a $135,000 barrier wall a sole-source purchase without City Council approval, which the City code requires for contracts over $25,000.
Practical Tips:
  • Understand Scope: Make sure that staff who are managing a project fully understand its scope.
  • Review Change Orders: Have procedures in place to carefully review all change orders, including checks and balances to be sure they fall within the scope of the original project.
  • Policy Training: Review employee training to ensure staff are fully informed about the laws and policies that govern their decision-making.
Audit Finding: Click here to read the three page audit finding (the second finding in the linked document, beginning on the third page)
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

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