Prototype Financial and Performance Review Report · PDF filePERFORMANCE REPORT AND FINANCIAL...

COLUMBIA PIKE PROTOTYPE SUPER STOPS Arlington, Virginia

PERFORMANCE REPORT AND FINANCIAL REPORT

TABLE OF CONTENTS

PAGE CONSULTANTS’ REPORT ............................................................................................................................... 1 Background ......................................................................................................................................... 2 Summary of Parties Involved .............................................................................................................. 4 PERFORMANCE REPORT ............................................................................................................................... 5 Methodology ...................................................................................................................................... 6 Summary ........................................................................................................................................... 6 Recommendations .............................................................................................................................. 7 Procedures and Results ....................................................................................................................... 7 FINANCIAL REPORT .................................................................................................................................... 14

Financial Report ‐ Findings ................................................................................................................ 15

Schedule of Overall Project Costs and Cost Allocation ....................................................................... 16 Schedule of Revenues and External Costs .......................................................................................... 17

Schedules of Cost Allocations ............................................................................................................ 18 Appendix A – Diagram of Organizational Structure ............................................................................ 22 Appendix B ‐ Timeline ....................................................................................................................... 23

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County Manager of Arlington County, Virginia We have concluded our engagement to perform procedures related to the Columbia Pike Prototype Super Stops. This engagement, which was agreed to by Arlington County, Virginia (the County), was applied solely to assist you in evaluating the project development and delivery of the project as well as the financial costs associated with the Columbia Pike Prototype Super Stops. Management of the County is responsible for the operations and internal controls. We performed this engagement in accordance with Statements on Standards for Consulting Services issued by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the management of the County. Consequently, we make no representations regarding the sufficiency of the procedures described in the attached document either for the purpose for which this report has been requested or for any other purpose. We have included findings resulting from the engagement for the consideration of the County. Our engagement to perform these procedures was conducted as a consulting services engagement. We were not engaged to, and did not perform an audit, the objective of which would be the expression of an opinion on the project development and delivery and the financial costs associated with the Columbia Pike Prototype Super Stops. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. The procedures performed and related observations and recommendations are described in the attached document. This report is intended solely for the use of the management of the County and should not be used by others.

a Arlington, Virginia September 12, 2014

CliftonLarsonAllen LLP www.cliftonlarsonallen.com

An independent member of Nexia International

COLUMBIA PIKE PROTOTYPE SUPER STOPS BACKGROUND

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Background The agencies and departments involved in the Super Stops project are the Arlington County (the County) Department of Environmental Services (DES) and Washington Metropolitan Area Transit Authority (WMATA) Department of Transit Infrastructure and Engineering Services. The idea for the Super Stops project was generated as part of the Arlington County Pike Ride Transit Initiative which included 24 new transit stations along Columbia Pike. The County’s intention for the project was to enhance service for Arlington Transit (ART) and Metrobus, and ultimately to serve the streetcar along the Columbia Pike Corridor. The project involved extensive community input regarding the design which spanned a period from October, 2002 to November, 2005. In August 2004, a contract between the County and Hellmuth, Obata + Kassabaum (HOK) was entered into for the design of the Super Stops. The County and WMATA had an agreement in place dated August 2, 2000 for the design and approval of certain public transportation projects to enhance Metrorail and Metrobus services in Arlington County (Phase One Agreement). The prototype Columbia Pike Super Stops project was added via an amendment to this agreement in 2007. At the time, the Columbia Pike corridor was a Virginia right‐of‐way and the project required Virginia Department of Transportation (VDOT) approval. The approval process spanned four years from June, 2006 to April, 2010. While the VDOT review process was ongoing, the Arlington County Board approved the Amendment to the Phase One Agreement with WMATA in November, 2007 which added the prototype Columbia Pike Super Stops project (as noted above). The Phase Two Agreement with WMATA, authorizing construction of three prototype Super Stops, was approved by the County Board on June 17, 2008. Per the agreement, the County was responsible for all costs associated with the project, and consistent with WMATA’s policies, provided advanced funding for the project. Also per the agreement, WMATA would procure, through its Job Order Contract (JOC), for the construction of the Project facilities in accordance with WMATA’s construction procurement procedures. WMATA would also have complete and overall management and administrative responsibility for the JOC contract. The agreement budgeted total costs for the three prototype Super Stops as follows:

