From Honolulu Auditor April 15, 2016
CH1—INTRODUCTION
This audit was conducted pursuant to City Council Resolution 15-90, Requesting the City Auditor to Conduct a Performance Audit of the Honolulu Rail Transit Project, to determine the adequacy of the Honolulu Authority for Rapid Transportation’s (HART) processes to ensure that the rail project is constructed and completed economically, effectively and efficiently.
Per the resolution, the audit sub-objectives were to examine the HART financial and contingency plans; contract awards, expenditures, and subcontractor costs; and evaluate the project cost increases and shortfalls. Other sub-objectives were to review rail project revenues and expenditures from 2007 through 2014; determine when HART was aware of the financial shortfalls; and to assess the potential for additional cost overruns. The resolution requested our office to evaluate the potential continuing costs after the project is completed and operational.
CH2--HART Needs to Improve Financial Management and Planning
Summary--Despite having a goal of completing the project on time and on budget, Honolulu Authority for Rapid Transportation’s (HART) project costs have increased $1.3 billion (25 percent) from the original estimate of $5.2 billion to an estimated $6.5 billion.
HART’s processes can be improved to construct and complete the project more economically, effectively, and efficiently. Specifically, we found that HART’s financial and operating plans are not reliable or current; and HART’s financial plan has not been updated to reflect the rail project’s most current financial condition in spite of the significant cost increases. HART needs to strengthen its controls over financial information reporting to ensure data is complete and readily available from its Contract Management System (CMS); delay claims are adequately tracked, monitored, and reported; and pending utility agreements, contingency allowance figures, and general excise tax (GET) county surcharge forecasts are accurately reported. Absent the improvements, we anticipate additional shortfalls and cost overruns will occur.
CH3—HART Needs to Improve Project Management and Contract Administration
Project management and contract administration controls can be improved. More specifically, Honolulu Authority for Rapid Transportation’s (HART) Project Management Plan (PMP) and its subsidiary plans are outdated and unreliable as decision making tools. HART made concessions to a single contractor; did not perform quantitative analysis to justify a major decision to repackage a bid for nine stations in the Westside Stations Group; and paid $1.5 million in stipends to unsuccessful bidders without knowing the bidders’ actual costs. HART is also paying for vacant office space. Contract administration controls need to address invoice payments, procurement file documentation, and prevent improper payments.
CH4--Better Planning Is Needed to Address and Manage Future Rail Project Costs
Once the rail system is completed and operational, other rail systems indicate annual and ongoing operations and maintenance costs must be addressed. Other rail systems in the nation indicate subsidies will be needed to fund rail operations and maintenance costs after the rail is constructed. HART has not planned for the operations and maintenance of the rail system or the costs of operating the system after it is completed. HART needs to improve planning and oversight to effectively address and manage future operations and maintenance needs; maximize fare box recoveries and ridership; minimize city subsidies; and fill operations and maintenance positions.
READ … ENTIRE REPORT
* * * * *
Mayor Caldwell statement on HART audit
News Release from City and County of Honolulu, April 15, 2016
Honolulu – Honolulu Mayor Kirk Caldwell issued the following statement regarding the Audit of the Honolulu Authority for Rapid Transportation:
“I received the HART audit at noon today and will take my time to thoroughly review its findings and conclusions. Ultimately, the report provides an opportunity to address concerns about the rail project to the HART board of directors, as well as Executive Director and CEO Dan Grabauskas. My focus is on building this transformational project as quickly and inexpensively as possible. The residents of the City and County of Honolulu deserve no less."
* * * * *
RELATED: Full Text: Resigning Horner vs Martin–HECO vs HART
Coverage: