Traffic Engineering Services Performance Audit

Transcription

1 Traffic Engineering Services Performance Audit April 2014 Office of the Auditor Audit Services Division City and County of Denver Dennis J. Gallagher Auditor

2 The Auditor of the City and County of Denver is independently elected by the citizens of Denver. He is responsible for examining and evaluating the operations of City agencies for the purpose of ensuring the proper and efficient use of City resources and providing other audit services and information to City Council, the Mayor and the public to improve all aspects of Denver s government. He also chairs the City s Audit Committee. The Audit Committee is chaired by the Auditor and consists of seven members. The Audit Committee assists the Auditor in his oversight responsibilities of the integrity of the City s finances and operations, including the integrity of the City s financial statements. The Audit Committee is structured in a manner that ensures the independent oversight of City operations, thereby enhancing citizen confidence and avoiding any appearance of a conflict of interest. Audit Committee Dennis Gallagher, Chair Maurice Goodgaine Leslie Mitchell Rudolfo Payan Robert Bishop Jeffrey Hart Timothy O Brien, Vice-Chair Audit Staff John Carlson, Deputy Director, JD, MBA, CIA, CRMA, CGAP Chris Wedor, Internal Audit Supervisor, MBA Katja Freeman, Lead Internal Auditor, MA, MELP Manijeh Taherynia, Senior Internal Auditor, CPA, CFE, CRMA Torry J van Slyke, Senior Internal Auditor You can obtain copies of this report by contacting us at: Office of the Auditor 201 West Colfax Avenue, Department 705 Denver CO, (720) Fax (720) Or download and view an electronic copy by visiting our website at:

3 City and County of Denver 201 West Colfax Avenue, Department 705 Denver, Colorado FAX Dennis J. Gallagher Auditor April 17, 2014 Crissy Fanganello, Director of Transportation Public Works City and County of Denver Dear Ms. Fanganello: Attached is our audit of the Traffic Engineering Services (TES) working group. The purpose of our audit was to analyze how goals and objectives from regional and local strategic plans are translated to the project level within TES. Further, the audit team assessed TES internal controls. This included a review of TES process to address citizen requests, and a review of the controls around signal repair work and TES inventory. The audit team also sought to determine if TES tracks its project and budget performance efficiently. TES is responsible for the life blood of the City; that is, controlling the various arteries that flow throughout our vibrant community. These connections can enhance or derail our daily life and require constant care and attention. While I understand Ms. Fanganello is new to the role of leading Traffic Engineering Services, it is my sincere hope that the issues highlighted in the audit report will be used as a roadmap to assist in making any necessary changes to the department. The goal is to ensure transparency and enhance TES operations. If you have any questions, please call Kip Memmott, Director of Audit Services, at Sincerely, Dennis J. Gallagher Auditor DJG/cw cc: Honorable Michael Hancock, Mayor Honorable Members of City Council Members of Audit Committee Ms. Cary Kennedy, Deputy Mayor, Chief Financial Officer Ms. Janice Sinden, Chief of Staff Ms. Beth Machann, Controller Mr. Scott Martinez, City Attorney Ms. Janna Young, City Council Executive Staff Director Mr. L. Michael Henry, Staff Director, Board of Ethics To promote open, accountable, efficient and effective government by performing impartial reviews and other audit services that provide objective and useful information to improve decision making by management and the people. We will monitor and report on recommendations and progress towards their implementation.

4 City and County of Denver Dennis J. Gallagher Auditor 201 West Colfax Avenue, Department 705 Denver, Colorado FAX AUDITOR S REPORT We have completed an audit of Traffic Engineering Services. The purpose of the audit was to analyze how goals and objectives from regional and local strategic plans are translated to the project level within Traffic Engineering Services. Further, my team assessed TES internal controls. This included a review of TES process to address citizen requests, and a review of the controls around signal repair work and TES inventory. We also sought to determine if TES tracks its project and budget performance efficiently. This performance audit is authorized pursuant to the City and County of Denver Charter, Article V, Part 2, Section 1, General Powers and Duties of Auditor, and was conducted in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The audit highlights several areas in Traffic Engineering Services that require immediate attention. Specifically, the lack of departmental formal business processes and procedures that establish and provide consistency through Traffic Engineering Services practices and processes appears to be common thread of the concerns raised through this audit. We extend our appreciation to Crissy Fanganello and the personnel who assisted and cooperated with us during the audit. Audit Services Division Kip Memmott, MA, CGAP, CRMA Director of Audit Services

5 City and County of Denver Office of the Auditor Audit Services Division REPORT HIGHLIGHTS Traffic Engineering Services Performance Audit April 2014 The audit reviewed how Traffic Engineering Services plans and prioritizes its projects. Moreover, we looked at TES internal controls and how budget and project performance is tracked. Background Traffic Engineering Services (TES) is responsible for the City traffic control systems, off-street parking assets and the City's multimodal transportation system in conjunction with other local, regional, and state agencies. Part of TES duty is to design Traffic Control Devices, comprising approximately 1,270 signal intersections and 600,000 traffic control signs. It is further responsible for all traffic signs for about 1,700 miles of roadway. TES Transportation Management Center performs traffic monitoring every day of the week to provide quick responses when traffic conditions change. Purpose The team analyzed how goals and objectives from regional and local strategic plans are translated to the project level within Traffic Engineering Services. Further, we assessed TES internal controls. This included a review of TES process to address citizen requests, and a review of the controls around signal repair work and TES inventory. We also sought to determine if TES tracks its project and budget performance efficiently. Highlights Finding 1 We determined that Traffic Engineering Services (TES) could benefit from improved strategic planning and a more formal system of internal controls. With regard to strategic planning, TES could improve the way in which its projects are prioritized by directly connecting work plans with higher level strategic plans. Although TES personnel reported that they continually work to incorporate provisions of strategic transportation plans, they could not provide supporting documentation of key business processes or criteria used to show how TES projects and operations connect to the strategies, goals, and objectives of these plans. Additionally, TES could develop a more formal internal control structure to ensure consistency of work, timeliness of repairs, and proper stewardship over assets. Finding 2 We determined that TES can improve the efficiency with which it tracks budget and project performance. TES has created spreadsheets, outside of the City's PeopleSoft system, to track project expenditures by individual projects. As a result, budget reports from PeopleSoft show budget activities under the main program s project ID, one of which has been in use since Using spreadsheets to track project budgets, instead of PeopleSoft, reduces the transparency of TES capital maintenance and improvement project activities. For a complete copy of this report, visit Or Contact the Auditor s Office at