o WMATA $2,000,000 o County (project management) $ 150,000

The design from HOK was finalized in July, 2007 and a separate contract with HOK was entered into in April, 2008 for construction administrative services. During the planning and pre‐construction phases, the WMATA Capital program was being restructured to minimize resources in their engineering and construction departments. This resulted in a reduction in staffing and turn‐over in key personnel at WMATA on this project. Arlington County issued a Limited Notice to Proceed to WMATA in September, 2010 which authorized WMATA to have the contractor, Potomac Construction and its subcontractors, begin submittals for distribution. The Limited Notice to Proceed also directed WMATA to initiate the permit process. WMATA states they were not able to begin any work on the project until November 2010 which, according to WMATA, was when they received the final design.

COLUMBIA PIKE PROTOTYPE SUPER STOPS BACKGROUND

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The County advance funded $500,000 to WMATA in October 2006 and an additional $150,000 in December 2009 ($650,000 total). Based upon the funding provided, WMATA issued an initial Order for Services/Notice to Proceed to Potomac Construction on December 3, 2010 for $437,105 for the start‐up and administrative costs involved with the project with the description of work being “Construct 3 Super Stops/Bus Shelters on Columbia Pike in Arlington, VA.” A full Notice to Proceed was provided by the County to WMATA in March, 2011 noting construction was expected to commence within ninety (90) days of the letter, for a lump sum base cost of $1,997,904. In February 2011, the County provided an additional $350,000 to fund the project ($1,000,000 total). Noting that additional funding was released by Arlington County, WMATA issued a second Order for Services/Notice to Proceed to Potomac Construction on June 1, 2011 for $412,895, with the description of work being “Construct Super Stops/Bus Shelters on Columbia Pike in Arlington, VA.” Potomac Construction broke ground on the Walter Reed site in September, 2011. However, a complete work stoppage on site was in effect from September 30, 2011 through March 18, 2012 while permitting issues were resolved. During this time, a subcontractor was fabricating the canopies for all three prototype stops off‐site. On December 22, 2011, the County terminated the Phase Two Agreement with WMATA effective upon the completion and acceptance of the Walter Reed stop, resulting in a change in the scope of the work to be completed by WMATA from three prototype stops to one. On March 23, 2012, WMATA invoiced the County $429,127 for the estimated costs to complete the project. This invoice was not paid by the County as the County and WMATA were having discussions about the costs of the project and the documentation of those costs. The Walter Reed stop was substantially complete in March 2013. WMATA issued a third (and final) Order for Services/Notice to Proceed to Potomac Construction on June 10, 2013 for $596,258 to complete the Walter Reed stop and provide canopies and glass for the Dinwiddie stops, with the description of work being “Construction of (1) SuperStop/Bus Shelters on Columbia Pike in Arlington, VA.” For all three task orders, WMATA paid total costs of $1,446,258 to Potomac Construction. Including all three advances and accrued interest (per the contract), the County’s total project funding at that time was $1,010,202. From April through August 2014, WMATA and the County finance staffs conducted discussions about the total costs of the project. As a result of those discussions, it was agreed that a fair settlement of the total project funds due from the County for the project was determined to be $1,020,211. Based upon County project funding of $1,010,202 to that point, a balance was due from the County of $10,009. This balance due was paid on September 2, 2014.

