Street Renewal

Street Renewal is not strictly a “project”, rather it is a program consisting of multiple small projects which are intended to maintain and repair local surface streets within the City. The types of projects included in Street Renewal include:

 Maintenance – routine maintenance and minor repairs

 “Mill & Fill” – potholes and crack repair

 Refurbishment – stripping pavement and relaying

During the interviews conducted relative to Street Renewal a significant amount of the routine maintenance and “mill and fill” work is performed by Public Works Department employees, using City owned equipment and City purchased supplies. Because of the relatively small size of these projects Public Works follows Procedures and Practices which are significantly more standardized then those followed to execute what the Department refers to as “one off” projects such as the Kenaston Underpass or the Chief Peguis Trail. For projects under $100,000 dollars Public Works either performs the work or contracts with one of a pre-selected and pre-qualified group of construction contractors to undertake and complete Street Renewal projects.

Public Works treats the City streets as an asset and thereby schedules periodic asset reviews to identify maintenance, repair and refurbishment projects on an annual basis. Depending on the City Council budget authorization, (for example $13 million in 2005), Public Works prioritizes the needed maintenance, repair and refurbishment projects which can be accomplished within that authorized budget amount. Public Works will then determine which projects Department staff will perform and which it will award to specialty contractors to perform. Where logical and

warranted, Public Works will “bundle” a number of small refurbishment projects into a program and either direct award or bid that bundle of projects. The bundling of projects has become more prevalent in recent years as it has gotten increasingly difficult to interest bidders in tendering bids for very small projects.

Another critical factor in the planning and execution of Street Renewal projects is the relatively short construction season within which to complete the work. Due to the low temperatures which exist from late fall to spring, the planning and award of the projects scheduled for a given season must be let by June of each year in order to assure that the selected projects can be completed prior to the onset of the cold season. The actual number of Street Renewal projects undertaken in any given season is directly controlled by the funds authorized by the City Council and the estimated cost of the individual projects identified for renewal.

An example of a typical “bundled” Street Renewal project is Bid Opportunity No. 184-2005, which identified the following projects:

 Major Rehabilitation

 Rue De La Morenie

 Ducharme Avenue

 Elizabeth Road

 Kings Drive

 Lawndale Avenue

 Reconstruction

 Ave Gendreau

 Rue Lestang

 New Pavement

 Horace/Eugenie Lane

 Tremblay/St. Catherine Lane

In total Pegasus-Global was informed that the work comprising those projects as bundled was estimated to cost $1,480,000.

In a document dated 2005 entitled “Recommended Locations” Public Works identified 70 Street Renewal projects with estimated total cost of $13,311,000.⁹⁵ The project cost estimates ranged from a low of $22,000 to a high of $473,000. According to that document, 29 of those projects (41%) with a total estimated cost of $5,055,000 were planned to be executed using in-house resources. The remaining Street Renewal projects were bundled by identified consultant as follows:

 Dillion – 6 Projects estimated at $1,048,000

 Earth Tech – 5 Projects estimated at $1,402,000

 KGS – 3 Projects estimated at $734,000

 ND Lea – 7 Projects estimated at $989,000

 SEG – 7 Projects estimated at $1,488,000

 Stantec – 3 Projects estimated at $593,000

 UMA – 5 Projects estimated at $844,000

 Wardrop – 5 Projects estimated at $1,158,000

In total the 70 Street Renewal projects averaged an estimated cost of $190,157 per project with each project bundle totaling an average estimated cost of $1,479,000 ($13,311,000 / 9 bundles). If the City staff performed bundle is removed, the remaining six bundles had an average estimated cost of $1,032,000 ($8,256,000 / 8 bundles).

Pegasus-Global examined one “bundle” of projects awarded to Dillion (the “Dillion Bundle”) in order to test the cost and schedule management and control processes in place for that project bundle. The initial project estimate prepared for planning purposes for the Dillion Bundle was

$1,020,000. At the completion of detailed design the construction estimate for the Dillion Bundle had risen to $1,416,483, an increase of $396,483 (49%). The increase in estimates between conceptual (Class 5) and budgetary (Class 3) was just within the accuracy ranges expected using the AAECi estimate classification system. There was one addition to the full scope of work estimated at $137,800 prior to tender which raised the total estimated budget amount to

95 Recommended Locations – 2005, Public Works Department, January 25, 2005

$1,480,000. The actual project cost to date was reported at $1,477,167, or $2,833 lower than budgeted. Although there were eight change orders issued for a total of $88,692, the cost increase was absorbed by the additional funds included within the final tender budget; as a result the changes orders issued had no appreciable impact on the final cost of the project compared against the final construction budget set. (See Section 7.5 below)

The construction was planned to commence at the end of May 2005 and be completed as of the end of July 2005. Actual construction completion was October 24, 2005, with total performance completion achieved on November 9, 2005. Although the Dillion Bundle took longer than planned the project team noted that the delay was primarily due to the changes made in the scope of work and the fact that the contractor encountered poorer than expected soil conditions during construction.

Pegasus-Global found that despite the relatively small size of the projects, even when bundled, Public Works still executed the projects (individual or bundled) following the Procedures and formats promulgated by Materials Management via Administrative Directive No. FM-002. While some “short cuts” were taken by awarding bundled projects to pre-screened and qualified design consultants and contractors, Pegasus-Global found that the same Procedures, Contract Documents and procurement templates were in use by Public Works to execute Street Renewal Projects as those used for the major projects examined as part of this Program Management audit.

The attached Table 6, Street Renewal Project Practices, summarizes Pegasus-Global’s findings relative to the project practices.

6.2.5.1 Scope Management

As noted in Section 5.4.1 above, Pegasus-Global found no Corporate or Department Level procedure addressing planning, definition, work breakdown structure, or verification of scope which met the standards contained within the PMBOK^®. As a result Pegasus-Global had no basis of comparison against which to measure if the Street Renewal Project management of the project scope was consistent wit the Corporate and Department Levels.

Street Renewal Projects are generally of limited scope and duration, and use long known standard technology, techniques and materials. Therefore the primary planning for a Street Renewal Project involves staging of labor, materials and equipment, development of a linear work sequence and development of a traffic diversion plan. Pegasus-Global found that all of the Street Diversion Projects reviewed contained the same basic plan elements, with the basic scope plans and definitions contained directly within contract document sets.⁹⁶

Because the Street Renewal Projects are of such limited and well defined scope, change management is not as significant an issue as would be found in a project which involved construction of an office facility or a process plant. Nevertheless Pegasus-Global found that Public Works utilized and followed the full change management Procedures set by the Corporate and Department Levels.

Verification of scope was accomplished when the Contract Administrator issued a certification of Total Performance for each of the Projects contained within a particular project bundle. During interviews Pegasus-Global learned that generally the street renewal projects planned in a given season were completed as planned.

Overall Pegasus-Global found that the Street Renewal Project Practices relative to scope management were more standardized and repetitive than is considered the norm within the PMBOK^® standards, and therefore it would appear that the Street Renewal Projects do not fully meet the processes established within the PBMOK^®. However, the nature of the Street Renewal Projects lend themselves to such standardization, which provides an effective and efficient process for planning, defining and executing those projects. For that reason, Pegasus-Global found that the scope management Practices in place for the Street Renewal Projects are appropriate to the nature of those projects.

As noted above, management of change is not a significant issue in the Street Renewal Projects, yet at the Project Level Public Works followed and employed the full change

96 For example: See Bid Opportunity N0. 184-2005, Supplemental Conditions, Section D 2, pages 1 through 3

management Procedures established at the Corporate and Department Levels. Pegasus-Global found that the Practices in place for the Street Renewal Projects met the standards promulgated within the PMBOK^®.

6.2.5.2 Time Management

As noted in Section 5.4.2 above, Pegasus-Global found no Corporate Level Procedures addressing time management (scheduling), however at the Department Level scheduling Procedures were addressed in the Project Administration Manual.⁹⁷ Pegasus-Global found that because there were no Corporate Level Procedures and because the Department Level Procedures had never been updated, that the Procedures in place did not meet the standards promulgated within the PMBOK^®.

Pegasus-Global was surprised to find that even given the linear nature and relatively short duration of the vast majority of Street Renewal Projects that the Contract Supplemental Conditions required that the contractor prepare and submit the same Critical Path Method schedules as required of much larger, more complex capital projects undertaken and executed by the City. In a few instances Pegasus-Global observed that the contract document had been modified to eliminate the need for a Critical Path Method schedule and to standardize those schedules to some extent:⁹⁸

The Contractor shall provide the Contract Administrator with a detailed work schedule …

… the Gantt chart shall show the time on a weekly and working day basis, and the required proposed work for each location in the contract. The time shall be on the horizontal axis, and the type of work shall be on the vertical axis, including the following:

(i) Planning and removal of pavement (ii) Excavation

(iii) Placement of base/sub-base

97 Manual of Project Administration Practice, Preliminary Edition for Trial Use and Comment, March 1992, Section 7.4, page 7.12 through 7-17

98 Bid Opportunity N0. 184-2005, Supplemental Conditions, Section D12.1 and D12.5, pages 5 and 6

(iv) Related underground works

(v) Concrete works including curb and sidewalk (vi) Asphalt or concrete paving

(vii) Restoration

Eliminating the need to prepare a full CPM schedule and to some extent standardize the work schedule activities is a reasonable modification of the much more detailed and complex process involved in preparing the CPM schedule described within the Project Administration Manual and the current standards set within the majority of Contract Supplemental Conditions reviewed by Pegasus-Global during this Program Management audit.

In this particular situation Pegasus-Global believes that while the schedule management and control Practices for the Street Renewal Projects did not meet the standards set forth in the PBMOK^® or the Procedures contained within the Project Administration Manual, those Practices as modified by Public Works for the Street Renewal Projects are reasonable and appropriate.

6.2.5.3 Cost Management

As noted in Section 5.4.3 above, the Corporate and Department Level Procedures met the cost management standards promulgated within PMBOK^®, with the exception of estimating processes.

A review of the project documentation by Pegasus-Global found that the cost management Practices for the Street Renewal Projects met the Corporate and Department Procedures relative to budgeting and cost control and therefore also met the standards contained within the PMBOK^®.

The document review and the interviews conducted with project management staff also revealed that the project prepared cost estimates as the scope definition was defined and refined by Public Works and the design consultants engaged for each of the projects. As a result, Pegasus-Global found that the estimating Practices for the Street Renewal Projects exceeded the Procedures at the Corporate and Department Levels, and met the standards identified within the PMBOK^®. As with Schedule Management, Pegasus-Global believes that

the Street Renewal program could benefit from developing a standard estimating process and template for the project bundles which may improve the efficiency executing those estimates.

6.2.5.4 Quality Management

As noted in Section 5.4.4. above, Pegasus-Global found that no Quality Management and Control Procedures were found at the Corporate and Department Levels.

The Street Renewal Project General and Supplemental Conditions of Contract were silent relative to Quality Assurance or Quality Control. Pegasus-Global found no documentation which indicated that the Street Renewal Projects had developed or implemented any quality planning, quality assurance or quality control Practices for implementation during the execution of the project. Therefore, Pegasus-Global found that the Street Renewal Projects did not meet the quality management standards set forth in the PMBOK^®.

6.2.5.5 Human Resource Management

Pegasus-Global learned during the interview for this program that a single project manager was responsible for at least 22 projects executed under this program. As noted above those individual projects were bundled into eight packages. Pegasus-Global found that the Project Manager was fully knowledgeable as to the responsibilities of his position, with a clear understanding of his limits of responsibility and authority and had full and complete knowledge concerning the projects for which he was responsible. However, during the discussions Pegasus-Global realized that the ability to manage this program was in great part due to the individual’s extensive experience as a project manager and the fact that he had been managing these or similar type projects for a long time. It is possible that an individual with less experience in project management and in particular, in managing these particular types of project and project bundles would find it much more difficult to execute those project successfully.