6 TABLE OF CONTENTS INTRODUCTION & BACKGROUND 1 SCOPE 6 OBJECTIVE 6 METHODOLOGY 6 FINDING 1 8 Traffic Engineering Services Does Not Have Effective Strategic Planning or an Adequate System of Internal Controls 8 RECOMMENDATIONS 20 FINDING 2 21 Traffic Engineering Services Can Improve Efficiency of Tracking Budget and Project Performance 21 RECOMMENDATIONS 24 APPENDIX A 25 Example of Program Budget Allocation to Project in PeopleSoft 25 AGENCY RESPONSE 26

7 INTRODUCTION & BACKGROUND Traffic Engineering Services Traffic Engineering Services (TES) designs, installs, operates, and maintains the City and County of Denver s traffic control systems and off-street parking assets. TES endeavors to manage and improve the City s complex and dynamic traffic control infrastructure in order to ensure safe and efficient movement of people and goods on the City s rights of way. According to the City and County of Denver Mayor s 2013 Budget (Budget Book), the City Traffic Engineer offers policy and management support to the Department of Public Works (Public Works) and coordinates with other engineering division agencies. 1 TES also plans, designs, and implements the City's multimodal transportation system in conjunction with other local, regional, and state agencies. 2 TES carries out its responsibilities through the following six traffic engineering and operations areas. Traffic Signals designs, reviews, evaluates, implements, and maintains the City s traffic signal system, comprising approximately 1,270 signalized intersections, and Intelligent Transportation System (ITS). 3 The purpose of this section is also to install mobility modifications and improvements to the City s streets and sidewalks. It further responds to customer inquiries about transportation system-related modifications, particularly for traffic signal timing improvements for specific corridors and intersections. The section is also tasked with re-timing City traffic lights in order to increase safety, improve traffic flows, and decrease air pollution. Signs and Pavement Marking designs, creates, installs, and maintains approximately 600,000 traffic control signs (e.g., stop signs, parking signs, no parking signs) on about 1,700 miles of City roadway. This applies to all regulatory and warning signs, vehicle lane lines, bike lanes, pedestrian crosswalks, symbols, and messages to ensure safe and efficient travel for all modes of transport. This section also reviews, evaluates, implements, supports, and develops concepts for the design of transportation system signing and pavement marking improvements. 1 City and County of Denver Mayor s 2013 Budget, p. 356, 2 The City s 2008 Strategic Transportation Plan defines multimodal as those issues or activities that involve or affect more than one mode of transportation or a path that can be traversed through different forms of travel. It further states that multimodal streets accommodate more trips by more people in the same amount of space by improving transit and providing better pedestrian and bicycle facilities, Denver Strategic Transportation Plan, 2008, p.50, 3 According to the U.S. Department of Transportation, Research and Innovative Technology Administration, ITS improves transportation safety and mobility and enhances American productivity through the integration of advanced communications technologies into the transportation infrastructure and in vehicles. Intelligent transportation systems (ITS) encompass a broad range of wireless and wire line communications-based information and electronics technologies. Accessed February 27, 2014, Page 1 Office of the Auditor

8 Transportation Management Center (TMC) performs traffic monitoring every day of the week to provide quick responses when traffic conditions change. Part of the TMC s duty is to support special events, provide emergency response, and assist in road construction activities by posting and maintaining variable message signs, highway advisory radios, and a blank-out sign system. The TMC delivers information to roadway users by showing camera views and traffic information on Denvergov.org. Moreover, TMC personnel design, develop, and install the ITS and provide communications to shorten delays and reduce congestion for roadway users. This center is located in the Wellington Webb Municipal Building (Webb Building). School Crossing Guards delivers funding for the intergovernmental agreement with Denver Public Schools for the School Crossing Guards program. Street Lighting reimburses the local energy company for its repair of existing and installation of new street lights. TES within Public Works manages the reimbursement of Street Lighting construction. Certain aspects of the franchise agreement with the local energy company are managed through the Public Works Division of Finance and Administration. Parking Operations manages all City-owned parking structures, such as at the Denver Performing Arts Center, Cultural Center, Webb Building, and some surface parking lots. It also performs research and analysis on the City s parking resources. A primary activity of this section is to design and implement operational improvements to increase the effectiveness of Denver s parking system through analysis of rates, parking restrictions, and the placement of meters, pay stations, and loading zones. Traffic Engineering Services Funding and Expenditures TES uses multiple funding sources for its operations and projects. The City s general fund provides funding for TES personnel, supplies and materials, and capital equipment expenditures. TES receives funding from the City s Capital Improvement Program (CIP) for its capital maintenance and system expansion projects related to traffic signals, signs, pavement marking, and parking. Allocations from CIP to TES projects are from the Capital Improvement Fund (CIF) and a portion of the Capital Maintenance Mill Levy (Mill Levy) that was approved by Denver voters in TES also receives state and federal grant monies. Grant funds are primarily federal funds received through the state and the Denver Regional Council of Governments (DRCOG). 5 TES 2013 expenditures for major programs by funding sources are shown in Table 1. 4 CIF is primarily funded through property tax assessments. In 2007, Denver citizens voted to dedicate an additional 2.5 mills in increased annual property taxes to repair the City infrastructure. 5 DRCOG is a non-profit association of local governments. Being the main agency for regional transportation planning in the Denver area, DRCOG prepares transportation plans and programs associated with a variety of topics such as improving air quality or reducing traffic congestion. City and County of Denver Page 2

9 Table 1 Traffic Engineering 2013 Expenditures by Funding Sources Funding Source General Fund CIP & Mill Levy Grant Totals Traffic Signals $3,368,732 $9,844,464 $7,978,048 $21,191,245 Transportation Management Center $657,384 $122,684 - $780,068 Signs and Pavement Marking $4,013,490 $4,260,992 $176,400 $8,450,882 Parking Operations $1,733,301 $337,503 - $2,070,804 Administration $1,878, $1,878,169 Totals $11,651,076 $14,565,643 $8,154,448 $34,371,167 Source: Auditors created this table based on financial data derived from Public Works weekly budget reports. Traffic Engineering Services Plans TES utilizes several strategic plans developed by Public Works and other outside agencies to help it meet its goals and objectives. These strategic plans guide the long-term transportation vision of the City and County of Denver and the greater metropolitan area. On the regional level, DRCOG Board members created Metro Vision 2035, which functions as DRCOG s primary policy document. Even though DRCOG is outside the City government structure, it is the funnel for a significant portion of the federal funding that TES receives. In 2001, forty-six communities within the Denver metropolitan area signed the Mile High Compact, which is an intergovernmental agreement to manage growth by adhering to the ideals outlined in Metro Vision. In addition to Metro Vision 2035, TES activities are influenced by two additional policy-focused plans the Strategic Transportation Plan and the Downtown Multimodal Access Plan and one more operationally oriented plan, Denver Moves. Metro Vision 2035 This plan is the primary policy statement of the DRCOG Board of Directors. Metro Vision 2035, the current plan to implement DRCOG s overall policy statement, outlines the broad goals in the areas of growth and development, transportation, and environment. Transportation-related goals include increasing the rate of construction of alternative transportation facilities, reducing the percent of trips to work by single occupancy vehicles to 65 percent by 2035, and reducing regional per capita vehicle miles traveled (VMT) by 10 percent between 2005 and Strategic Transportation Plan On the local level, the Strategic Transportation Plan (STP) is a multimodal transportation plan initiated by Public Works with support from other City agencies and interested stakeholders. This document from 2008 provides a vision of the future for the City and County of Denver, addresses current and future innovations, and lays out a process to implement planned changes. It serves as an approach to identify future system needs and community values, and offers a method to include them into future transportation decisions and solutions. The STP addresses current challenges to the City and County of Denver that are predicted to increase over time, such as: Page 3 Office of the Auditor

10 o o o o o o Urban sprawl Traffic congestion Number and length of automobile trips Safety concerns Community and environmental health impacts Health issues (including respiratory illnesses, obesity, and mental health) More specifically, it outlines desired transportation outcomes, namely moving Denver to a multimodal transportation plan that ultimately focuses on person trips (utilizing various transportation methods) over number of individual vehicles trips. STP recommends improvements to City s various travel sheds to achieve these outcomes. Strategies of the STP include improving the function or efficiency of existing facilities in the public right-of-way, exploring new sources of funding, and expanding infrastructure for public transit, bicycles, and pedestrians. Downtown Multimodal Access Plan - The 2005 Downtown Multimodal Access Plan (DMAP) has the purpose of facilitating multimodal access into and throughout Downtown Denver. The plan focuses on the relationship between land use and transportation, major infrastructure improvements, and the important urban design role streets play in creating quality connections between destinations, people, land use, and surrounding neighborhoods. Denver Moves The 2011 Denver Moves plan is a joint effort of Public Works and the Department of Parks Recreation (Parks) and focuses on improving the nonmotorized (bike and pedestrian) transportation components of the City. The plan has overall goals of creating "a biking and walking network where every household is within a quarter mile (5-minute walk or 2-minute bicycle ride) of a high ease of use facility" and creating a 15-percent bike/walk mode share by This plan is more of an operational document, central to determining specific steps necessary to carry out the City's bike/walk transportation projects. The document also contains cost estimates for the various types of projects advocated, as well as performance measures that Public Works and Parks will use to evaluate projects and plan implementation. Traffic Engineering Standards The main criteria that TES follows come from the federally promulgated, and State of Colorado and City and County of Denver adopted, Manual on Uniform Traffic Control Devices (MUTCD). 6 Traffic control devices are critical for the safe and efficient transportation of people and goods. The MUTCD sets minimum standards and provides guidance as well as ensures uniformity of traffic control devices across the nation. Using uniform Traffic Control Devices with regard to messages, location, size, shapes, and colors, helps to reduce crashes and congestion, and enhances the efficiency of the 6 Manual on Uniform Traffic Control Devices for Streets and Highways, 2009 Edition, City and County of Denver Page 4

11 transportation system in place. Standardization also helps to reduce costs for transportation departments in general. The MUTCD is based on years of practical experience and is a dynamic document incorporating updates to current safety and operational issues. Non-compliance with the MUTCD could ultimately result in the loss of federal funds and increase the risk of tort liabilities. 7 7 A tort is a civil wrong arising from an act or failure to act, independently of any contract, for which an action for personal injury or property damages may be brought. Page 5 Office of the Auditor

12 SCOPE This audit focused on two areas, TES project planning and prioritization and TES project management activities including budgeting and tracking practices. The audit team analyzed how goals and objectives from regional and local strategic plans are translated to the project level within TES. Furthermore, the team researched how TES prioritizes and selects projects. The team researched the tracking of work orders and the inventory system used for signals. Lastly, we assessed the project budget tracking procedures within TES. Review of documentation focused on the time period of calendar year 2013 and included projects from the Operations and Engineering sections of TES. We did not evaluate the School Crossing Guards program, the Signs and Pavement Marking Program, Street Lighting, or the Parking Program within TES. Our offices information technology (IT) audit team analyzed the IT security of TES as part of a larger audit, the findings of which were presented during the March 2014 Audit Committee meeting. OBJECTIVE The objective of this audit was to evaluate components of TES management of TES projects by reviewing documentation associated with several projects. Areas of review included: Assessing TES project planning and prioritization according to established internal criteria Evaluating TES project budget and cost tracking practices METHODOLOGY We utilized several methodologies to achieve the audit objectives. Our analyses tools included the following: Conducting interviews with management and staff members from TES and departments coordinating their work efforts with TES to obtain an understanding of TES policies and procedures for managing, planning, and prioritizing projects and communicating expectations to employees Conducting interviews with 311 management and staff to analyze TES response to 311 requests Reviewing strategic plans to gather information on the goals and objectives that need to be translated and applied to local TES projects Reviewing related audits conducted by local government entities to identify potential risk areas commonly found in traffic engineering Reviewing sample projects from the annual traffic signal work program list City and County of Denver Page 6

13 Testing the accuracy and timeliness of dispatch reports Reviewing TES information in the 2013 Budget Book and PeopleSoft budget reports Researching best practices Page 7 Office of the Auditor

14 FINDING 1 Traffic Engineering Services Does Not Have Effective Strategic Planning or an Adequate System of Internal Controls The Traffic Engineering Services (TES) division of the Department of Public Works (Public Works) is integrally involved in the design and support of transportation corridors throughout the City and County of Denver. Managing, monitoring, and repairing traffic signals, signage, and markings is of paramount importance, especially as Denver evolves to accommodate a growing population with diverse transportation needs. Through our audit work, we found that TES could improve the way in which it carries out its duties in two areas. First, TES could improve the way in which its projects are prioritized by directly connecting work plans with higher level strategic plans. Although TES personnel reported that they continually work to incorporate provisions of these strategic transportation plans, they could not provide supporting documentation of key business processes or criteria used to show how TES projects and operations connect to the strategies, goals, and objectives of these plans. Second, TES could develop a more formal internal control structure to ensure consistency of work, timeliness of repairs, and proper stewardship over assets. TES Could Benefit from an Improved Strategic Planning and Performance Measurement Process When we sought to determine how strategic goals and objectives were being met by TES, we identified a disconnect between strategic planning and project execution practices. We examined the 2013 Annual Traffic Signal Work Program a list of signal projects used to guide TES annual work load as well as a random sample of projects from this Program list. While TES staff reported they have other annual work programs for other types of projects, such as traffic signs and pavement markings, they did not provide annual programs or project lists for these types of projects. Our review of the traffic signal work program and sample of projects determined that in order to ensure TES is formally prioritizing projects and transparently documenting those decisions, TES could benefit from implementing certain project management tools into their business processes. TES Cannot Demonstrate How Operations Help Achieve City s Strategic Transportation Goals As noted in the Introduction section of the report, there are four major strategic transportation plans currently in place that are intended to change the City s transportation and traffic infrastructure: the 2005 Downtown Multimodal Access Plan, the 2008 Strategic Transportation Plan, the 2011 Denver Moves plan, and the Denver Regional Council of Governments Metro Vision 2035 plan. TES was integrally involved in the development of the City-initiated plans. Furthermore, TES lists a number of other strategies in the 2013 Budget Book that describe the way they intend to use their funds to City and County of Denver Page 8

