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Boston — State Auditor Suzanne Bump today announced a performance audit of the Division of Capital Asset Management and Maintenance (DCAMM), which calls for greater accountability in determining who is liable for costs that push major public construction projections over budget.
Since 2004, DCAMM, the state agency responsible for major public construction and real estate services for the Commonwealth, has been utilizing new contracting agreements known as Construction Manager at Risk (CMAR). Under CMAR agreements the state outsources management of construction earlier, during the design phase of the project’s lifespan. This advanced arrangement allows the state and construction managers to more accurately estimate the cost of construction and set a “Guaranteed Maximum Price.” In theory, changes in the construction plan (“change orders”) initiated by construction managers that push costs beyond the maximum price are more likely to become the responsibility of the contract manager or project designer, but the audit finds the state is footing the bill for many CMAR project overruns.
Auditors reviewed six CMAR projects which had more than 1,000 state approved change orders, pushing budgets $19,503,472 beyond their established maximum price. Of 104 change orders tested (totaling $2,361,966), auditors found 71 percent of the changes were requested by the construction manager or designer and not the state.
The audit acknowledged DCAMM has experienced a decrease in cost growth by utilizing the CMAR method, but recommends that more can be done to leverage the agreement to decrease costs for the state.
“I applaud DCAMM for implementing new and creative strategies to lower construction costs for the Commonwealth. They appear to be bearing fruit,” said Auditor Bump. “However, in order to maximize the benefits of the CMAR method there needs to be more clarity in the contract agreements so construction managers can be made accountable to hold up their end of the bargain, and they need to ensure that all contracts are awarded based on a record of performance and qualifications.”
Other findings of the audit include:
Along with past and ongoing audits of critical state systems like MassHealth and the MBTA, today’s report represents Auditor Bump’s continuing effort to promote effective management of public resources.
Auditor Bump has called on DCAMM to more clearly define a construction manager’s responsibilities for CMAR projects, to implement an effective means of interstate communication, and to revise its performance evaluation process.
The Office of the State Auditor conducts technical and performance assessments of state government’s programs, departments, agencies, authorities, contracts, and vendors. With its reports, the OSA issues recommendations to improve accountability, efficiency, and transparency.
Read the audit of the Division of Capital Asset Management and Maintenance here.