TxDOT Internal Audit Report Equipment Maintenance and Repair Objective Determine if there are adequate policies, procedures, and practices for ensuring the adequate inspection, maintenance, and repair of TxDOT equipment/vehicles. Opinion Based on the audit scope areas reviewed, control mechanisms are effective and substantially address the risks considered significant relative to operational execution for the equipment program. The organization s system of internal controls provides reasonable assurance that most key goals and objectives will be achieved despite significant control gap corrections and improvement opportunities identified. Control gap corrections and improvement opportunities identified are likely to impact the achievement of the organization s business/control objectives but management has agreed to corrective action plans to address the relevant risks within six months. Overall Engagement Assessment Satisfactory Finding 1 Finding 2 Finding 3 Title Findings Completion and Documentation of Daily (Pre-Trip) Equipment/Vehicle Inspections Consistency of Region Preventive Maintenance (PM) Coordinator Inspections Review/Approval of Discrepancies on the Pre-Trip Inspection Checklist and Subsequent Equipment/Vehicle Release Control Design x Operating Effectiveness x x x Rating Needs Improvement Needs Improvement Needs Improvement Management concurs with the above findings and has prepared Management Action Plans to address the noted deficiencies. Internal Environment The department has an established structure, manuals, standard operating procedures, and various tools (e.g. electronic systems, flow chart and checklists) to help mitigate potential risks with this program. The Region Fleet Managers and District Equipment Custodians believe that there is a positive tone in the equipment program, integrity of data, and an attempt to identify and address problems in the program. Each Region has many different types of equipment with various maintenance/repair needs and an average fleet age of 11 years.
Summary Results Scope Area Finding Evidence Equipment/Vehicle Inspections 1 2 3 23 of 59 (39%) equipment/vehicles did not have the required Pre-Trip Inspection Checklist Forms completed and documented 7 of 18 (39%) equipment/vehicles were not inspected by PM Coordinators as required in the West Region 14 of 24 (58%) equipment/vehicles had no evidence of the supervisor review/authorization for discrepancies identified on the Pre-Trip Inspection Checklists Equipment/Vehicle Maintenance N/A No Findings Equipment/Vehicle Repairs N/A No Findings Audit Scope The audit covered equipment/vehicle inspections, maintenance, and repairs in a sample of Districts at all four Regions. Audit work was conducted by Albert Bourque, Romy Grimmell, David Kossa, Jennifer Stanush, and Raymond Martinez (Engagement Lead). The audit was conducted from October 11, 2012 through December 14, 2012. Methodology Audit work included reviewing state laws, department/region policies and procedures, existing equipment flow charts, various General Services Division (GSD) reports, and other supporting information; interviewing GSD staff, Regional Fleet Managers, Preventive Maintenance (PM) Coordinators, and District Custodians; reviewing and analyzing equipment/vehicle inspections, maintenance and repair information from August through October 2012. The equipment/vehicle inspections were reviewed to determine if inspections were conducted, documented, and reported (e.g. maintenance and repair needs) in accordance with department requirements. Maintenance was reviewed to determine if equipment/vehicles were maintained properly. Repairs were reviewed to determine if repair needs identified were being addressed and repaired properly. 2 of 11 May 31, 2013
Testing samples were selected as follows: Two Districts within each Region - based on inspection results conducted from the GSD Two Maintenance Sections and one Area Office in each district - based upon the date of their last PM Coordinator inspections Three equipment/vehicles for each office - based upon the results of the PM Coordinator inspections The five most recently red-tagged equipment/vehicles in each Region, based on information provided by the Regional Equipment Shop Background This report was prepared for the Transportation Commission, TxDOT Administration and Management. The report presents the results of the Equipment Maintenance and Repair Audit, which was conducted as part of the Fiscal Year 2013 Audit Plan. Regional Fleet Management oversee capital equipment budgets, equipment purchasing and equipment repairs. The Districts manage the day-to-day operations with assistance from the Regions to include daily pre-trip inspections, preventive maintenance, and repairs. Since January this