Airport Needs to Strengthen Construction Oversight

Airport Needs to Strengthen Construction Oversight

Published on May 23, 2022

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DENVER - Denver's airport needs to keep a closer watch on its construction projects to avoid costs overruns and scheduling delays, according to an audit out this month from Denver Auditor Timothy M. O'Brien, CPA.

"The airport is spending billions on a new runway, gate expansion, the Great Hall, security updates, and other construction projects," Auditor O'Brien said. "Air-tight monitoring and oversight of all construction projects is essential to keep the public's investment on track."

In this audit, we examined the Airport Infrastructure Management Division's oversight of the Peña Boulevard construction project, which is the main access road to Denver International Airport. However, we found organizational concerns that could be applied to all construction projects at the airport.

Without strong project oversight, the airport may not be ensuring it receives all work in compliance with its contract. The airport risks overpaying for construction and failing to meet project deadlines.

Specifically, we found both the primary contractor on the Peña project - Interstate Highway Construction - and airport staff missed deadlines for invoices and contract changes. If the contractor delays finalizing responses to contract changes, the airport might be forced to unnecessarily extend the project timeline. And when the airport misses deadlines for invoices, the contractor and its subcontractor might not get paid on time.

We also found the airport is not correctly documenting issues with the contractor's performance in the system of record, Unifier. Inaccuracies in the log and lack of complete documentation could prevent the airport from ensuring a contractor fixes all issues, such as materials and work that does not match contract requirements.

"Processing paperwork and keeping appropriate documentation is a step that's easily overlooked but essential when it comes to keeping such large-scale projects on time and on budget," Auditor O'Brien said.

Other gaps in construction oversight on the Peña Boulevard project include not accurately tracking the budget. The airport paid for contract changes out of the contingency fund for the project but was not accurately tracking how much contingency had already been used. This did not lead to the project going over budget at the time of the audit but increases the risk of overruns in the future.

The airport needs to ensure it gets what it pays for and the prices it agrees to are accurate and fair. This means doing in-house cost estimates for change orders to ensure the airport is not overpaying for labor, equipment, or materials. Airport staff should also ensure any increases in the project schedule or costs are properly documented and justified.

Finally, the audit team found the airport needs to ensure all subcontractors are properly vetted and paid on time. And the airport needs to create a standard for how management chooses project delivery methods for each of its construction projects.

"We saw similar issues in our previous construction audits," Auditor O'Brien said. "The city should get what it pays for and it should not overpay compared to market rates. Oversight is the first step to accountability for public resources."

The airport disagreed with some of our recommendations regarding tracking changes and workflow in the system of record. However, airport responses indicate they have already taken some action anyway.

AUDITOR TIMOTHY O'BRIEN, CPA
Denver's Auditor

Denver Auditor's Office
201 W. Colfax Ave. #705 Denver, CO 80202
Email: [email protected]
Call: 720-913-5000
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