Lauren Sundararajan, CFE, Internal Audit Manager

Transcription

1 Interdepartmental Correspondence Sheet Date: September 2, 2015 To: From: Copies to: Subject: Harry Black, City Manager Lauren Sundararajan, CFE, Internal Audit Manager Sheila Hill-Christian, Assistant City Manager John Juech, Assistant City Manager Maraskeshia Smith, Acting Director of Public Services Kim Neal, Director of Citizens Complaint and Internal Audit Audit Attached is the (CFM) audit report. The objectives of this performance audit were to assess the efficiency and effectiveness of CFM with relation to maintenance, continuing need, and customer satisfaction. This audit was completed in accordance with Internal Audit s current work plan. We would like to thank the CFM staff for their assistance and cooperation during this audit. If you need any further information please contact me. Attachment

2 Department of Public Services September, 2015 Lauren Sundararajan, CFE Internal Audit Manager Conor Moore, CGAP Senior Internal Auditor

3 Table of Contents Executive Summary I. Introduction Background Audit Selection Audit Objectives Audit Scope and Methodology Statement of Auditing Standards Commendations 1 2 II. III. IV. Audit Findings and Recommendations Conclusion Department of Public Services Response i

4 Executive Summary Internal Audit (IA) performed an audit of the (CFM) division, currently housed in the Department of Public Services (DPS). The objectives were to assess the efficiency and effectiveness of CFM with relation to maintenance, continuing need, and customer satisfaction. IA used program data (internal tracking documents, files), reviewed processes and procedures, financial documents and interviewed CFM staff and interdepartmental staff to make this assessment. CFM had the goal to perform preventative maintenance (PM) on each property every 6 months in each of the 5 trades (Electrician, Plumbers, HVAC, Carpenters, and Masons). In reviewing the tracking methods, IA found that technology limitations created significant hurdles for CFM staff. The Maximo database utilized by CFM for work-order tracking was several generations behind on updates, which rendered the program useless for reporting purposes; additionally, entry errors that could be corrected if database queries were available, have made the data unreliable. DPS is in the process of implementing a fully updated version of Maximo, but it will likely be at least 12 months before it is fully implemented and operating. The task of updating all the information in the new system is daunting, as a simple data merge will not be sufficient due to the unreliable nature of the information in the current system. According to the internal goal of performing PMs in each property for each trade every 6 months, IA found that CFM was significantly behind, with only 34% meeting this criterion. Also, the data was inconsistent between Maximo and the work-order paperwork, which would make any database queries invalid. Correcting these errors will require reviewing the properties and work-orders individually and making the necessary changes. CFM will face significant turnover in the coming years; 3 of the top 4 positions are currently filled by individuals that will be eligible to retire in the next 1-5 years. IA found that many of the policies, procedures, and general institutional knowledge from these (and other) individuals were not documented. 1

5 I. Introduction Background The Public Services Department s Division (CFM) oversees the City s properties and building improvements, including maintaining City-owned buildings. CFM is responsible for property management (including space allocation), maintenance, City Hall campus operations, architectural design services for new City projects, and various historic landmarks, such as Fountain Square, Music Hall, and Union Terminal, through contracts with various entities like the Cincinnati City Center Development Corporation (3CDC). CFM oversees more than 2 million square feet in general fund properties, and works with contracted services for many historical properties that are owned by the City to ensure that funds are spent appropriately. In FY2016, CFM has $2.2 million budgeted for facilities renovation and repairs, down from $3.2 million in FY2015. Currently, CFM includes 16 tradesmen, 1 supervisor of maintenance, 2 office staff, 2 assistant facilities maintenance managers, 1 supervising architect, 2 architect interns, and a Facilities Manager. CFM utilizes the Maximo database for tracking work-orders for maintenance, however, the version of Maximo is several generations behind on updates, possibly due to tailoring the system to meet the needs of CFM when it was originally purchased. These alterations to the software made it prohibitively expensive to revert the program back to its original state, and then update it to the latest version. Unfortunately, these changes have also made it so that reports are not able to be run by CFM. There are five trades that operate under the umbrella of CFM with all other services being provided by private resources. They are: Electricians, Plumbers, HVAC, Masons, and Carpenters. These tradesmen perform preventative and regular maintenance on a scheduled and as needed basis. The tradesmen receive paper work-orders, on which they track their work; that paperwork is then given to the office staff along with documentation for parts that were used to perform the necessary maintenance. The CFM office staff is responsible for updating the work-order in Maximo, per the information provided by the tradesmen. 2

