City of Saskatoon Internal Audit

Transcription

1 City f Saskatn Internal Audit Rad Maintenance Terms f Reference City f Saskatn Fr presentatin t the Public Cmmittee n September 8, 2015 PwC City f Saskatn

2 PwC Internal Audit fr City f Saskatn We are pleased t present ur terms f reference fr ur first internal audit prject with the City f Saskatn (the City ), which is a Value fr Mney Review f Rad Maintenance. Based n the risk assessment exercise which we perfrmed with the City s management and cuncillrs, Rad Maintenance was identified as a high risk area and as the tp pririty fr internal audit. The purpse f the prject is t identify areas fr imprvements and cst management, in part by benchmarking against ther municipalities in Canada. The prject will assist the City s management and cuncillrs in understanding whether the prcesses and activities undertaken as part f the Rad Maintenance prgram (the detailed scpe f which is included in the terms f reference) are being carried ut in the mst ecnmical, efficient and effective manner and, if nt, t identify the specific areas fr imprvement. The prject will fcus n radway cnditin/rehab/maintenance nly and will exclude lanes, sidewalk maintenance, and winter peratins (the latter tw f which are intended t be separate internal audit prjects based n the risk assessment exercise and crrespnding fiveyear audit plan). During the curse f the prject, we will examine key reprts and ther dcumentatin and cnduct interviews with key persnnel within the Transprtatin & Utilities department including Majr Prjects, Cnstructin & Design, and Public Wrks. We will perfrm a cmparative analysis/benchmarking f the City s Rad Maintenance prcess and activities with fur t five municipalities within Canada, which will prvide relevant infrmatin and will supplement the recmmendatins that we make based n ur wn findings. At the cnclusin f the prject, a reprt will be prepared including an executive summary f ur findings and recmmendatins, specific bservatins relating t the City s current prcesses and activities, recmmendatins fr management, and management s respnse t ur recmmendatins and advice. Upn cmpletin f the prject, a meeting will be held with management t discuss the results and a draft reprt will be distributed in advance f the meeting fr cmments. A summary f the draft reprt will be discussed with Standing Plicy Cmmittee n Finance ( SPCF ) and management, with the final reprt being issued t key stakehlders and the SPCF. The prject cmmenced n July 21, 2015 with an initial kick-ff meeting with the key stakehlders. The majrity f the wrk was cmpleted in July and August with benchmarking interviews with ther municipalities t be cmpleted in late August/early September. The initial estimate was fr the prject t be cmplete within apprximately 10 weeks. We anticipate that the prject will be cmplete by mid-octber, apprximately 12 weeks frm prject cmmencement. T be clear, prject cmpletin dentes a summary f the draft reprt highlighting key bservatins and recmmendatins will be available fr discussin with the SPCF. September 1, 2015 PwC City f Saskatn

3 Appendix PwC City f Saskatn

4 BACKGROUND The radway infrastructure within the City f Saskatn ( City ) has nt met citizen s expectatins in recent years. Funding did nt keep pace with inflatin ver the past decade, and as a result, the amunt f radways that culd be rehabilitated each year was reduced t unsustainable levels, and the rad netwrk cnditin deterirated. Cnditin assessments have been cnducted peridically and the City has significantly increased funding t ensure mre apprpriate funding levels are in place. A number f funding changes have been intrduced ver the past few years, and Cuncil has made significant investment in rads ver that same perid f time, including: The 2013 Budget intrduced a prperty tax increase f 1.25% ver the 2012 tax base dedicated specifically t paved radways; Allcatin f ad hc funding, including allcatins frm neighbrhd land develpment prfits and year-end surpluses; Allcatin f federal Infrastructure Stimulus Funding; and Building Better Rads, the mst aggressive prgram f rad cnstructin, repairs and maintenance in the City s histry, was intrduced in City administratin is respnsible fr evaluating the cnditin f the City's paved radways and fr develping an annual prgram t maintain them at a minimum lng-term cst, with mdificatins based n apprved funding levels. Where feasible, cnditin assessments are cnducted n an annual basis. The assessments are used t determine cnditins and t develp annual capital imprvement plans. This year, mre than $53 millin is budgeted t be spent n rads, including street sweeping, pthle patching, winter maintenance, sidewalk rehabilitatin, back lane upgrades, and rad cnstructin and repair. The 2016 and 2017 preservatin budgets assume that the prpsed 1.94% dedicated tax levy will be apprved in each respective year with supplemented funding in 2016 t increase the budget t the riginal amunts established in In 2017, the funding base will be at the target. The tables belw utline the budgets fr 2015 and prjected budgets fr 2016 and Surface Preservatin Budget 2014 Budget Carryver $700, Apprved Budget $26,245,000 Ttal 2015 Cnstructin Year Budget $26,945, Estimated Expenditures 2015/ 2016 Prgram Develpment $1,710,000 Building Better Rad Cmmunicatins $300,000 Radway Preservatin Prjects $19,250,959 Patching Prgram $1,500,000 Pavement Marking $250,000 Sidewalk/Curb Wrks Preservatin Prjects $3,921,622 Ttal Estimated Expenditures $26,932,581 1

