1.1 Develop and implement a project delivery method selection process – Denver International Airport’s Special Projects Division should develop and implement a process to ensure managers and staff use a risk-based approach to select a construction project’s delivery method. This process should align with leading practices — such as the Colorado Department of Transportation’s “Construction Manager/General Contractor Manual” and the “Airport Owner’s Guide to Project Delivery Systems.”
This process should also be thoroughly documented and include primary selection factors as outlined in leading practices, as well as staff members’ rationale for the chosen method.
Agency Response: Agree, Implementation Date – June 1, 2023
See Page 63 of the report for the Auditor's Addendum.
1.2 Follow construction procurement procedures and document steps – Denver International Airport’s Special Projects Division should follow its standard operating procedures for construction procurements and ensure thorough documentation exists for each project to show staff met all required steps in the procurement process.
Agency Response: Disagree
See Page 63 of the report for the Auditor's Addendum.
1.3 Develop construction procurement procedures for expedited needs – Denver International Airport’s Special Projects Division should work with the airport’s Business Management Services to update its existing standard operating procedures for construction procurement to include necessary steps staff should take for special cases when a procurement needs to be expedited.
Agency Response: Agree, Implementation Date – Dec. 1, 2023
1.4 Develop and implement policies and procedures for the construction manager/general contractor delivery method – Denver International Airport’s Special Projects Division should develop and implement policies and procedures addressing the unique risks of the construction manager/general contractor project delivery method. These policies and procedures should align with leading practices and detail the steps required to effectively manage such projects, beginning with the initial scoping of a project all the way through completion. These should also be sufficiently defined and structured so tasks are performed consistently across projects.
Agency Response: Agree, Implementation Date – Dec. 1, 2023
1.5 Oversee the subcontracting process – Denver International Airport’s Special Projects Division should oversee the awarding of subcontracted work to ensure the terms of construction manager/general contractor contracts are adhered to. Specifically, the division should develop and implement policies and procedures to ensure subcontracted work is awarded in a fair and reasonable way and, to the greatest extent possible, is based on open competition. At a minimum, the division should:
- Obtain and review all bid packages submitted by prospective subcontractors to ensure:
▪ At least three bids for each trade are received — and if not, that the contractor makes an effort to re-bid or to document why three bids were not received.
▪ The lowest, responsive, and qualified bidder is selected — and if not, document the justification as to why.
▪ The contractor sufficiently documents its rationale when it chooses another bidder instead.
- Document the review and approval process for all bid packages for subcontractors chosen by the contractor.
- Obtain and review all subcontracts the contractor enters into to ensure proper oversight.
Agency Response: Disagree
See Page 63 of the report for the Auditor's Addendum.
1.6 Oversee multi-tiered subcontracted work – Denver International Airport’s Special Projects Division should strengthen its oversight of multi-tiered subcontracted work to ensure markups are calculated in accordance with contract terms.
Specific to the current Great Hall project, the division should obtain information on all subcontractor work done during phases one and two that used multiple tiers of contractors. The division should recalculate the markup charges and seek credit for any amounts the airport was overcharged.
Agency Response: Disagree
See Page 63 of the report for the Auditor's Addendum.
1.7 Oversee contractors’ awards for self-performed work – Denver International Airport’s Special Projects Division should ensure its project managers are actively involved when any contractor awards itself subcontracted work to ensure the terms of the primary construction contract are adhered to with regard to awarding self-performed work.
Specifically, project managers should ensure the work is awarded in a fair and reasonable manner and, to the greatest extent possible, is based on open competition. At a minimum, project managers should:
- Obtain and review all bid packages submitted by prospective subcontractors to ensure at least three bids for each trade are received — and if not, that the contractor makes an effort to re-bid — and that the lowest, responsive, and qualified bidder is selected.
- Review all bid packages for reasonableness — such as ensuring a contractor does not bid on self-performed work that they will subsequently subcontract out.
- Approve all self-awarded work.
- Obtain and review all self-performed work agreements entered into by the contractor so that managers are familiar with the terms and conditions contained within them and can ensure all costs are reasonable.
Agency Response: Disagree
See Page 63 of the report for the Auditor's Addendum.
1.8 Validate and reconcile project allowances – Denver International Airport’s Special Projects Division should:
- Ensure division staff understand how construction allowances are defined by industry standards and that they understand how allowances should be tracked, reconciled, and used.
- Require contractors to track and reconcile actual costs incurred and compare them against the estimated allowance amount to ensure they do not overcharge the airport.
- Require contractors to submit supporting documentation, such as vendor invoices and time sheets, to allow the airport to verify actual costs incurred — that is, that the actual costs are accurate and allowable under the contract terms.
Agency Response: Disagree
See Page 63 of the report for the Auditor's Addendum.
1.9 Appropriately use project allowances – In conjunction with Recommendation 1.4, Denver International Airport’s Special Projects Division should include in its policies and procedures specific guidance on how allowances are to be estimated and used in a construction project. At a minimum, this should include prohibiting the use of allowances for any other costs of work except for the specific scope of work an allowance was initially created for.
Agency Response: Disagree
See Page 63 of the report for the Auditor's Addendum.
1.10 Verify general conditions billing rates – Denver International Airport’s Special Projects Division should require contractors to provide a detailed breakdown of the components making up general conditions costs on all future projects. Staff should document their review of this schedule to include allowable and unallowable items and the reasonableness of individual items.
Agency Response: Disagree
See Page 63 of the report for the Auditor's Addendum.