COLUMBIA PIKE PROTOTYPE SUPER STOPS SUMMARY OF PARTIES INVOLVED

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Below is a summary of the parties involved and their respective roles in the construction of the Columbia Pike Prototype Super Stops. Arlington County Government (ACG) – Governmental entity in Northern Virginia who initiated and approved the construction of the Columbia Pike Super Stops. ACG Vendors:

First Transit – Provides contract public transit and paratransit services, as well as management services. Hired by ACG to provide management and consulting services. Hellmuth, Obata + Kassabaum (HOK) – Hired by ACG to create and provide to the County construction administration services including review and approval of contractor submittals, review and response to contractor Requests for Information and the inspection of the construction by others of three Columbia Pike Metro bus shelters for compliance with contract drawings and specifications. ECS Mid‐Atlantic – Engineer hired by ACG to perform third party soil, concrete and structural steel inspections as required by ACG. Kaspar Wire Works – Manufacturer hired by ACG to provide newspaper vendor boxes.

Washington Metropolitan Area Transit Authority (WMATA) – Tri‐jurisdictional government agency that operates transit service in the Washington Metropolitan Area. Entered into an agreement with ACG to provide complete construction of at least three (3) bus shelters, including site work. WMATA Vendors:

Potomac Construction Company, Inc. – Job Order contractor which WMATA hired as the general contractor for the construction of three Super Stops.

Potomac Subcontractors:

Redmon Group – Multimedia and technology company hired as a subcontractor by Potomac to furnish and install electronics displays.

Novum Structures – Subcontractor hired by Potomac to furnish and install canopies, canopy glass, screenwall bases, screenwall glass and pylon support framing as well as a certified structural design of the components.

Signature Renovations – Subcontractor hired by Potomac to furnish and install pylon cladding panels, stainless steel benches, mechanical, electrical and lighting work through second tier subcontractors.

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PERFORMANCE REPORT

COLUMBIA PIKE PROTOTYPE SUPER STOPS PERFORMANCE REPORT

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Methodology The purpose of this report is to perform an assessment of the project development and delivery of the Columbia Pike Super Stop construction project including: review of the organizational structure of the project and adequacy of management oversight and reporting; identify and review the adequacy of processes and procedures used to identify, manage, and mitigate schedule, scope, and budget risks; review project documents to support scope, review processes, and project deliverables; review project delivery timeline and identify key reasons for delays; and review classification of project costs to identify key drivers for costs and how they were managed. Our work included a review of the Columbia Pike Super Stops financial documentation, planning documents, design contracts, design specifications, certain contract drawings, construction agreements, correspondence within and between Arlington County and WMATA, minutes of progress meetings, and interviews with project management and other personnel. Interviews were conducted with both County staff and WMATA personnel. The work was completed at the direction of the Arlington County Department of Management and Finance. Therefore, the recommendations in this report apply only to the County. Summary Based on the results of the procedures performed, project issues were revealed, some of which created delays and additional costs incurred on the project. These issues included, but are not limited to, the following:

There was a lack of mutual understanding as to what was to occur and who was responsible at key points throughout the project and there was miscommunication as to expectations of both the County and WMATA. The agreement between the County and WMATA was not clear on roles and responsibilities, with terms such as “provide support” and “coordinate” which are not clearly defined in the agreement.

WMATA was going through a restructuring of their Office of Engineering Services (ESVC) which included downsizing, changes in personnel, and relinquishing responsibility for certain projects. The Columbia Pike Super Stop project was in progress in the midst of this environment.

Unforeseen external delays, specifically VDOT’s approval, because of the Super Stop being in a Virginia right of way (2006‐2010).

Poor execution in the actual construction performance including errors in constructing to designs and specifications.

The documentation provided to WMATA from their general contractor, Potomac Construction Company,

on the charges to the project lacked proper detail to support additional payments from the County.

Change orders charged to the project were not mutually agreed to in writing by both the County and WMATA, as per the Phase Two Agreement. This resulted in the additional costs being borne by WMATA.


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Recommendations Based on the results of the procedures performed, we recommend the following with respect to future comparable projects:

Ensure the County project manager has outlined all project tasks and the expected time line prior to the project starting based on as many known factors as feasible to minimize delays, especially when working with third parties. Develop a process for reporting on the actual work as compared to the outline of tasks and the time line.

Ensure that an individual is assigned the responsibility of monitoring the budget throughout the project and steps are in place to make any changes to the budget, if necessary.