15 achieve their mission. However, our review determined that TES cannot demonstrate how their current projects and day-to-day operations directly support the implementation of the strategies, goals, and objectives of these important strategic plans. Additional TES strategies are present in the City s 2013 Budget Book, specifically that TES intends to implement the Strategic Parking Plan, implement a neighborhood-based sign replacement program, and support other strategic plans such as Denver Moves. The TES Budget Book entry also indicates that TES will continue its emphasis on multimodal travel solutions by ensuring that pedestrian, bicycle, and transit components are integrated into maintenance programs, design of new projects, and capital planning processes. Specifically, TES was unable to provide documentation to demonstrate that they actively plan for and work toward implementation of their Budget Book strategies and the four broad strategic plans that require TES involvement. TES personnel explained that agency management and employees have ongoing discussions regarding the implementation of these plans, both within Public Works and with other relevant City agencies. However, TES could not provide documentation to demonstrate that its projects and day-to-day operations have helped move the goals of these strategic plans forward. They reported that doing the actual work requires all of TES time and resources and there is no time left for documenting their key business processes. TES Could Benefit from More Robust Annual Project Planning TES management creates an annual work plan for TES projects, based on ongoing internal discussions and decisions over funding and staffing resources, as well as input from other Public Works divisions, such as Planning, Street Maintenance, and Wastewater. Auditors reviewed TES Annual Traffic Signal Work Program for 2013 and found two significant weaknesses with this annual project list. First, the program does not include dollar amounts for the projects listed. Accordingly, it is difficult to determine how budgeted monies are allocated between projects on the program list. The second weakness with this program list is that it does not specify why each project was selected for Although this work program does contain basic TES was unable to provide documentation to demonstrate that it actively plans and implements TES Budget Book strategies or elements of the four broad strategic plans. project information such as location, status, and funding source, it contains no information regarding why the projects were prioritized ahead of other potential TES projects. TES management reported that inclusion of a project in the 2013 work program serves as documentation of the decision. Accordingly, TES has no further documentation of the decision-making process. Limited documentation of key business processes represents a lack of transparency with regard to how taxpayer dollars are being used to fund traffic engineering projects and whether the highest priority projects are the ones Page 9 Office of the Auditor

16 receiving funding. Moreover, increased documentation of the processes and collected data could help TES when supporting their budget requests. TES Lacks Formal Criteria for Prioritizing and Executing Individual Projects In the absence of a more robust annual work plan, auditors sought to evaluate TES planning and prioritization process by examining select projects from the 2013 signal work program. We randomly selected eight signal projects from the program list and requested any and all associated documentation, such as studies, analyses, reports, costs, policies, and procedures. Two of the eight signal projects were safety improvements, two were upgrades due to concurrent outside agency projects, and four were substandard diagonal span upgrades. 8 For seven of the eight signal projects in our sample, TES did not provide documentation to evidence a robust planning and prioritization process. For example: For five of the eight signal projects, TES could only provide the associated signal work orders and the computer-aided design (CAD) drawings for the engineered improvements to the intersections traffic signals, signs, or pavement markings. 9 However, neither the signal work orders nor the CAD drawings included any information related to criteria, analyses, reports, or costs. For the sixth signal project, documentation was limited to one from the Denver Metro Rehabilitation Office requesting an audible pedestrian signal and the associated work order to upgrade and re-time the affected pedestrian signal. For the seventh signal project (a safety improvement project), documentation included spreadsheets and diagrams showing all traffic accidents at the intersection for a two-year period. TES staff reported that this project arose from their analysis of City-wide intersection crash data, which identified this intersection as a hot spot. However, TES could not provide us with documentation showing the crash data analysis or the criteria used to re-time the intersection signals. For the eighth signal project, TES provided more documentation than for the other seven projects, demonstrating additional work done in the areas of planning and prioritization. This project was funded by the Federal Safety Hazard Elimination (SHE) program. Before being selected for funding, TES had to submit to the Colorado Department of Transportation (CDOT) an SHE application, which included traffic counts for the project area, a description of the existing hazards, and a proposed cost estimate for the project. This project is an example of the type of documentation that could be included for all TES projects, and it demonstrates TES ability to gather such information when required. In the same way that CDOT requires justification for use of SHE funds, TES should provide justification for use of taxpayer funds on its other projects. 8 Section 4D of the MUTCD provides that locating primary signal faces overhead on the far side of the intersection has been shown to provide safer operation as compared to diagonally-oriented mast arm or span wire, Manual on Uniform Traffic Control Devices, 2009, p. 460, 9 Work orders are requests for work, created by TES engineers and passed on to TES work crews for completion, e.g., to retime traffic signals. City and County of Denver Page 10