5 2015 Estimated Radway Treatment Expenditures Treatment Unit Rate Per Treatment Type Estimated Cst Treated Lane KM Crack Sealing $7.00/m $351,050 - Micr-surfacing $10.00/m 2 $2,885, Blade Leveling $20.00/m 2 $326, Patching $25.00/m 2 $968, UTO $25.00/m 2 $2,746, Resurfacing $45.00/m 2 $7,767, Recnstructin $105.00/m 2 $2,832, Water/ Sewer Crdinated Rad Wrks $65.00/m 2 $1,372, Ttal $19,250, Prject 2016/ 2017 Budgets Budget $28,730,000 $28,730, / 2017 Estimated Expenditures Prgram Develpment $1,500,000 $1,500,000 Building Better Rads Cmmunicatins $300,000 $300,000 Radway Preservatin Prjects $22,715,000 $22,690,000 Patching Prgram $1,435,000 $1,460,000 Pavement Marking $250,000 $250,000 Sidewalk/Curb Wrks Preservatin Prjects $2,530,000 $2,530,000 Ttal Estimated Expenditures $28,730,000 $28,730,000 In an effrt t ensure value fr mney f the City s rad maintenance prgram, the City has apprached Internal Audit t perfrm a value-fr-mney audit t identify areas fr imprvements and cst management, in part by benchmarking against ther municipalities in Canada. OBJECTIVE The bjective f this engagement is t understand whether the prcesses and activities undertaken as part f the rad maintenance prgram, as scped immediately belw, are being carried ut in the mst ecnmical, efficient and effective manner and, if nt, t identify the areas fr imprvement. SCOPE AND APPROACH Our value-fr-mney audit will fcus n the radway cnditin/rehab/maintenance nly (i.e. the apprximately $26 millin in rehab funding, cmbined with Public Wrks summer radway maintenance). Lanes, sidewalk maintenance, winter peratins, etc. will nt be within the scpe f this value-fr-mney audit. We will examine key reprts and ther dcumentatin (fr the past 3 years and current) and cnduct interviews with key persnnel within the Transprtatin & Utilities Department including Majr Prjects, Cnstructin & Design, and Public Wrks divisins t understand current prcesses/activities and t identify areas fr imprvement. 2