Ensure agreement language is adequate not only with respect to legal requirements, but also as to clear identification of roles and responsibilities of all parties involved. This includes definitions of all applicable terms and identification as to who is performing what in the context of both internal (to the County) and external communications and actions. Ensure the County project manager periodically refers to the agreement throughout the project, and proposes changes, if necessary.

Develop a formal process to establish at what point or what has to occur on a project for the County project manager to escalate difficulties with contractors, partners, or other third parties to the next level, including when legal action is to be taken.

Consider revising agreements with partners to include consequences for failure to achieve project benchmarks, failure to provide reports as agreed, errors in construction (re‐work) and any other terms considered important to the County to better ensure compliance with those terms.

Procedures and Results 1. Review of project organizational structure, including management oversight and day‐to‐day project

management. Describe and diagram the organizational structure and roles / responsibilities including scope and financial approval processes. Was appropriate structure in place? Were appropriate reporting mechanisms in place?

A diagram of the organization structure is attached as Appendix A. WMATA contracted with Potomac Construction, one of their Job Order Contractors, for the construction of the project. Potomac subcontracted out 75% of the project to three other vendors, with all but the concrete work being completed by subcontractors of Potomac. For the concrete work, Potomac utilized a supplier, Patriot Ready Mix Concrete to supply and deliver the concrete to the site, with the concrete installation performed by Potomac. Some of the delays in the Project were specifically related to concrete work including curbs poured at the incorrect height and incorrect concrete mix ordered resulting in concrete pours being cancelled.

Construction management, project management, construction administrative services, and other descriptions imply project supervisory roles were filled by personnel from Arlington, HOK, and WMATA. Interviews conducted as part of our procedures indicate that there was a lack of mutual understanding as to roles and delineation of project management responsibilities between the involved parties. Even though


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these roles and responsibilities were stated in the Phase Two Agreement, and in the contract drawings and specifications, there was an excessive number of people involved, turnover or reduction of both County and WMATA staff in key positions, a lack of understanding of the roles of each, limited communication to clarify, and misinterpreted contract language that was ultimately insufficient and ineffective at documenting the intended roles of all parties. The results of these issues are evidenced by an inability to mitigate the delays and bring the project back on schedule at multiple points in the time line of the Project. WMATA indicates that they hired Parsons Brinkerhoff (PB) to re‐establish their project management and delivery departments, however, based on the procedures we performed, there is no indication of PB being involved in this project.

An example of this lack of understanding of the roles and responsibilities of each party can be illustrated with the process to obtain permits. The Phase Two Agreement from June, 2008 states that “WMATA shall, with County support, obtain all permits, permissions and approvals from the County and other entities for all Project work.” The same document states that “the contractor shall, without additional expense to the owner, be responsible for obtaining any necessary licenses, fees, inspections, and permits” and “the County shall coordinate with WMATA as WMATA obtains all permits, permissions and approvals from the County and other entities for the construction of the Project.” During this review, WMATA produced a copy of Proposal Review Meeting Notes from July 2010 where it is noted “Potomac agreed to cancel the costs from their proposal if Arlington County will perform all work to satisfy and get the necessary permits.” The notes indicate that the County’s project manager agreed to the request. The County’s project manager left the County in June 2011 and current County staff indicates that these meeting notes were never formally transmitted to either the new County project manager or the project officer at the time of his departure. Neither the Phase Two Agreement nor the Specifications documents were modified to reflect any change in the permit process. As a result there was a disagreement on who was responsible for obtaining the permits. Based on interviews, the County believes WMATA knew what to do to obtain the permits and WMATA expected the County’s assistance. Even with meetings and correspondence regarding the permit process, the delay was a result of neither WMATA nor the County taking ultimate responsibility for the process. As a result of this misunderstanding, there was a complete work stoppage on‐site from September 30, 2011 to March 18, 2012. During this time a subcontractor was fabricating the canopies off‐site.