17 Although such documentation as CAD drawings and signal work orders indicate how TES designs transportation improvements and implements work in the field, they do not demonstrate how TES plans or prioritizes specific projects. Furthermore, outside s requesting infrastructure upgrades and raw intersection crash data likewise do not provide evidence of project planning or prioritization. The documentation TES provided for these sample projects does not demonstrate what criteria TES used when deciding to carry out these projects ahead of others on the annual signal work program list. 15 th Street Bike Lane Project Highlights Opportunities to Improve Future Planning and Project Prioritization Processes One example we encountered that demonstrates improved threaded strategic planning process and transparent decision making is the recent completion of a dedicated bike lane on 15 th Street in downtown Denver. 10 Officially known as the 15 th Street Bikeway, this multimodal project incorporates many innovative bicycle transportation features and culminated in a collaborative effort between the TES, Planning, and Wastewater divisions of Public Works. This buffered bike lane runs on the far left-hand side of 15 th Street between Cleveland Place and Larimer Square in Denver s Central Business District and incorporates the use of high-visibility lane markings, mixing zones, bike boxes, turn queue boxes, and a bicycle traffic signal. The 2011 Denver Moves plan recommends expanded use of such bicycle treatments, which offer increased ease of use for non-motorized travel and help fulfill the Denver Moves goals of increased pedestrian and bicycle mode share. Despite these direct connections with Denver Moves, TES could provide little documentation demonstrating that specific criteria were used to plan, prioritize, and implement this project. Within the 2011 Denver Moves plan, the 15 th Street Bikeway is included as a Phase I project, meaning it is a near-term [project] concentrated on making significant investment in the connectivity by closing gaps in the existing system, providing geographic equity of biking and walking corridors, and on-street facilities to link regional parks and trails. When asked why this particular project was implemented ahead of the other thirteen Phase I projects listed in Denver Moves, TES could not provide any documentation of criteria used to inform the planning or prioritization processes that led to the decision. Through interviews with Public Works personnel we learned of the following regarding the 15 th Street Bikeway project: High volumes of merging bus traffic along the right-hand side of this section of 15 th Street served as the primary impetus for placing the bike lane on the left-hand side of the street. However, TES provided no documentation supporting their decision to locate the bike lane on the left-hand side of 15 th Street. While TES provided no supporting documentation, they reported that strong interest and pressure from outside entities such as the Downtown Denver Partnership, Bike Denver, and City Council were a factor in prioritization of the 15 th Street Bikeway over other Phase I projects. 10 By threaded, we mean an interconnected, consistent process for planning projects from inception to completion to demonstrate how TES connects projects to the goals and objectives of strategic transportation plans. Page 11 Office of the Auditor

18 Wastewater had planned significant improvements to the storm drains, curb ramps, and curb and gutter along this corridor, which were needed for a quality and user-friendly bike facility and provided additional opportunity to prioritize the 15 th Street bike lane. However, TES was unable to provide documentation of Wastewater s planning or that TES decided to prioritize the 15 th Street bike lane due to this concurrent Wastewater work. Public Works personnel stated that they conducted traffic analyses and feasibility studies for this project, but were unable to provide the actual analyses and studies. The documentation Public Works provided us for the 15 th Street Bikeway project includes pre- and post-project cyclist counts, a survey of residents use and satisfaction, and an itemized spreadsheet of project cost. Although the counts and survey demonstrate increased volume of cyclists along and resident satisfaction with the new 15 th Street Bikeway, they do not demonstrate what criteria TES used to plan and prioritize the project and why the project was deemed a higher priority than other possible projects. By documenting specific business processes, such as conversations, meetings, and other factors that impacted the decision to prioritize the 15 th Street Bikeway, TES would be in a better position to transparently and accountably justify the use of tax dollars to select that project over the many other projects that will be central to shaping the transportation and traffic landscape of the City. Moreover, TES should consider using criteria similar to those used for the SHE project described earlier, which has established and specific materials required for project consideration. TES Could Benefit from Adopting Formal Project Prioritization Criteria and Enhanced Performance Measurement Practices Throughout the audit, TES personnel reported insufficient staffing and time as the main reasons why TES has not developed, documented, and utilized formal criteria to guide and establish consistency with TES project prioritization and management practices. In addition, TES personnel maintain that they require flexibility to adjust funds, staffing, and priorities as necessary, which policies and procedures could hinder. Further, some TES engineers argue that policies and procedures are not necessary since the specifics of the work TES performs are innate and that project elements, such as reports, studies, and analyses, vary from project to project. Although TES work may seem innate to its personnel, audit work demonstrated that TES relies heavily on the institutional knowledge of senior TES staff. Public Works management reported that over half of Public Works personnel are, or soon will be, retirement eligible. Recent retirements within TES emphasize the limits of this non-documented knowledge and underscore the benefit of having that knowledge persist in documented form. We recognize that public spending, specifically federal dollars, on transportation infrastructure has fallen since the 1970s, and traffic engineers and planners in the U.S. have been struggling with a growing gap between the cost of building and maintaining transportation improvements and available funding. Decision-makers have been faced with the challenge of selecting which projects are to be prioritized and which are to be deferred due to a lack of sufficient funding for transportation projects; TES is not immune City and County of Denver Page 12

19 to these challenges. Formalized policies, procedures, project selection and prioritization criteria, and documentation would ensure consistency and transparency for TES operations and could provide greater flexibility in TES operations by establishing clear expectations of and guidelines for staff. Formal Project Prioritization Criteria A project prioritization matrix is a helpful tool for decision makers to utilize when they are making difficult funding decisions and trade-offs. More specifically, using a formal project prioritization process has several advantages. 1. Helps prioritize complex or unclear issues when there are multiple criteria for determining importance 2. Offers a consistent method for evaluating options 3. Quantifies decisions by showing numeric rankings 4. Aids in reaching agreement when more than one person is involved in the decision-making process 5. Increases transparency and public accountability for decisions made Two scholars, Turochy and Willis (2006), have argued for a rational approach to project prioritization, which reduces the political element from the project selection process: The technical information is not muddled by the political framework within which the programming decisions are ultimately made. 11 Using this type of approach provides valuable information on how projects compare to each other to allow those in charge to make more calculated decisions using clear steps and sequence but without the bias of the evaluator. Connected to that is the idea of defensibility. Turochy and Willis (2006) define a defensible procedure as one that is open to scrutiny with respect to the data used in the process and which resultant scores or rankings assigned to projects evaluated are related to the attributes of the proposed improvements. 12 Transparency of data, criteria, and performance measures that allow outside entities to evaluate the process and ensure that guidelines are followed are the main aspects of defensible procedures. Enhanced Performance Measurement Practices In addition to using formal project prioritization to make effective, transparent, and accountable decisions, TES should implement formal performance measurement practices to assess both the impact of various projects on the community and whether projects help meet goals of the various strategic transportation plans. The U.S. Governmental Accountability Office defines performance measurement as the on-going monitoring and reporting of program accomplishments, particularly progress towards pre-established goals. 13 Additionally, performance measurement can help assess the efficacy of budget management practices. 11 Turochy, R. E., and Willis, J. R. "Procedures for prioritizing proposed transportation improvements at the metropolitan level." Transportation Research Board 85th Annual Meeting, Washington, D.C., CD ROM. 12 Ibid. 13 Government Accountability Office, Performance Measurement and Evaluation, May, 2011, file:///i:/internal%20audit/audit%20&%20project%20documentation/traffic%20engineering%20services/2.%20fieldwork/obj ective%20a/performance%20measures/77277.pdf. Page 13 Office of the Auditor

