Office of Internal Audit

Summary Report to the Committee on University Audits

Report Date: February 2014 Auditee: University of Hawaii at Mnoa (UHM) Office of Facilities and Grounds (OFG) Description of audit: Review the development and construction of the Clarence T.C. Ching Athletic Complex (Complex) managed by OFG. Type of audit: Operational and Financial Period under audit: Not applicable Summary of audit results and recommendations: Aggregate development costs associated with the Complex pursuant to signed contracts approximated $13.7 million. OFGs current estimated cost at completion is approximately $16.7 million with an anticipated completion date of April - May 2014. The delays and additional costs are primarily attributable to the following: Asbestos: During July 2012, unexpected asbestos was detected in the existing underground concrete encased conduits adding 45 days to the construction schedule and increasing costs by approximately $160,000. HVAC exclusion: The general contractors HVAC cost estimate of $995,000 was excluded from their construction contract due to lack of available funds. In November 2012, the general contractor was notified to proceed with the HVAC work. The HVAC subcontractor engaged by the general contractor subsequently identified design drawing conflicts between structural, mechanical and electrical work. The exclusion of the HVAC work at construction commencement added 122 days to the construction schedule. Additional architecture services: OFG informed Internal Audit that the architect was instructed to exclude required design services from the architects contract such that the contract would not exceed $1 million. A change order was subsequently processed amounting to $335,000.
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Overall: Various reasons contributed to the delay in the completion of the Complex (anticipated completion date of July 2013) as well as the unanticipated cost overruns of approximately $1.7 million ($3 million additional contract costs less the expected $335,000 of architectural services and $995,000 of HVAC work.). The detection of asbestos in underground conduits was unforeseen. However, Internal Audit believes more comprehensive design plan reviews and increased and timely collaboration by OFG and its service providers with respect to construction expectations and costs could have reduced the number of delay days and cost overruns

Risk rating (include quantitative and qualitative reasons for a rating of Low, Medium or High for the following categories if applicable - financial, compliance, operational): Medium OFG has adopted procedures and practices (such as Architectural Design Programming) that they believe will assist them in better managing the construction schedule in addition to cost overruns. Auditees responses/corrective action plan: OFG concurs with and is adopting procedures and practices to address Internal Audits observations.