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02-25-15 - 15-102 - Performance Audit - Albuquerque Convention Center Renovation – Phase II Change Orders

The Department of Municipal Development (DMD) should be aware of and abide by contractual requirements, should perform an independent review of change orders and change order requests, and formally document City approval when change order work is authorized to begin. By addressing these items, DMD will improve project management and may help to identify additional cost savings in future projects. Strengthening and clarifying the contractual language regarding the consultant’s review of change orders will assist and benefit the City by increasing the level of confidence placed on the consultant in the future.

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Background

In order to better represent the City of Albuquerque, Mayor Richard J. Berry approved the renovation of the Albuquerque Convention Center in 2012. The renovation project was separately bid in two Phases. Phase I was completed in September 2013 and Phase II began in October 2013 and was on-going throughout the audit. Phase II involved exterior and interior improvements to the West and East buildings of the Convention Center. This audit addresses only change orders to the Phase II renovation contract.

The Phase II renovation lump sum contract was awarded to Bradbury Stamm and totaled $12,944,572. The six approved change orders added a total of $1,186,170 to the base contract, a 9.2 percent increase, bringing the total cost of the Phase II construction to $14,130,742.

Findings

Familiarity and compliance with contractual specifications, along with independent monitoring and review of change orders and change order requests are needed. Net cost savings totaling $13,123 were identified throughout the audit and stem from the following items:

  • Separate contract for movable furniture and equipment,
  • Excluded equipment charges,
  • Mathematical errors,
  • Duplicate charges of gross receipts tax, and
  • Unapplied credits due to the City.

Work for change order requests often begins prior to the final approval of the change order. Additionally, verbal authorization is often given, and the City does not formally document when work is authorized to begin for each change order request.