AASHTO Audit Subcommittee Meeting July 22, 2013

Dave Bruce – National Review Team Leader – Program Management

Improvement Team

Background: FHWA’s Risk-Based, Data-Driven Stewardship & Oversight Approach (Why & How)

Core Principles & Framework Program level Stewardship & Oversight: Context

for National Review Program Project Closeout & Inactive Funds Management

Review

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Risk-based Project Involvement Required project actions Compliance Assessment Program (CAP) Projects of Division Interest (PoDI) Projects of Corporate Interest (PoCI)

Risk-based Program Involvement Required Program Actions Strategic National Initiatives National Program Stewardship & Oversight

Initiatives Division Program Stewardship & Oversight

MAP 21 Changes

Recent evaluations of our current approach to stewardship & oversight

Need to make more effective use of limited resources

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Taking proactive steps to meet our future challenges

Integrating risk into our strategic planning process

Consistent stewardship & oversight at National and Division levels

Developing risk responses in order to achieve our corporate, unit, program and project objectives

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Risk-based: risk assessment is integrated throughout the performance planning process

Data-driven: decisions are grounded in objective data and information to the extent possible

Value-added: actions are taken with a primary objective of improving programs and projects

Consistent: actions are based on consistent approach to planning, risk assessment, and S&O

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Project Involvement Required Project Actions Data-driven Compliance Assurance Risk-based Project Involvement

Program Involvement Required Program Actions Risk-based Program Involvement

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Risk-based Program Involvement National Program Stewardship & Oversight Initiatives

Included within the “National Program Stewardship & Oversight Plan” that is part of the annual Strategic Implementation Plan

Based on strategic goals, objectives, and national priorities

Informed by corporate, program, and unit risks

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Risk-based Program Involvement National Program Stewardship & Oversight Initiatives

Includes National Program Reviews conducted by the Program Management Improvement Team (PMIT)

Coordinated for effective management of existing programs and use of agency resources

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Fieldwork conducted in February and March 2013 Six States visited National survey issued Final report issued in June 2013

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Much attention has been focused on this subject Material weakness on USDOT financial

statements in 2012 FHWA has been making changes

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Two root causes of inactive funds situation: Lack of attention to project closeout Lack of attention to project agreement funds

management

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States and FHWA Divisions starting to emphasize closeout in recent years

2012: 31,000 projects closed Average length of time to close after last

payment in FHWA payment database: 1.8 years 2012: $1.4 billion in federal funds released at final

voucher 2012: 1,350 projects released $940 million

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No national standards for closeout timeframes Common Grant Rule closeout time requirement

of 90 days does not apply to FHWA grants Various State DOT offices involved in closeout

generally do not coordinate/communicate roles and responsibilities

Metrics and performance goals are generally not in place

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23 CFR 630.106(a): Requires process for project cost estimates Requires FHWA project agreement be kept up to date

based on latest cost estimate Specifically requires deobligation within 90 days of

downward project cost estimate of $250,000 or more This aspect of the regulation does not appear to be

closely adhered to.

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Bases for project agreement funds modifications: Plans, specifications and estimate Contract award Major change orders Cost over/under runs States do pretty well except for cost over/under runs Often a significant time lag after downward

adjustment of cost estimate occurs

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Follow up National Program Review under way 7 States being visited Scope is project closeout and project agreement

funds management involves mapping the processes for all offices

involved – using “swim lanes” to identify dependencies, concurrent actions and efficiency gains

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Objectives of review: Provide Divisions and States with hands-on assistance Identify barriers to efficient closeout and project

agreement funds management Identify best practices Provide recommendations to FHWA’s Office of Chief

Financial Officer for use in developing guidance and performance goals

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Project Closeout Phase 2 Highway Performance Management System

(HPMS) Data Quality Bridge Load Posting Enforcement National Bridge Inspection Program Truck Size & Weight Local Public Agency Oversight

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