WMATA was responsible for the construction and project management. However, when the County believed WMATA was not properly managing the project, they attempted to step in. The issue with this was the County could not control all aspects of the project because they did not have a contractual agreement with Potomac, the contractor performing the work. Potomac had contractual agreements with WMATA as well as their subcontractors. WMATA procured the project using one of their own Job Order Contracts (JOC). Job order contracts are used when constructing numerous, similar structures and was recommended by WMATA for the Super Stops project. This appeared to be a reasonable approach for constructing three prototype Super Stops with an ultimate goal of 24 stops. One of the main characteristics of the job order contracting process is the use of a unit price book, which provides pre‐set costs for specific construction tasks. While this may be more expensive initially, efficiencies are gained as additional structures are built. Other advantages of JOCs include fast and timely delivery of projects and low overhead costs of construction procurement. JOCs are quite common to WMATA given the nature of their projects, and WMATA was ultimately responsible for managing the JOC.

WMATA acknowledged that the three task orders issued under the JOC contract submitted by Potomac Construction lacked proper detail with regard to specific work that was being completed per the task orders submitted and the site locations. Due to lack of proper detail, it was difficult to establish proper allocation of


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the costs per stop. Additionally, proper supporting documentation of agreements and backup invoices for some of the additional costs listed in the third task order from Potomac Construction did or does not exist.

For all three task orders issued under the JOC contract, WMATA paid Potomac Construction $1,446,258. The total funds due from the County for the project was determined to be $1,020,211. Communication issues noted based on review of documentation included:

Progress meetings were held approximately every two weeks and attended by both WMATA and County staff. While the contract for construction administrative services with HOK included their attending up to six progress meetings, they did not attend any.

The minutes of the progress meetings show a lack of overall project leadership and no clear next steps as issues arose, and no clear resolutions when issues were said to be resolved.

The issuance of submittals was a major issue throughout the project. The Progress meeting minutes indicate there were times when submittals were not received by the County, were received late or were never submitted.

These communication issues resulted in multiple instances of “re‐work” being required on various tasks under the Project. These included but were not limited to:

Layouts not in accordance with contract drawings

Electronic display cutout at the incorrect height

Incorrect size of glass panels

Revision of fixture specifications due to errors in concealment of wiring

All of this resulted in disputes between the County and WMATA over documentation, costs, job status, and project management. Budget issues were also noted from the start and throughout the life of the project. As noted in the Background portion of the report, the original budget for WMATA for 3 Super Stops, as approved by the County Board, was $2,000,000. The final construction budget agreed to by both parties was $1,997,803 for construction and WMATA project management. The County project manager, who was interviewed during our review indicated that the previous County project manager was part of the original budget discussions. On July 14, 2010, the County was provided a copy of Potomac Construction’s complete Job Order Contract (JOC) in the amount of $1,664,836. This JOC, which was approved by WMATA, provided specific detail on the items included in the project. The total budget figure of $1,997,803 was included in the County’s Notice to Proceed to WMATA in March 2011. When the scope of work changed from three prototypes to one, there was never a formally revised budget agreed upon by all parties.