20 The relationship between performance measures and budgeting can be described in four main areas: Through strategic planning an agency finds its broad organizational objectives. These are then translated into specific goals and objectives. The agency then informs its budgetary requests on results that are directly linked to these specific goals and objectives. The agency uses performance measures to track actual results. The agency can then compare actual and estimated results and use this type of analysis to find areas of improvement. Performance measures should be specific rather than generic to help monitor the effectiveness of a program or project. This process is only helpful if it is clearly linked to the goals and objectives that the agency has set. Each governmental entity tasked with identifying performance measures will differ in its choices from other entities since public policy decisions specific to each will influence the choice of performance measures. TES uses several performance measures in the 2013 Denver budget; however, the lack of explanation of how this data ties back to TES goals and objectives, and the inability to provide context for this information, renders these performance measures unhelpful in assessing the success of TES projects. We found an example of useful performance measures listed in the 2012 National Traffic Signal Report Card. The National Transportation Operations Coalition (NTOC), which is a group of transportation associations, conducts regular national traffic signal assessments. NTOC claims that the effort to enhance the nation s traffic signal system is driven by benefits such as reduced fuel consumption and congestion mitigation. Participants are asked to enter their department s traffic data into a survey. The respondents have to grade themselves in five areas (Management, Traffic Signal Operations, Signal Timing Practices, Traffic Monitoring and Data Collection, and Maintenance) and come from state and local government backgrounds. They rate the extent to which a particular policy or practice had been adopted by their agency on a scale from one to five based on their program s progress throughout the year. NTOC then averages all self-reported scores and issues a National Traffic Signal Score Card with a national letter grade. The release of national averages by NTOC provides a way for TES to assess their performance in these five areas. The set of performance measures created within the score card show how traffic engineering organizations fare compared to similar entities. TES reported that they had participated in these assessments but were unable to provide documentation to the audit team. Therefore, the audit team could not compare these assessments to local entity averages or to the national average. This is an example of a missed opportunity for TES to use this benchmarking tool to evaluate their programs and practices in support of their own achievements and practices, and compare themselves to national best practices. It is also a helpful tool in providing guidance on how to improve TES performance in areas that did not score well compared to the national average. City and County of Denver Page 14

21 TES management should develop and implement formal project selection and prioritization criteria and performance measurement processes based on established strategic goals to better ensure limited resources are being effectively and consistently allocated in a transparent manner. TES Could Benefit from a More Formal System of Internal Controls for Key Operational Areas TES is operating without a formalized internal control structure, the effects of which are apparent in three different areas. First, citizen requests for traffic-related repairs are not being handled consistently. Second, signal repair work is not always recorded. Third, TES parts inventory is not being managed effectively. In the absence of proper controls in these areas, customer service delivery may be compromised and City resources may be used inefficiently or improperly. TES Does Not Have a Formal Process to Ensure That Citizen Requests Are Effectively Addressed Citizens contact the City to report problems that directly relate to TES, for example inoperable traffic lights, insufficient lane markings, or need for an additional stop sign. Although citizens may contact TES directly, we focused on those citizen requests that come in through the City s 311 Help Center, which are routed to TES. For this audit, we analyzed citizen requests regarding traffic signals. We found that while the 311 Help Center tracks these requests through its customer relationship management (CRM) database, TES has no formal way of tracking all of those requests. 14 Furthermore, TES personnel handle the response to citizen requests in a variety of different ways. TES Dispatch Records Do Not Match 311 s CRM Database Our review determined that there is little connection between the 311 Help Center s CRM database and the data maintained by TES for the calls they receive from 311. Specifically, we reviewed a CRM report for TES-related calls for the month of November 2013, which showed 130 cases related to citizen requests for signal repairs. The CRM report shows that 311 Help Center staff routed all 130 requests to TES dispatch. However, when we reviewed a report from the TES dispatch system of 311-related calls for the same period, there were only twentyfour cases. Since the dispatch system report was limited, we attempted to identify the resolution of the 130 requests from the CRM report in the Daily Work Report (DWR) database, which is a daily work log completed by TES field work crews. However, we could only connect two cases from the November 2013 CRM report to entries in DWR. Although it is possible that all 130 citizen requests routed through 311 may have been resolved, TES does not have documentation to show that this work was completed. 311 often enters into Service Level Agreements (SLAs) with City agencies to establish formal working relationships between City entities and to allow agencies to use the CRM 14 In July 2006, the City and County of Denver launched the 311 Help Center as a comprehensive one-stop resource for anyone seeking information about non-emergency City services. Denver 311 serves both external and internal customers by providing a quick source of information or call routing for external callers, which assists internal City agencies with their customer service efforts. Page 15 Office of the Auditor

22 system to track 311 requests. 15 While an SLA between TES and 311 was drafted, it was never formalized. TES staff believed the SLA would have given too much control of TES processes and operations to 311 and therefore did not sign the SLA. Furthermore, TES staff reported the CRM system did not meet TES needs in that it did not capture enough detailed information of the citizen request and did not allow enough functionality for TES staff. 311 staff reports they are currently in the process of developing the next generation of CRM software and plan for it to have expanded functionality. TES management reports they will analyze and test the updated CRM upon its release, and may adopt this new CRM system for all area engineers if it meets TES needs. TES Lacks Consistency In How They Address Citizen Requests The Operations and Engineering groups of TES address 311 calls differently. For issues related to Operations, such as signal maintenance and malfunctions, 311 Help Center personnel transfer those requests to TES dispatch, which then dispatches requests to work crews in the field. For issues related to Engineering, such as signal installation, removal, and re-timing, 311 personnel transfer those requests to one of six Area Engineers, whose jurisdictions TES bases on geographic areas of the City. These engineers investigate and research these issues and report their decisions to the requesting citizens. Audit work in this section focused on Engineering s processes for addressing citizen requests. TES does not have formal procedures in place to establish consistent, documented processes for how TES should address, track, manage, review, or record citizen requests that relate to the City s traffic infrastructure. Interviews with TES staff revealed that area engineers have established individual methods and processes to handle their respective citizen requests. For example, some engineers maintain excel spreadsheets of their requests while others track requests in paper notebooks. Engineers have no guidance regarding how much time they should spend on requests or what studies, analyses, or reports they should conduct for the various types of requests they handle. In the absence of policies or procedures to establish consistent processes to address and track citizen requests, the development and use of different methods has made it difficult for TES management to assess the efficiency or effectiveness of how Engineering handles citizen requests. Without a procedure in place for consistent treatment of citizen requests, it is possible that requests could inadvertently not be addressed, or not be addressed effectively or equitably, thereby reducing the overall level of customer service to the people of Denver. Furthermore, a lack of documentation prevents TES from identifying possible trends that could arise by analyzing such information. Controls over Signal Repair Work Could Be Strengthened Audit work identified several weaknesses in the way that TES manages and documents repairs made to malfunctioning or damaged traffic signals. Specifically, TES Operations does not have any policies and procedures guiding the signal maintenance work and supervisory review of this work. Additionally, the systems that TES uses to track signal repair work are antiquated Microsoft Access databases that were designed by a now-retired TES staff member and last updated in These systems, which are no longer 15 See our 2012 performance audit report on Denver s 311: City and County of Denver Page 16

23 supported by Technology Services, lack functionalities such as data validation to disallow erroneous data or blank fields. Absence of any procedure manual compounded by the system limitations has resulted in inadequate and inconsistent documentation of repair activities, which makes it difficult for TES to ensure that all repair requests are addressed properly and timely. When TES dispatch personnel request that a signal technician go to a site for investigation and repair, dispatchers log calls into a database along with the date and time of receipt, the source of the call, and the time the call is dispatched to TES technicians. For any signal work, including work resulting from dispatched calls, signal technicians manually log their field activities using a paper form or a regular note pad. When these technicians return to the office, they enter their manually recorded data into DWR, which is different from the dispatch database. We identified several weaknesses in the processes and documentation related to signal call activities. TES has not established a deadline by which signal technicians must enter into DWR the data they manually recorded during the repair. TES Operations management indicated that some technicians record their manual data in the system on a daily basis while the others do this task every few days. Therefore, DWR data may not be up to date. Dates recorded by technicians in DWR as the dates of signal malfunction appear to be dates of data entry, rather than the actual signal malfunction dates. We reviewed a DWR report containing 3,156 technician records logged in response to signal problems from January 1, 2004, through December 31, 2013, and noted that often a few days in each month were repeatedly shown as the dates of incidence, rather than dates throughout the month. 16 Since dispatch information and signal technician activities are recorded in two separate databases that are not connected, dispatch data cannot be tracked to corresponding technician activity data in DWR. Therefore, it cannot be determined if and how a dispatch call was addressed by the technician. TES management indicated that TES average response time for signal problems is less than forty-five minutes. A technician s response time is calculated in DWR as the difference between the time the technician received the repair request and the time the technician arrived at the signal. To validate the forty-five-minute average response time, we reviewed response times for the 3,156 technician cases. We found that 855 (27 percent) of the records showed response times equaling zero because the technician had reported the same time for both dispatch receipt time and arrival time. In 209 cases (7 percent), the calculated response times were a negative number because the dispatch receipt time was recorded as having occurred after the technician s arrival time. Based on this data, it is unknown how TES management calculated the average response time that they reported to us. 16 According to TES personnel, DWR was last updated in All migrated data from prior periods show the dates starting January 1, Page 17 Office of the Auditor

24 TES personnel noted that there are cases where a technician might not even go to a signal malfunction site. This may occur when a problem is remotely fixed by TMC, a power outage is causing the malfunction, or TES Operations checks the signal remotely and ensures it is working properly. In these cases, since a technician does not go to the site or subsequently create a work report in DWR, there is no record of case resolution. Without proper controls in place, TES management has no assurance that repair work is being performed efficiently, effectively, or at all. In the absence of such information, it is difficult for TES to demonstrate that they are being responsive to the traffic-related needs of the City. TES personnel indicated that they are currently reviewing options for purchasing a work order system to replace the old Access databases used by TES Operations. 17 TES personnel anticipate the new system will enable TES to maintain all inhouse work order data in one location, including dispatch data and information about signal maintenance and repair work. Controls over TES Inventory Could Be Improved Similar to the ad hoc way in which TES personnel manage citizen requests and signal repair documentation, TES does not have adequate controls over its inventory, some of which includes very expensive parts. Not only does the inventory database contain insufficient information about signal parts, equipment, and supplies, but there are no procedures governing how adjustments to inventory should be recorded. Inventory Database Lacks Asset Value Information TES maintains inventory data in an Access database, but it does not include inventory cost data. The cost data is available in PeopleSoft, but the two databases are not linked. Consequently, TES personnel cannot easily determine the overall value of the inventory they manage. Inefficient Inventory Management Practices TES Operations management indicated that a physical inventory is performed periodically, primarily to ensure that signal crews do not run out of the parts and supplies needed for their daily duties. However, there are no policies and procedures governing how TES inventory should be handled. Signal crew members take out the parts they need with no inventory control. Further, signal crews are expected to report to TES Operations management when they are about to run out of a part, but there is no formal procedure for reporting low stock. TES management cited several instances where a crew member did not have adequate parts or equipment to complete their work timely. In such cases, the planned work was delayed and the item in question may have been purchased at a higher price because of a rushed order. In addition to affecting speed of service delivery and cost of parts, inadequate controls over inventory introduces the risk of lost or stolen parts, equipment, and supplies. According to the Best Practices in Achieving Consistent, Accurate Physical Counts of Inventory and Related Property issued by the United States Government Accountability 17 In addition to DWR and dispatch database, TES Operations currently uses separate Access databases for its other data needs such as inventory of parts and supplies to be used in repair work, and inventory of equipment and parts installed at signalized intersections. City and County of Denver Page 18

25 Office (GAO) in March 2002, proper inventory accountability requires that detailed records of produced or acquired inventory be maintained, and that this inventory be properly reported in the entity s financial management records and reports. 18 Physical controls and accountability reduce the risk of (1) undetected theft and loss, (2) unexpected shortages of critical items, and (3) unnecessary purchases of items already on hand. These controls improve visibility and accountability over the inventory, which help ensure continuation of operations, increased productivity, and improved storage and control of excess or obsolete stock. 19 To achieve the level of control recommended by the GAO, an agency should use a perpetual inventory system in which all inventory data is up-to-date to ensure timely inventory replenishment and loss prevention. 18 GAO G, Executive Guide: Best Practices in Inventory Counts, March 2002, 19 Ibid. Page 19 Office of the Auditor

26 RECOMMENDATIONS We offer two main recommendations: 1.1 Procedures and Processes - Traffic Engineering Services (TES) should develop and implement comprehensive business procedures and processes that: Consistency - Document and establish consistency in the processes and operations of the Traffic Engineering Services Division Criteria - Create clear and established criteria and documentation to support key planning, project, or override decisions within the TES decision making processes in order to ensure transparency and openness Annual Plan and Budget - Create a formal annual plan which includes a reviewed and documented strategic management approach describing the actions for all available system projects, operations, and budget information Documentation - Provide increased and documented project prioritization, coordination, and planning with internal and external stakeholders Damage and Malfunction Calls - Ensure work related to signal damage and malfunction calls is documented and reviewed, including: Internal memos to serve as interim guidance for TES signal crews regarding how to document their work and require regular review of these documents by the crew supervisors until the new system is installed Policies and procedures to serve as formalized guidance for signal maintenance and repair work as the new system is implemented Inventory Handling - Establish inventory policies requiring personnel to document the date and information of the items they take out of inventory. This documentation should be frequently reviewed by TES Operations management to ensure proper usage of inventory items, up-to-date inventory information in the current database, and timely inventory replenishment Communication - Clearly communicate the expectations of these policies and procedures to all TES staff members 1.2 Performance Measures - TES should develop a set of data driven performance measures which are based on formalized goals and objectives, and should periodically collect and evaluate performance data that is based on these measures City and County of Denver Page 20