6 We will btain infrmatin with respect t: A. Ecnmy What are the last 3 years, current and future budgeted expenditures? What d they cmprise f and hw were they determined? Hw des the city cmpare with respect t per unit expenditures n rads in cmparisn t ther cities? Hw d ther cities fund their rad maintenance prgrams? Hw are csts estimated fr treatment type and lcatin? What is the cntract tendering and awarding prcess at a high level? Is it giving the City best ptins frm an ecnmy perspective? Hw is it ensured that ther aspects (e.g. landscaping, irrigatin system, man hles, and electricity cables) f radways affected by the maintenance wrk are taken care f? Wh is respnsible (i.e. cntractr) fr taking care f these affected areas? Are the csts f taking care f these affected areas factred int the csting f the cntract r are they cst plus? B. Efficiency Hw is it determined which radways t include in the annual capital imprvement plan? Hw is the budget and funding determined fr rad maintenance wrk included in the annual capital imprvement plan? What are the criteria used t determine the treatment type (crack sealing, micr-surfacing, blade level, paver lay, ultrathin verlays, resurfacing, patching, and recnstructin) fr a particular radway and hw are the criteria determined? What are the prcesses/steps undertaken fr each treatment type? Hw is it mnitred that the required prcesses/steps have been fllwed fr the particular treatment type and wh mnitrs it? Hw is the quality f radway maintenance wrk mnitred (befre, during and after) and wh mnitrs it? Hw is it ensured that the required quality is maintained? What degree f preparatin des the City d with the apprach f spring weather? Hw d different departments/ divisins (e.g. Public Wrks and Majr Prjects) crdinate with respect t wrk dne fr radway maintenance t ensure there is n duplicatin f effrts? C. Effectiveness What are the key indicatrs with respect t rad maintenance? Are these being met within the City? Hw des the City cmpare t ther cities with respect t these indicatrs? What are the current service levels fr the different asset classes (paved radways, sidewalks, paved back lanes, gravel back lanes and bundary rads) and hw were they determined? What is the physical state f the radways and hw is that state mnitred, assessed and reprted? Hw is citizens cncern and satisfactin mnitred and addressed with respect t radways maintenance? 3

7 Des the City s pavement and structural design specificatins represent best practice fr bth new cnstructin and preservatin? We will perfrm a cmparative analysis/ benchmarking f the City s rad maintenance prcess and activities with fur t five municipalities within Canada. These municipalities culd include Edmntn, Calgary, Regina, Lndn and Winnipeg. The cmparative analysis/ benchmarking will help prvide relevant infrmatin regarding what is being dne well by the City in cmparisn t ther municipalities and what prcesses/activities need imprvement r can be made better. We will need the City s help in engaging each f these cities with respect t the benchmarking aspect. DELIVERABLES At the cnclusin f the prject, a reprt will be prepared that will include: An executive summary f ur findings and recmmendatins fr the City; Specific bservatins relating t the City s current rads maintenance prcess and activities; Recmmendatins and advice fr management; and Management s respnse t ur recmmendatins and advice. REPORTING Draft Reprt fr Clsing Meeting Upn cmpletin f the prject, a meeting will be held with management t discuss the results arising frm the prject. A draft reprt will be distributed in advance f the meeting fr cmments. A summary f the draft reprt highlighting key bservatins and recmmendatins will be discussed with SPCF and management. Final Prject Reprt A final internal audit reprt will be issued t Jeff Jrgensen, General Manager, Transprtatin & Utilities, Pat Hyde, Directr f Public Wrks and will be cpied t Murray Ttland, City Management and ther key individuals, as necessary. The full reprt will als be issued and presented t the SPCF. KEY CONTACTS The key cntacts fr this prject are: Jeff Jrgensn, General Manager, Transprtatin & Utilities Pat Hyde, Directr f Public Wrks Mike Gutek, Directr f Majr Prjects Rb Frank, Manager f Asset Preservatin Celene Anger, Directr f Cnstructin & Design We will rganize bi-weekly meetings fr the key persnnel t keep everyne apprised n ur prgress. 4

8 ENGAGEMENT TEAM, TIMELINES & BUDGET The engagement team will cnsist f: Name Rle Expected Hurs Cntact Details Arun Gupta Quality Assurance Partner 20 Phne: (780) Jesse Radu Engagement Partner 27 Phne: (306) Kamran Rana Engagement Manager kamran.rana@ca.pwc.cm Phne : (306) Hany Al-Anwer Senir Assciate hany.m.al-anwer@ca.pwc.cm Phne: (780) Ext Imran Muhammad Senir Assciate imran.muhammad@ca.pwc.cm Phne: (306) Ttal 400 We expect t start the engagement effective July 6, 2015 and will be perfrming the majrity f ur wrk during July and August. We estimate that ur reprt n the prject will be cmpleted by September 15, The prject is expected t cst apprximately $66,600 with respect t fees. In additin we expect t incur ut-f-pcket expenses f apprximately $5,000 fr this prject. 5

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