year, the Fleet organization has been working with a consultant to review the fleet organization and provide areas for improvement. The three main areas for improvements are: 1) reducing the fleet size, 2) improving fleet procurement, and 3) improving the fleet operating system (which includes fleet maintenance). Currently, the team is mainly focused on reducing the fleet size and setting up effective rental programs. There are pilots in three districts, and the plan forward is to do a similar effort in each of the districts. Furthermore, there are several topics that the fleet organization is undertaking to improve the overall functioning of the fleet organization. The fleet organization is also currently in the process of procuring a new Fleet Management System. This new system will replace EOS, and it will have a broad range of functionality, such as monitoring PM schedules, tracking asset utilization, and keeping up with warranty administration, etc. The new fleet organization structure has been stood up. Going forward, the entire fleet organization will be grouped together into one organization. One of the main changes in the new organization, as compared to the previous structure, is that there will be a lead PM manager overseeing the work of the PM coordinators in the field. This will ensure consistency and quality of the work. The team is working to implement 3 quick wins: 1) start using synthetic oil instead of rerefined oil, 2) installing telemetry on the fuel tanks to automatically monitor fuel usage, and 3) further roll-out of fuel cards across the state. 3 of 11 May 31, 2013
Together these improvements will greatly enhance PM oversight, and with timely and accurate data from the field, it will be easier to detect trends. Finally, having a single functional aligned fleet organization will greatly improve communications so we can take appropriate action when needed. We conducted this performance audit in accordance with Generally Accepted Government Auditing Standards and in conformance with the International Standards for the Professional Practice of Internal Auditing. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. A defined set of control objectives was utilized to focus on operational goals for the identified scope areas. Our audit opinion is an assessment of the health of the overall control environment based on (1) the effectiveness of enterprise risk management activities throughout the audit period and (2) the degree to which the defined control objectives were being met. Our audit opinion is not a guarantee against operational sub-optimization particularly in areas not included in the scope of this audit. 4 of 11 May 31, 2013
Detailed Findings and Management Action Plans (MAP) Finding No. 1: Completion and Documentation of Daily (Pre-Trip) Equipment/Vehicle Inspections Some of the daily (Pre-Trip) inspections in the sampled Districts at each of the four Regions were not completed and documented as required. We found that 23 of 59 (39%) pieces of equipment/vehicles did not have the required Pre-Trip Inspection Checklist Forms for the equipment/vehicle usage during the sample period. Multiple factors contributed to the status of these checklists including the operators forgetting to do the inspections as they were focused on other priorities and/or inconsistent oversight/monitoring. Region Equip./Vehicles without required inspection checklists East 10 of 14 (71%) North 7 of 15 (47%) South 4 of 12 (33%) West 2 of 18 (11%) Equipment Preventive Maintenance Manual (Chapter 5, Section 2 and Chapter 1, Section 2) The manual states that the Pre-Trip inspections should be performed daily and documented prior to equipment use. Inspections of light-duty vehicles, such as sedans and pickups, which are assigned to a specific operator, may be performed on a weekly basis. The daily preventive maintenance inspection is the primary responsibility of the operator. The Area Engineers and Maintenance Supervisors must ensure thorough daily inspections are completed and documented before equipment is operated. Region Fleet Management Standard Operating Procedures (SOPs) (Equipment Preventive Maintenance) The SOPs state that the operators are required to perform daily preventive maintenance inspections. Effect/Potential Impact: Not completing the daily Pre-Trip Inspection Checklist Forms as required increases the safety risk for the operator and the public. In addition, incomplete forms may lead to unforeseen maintenance, repair needs, or additional costs if repairs are postponed. Management Action Plan (MAP): MAP Owners: Dalton Pratt, North Region, Rhonda Branecky, South Region, Scott Koczman, East Region, and Ricky Nieman, West Region (Fleet Managers) 5 of 11 May 31, 2013
