Report 2010-122 Highlights - April 2011
California Department of Transportation:
Its Capital Outlay Support Program Should Strengthen Budgeting Practices, Refine Its Performance Measures, and Improve Internal Controls
Our review of the California Department of Transportation's (Caltrans) Capital Outlay Support Program (support program), highlighted the following:
- Caltrans has done little analysis to determine the frequency or magnitude of support cost budget overruns and to inform stakeholders of the overruns.
- Sixty-two percent of the projects that completed construction during fiscal years 2007-08 through 2009-10 had support costs budget overruns, which totaled more than $305 million of the $1.4 billion of such cost expenditures made during that period.
- Differences between a project's budgeted and actual support costs are due primarily to an increase in the hourly rate for support costs—one project we reviewed was about 14,600 hours under budget yet nearly $6.8 million over the cost budgeted.
- Some potential causes for support cost overruns include:
- Project managers did not use a detailed approach to develop a support budget when the project was ready for construction.
- Project managers monitored their budgets based primarily on the hours charged and not the dollars spent.
- Although Caltrans has established a goal of reducing total support costs to 32 percent of the total capital costs, it has historically failed to use a consistent method to calculate the ratio over time, and has generally not met its goal for the last three fiscal years.
- Caltrans' time-reporting system lacks strong internal controls, and better project monitoring and the use of performance metrics could help it minimize cost overruns.