Review of Port Everglades Capital Construction Planning Process

Transcription

1 Review of Port Everglades Capital Construction Planning Process October 11, 2006 Report No Office of the County Auditor Evan A. Lukic, CPA County Auditor Office of the County Auditor 0

2 EXECUTIVE SUMMARY The Office of the County Auditor conducted a review of the Port Everglades capital construction planning process. This review was initiated by our Office as a part of a comprehensive approach to examining Port Everglades construction related activities and processes. As many of the capital improvement projects at Port Everglades require extensive foresight and development, our goal was to evaluate if the current planning process is sufficient to meet and anticipate the needs of Broward County. SCOPE AND OBJECTIVE The primary objective of the review was to evaluate the adequacy of the Port Everglades capital planning process regarding: Implementation and review of master planning documents Current staffing plan and levels Ongoing development of planning activities. METHODOLOGY To accomplish our objectives we reviewed: Organizational structure and staffing Port Everglades reports and planning documents. In addition to the review of the information listed above, we: Conducted interviews with Port Everglades staff Applied other auditing procedures as deemed necessary. SUMMARY OF ISSUES The findings of this review indicate that the Port Everglades capital planning process has not been afforded an appropriate level of attention and priority. As a result, planning activities do not appear to be adequate to meet the growing needs of the Port. Based on our observations, the planning section 1 at Port Everglades is performing its role with limited resources. The ongoing assignment of additional responsibilities to the section has significantly impacted its ability to perform long range master planning activities. Port Everglades management staff should take appropriate steps to assess and modify the current Port Everglades capital planning process. The continued development and expansion of planning activities will assist Port Everglades in meeting future challenges and remaining competitive as an international port facility. 1 It is important to note that the planning section referred to throughout this report is comprised of one staff member, the Strategic Planning Manager. Office of the County Auditor 1

3 Our primary concern is: Capital planning has not received an appropriate level of priority at Port Everglades; as a result planning activities are rudimentary. (see page 7) It is important to note that Port Everglades is currently transitioning responsibility for the planning function within their organizational structure demonstrating a proactive approach in prioritizing the planning process and addressing several of the issues identified within this report. This presents an ideal opportunity for management to implement the changes necessary to augment the planning process. We would like to thank Port Everglades Management and the Public Works Seaport Construction and Planning Division (SCPD), and all other County employees who aided in the completion of this review. Office of the County Auditor 2

4 BACKGROUND Port Everglades (PE) is currently one of the nation s busiest seaports, providing services to twenty cruise lines, thirty five cargo shipping lines and thirteen privately owned petroleum terminals. The Port is also South Florida's primary bulk cargo depot, serving as a major petroleum storage and distribution hub and a favorite U.S. Navy liberty port. The Port Everglades complex encompasses approximately 2,190 acres with 356,800 square feet of warehouse space and over thirty deep-water berths. 2 It is estimated that Port Everglades has an annual impact of $2.87 billion on the South Florida economy providing over 25,000 direct and indirect jobs. 3 Source: Port Everglades Facilities Guide & Directory 2006 Port Everglades falls within three separate municipalities - the cities of Hollywood, Dania Beach and Fort Lauderdale, as well as unincorporated Broward County. The Port is also located adjacent to Fort Lauderdale - Hollywood International Airport, Interstate 595 and the Florida East Coast Railway. PE s straight, short, wide and deep entrance channel provides easy access to and from the Atlantic Ocean for a variety of ships. 4 Although PE is a department of Broward County government, it operates as an Enterprise Fund. As such, PE generates its own revenues in order to pay for its expenses and capital improvements. In 2005, PE had over $105 million in operating revenue and $65 million in expenses. 5 This represents a growth rate of 87% in operating revenue and 131% in expenses from 1996 (see Exhibit 1, on the following page, for additional details). 2 Excerpts from Port Everglades website: 3 Information obtained from the Port Everglades Facilities Guide & Directory Information obtained from the Port Everglades Facilities Guide & Directory Information obtained from the Port Everglades Facilities Guide & Directory Office of the County Auditor 3

5 Exhibit 1: Port Everglades Revenue and Expense History Port Everglades Operating Revenue and Expense History FY $120,000,000 Dollar Amounts $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 Operating Revenue Expenses Fiscal Year Source: Port Everglades Annual Commerce Report, FY 2005 As shown above, Port Everglades has grown significantly in the past ten years and continues to expand to meet the demands of its business operations. New customers are solicited on a regular basis and higher volumes of trade are encouraged. The annual Air and Sea Show and Fleet Week activities provide tourist revenue and significant media attention. However, even as business grows, there are continuing challenges to ongoing operations at the Port including: Heightened security requirements since the events of September 11 th Increased transportation needs; including development of roadways and proposed intermodal center /people mover system Increased parking needs for cruise line customers Need for deeper channels to accommodate larger ships (US Army Corps of Engineers Portwide Dredging Project) Need for expanded infrastructure to accommodate larger ships and increased cargo/container volume Need to create additional berths for ships These needs are being addressed through current and proposed capital projects at PE (see Exhibit 2 below). Exhibit 2: Port Everglades Capital Improvement Projects Passenger Loading Bridges Cruise Passenger Terminals Parking and Traffic Circulation Improvements Southport Container Yard Developments Port Everglades Security Improvement Program (recently completed) Eller Drive Overpass (FDOT funded project) Eller Drive Return Loop (FDOT funded project) Intermodal Center/Automated People Mover US Army Corps of Engineers Portwide Dredging Project Source: Port Everglades Annual Commerce Report, FY 2005 Office of the County Auditor 4

6 In addition to practical business concerns, environmental responsibilities at PE play a significant role in the planning process. PE is currently one of nine initial participants in the Environmental Protection Agency s Environmental Management System program. This program aims to mitigate environmental impacts to the Port s water and land through the reduction of solid and liquid wastes. PE has implemented programs to protect endangered species such as sea turtles and manatees. PE grounds also include protected mangrove ecological systems. In this dynamic environment, the capital planning process is critical to ensuring the Port s ongoing success. Across the United States, container ports are struggling to increase capacity in order to handle the booming import industry. A primary challenge in this process is finding ways to accommodate growing business with the same amount of dockside land and space. 6 In order to facilitate the strategic and capital planning process, many ports engage the services of private consulting firms. In 2000, PE commissioned TranSystems Corporation to prepare the Port Everglades Master Plan Update The resultant report was completed in late PE management presented the Master Plan to the Board, but did not recommend its approval due to security concerns regarding the events of 9/11 and changes within Port management. Without the guidance of a fully developed and approved plan, PE and SCPD have faced challenges in the capital construction planning process. Presently, DMJM Harris has been retained by PE to prepare a five year master plan and ten and twenty year vision plans. 7 The plans, which are anticipated to be completed by spring 2007, will explore how PE can expand and enhance its existing facilities in an economical and efficient manner. Until recently, the Strategic Planning Manager position had been a part of Seaport Construction and Planning Division (SCPD), a section of the Facilities Maintenance Division for the Public Works and Transportation Department. As part of SCPD, the planning function was responsible for the development and implementation of planning projects and studies for the Department of Port Everglades. 8 Effective June 17, 2006, the Strategic Planning Manager position has transitioned from SCPD and is now a part of the Port Director s Office (see Appendix A, pages 11-12). As this change occurred during the course of this review, several of the comments included in this report are reflective of the planning function as a part of SCPD, with recommendations for improvement addressed to PE. 6 ENR Engineering News-Record, July 2006 Design Firms Sourcebook, Transportation. 7 The South Florida Business Journal, July 18, Seaport Construction and Planning Division website. Office of the County Auditor 5

7 Observations and Discussion The following section of this report provides detailed information regarding observations made during our review. As necessary, additional information is provided in referenced appendices. Role of Planning in Port Development The development of a multiyear master plan is a key component of the planning process. The master plan should reflect management goals and provide direction and vision for growth and development. Ideally, the plan should be updated on a regular (annual) basis, consistently incorporating and accounting for new opportunities and challenges. However, the master plan itself does not replace the need for ongoing involvement of the planning function in the day to day operations of a port facility. It is important to note that once a proposed project is approved, the planning process remains a critical function, assisting in the ongoing identification of resources and project development. Strategic and capital planning for a port facility encompasses several disciplines. It is a multifaceted practice incorporating areas such as: current and long range planning; comprehensive planning; land use planning; transportation planning; business planning; budgeting, grant writing and administration. A recent Port Management Series analysis 9 cites port planning as a tool for distinguishing between solid opportunities and latent disasters and a rationale for [the] acceptance or rejection of potential opportunities. The report also emphasizes the importance of strategic and business planning in enabling a port facility to become proactive and able to manage risk and make informed decisions. In 1999, the American Association of Port Authorities (AAPA) s Planning and Research Committee distributed a survey to its members regarding key strategic issues facing ports. Of 150 ports surveyed 10, 104 responded, indicating that 83% have an established strategic planning process, of which 99% felt it has been effective for their port. More than one third (37%) of the respondents indicated that they complete the strategic planning process on an annual basis. The top ten strategic issues identified were: Facility expansion/modernization Ability to secure funding/financing Pricing pressures and new revenue sources Environmental regulation Railroad and highway intermodal access Global economic trends Land acquisition and site development Dredging and disposal 9 Considering Strategic Planning for Your Port? Port Management Series, by Thomas J. Dowd, FCIT; report completed by Washington Sea Grant # NA 86 AA-D-SG044, Project R/MS Surveyed and responding ports include: United States, Canada, the Caribbean and Latin America. Port Everglades is also a member of AAPA, and the Strategic Planning Manager is a current member of the AAPA s Planning and Research Committee. Office of the County Auditor 6

8 Federal legislation and regulation Introduction of larger ships. These issues are consistent with the current needs of Port Everglades as identified earlier in this report. This review serves to highlight the importance of capital planning activities for Port Everglades in order to maintain its status as one of the nation s busiest port facilities. Capital planning has not received an appropriate level of priority at Port Everglades; as a result planning activities are rudimentary. A lack of sufficient planning activities at PE has lead to reactionary decision making. As PE has expanded throughout its 75 year history, additional amenities for cargo, cruise and petroleum were constructed and modified on an as needed basis. This approach has resulted in the less than optimum physical layout of Port facilities. Although long term needs are not easily predicted, a lack of planning and consideration of consequences can still be observed in many of the Port s recent expansion activities. Examples of insufficient planning can found in: the construction of the Northport parking garage traffic congestion along McIntosh Road placement of checkpoint gates. The lack of prioritization of the overall planning process was also observed in other aspects of PE operations. The Strategic Planning Manager has stated that due to lack of identified funding, larger and more costly projects have been continuously deferred. The impact of poor maintenance of PE facilities has also become a factor in ongoing capital planning and budgeting as facilities continue to deteriorate and require extensive repairs. The staffing of the Port Everglades planning function does not appear to be adequate. Our review suggests that SCPD/PE does not have sufficient staff resources available to meet the ongoing planning needs of Port Everglades. Currently, PE has one Strategic Planning Manager to assist with the development of a nearly $600 million five-year capital improvement plan (refer to Exhibit 3 on the following page). Furthermore, the assignment of additional responsibilities to the planning section has resulted in its reduced ability to perform planning activities as its primary function. Office of the County Auditor 7

9 Exhibit 3: Proposed 5-Yr Capital Improvements Program Proposed Project Capital Expenditure General Infrastructure Facilities/People Mover $97,400,000 Cargo Improvements $140,100,000 Petroleum Improvements $57,800,000 Passenger Facilities $109,400,000 Miscellaneous Improvements/Roadways/ Dredging $167,700,000 Total Five Year Capital Expenditures $572,400,000 Source: Port Everglades Annual Commerce Report, FY 2005 The Strategic Planning Manager has been severely limited in his role as there is no support staff directly allocated to this section. This matter was brought to SCPD s attention through a report completed by Connie Hoffmann in winter 2005, entitled Organizational Analysis of the Broward County Construction Management and Planning Division. In this report, it was noted that the Strategic Planning Manager was a one-man show. With only one staff member responsible for the entire planning process, PE does not have any additional resources available in case of this individual s absence. This issue is compounded by the fact that the Strategic Planning Manager spends a significant portion of his time in contract and grants management activities. Other responsibilities assigned to the Strategic Planning Manager have included: liaison with FDOT, assisting in communication with municipality and zoning officials, right of way and acquisitions, and federal appropriations. As a result of these additional duties, the ability to perform short or long term planning activities has become severely limited. As observed in the Organizational Analysis report, the Strategic Planning Manager has a wide variety of assignments but, in actuality, gets to do little substantive planning for the Port. The Hoffman report also raised concerns about the reporting structure at that time, observing that the Strategic Planning Manager was not included in all planning related meetings and that his experience and qualifications 11 were being under-utilized, while the decision making function on strategic planning is closely held in the upper echelons of the Port Administration. The Strategic Planning Manager should be an active participant in all meetings and decision making that may effect or be affected by the planning process. As a result of this exclusion, projects may go forward without the benefit of the Strategic Planning Manager s knowledge regarding the impact of the choices being made by management. Recent changes within PE and SCPD have now shifted reporting requirements for this position from SCPD to the PE Deputy Director. It is also noted that the Security Enhancements and Improvements project has recently been completed. A significant portion of the Strategic Planning Manager s time which was previously spent in 11 The incumbent Strategic Planning Manager has a Master s Degree in Planning and is certified by the American Institute of Certified Planners (AICP). Office of the County Auditor 8

10 managing grant activities for this project will now be available for focus on other tasks more relevant to his position. Although this restructuring indicates a positive step towards change, additional actions will be needed to further enhance the capabilities of this section. It is also important to note that in comparison to other similar Port facilities, the strategic planning function at PE is considerably under staffed. A study prepared by the American Association of Port Authorities (AAPA) indicates that additional staff and more competitive salary rates may be in order. Appendix B, Tables 1 and 2 (page 13) provide additional details and information gathered from this report. Port Everglades Master Plan Update 2000 was not formally approved and has not been consistently updated. PE last drafted a multi-year Master Plan in Although this plan developed possible opportunities for PE s growth in the coming years, it did not sufficiently address financial components such as costs/benefit analyses, returns on investments, or the identification of funding sources for potential projects. Furthermore, this plan was never formally approved by the Board and has not been updated in five years. The lack of an approved master plan has had a significant effect at Port Everglades. Without the identification of appropriate funding sources, larger/costlier projects at PE have been deferred, while other, more affordable projects have been completed. A comprehensive and approved plan will serve as a guideline for the prioritization and development of future capital projects. Long term strategic planning is critical to the development and success of public construction projects. Capital assets (facilities and infrastructure) are important legacies that serve current and future generations. A sound multi-year plan should clearly identify capital and major equipment needs, maintenance requirements, funding options and operating budget impacts. 12 Although the development of the 2007 Master Plan will be the primary responsibility of DMJM as the contracted consultant, it is critical that the Strategic Planning Manager remain involved throughout the planning process to ensure that the plan is consistent with Port Everglades management goals, its future business plan and to coordinate the subsequent implementation of its component projects. It is important to note that PE Management expects that the new Master Plan will be comprehensive in its scope and fully address the financial feasibility of the Port s capital construction program. It also anticipated that the plan will include information regarding the Port s impact on the local economy and complement the County s own Comprehensive Plan. 12 Government Finance Officers Association, Recommended Practice, Multi Year Capital Planning (2006). Office of the County Auditor 9

11 Recommendations We recommend that the Board direct the County Administrator to examine the current structure of the PE planning section and make appropriate adjustments as needed to ensure that: Staffing resources are sufficient to manage a capital improvements budget of the size and scope present at PE. Tasks assigned to strategic planning staff are consistent with the primary responsibilities of their position(s). Planning activities are established as a priority of planning staff and that support is available for other related assignments. Ensure that strategic planning staff is included in major planning and decision making activities at PE, including the development of the 2006 Master Plan. Salary compensation rates are commensurate with port facilities of similar size and function. The 2006 Master Plan includes all elements necessary to make sound decisions for the future. An acceptable 2006 Master Plan is presented to Commissioners for formal Board approval. Office of the County Auditor 10

12 Appendix A Seaport Construction and Planning Division Organizational Chart (Former) PE Director of SCPD Admin Coordinator I PE Asst. Director SCPD Engineer Tech II PE Engineer Office Manager PE Drafter PE Secretary (2) PE Eng. Docking Clerk Project Mgr III Project Mgr IV Project Mgr IV PE Reg. Survey Party Chief PE Environmental Projects Manager PE Strategic Planning Manager Project Mgr I Project Mgr III Project Mgr III PE Surveyor Project Mgr II Project Manager II Engineer Inspector Office of the County Auditor 11

13 Appendix A PE Organizational /Operational Chart (Effective June 17, 2006) Port Director Port Security Deputy Port Director Business Administration Finance Trade Development Operations Planning (22 staff) (22 staff) (15 staff) (130 staff) (1 staff) Office of the County Auditor 12

14 Appendix B Table 1: US South Atlantic Ports Port Everglades North Carolina State Ports Authority South Carolina State Ports Authority Jacksonville Port Authority Georgia Ports Authority Total Port Revenue $112,476,658 $35,582,182 $116,530,000 $31,013,844 $128,952,270 Total Port Employees Director of Planning / Title Equivalent PE Strategic Planning Manager Director Strategic Planning Dir. of Planning & Business Development Senior Director, Planning & Port Development Dir. of Strategic Development & Information Tech. Year Appointed Staff Size (Direct Report) Position Salary Range $49,782 - $73,822 $72,100 - $106,200 $71,640 - $128,812 $85,910 - $128, Salary $64,272 $86,805 $97,400 $111,411 $119,631 Ft. Lauderdale Area Salary Adjustment* - $93,928 $104,629 $117,137 $127,489 Table 2: US Gulf Ports Tampa Port Alabama State Port Port of New Port of Houston Port Everglades Authority Authority Orleans Authority Total Port Revenue $112,476,658 $62,601,000 $79,400,000 $37,485,699 $181,225,000 Total Port Employees Director of Planning / Title Equivalent PE Strategic Planning Manager Senior Director, Marketing Vice President, Planning & Security Director, Division of Corporate Services Director of Planning & Environment Year Appointed Staff Size (Direct Report) Position Salary Range $49,782 - $73,822 - $67,340 - $102,521 - $100,500 - $150, Salary $64,272 $104,000 $102,521 $112,794 $122,892 Ft. Lauderdale Area Salary Adjustment* - $109,835 $111,173 $117,644 $120,535 Data Source: 2005 American Association of Port Authorities (AAPA) Annual Salary Survey * Regional Port salaries were adjusted to reflect Ft. Lauderdale area cost of living indexes utilizing Salary.com Cost of Living Wizard Office of the County Auditor 13