Follow-up to OIG’s Audit of the City’s Capital Improvement Program Development and Evaluation

The City of Chicago Office of Inspector General (OIG) has completed a follow-up to its December 2020 audit of the City's Capital Improvement Program (CIP) Development and Evaluation. Based on the Department's responses to OIG's follow-up inquiry, OIG concludes that the Office of Budget and Management (OBM) has substantially implemented one of nine corrective actions, partially implemented six others, and has not implemented two corrective actions related to the audit findings.

The purpose of the 2020 audit was to determine whether the City develops and evaluates its CIP, a five-year plan for infrastructure spending, in accordance with leading practices outlined in the United States Government Accountability Office's (GAO) Executive Guide: Leading Practices in Capital Decision-Making. The audit found that the City's CIP development and evaluation process largely followed leading practices for development but did not consistently evaluate goal achievement using performance measures or incorporate lessons learned from completed projects into future capital decision-making.

Based on the results of the 2020 audit, OIG recommended that OBM define, standardize, and document Citywide processes aligning with GAO leading practices, thereby providing a strong framework for capital decision-making independent of external funders' requirements. Specifically, OIG recommended that OBM guide City departments responsible for CIP allocations to,

• Conduct comprehensive needs assessments to identify capital assets necessary to meet both program-specific and general City goals;
• Maintain inventories of capital assets that include updated status reports on their conditions;
• Compare current assets to needed assets and determine how to bridge the gap, including consideration of alternative approaches such as public-private partnerships;
• Establish review and approval frameworks with pre-defined project ranking and selection criteria that are both generally applicable and particular to each major program;
• Create multi-year plans that anticipate future resource needs and implementation priorities;
• Use performance measures to evaluate the results of completed projects in relation to general and program-specific goals; and
• Engage in post-completion evaluation processes that include sharing lessons learned within and across departments.

OIG also recommended that OBM monitor departments' adherence to the guidance and provide further support and direction as needed. In the interest of transparency and to promote public engagement, OIG further recommended that OBM initiate collaboration on capital planning with the City Council Committee on Economic, Capital, and Technology Development, consider re-establishing the Capital Improvement Advisory Committee, and resume the practice of hosting geographically diverse community meetings regarding capital planning. Finally, OIG recommended that OBM provide more information online about capital project selection criteria, project results, and opportunities for public input. In its response to the audit, OBM described corrective actions it would take.

In February 2022, OIG inquired about corrective actions taken by OBM in response to the 2020 audit. Because OBM develops the CIP in collaboration with other departments, OIG also inquired of the four departments that account for the vast majority of the CIP projects-the Department of Assets, Information and Services (AIS), Chicago Department of Aviation (CDA), Chicago Department of Transportation (CDOT), and Department of Water Management (DWM)-to better understand how the City had implemented corrective actions. Based on the responses to these inquiries, OIG concludes that OBM substantially implemented one of nine corrective actions, partially implemented six others, and has not implemented two corrective actions.

Specifically, OBM has substantially implemented the guiding of departments to conduct comprehensive needs assessments and to create multi-year plans that anticipate and prioritize future needs. OBM has partially implemented the guiding of departments to maintain inventories, compare current assets to needed assets, and establish review and approval frameworks. Additionally, OBM has partially initiated collaboration on capital planning with the City Council Committee on Economic, Capital, and Technology Development, engaging public stakeholders, and providing more information online about the capital planning process and opportunities for public input.

Once fully implemented, OIG believes the corrective actions reported by OBM may reasonably be expected to resolve the core findings noted in the 2020 audit. However, OIG urges OBM to complete implementation of its guidance that departments use performance measures, evaluate completed projects relative to documented goals, and share the lessons learned from these evaluations with relevant departments.

Read the full follow-up document here. Read the original 2020 Audit of the City's Capital Improvement Program Development and Evaluation here.