MAP 1.1 - Region Fleet Managers will work with the Districts and applicable supervisors to remind the operators of the requirement and importance of conducting and documenting the daily inspections (remind each section once per quarter). Evidence of these actions (e.g. email, meeting agenda or log) should be maintained. Completion Date: February 15, 2013 MAP Owner: Glenn Hagler, Interim GSD Director MAP 1.2 - GSD will establish compliance reviews for the Preventive Maintenance Program to determine if the Districts are conducting and documenting the daily (Pre- Trip) inspections as required. These reviews will cover the daily (Pre-Trip) inspections, preventive maintenance, and repairs of equipment/vehicles. These reviews will be conducted on a quarterly basis and reported to the GSD Director, Chief Programs Officer, and the Deputy Executive Director/Chief Engineer. Completion Date: July 15, 2013 6 of 11 May 31, 2013
Finding No. 2: Consistency of Region Preventive Maintenance (PM) Coordinator Inspections Some Region inspections were not completed twice a year in the sampled Districts at the West Region. We found that 7 of 18 (39%) pieces of equipment/vehicles sampled were not inspected by the West Region as required. Compliance was not achieved as a result of the West Region not having PM Coordinators but instead Field Mechanics. These Field Mechanics weren t able to perform their required function and inspect all the equipment/vehicles in the Region as required. Equipment Preventive Maintenance Manual (Chapter 1, Section 3) The manual states that the PM Coordinator should visit each section twice a year, at a minimum, to inspect equipment. Region Fleet Management Standard Operating Procedures (SOPs) (Equipment Preventive Maintenance) The Region PM Coordinators are responsible for reviewing each piece of equipment for PM compliance two times each fiscal year (Note: the SOPs state that the requirement is three times each fiscal year, but this was decreased due to limited resources and this requirement will be reviewed by GSD in the near future). Effect/Potential Impact: Not conducting the biannual inspections increases the safety risk for the operator and the public which may lead to unforeseen maintenance, repair needs, or additional costs if repairs are postponed. Management Action Plan (MAP): MAP Owner: Donna Hill, West Region Director MAP 2.1 West Region will post and hire seven PM Coordinator positions in the Equipment Shops in the Region to ensure compliance with the PM Coordinator inspections that are required two times per year. Completion Date: February 15, 2013 7 of 11 May 31, 2013
Finding No. 3: Review/Approval of Discrepancies on the Pre-Trip Inspection Checklist and Subsequent Equipment/Vehicle Release Instances were found where there was no evidence (e.g. signature or initials) that the supervisors reviewed the discrepancies identified by the operators on the Pre-Trip Inspection Checklist Forms in the sampled Districts at the North, South, and East Regions. In addition, there was no evidence that the supervisors authorized the equipment/vehicles to be used with the identified discrepancies. Testing identified 14 of 24 (58%) pieces of equipment/vehicles that had no evidence of supervisor review of discrepancies identified on the Checklists or the supervisor s authorization. The missing review/approval was due to multiple factors including the supervisors forgetting to document their review as they were focused on other priorities and/or had uncertainty about when the supervisor s signature is required on the Checklist or what the supervisor s signature signifies. The line on the bottom of the Checklist form states Supervisor s signature of Release (if required). Region Equip./Vehicles with no evidence of supervisor review South 4 of 4 (100%) North 8 of 9 (89%) East 2 of 4 (50%) West 0 of 7 (0%) In addition, some repair needs identified on the Checklists that may have been a safety hazard were not immediately addressed by the sampled Districts at the North and South Regions. Region Equip./ Vehicles not immediately addressed North 5 of 7 (71%) South 1 of 10 (10%) *business days Repair Examples: (delay in addressing/opening repair order for discrepancy) Driver s inside door handle --- delay time: 52 days* Top of shift lever loose -------- delay time: 16 days* Gauges not working ------------ delay time: 15 days* Gauges not working, cracked windshield, needs new steering wheel ---- delay time: 47 days* Equipment Preventive Maintenance Manual (Chapter 1, Section 2) The manual states that the operators must report to the supervisor uncorrected discrepancies critical to safe and economic use of the equipment before the equipment is operated. Maintenance supervisors must review the daily inspection checklists that have a noted discrepancy for safety. 8 of 11 May 31, 2013