27 FINDING 2 Traffic Engineering Services Can Improve Efficiency of Tracking Budget and Project Performance TES receives funding for its capital maintenance and improvement projects from the City s Capital Improvement Program (CIP), including CIP funds, dedicated mill levy funds, and state and federal grant monies. CIP and mill levy funds are appropriated to specific programs managed by TES. 20 A program may or may not consist of multiple projects. For example, the Traffic Signal Annual Program includes several individual projects, such as rebuilding traffic signals at various intersections throughout the City. When a program is initially set up in PeopleSoft, Budget Management Office (BMO) personnel assign it a project ID, consisting of a string of letters and numbers. The ID includes two digits that indicate the year in which the program was first entered into PeopleSoft, referred to as the inception year. For example, the Traffic Signals Annual Program s PeopleSoft ID is PZ03798_417; the 98 indicates that the program was created in PeopleSoft in TES continues to use this ID for all budget monies allocated to the Traffic Signal Annual Program annually. After annual budget appropriations are made at the program level in PeopleSoft, TES personnel allocate the program budget to different line items within the program outside PeopleSoft using spreadsheets. Some of these line items are individual projects, which require detailed financial tracking as the project progresses. TES has created Excel spreadsheets, outside of the PeopleSoft system, to track project expenditures. For example, for tracking 2014 individual projects under the Traffic Signals Annual Program, TES personnel created three separate spreadsheets showing the three steps that are necessary to break down encumbrances and available budget from the program to individual projects, by funding source. 21 Despite the detailed tracking that TES personnel undertake using Excel spreadsheets, TES does not break down the available program budget by individual projects in PeopleSoft. As a result, when management runs TES budget reports in PeopleSoft, the reports show budget activities TES does not break down the available program budget by individual projects in PeopleSoft. under the main program s project ID. Further, they reflect figures from the program s inception date rather than figures limited to current, ongoing individual projects. For example, for the Traffic Signal Annual Program, PeopleSoft shows all budget allocations and expenditures since the program was created in PeopleSoft in To see each individual project expenditures and encumbrances, additional queries must be run in 20 Budget appropriation, authorized by City Council, designates public funds for a specific purpose. 21 Encumbrances are commitments related to unperformed, legally binding contracts for the purchase of goods or construction in progress. Page 21 Office of the Auditor

28 PeopleSoft using information such as contract and purchase order numbers associated with each of those projects. TES personnel have to run these queries to update their project budget tracking spreadsheets periodically. According to TES personnel, the reason they developed an internal tracking method using Excel spreadsheets was to maintain flexibility in project budgeting. Many TES projects take two or three years to complete. Therefore, to ensure that budgets do not remain idle, TES benefits from having the flexibility to move funds within a program from one project to another project based on shifting project priorities. Although it is possible to create IDs for individual projects within PeopleSoft, TES personnel believe that moving funds between projects in PeopleSoft would be time consuming and cumbersome. Although TES personnel prefer flexibility of the internal tracking approach, they also admit that this method is time consuming because of the manual nature of entering budget activity figures from PeopleSoft into spreadsheets. Using spreadsheets to track project budgets, instead of PeopleSoft, reduces the transparency of TES capital maintenance and improvement project activities. In addition to being time consuming, using spreadsheets to track project budgets reduces the transparency of TES capital maintenance and improvement project activities. Expenditures associated with individual projects are not readily visible to determine the amounts to be capitalized as a long-term asset for City financial reporting purposes. Currently, Public Works accounting personnel must look at every payment voucher to determine what was already capitalized and what remains to be capitalized. Further, by not tracking individual projects in PeopleSoft, TES cannot assess how efficiently a project is moving toward completion. This is because in PeopleSoft, the way it is currently being used, only the year in which a project budget is expended can be seen. 22 The spreadsheets prepared outside PeopleSoft only show allocated and available budget for each project as a lump sum. By tracking individual project progress using these spreadsheets, TES management cannot see whether a project is still expending the previous year s budget allocation or using the allocations from the current year s appropriation. Audit work determined that PeopleSoft has the functionality to allow TES to avoid creating internal tracking spreadsheets for individual projects. Upon request, BMO can create a project ID for each individual project under a TES program. Project IDs in this situation are known as child project IDs. BMO management personnel explained that the creation of a child project ID is a simple step that can serve as a tool for internal project budget and performance tracking. Once child project IDs are established in PS, TES can make allocations from the program budget to each child project ID using accounting entries referred to as budget journals. This way, all subsequent project budget activities, including but not limited to encumbrances and expenditures such as payment vouchers, will be recorded under a more granulated child project ID. Moving funds from one 22 To see an individual project expenditures and encumbrances, PeopleSoft queries can be run based on contract and purchase order numbers associated with the project. City and County of Denver Page 22

29 project to another within the same program can be accomplished using budget journals. Public Works Project Resource Office expressed willingness to assist TES with any accounting needs related to budget journals. Moreover, at the beginning of each new budget year, TES, with assistance from BMO, can establish new project IDs for each project that has remained in-progress from the prior year and allocate any new budget appropriations to the new ID. This way, budget performance of a project with more than one PeopleSoft ID can be analyzed during the year to determine if the project is still expending the previous year s budget allocation or using the current year s appropriation. Using a more transparent and granulated tracking method in PeopleSoft will allow TES and Public Works management, BMO, and other stakeholders to readily view and evaluate TES project progress and performance. The diagram in Appendix A provides an example of how a program budget can be allocated among individual projects. Page 23 Office of the Auditor

30 RECOMMENDATIONS 2.1 PeopleSoft Enhancements - We recommend that TES, with assistance from BMO and Public Works Project Resource Office, take steps to set up a more effective tracking system, such as child project IDs, in PeopleSoft for the projects under each program, allocate program budget to these projects, and track budgetary performance of these project in PeopleSoft to provide more efficient and transparent project tracking and performance monitoring. City and County of Denver Page 24

31 APPENDIX A Example of Program Budget Allocation to Project in PeopleSoft Page 25 Office of the Auditor

32 AGENCY RESPONSE City and County of Denver Page 26

33 Page 27 Office of the Auditor

34 City and County of Denver Page 28

35 Page 29 Office of the Auditor