This situation is representative of the fact that the City currently enjoys the benefit of a very experience and capable senior project management cadre which is able to work effectively and efficiently within the current project Procedures, Processes and Practices that exist. However,

should those individual project management staff members leave public service for the City, newer, less experienced staff would have to move into those positions quickly and without the benefit of that long term exposure to operating within those current project Procedures, Processes and Practices. Pegasus-Global recommends that the City take every opportunity to capture that current knowledge base in three ways:

(1) Utilize this experience in the formation of a more uniform, transparent set of capital project and program Procedures. Project management is an art that combines both formal tools and structures and creative response to unknown or unexpected situations which arise during execution of a project. This experience base could assist the Manager of Capital Projects develop uniform Procedures which provided the best “fit”

and the flexibility necessary to meet a variety of disparate project and program needs real time needs.

(2) Utilize this experience in capturing lessons learned across a variety of project types, sizes and complexities. The project management cadre as a whole has valuable experience that should be captured in such a manner as to pass the knowledge on to newer members of the project management cadre. This could be done by preparation of a “lessons learned” matrix that captured an issue, event or situation and indexed that information against options, actions and results.

(3) Utilize this experience in a more formal master/apprentice relationship which paired the experienced project management cadre members with new cadre members on specific assignments in order to provide direct hands on training and experience.

Pegasus-Global found no staffing plan for the street renewal program or projects, which given their size is not unexpected. The lack of a staffing plan force the conclusion that the management of human resources is not uniform or transparent, however in this situation as with other elements of management as they relate to this particular program of projects, a standardized template of required “positions” or duties could be developed from which staffing decisions might be made for both the routine renewals and the more challenging projects.

6.2.5.6 Communications Management

As noted in Section 5.4.6 above, with the exception of “Performance Reporting”, there were formal Procedures in place which governed project communications at the Corporate and Department Levels. With the exception of “Performance Reporting” Pegasus-Global also concluded that the Procedures adopted by the Corporate and Department Levels met the standards promulgated by PMBOK^®.

Pegasus-Global found that the Street Renewal Project Practices followed the Corporate and Department Procedures insofar as planning, distribution and management of stakeholders. In addition, Pegasus-Global found that the Street Renewal Project Practices required the same performance meetings and reports as required contractually in every other City capital construction project.⁹⁹ During review of the Street Renewal Project documents Pegasus-Global found examples of the minutes which were produced to record those progress meetings.

Overall Pegasus-Global found that the Practices followed by the Street Renewal Projects met the PMBOK^® standards for communications management and met the Corporate and Department Level Procedures in place, again acknowledging that the size of the projects exempted the project from many of the reports required of major projects, as defined within City Procedures.

6.2.5.7 Risk Management

As noted in Section 5.4.7 above, Pegasus-Global found no Procedures at the Corporate or Department Level which addressed requirements for a risk management program for capital projects.

Pegasus-Global found no indication that risk management Practices had been developed for, or were used during, the execution of Street Renewal Projects. Therefore Pegasus-Global concluded that the Street Renewal Projects did not meet the standards promulgated within the PMBOK^®.

99 Bid Opportunity N0. 184-2005, Supplemental Conditions, Section D23.1, page 9

Pegasus-Global as a rule believes that risk management is a necessary and positive function in the management and control of capital construction projects. However, given the relatively small size of the projects and the repetitive nature of the work, Pegasus-Global suggests that Public Works think of developing a standard potential risk element checklist for the various types of renewal projects, and utilize that checklist to ascertain if any of those risk elements are factors in a particular project and, if yes, develop simplified avoidance and mitigation plans and monitor the project for manifestation of those risks.

6.2.5.8 Procurement Management

As noted in Section 5.4.8 above, Pegasus-Global found that the Corporate and Department Level Procedures addressed all of the PMBOK^® procurement management functions and met the standards set for those functions.

During its review of the Street Renewal Projects Pegasus-Global found that project management team had aligned its procurement management Practices to match the Procedures set at the Corporate and Department Levels. As a result Pegasus-Global found that the Street Renewal Projects met the standards for procurement management contained within the PMBOK^®.

Although Pegasus-Global found that the procurement management Procedures and templates were used as set by the Corporate and Department Levels, Pegasus-Global does question the effectiveness and efficiency in using all of those Procedures and templates considering the

Although Pegasus-Global found that the procurement management Procedures and templates were used as set by the Corporate and Department Levels, Pegasus-Global does question the effectiveness and efficiency in using all of those Procedures and templates considering the