Region Fleet Management Standard Operating Procedures (SOPs) (Equipment Preventive Maintenance) The SOPs state the employees who operate equipment or vehicles will report problems that require repair using the On-Line Repair Order Process. The equipment custodian reviews daily inspection reports and discusses repair options with the Shop Coordinator as warranted. Effect/Potential Impact: By not documenting or obtaining the supervisor s 1) review of discrepancies identified on the Checklists or 2) authorization to use a piece of equipment/vehicle with discrepancies, preventive controls are bypassed that will reduce injury or harm to an operator since they may be using equipment/vehicle that was unsafe to use. This may also create a liability for the department if the operator/vehicle is involved in an accident. Management Action Plan (MAP): MAP Owners: Dalton Pratt, North Region, Rhonda Branecky, South Region, Scott Koczman, East Region, and Ricky Nieman, West Region (Fleet Managers) MAP 3.1 - Region Fleet Managers will: work with the Districts and applicable supervisors to remind them (once per quarter) to review any discrepancies for safety hazards or serviceability issues that were identified and reported on the Checklists and document this review on the Checklists work with the Districts and applicable supervisors to remind the operators (once per quarter) of the requirement and importance of reporting any identified discrepancies for safety hazards or serviceability issues work with GSD to review the Checklist forms and SOPs to determine if any clarification is needed regarding the supervisor s authorization to use the equipment/vehicle with identified discrepancies Evidence of these actions (e.g. email, meeting agenda or log) will be maintained. Completion Date: February 15, 2013 MAP Owner: Glenn Hagler, Interim GSD Director MAP 3.2 GSD will establish compliance reviews for the Preventive Maintenance Program (as described in the MAP for Finding No. 1) to determine if the supervisors in the Districts are properly reviewing the discrepancies identified on the Checklists and are properly authorizing the equipment/vehicles to be used. Completion Date: July 15, 2013 9 of 11 May 31, 2013
Observations and Recommendations Audit Observation No. 1: Consistency of Discrepancy Reporting Some of the daily (Pre-Trip) inspections in the sampled Districts at North, South, and East Regions did not identify the same types of discrepancies that were identified by the Region PM Coordinator inspections. The Pre-Trip inspection Checklists were reviewed two weeks prior to the PM Coordinator s inspections. Examples of discrepancies that weren t identified by the operators include: oil leak, low tires, missing coolant cap, backup alarm not working, missing first aid kit, horn not working, lights not working, low power steering fluid, and windshield washer not working. Recommendation: The Region Fleet Managers should work with the Districts and applicable supervisors to help provide any additional training needed on conducting the daily equipment/vehicle inspections and to emphasize the importance of completing the inspections in a thorough manner. In addition, GSD should work with the Administration to determine if it would be beneficial to develop certifications for the PM Program. Audit Observation No. 2: Consistent Utilization of FleetTracks for Preventive Maintenance The consistent use of FleetTracks can help the Districts and Regions keep up with their preventive maintenance needs by identifying when preventive maintenance is due and providing alerts when it is past due. We found that 14 of 18 (78%) pieces of equipment/vehicles in the sampled Districts of the South Region showed past due items in FleetTracks. In addition, 6 of 6 (100%) District Custodians interviewed gave testimonial evidence stating that they were not utilizing FleetTracks to monitor their equipment/vehicle preventive maintenance needs. Recommendation: The South Region Fleet Manager should look into this to determine if the Districts in the South Region are having problems using FleetTracks or obtaining status reports or if the Districts need additional training on FleetTracks. 10 of 11 May 31, 2013
Summary Results Based on Enterprise Risk Management Framework Closing Comments The results of this audit were discussed with the GSD Interim Director, Region Support Center Directors, and Region Fleet Managers in an exit conference held on December 20, 2012. The results were also provided to the Office of General Counsel, the Chief Programs Officer and the Deputy Executive Director/Chief Engineer via e-mail. We would like to thank the employees contacted during this audit for their assistance and cooperation. 11 of 11 May 31, 2013