6 Audit Selection IA conducted this audit as part of the FY2015 audit agenda. Audit Objectives The primary objectives of this audit were to assess the efficiency and effectiveness of CFM with relation to maintenance, continuing need, and customer satisfaction. Audit Scope and Methodology This audit focused on the operations of the Division of the Department of Public Services, with particular attention on preventative maintenance plans and schedules, performance measures, and restricted funds used for the Division. IA reviewed program data for 2014 and 2015, processes and procedures, financial reports, and interviewed relevant staff. Statement of Auditing Standards As required by Article II, Section 15 of the City of Cincinnati Administrative Code, this audit was conducted in accordance with the Generally Accepted Government Auditing Standards (GAGAS), except for standard 3.96 pertaining to external peer review requirements. This exception did not have a material effect on the audit. Audit fieldwork was performed between May and July, Commendations Internal Audit commends the staff of on their cooperation throughout the audit. 3

7 II. Audit Findings and Recommendations Preventative maintenance was not performed in a timely manner for properties overseen by CFM. CFM is responsible for overseeing the maintenance and repairs of 64 City owned properties. Based on interviews with CFM, the internal metric for scheduling PMs is for each trade to perform 1 PM every 6 months. IA randomly selected 10 of the 64 properties to determine when the latest PM was completed and whether it was within the previous six months. Each of 64 properties should receive a PM for each of the 5 trades, for a total of 320 PMs. According to interviews, CFM instituted a new tracking system in the late spring of This tracking method utilized a spreadsheet of all the properties populated by data from Maximo, and paper work-orders. The spreadsheet was provided on May 28, 2015, so any PMs done after November 28, 2014 were considered timely per the CFM standard. By sampling 10 properties, IA considered there to be 50 potential PMs (10 properties and 5 trades), referred to here as instances. IA compared the master tracking spreadsheet used by the Assistant Facility Maintenance Manager and reviewed the filed paperwork to ensure the tracking document was accurate. For the purposes of this finding, IA is referring to the filed paperwork obtained by IA. There were 17 instances that had occurred in the previous 6 months (34%); 13 instances occurred prior to the 6 month period (26%); and 20 did not have paperwork for a PM filed (40%), meaning PMs had not been performed in 2014 or 2015, although they may have occurred in the period prior to the dates selected for IA review. In interviews, CFM indicated that steps were being taken to better define the necessary time intervals between PMs for each of the trades, to better fit leading practices. Recommendation 1: CFM should develop a strategy to perform PMs in a timely manner. Department Response: Agree. The spreadsheet tracking system maintained by the Assistant Facility Maintenance Manager was not being updated by field staff. CFM has been operating without two support positions which were vacant due to retirements of two Administrative Technicians. It was discovered field staff were submitting the paperwork to a temporary staff employee without it being tracked. Staff now submits the paperwork on all PMs directly to the Manager for tracking purposes. Since the Audit began CFM has filled one the Administrative positions who will take over responsibility of entering these PMs on the tracking sheet. This will be further enhanced once the Maximo system is updated. Work-orders details were inconsistent between Maximo and paper work-orders. When IA reviewed the paperwork for PMs, inconsistencies were found between Maximo and the paper work-orders used by the tradesmen to track what has been done at a property. The process for paperwork is as follows: a paper work-order will be printed from Maximo and given to a tradesman. The tradesman will perform the required PM, write down the work performed, date, and sign the document. This document will be turned in to the front office staff, along with any documentation regarding parts replaced or repaired. This information is then updated in Maximo by the CFM office staff. 4

8 For example, work-order # was assigned to the trade plumber but the paper work-order has the word plumber crossed out and HVAC is handwritten beside it. The description text box for work performed includes PM HVAC system in Maximo, but is still categorized as plumber in the drop down categorization field. While this is a minor issue, it makes database queries difficult for management as this result would be included as Plumbing, not HVAC, when reviewing the most recent PMs. In interviews with the Assistant Facility Maintenance Manager, IA observed the information in Maximo for PMs and saw several other instances of this categorization issue. Another example is work-order # It was categorized as a PM in Maximo, but the paper work-order indicates that regular work was performed. If the information in Maximo is incorrect, then it would show as being in compliance with the 6 month period, and could result in PMs not being performed for another 6 months. There are technological solutions, which could help control for these issues, already in use in the City. Preventative Maintenance Code Enforcement in the Department of Buildings & Inspections utilizes tablets to connect to the Permits Plus database and allows the inspectors the ability to continually work in one technology environment. This reduces the number of times data must be entered, and allows a supervisor to see when things are updated and by whom. CFM and Public Services are in the process of updating Maximo to a current version that will require much of this information. While the implementation process for a new version will likely take 12 months, at least, CFM may be able to utilize the time prior to organize the data for the transition. Recommendation 2: CFM should carefully review PM documentation and make any corrections to Maximo to ensure consistency of information. Department Response: Agree. Due to vacancies CFM did not have the Administrative Technician staff to enter and correct information into the Maximo system for any changes in the field. Currently this is being be addressed by the Supervisor of Maintenance and the Assistant Facility Maintenance Manager by training the staff handling work order intake to properly input data. Even with that step the information provided to CFM by callers is sometimes inaccurate as they often do not understand the building issue correctly so the initial work order will need to be adjusted. Making the necessary changes under the current paper based process will be assigned to our Administrative Technician. Finally, when the Maximo system is updated and field staff is provided the correct mobile devices they will be able to make these changes in the field when the issue is discovered. Recommendation 3: CFM should update technology to allow tradesmen to move away from using paper work-orders and towards a single technology medium to reduce the number of opportunities for inconsistencies. Department Response: Agree. The updated Maximo system with mobile devices for the field staff will allow the tradesmen to enter data directly into work orders and document items while at the site. This will allow any corrections, notes, equipment numbers and field changes to be immediately entered into the Maximo system. Long term that will provide the managers useful information for scheduling future PMs and planning the work sequence. 5

9 The scope of what constitutes preventative maintenance was not defined. As with much of the knowledge in CFM, it is contained in the collective knowledge of the division, but not written. Many of the supervisors have been promoted through the general staff and are well aware of what tasks are required for each craft in terms of maintenance work. However the tasks are not specified making third party verification of completed work impossible. Further, without documenting what steps are to be taken, the risk that crucial items could be missed increases dramatically. Training materials could also be created from the scope of work to ensure that any new tradesmen are aware of what is required in each facility. Documenting the scope of work involved in PMs and the materials and assets in each property will provide the necessary information to properly use and populate a database, which will allow tradesmen to operate in the field more independently. Recommendation 4: CFM should define and document the tasks of preventative maintenance for each trade. Department Response: Agree. CFM field staff have assembled list of all items requiring PMs for all trades. This information will be entered into a simple checklist for use in the field until the updated Maximo system can be populated with the same information. The assembly of this information will be assigned to the Administrative Technician. There were no written policies or procedures governing operations. Aside from department wide policies and procedures, as well as Human Resources policies, CFM has no written policies and procedures specific to the function of the division. These functions include preventative maintenance, regular maintenance, architectural design, space allocation, and project management. A tremendous amount of the division knowledge is unwritten. Upper management includes 3 people that can retire within 5 years. These individuals have awareness of preventative maintenance, project management, budgeting knowledge, and other institutional knowledge. There are no succession plans currently in place to ensure that knowledge is passed along as the current supervisors retire. Recommendation 5: CFM should develop written policies and procedures governing operations, to ensure smooth operations and transitions in the event of staff turnover. Department Response: Agree. Senior staff has been assigned to list all procedures covering all sections of work they have learned by direct verbal training during their years here at the City. This list is due to the Facility Manager by the middle of November Draft procedures are to be formulated by the end of December and final policies reviewed and approved by the Department February 1, This will greatly improve succession planning as retirements approach. Concurrently CFM will schedule monthly reviews and training on these procedures with staff eligible for promotion. We recommend also that we work with Human Resources and our AFSMCE and Trade staff who expresses interest in additional education or training to become eligible for these promotional opportunities. 6

10 There was no plan for accomplishing PMs or prioritizing repairs. Staffing levels, a lack of technology upgrades, and years of deferred maintenance have caused a backlog of PMs and more frequent repairs to facilities. CFM has identified over $100 million in repairs and replacements. For FY2016, CFM has been budgeted $2.2 million for City Facility Renovation and Repairs. While it is not practical or sound strategy to allocate $100 million for a biennial budget, a strategic plan should be developed to balance long term needs, emergency situations, and available resources. Recommendation 6: A plan should be developed to ensure that preventative maintenance is done on time, with a focus on the long term health of City facilities; and that contingencies exist, in the case of major repairs, to ensure that necessary maintenance is not delayed. Department Response: Agree. CFM field staff have assembled a listing of all equipment requiring PMs for all trades and contract services. This information will be entered into a simple checklist and frequencies of service with priority ratings added. Using CFM s current staff and contractual resources a PM schedule for three month periods will be issued to address these needs. This schedule will then be verified and adjusted to accurately reflect the amount of funding or staff time necessary to complete PMs compared to industry standards. The Department of Public Services has documented a shortfall in capital funding so we are not keeping pace with our replacement of equipment in our aging buildings. A comprehensive capital plan was submitted during the last budget cycle and will continue to be updated and submitted. This new PM plan will be coordinated with the capital plans to also be included in any future budget request. Verification of oversight was not documented. The Supervisor of Maintenance is responsible for oversight of the tradesmen. According to CFM, the Supervisor performs spot checks and random drop-ins on the tradesmen to ensure that work is being performed as stated. Random checks are a valid internal control and are utilized in the performance reviews of the tradesmen. However, CFM does not require documentation of these spot checks, and therefore the Assistant Facility Maintenance Manager must trust that the checks are being done. There is no indication that the oversight is not being performed, however, third party review could not be accomplished. Recommendation 7: CFM should create a system to ensure that oversight is documented. Department Response: Agree. The Supervisor of Maintenance will use the same format for tracking time on work orders as the tradesmen. When the Maximo system is updated and mobile devices provided the Supervisor of Maintenance will be able to utilize the enhanced system, comment in the field on the work and if necessary issues new work orders. The larger issue is spot checking work is not sufficient to properly maintain the quality work of both City trade staff and the numerous contractors performing work for CFM. During the last budget cycle CFM submitted a request to fund an additional Supervisor of Maintenance position to increase the daily oversight of field work. This request will be submitted again during the next budget cycle. 7

11 Funding for Centennial II was complicated and unequal between tenant departments. The restricted fund (340) was created in order to fund the operations and maintenance of the Centennial II office building that houses many City departments. When originally purchased, Centennial II had several private lessees whose rent helped pay for maintenance and operations of the building. Burke Marketing was the last private tenant to leave the facility, and the fees for breaking the lease will be paid in full soon. Fund 340 was funded through a combination of these private rents and "rental" payments from tenant City departments. In practice, when a new department moved to Centennial II, any funds that were paid to private landlords were, instead, transferred into Fund 340, or to general fund (050) for CFM and ID billed into 340. The funds that were transferred out of the departments were no longer represented in the departmental budgets. The funds in CFM s 050 are used to pay for any department that is primarily funded through 050, but an analysis has not been done to determine whether these funds are sufficient. Generally, departments that have other sources of income pay a rental fee, while those without, are funded through CFM. Recommendation 8: CFM should work with the administration to complete an analysis of the funding model for Centennial II to determine the long-term maintenance costs to be paid by appropriate and proportional rent from tenant departments. All tenant departments should pay rent fees to fund 340, and budgets should reflect any increases necessary to ensure the property is maintained. Department Response: Agree. The Department will request assistance from the Budget office to create an equitable distribution of the current budget to all departments. In creating this distribution we will differentiate between general fund agencies and enterprise services. Due to their fee structures these enterprise service agencies are set up to cover expenses and not just meet budgetary limits. This will allow the building to maintain operations at its current levels. 8

12 III. Conclusion Technology limitations have created significant hurdles for CFM staff. The Maximo database is in the process of being updated; however, if preparation is not carefully considered, the data that will populate the database will be incorrect and could cause significant delays in utilizing the information in the best way possible. Steps must be taken to document roles, processes and procedures in order to get the most out of the new system. Special care should be taken to ensure institutional knowledge is retained, as much of the senior staff will be eligible to retire in the next 1-5 years. The need to use paper and the database has increased the number of opportunities for mistakes, and streamlining the entry of data into the system will help mitigate and control for these errors. Tablet technology should be explored for use in the field to allow the tradesmen to operate in the same system at all times. This will reduce the number of opportunities for errors and a clearer way to identify and correct any issues. Interviews with CFM indicated that steps were already being taken to review the timeline for PMs to ensure that industry standards were being followed, rather than following a single standard for all trades. In addition, IA found that the staff was extremely knowledgeable and willing to identify issues and help work towards solutions. 9

13 IV. Department of Public Services Response Department Response: The Department and CFM are looking forward to implementing solutions to each of these recommendations. CFM s goal is to move from a six month PM schedule to one following manufacturer and industry standards for frequency of work. This will require technological solutions that include ongoing cost, updates and availability of staff to maintain the data. As this process moves forward these roadblocks will be identified and if needed submitted during subsequent budget request. The required budgetary and administrative support to fully implement these IT solutions is tantamount to the long term success of this Audit. Recommendation 1: CFM should develop a strategy to perform PMs in a timely manner. Department Response: Agree. The spreadsheet tracking system maintained by the Assistant Facility Maintenance Manager was not being updated by field staff. CFM has been operating without two support positions which were vacant due to retirements of two Administrative Technicians. It was discovered field staff were submitting the paperwork to a temporary staff employee without it being tracked. Staff now submits the paperwork on all PMs directly to the Manager for tracking purposes. Since the Audit began CFM has filled one the Administrative positions who will take over responsibility of entering these PMs on the tracking sheet. This will be further enhanced once the Maximo system is updated. Recommendation 2: CFM should carefully review PM documentation and make any corrections to Maximo to ensure consistency of information. Department Response: Agree. Due to vacancies CFM did not have the Administrative Technician staff to enter and correct information into the Maximo system for any changes in the field. Currently this is being be addressed by the Supervisor of Maintenance and the Assistant Facility Maintenance Manager by training the staff handling work order intake to properly input data. Even with that step the information provided to CFM by callers is sometimes inaccurate as they often do not understand the building issue correctly so the initial work order will need to be adjusted. Making the necessary changes under the current paper based process will be assigned to our Administrative Technician. Finally, when the Maximo system is updated and field staff is provided the correct mobile devices they will be able to make these changes in the field when the issue is discovered. Recommendation 3: CFM should update technology to allow tradesmen to move away from using paper work-orders and towards a single technology medium to reduce the number of opportunities for inconsistencies. Department Response: Agree. The updated Maximo system with mobile devices for the field staff will allow the tradesmen to enter data directly into work orders and document items while at the site. This will allow any corrections, notes, equipment numbers and field changes to be immediately entered into the Maximo system. Long term that will provide the managers useful information for scheduling future PMs and planning the work sequence. 10

14 Recommendation 4: CFM should define and document the tasks of preventative maintenance for each trade. Department Response: Agree. CFM field staff have assembled list of all items requiring PMs for all trades. This information will be entered into a simple checklist for use in the field until the updated Maximo system can be populated with the same information. The assembly of this information will be assigned to the Administrative Technician. Recommendation 5: CFM should develop written policies and procedures governing operations, to ensure smooth operations and transitions in the event of staff turnover. Department Response: Agree. Senior staff has been assigned to list all procedures covering all sections of work they have learned by direct verbal training during their years here at the City. This list is due to the Facility Manager by the middle of November Draft procedures are to be formulated by the end of December and final policies reviewed and approved by the Department February 1, This will greatly improve succession planning as retirements approach. Concurrently CFM will schedule monthly reviews and training on these procedures with staff eligible for promotion. We recommend also that we work with Human Resources and our AFSMCE and Trade staff who expresses interest in additional education or training to become eligible for these promotional opportunities. Recommendation 6: A plan should be developed to ensure that preventative maintenance is done on time, with a focus on the long term health of City facilities; and that contingencies exist, in the case of major repairs, to ensure that necessary maintenance is not delayed. Department Response: Agree. CFM field staff have assembled a listing of all equipment requiring PMs for all trades and contract services. This information will be entered into a simple checklist and frequencies of service with priority ratings added. Using CFM s current staff and contractual resources a PM schedule for three month periods will be issued to address these needs. This schedule will then be verified and adjusted to accurately reflect the amount of funding or staff time necessary to complete PMs compared to industry standards. The Department of Public Services has documented a shortfall in capital funding so we are not keeping pace with our replacement of equipment in our aging buildings. A comprehensive capital plan was submitted during the last budget cycle and will continue to be updated and submitted. This new PM plan will be coordinated with the capital plans to also be included in any future budget request. Recommendation 7: CFM should create a system to ensure that oversight is documented. Department Response: Agree. The Supervisor of Maintenance will use the same format for tracking time on work orders as the tradesmen. When the Maximo system is updated and mobile devices provided the Supervisor of Maintenance will be able to utilize the enhanced system, comment in the field on the work and if necessary issues new work orders. The larger issue is spot checking work is not sufficient to properly maintain the quality work of both City trade staff and the numerous contractors performing work for CFM. During the last budget cycle CFM submitted a request to fund an additional Supervisor of Maintenance position to increase the daily oversight of field work. This request will be submitted again during the next budget cycle. 11

15 Recommendation 8: CFM should work with the administration to complete an analysis of the funding model for Centennial II to determine the long-term maintenance costs to be paid by appropriate and proportional rent from tenant departments. All tenant departments should pay rent fees to fund 340, and budgets should reflect any increases necessary to ensure the property is maintained. Department Response: Agree. The Department will request assistance from the Budget office to create an equitable distribution of the current budget to all departments. In creating this distribution we will differentiate between general fund agencies and enterprise services. Due to their fee structures these enterprise service agencies are set up to cover expenses and not just meet budgetary limits. This will allow the building to maintain operations at its current levels. 12