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At times, WMATA provided monthly Source and Use Statements which included total project expenses to date broken down by project management and construction costs and showed the percent complete against the funding provided by the County. However it does not appear that WMATA provided all of the monthly statements, and some of those received were not timely. Some statements were two to three months late and others were not received at all. WMATA began incurring project management costs in November 2008 and incurring construction costs in March 2011. WMATA believed submission of the Source and Use statements met the financial compliance requirements of the agreement. However, County staff indicated they did not receive supporting documentation related to the source and use statements submitted as required by the agreement. The County asked WMATA for the statements when they were not sent, but did not request any additional financial information on the project until three years after costs were incurred, in December 2011, when two stops were deleted from the project. Since the County did not ask for additional financial information for the first three years on the project, this supported WMATA’s belief that they were complying with the financial requirements in the agreement. The trigger for reporting any cost overruns was tied to the original project budget of $1,997,803 which was never exceeded. However, the total project budget was for the completion of all three prototypes. In addition, with a fixed price contract, the payments are based upon percent complete, which was noted on the invoices from Potomac to WMATA. However, documentation reflects that since three separate purchase orders were issued by WMATA to Potomac, the percent complete was against the amount of each purchase order and not the total project budget. It appears that throughout the project no staff person from either the County or WMATA was analyzing how much of the total project budget was being expended compared to the work on the project itself. As noted, the budget figure was not adjusted when two stops were eliminated. While the budget should have been revised, it should not have been proportionately adjusted to one‐third of the original budget because some of the work done in the initial phase of the project could have been used going forward. For example, the three canopies and glass for all three stops was fabricated when the scope of work was for three Super Stops. While materials for one stop were placed in service, the County placed the pieces for the other structures in storage for a monthly storage fee. The materials were all produced for a very unique design and have little utility except for the purpose for which they were designed. The County has determined that correcting the design flaws so that these materials could be repurposed is not practicable or cost effective. It will retain a set of the canopy glass panels for replacement in the event of breakage and will dispose of the remaining steel components after meeting local, state, and federal requirements for disposal of surplus or obsolete property.

2. Review the processes and procedures used to identify, manage, and mitigate schedule, scope, and budget

risks.

The Phase Two Agreement states “the Program Manager for WMATA and the Project Officer for the County are authorized to make minor modifications to the Scope of Work as to any individual bus shelter, which modifications are based upon or required by, field conditions, budget limitations, or value engineering, provided however that such modifications are mutually agreed to in writing by the Project Manager and Project Officer prior to the initiation of such modifications.” Change orders were charged to the project but there was no documentation of agreement or formal approvals from either party for these changes. While the meeting minute notes reflect some discussion about change orders, no final cost or resolution is reflected in the minutes for any of the changes. WMATA cited minutes of the progress meetings as potential proof of agreement to support actions regarding design changes and/or additional cost. While both sides acknowledge the discussion of change


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orders and added cost, neither party was able to prove a consensus was reached to proceed with adding cost or accepting modifications. The meeting minutes were not sufficiently clear or detailed enough to establish that definitive agreements were reached on costs to be borne by the County.

Even with regular progress meetings, which noted requests made after December 2011 for detailed financial documentation from WMATA by the County, the County believes sufficient documentation was not provided. However, WMATA believes they provided all of the necessary documentation. Supporting documentation for the final invoice from the contractor that we received during this review did include a meeting between WMATA and Potomac staff agreeing to increased costs, however the County was neither informed of nor invited to the meeting between WMATA and Potomac. Given the County’s previous requests, it is not clear why the County would not have been invited to this meeting. WMATA contends that they were obligated to pay their contractor regardless of whether the County agreed with the costs. WMATA decided to pay the contractor and attempt to reach a settlement with the County separately.

The County wrote three separate letters to WMATA (October 2011, October 2012 and December 2012) expressing concern about WMATA’s inability to manage the project. WMATA responded to these letters disagreeing with the County’s assertions. This correspondence illustrates how both parties disagreed about their respective responsibilities.

3. Review of project and contract documents. Was scope appropriately captured? Did the documents include

appropriate review mechanisms? Were the documents adhered to during project delivery? Based on interviews and documentation available, there appears to have been a lack of communication as to what constituted documentation and support for project activity. Additional uncertainties or lack of oversight appear to have been the result of misinterpreted agreement language regarding the areas of project management, permits, and project submittals. The County insists WMATA was responsible for project management and engineering services, such as providing detailed shop drawings, coordinating with the subcontractors, and obtaining the necessary permits, however the Project Management Plan (PMP) states that “the County reviews Contractor submittals for approval and provides Engineering and Design services for the project” and that “WMATA administers the construction contract and manages construction, start‐up and testing of the project.” It appears Engineering and Design services include providing specifications and contract drawings. Under Project Tasks by WMATA, the PMP states “as stated in the Phase Two Agreement, WMATA shall provide project management and technical oversight of the Project to construct, start‐up, test and turn over the Project facilities, and with County Support, obtain all permits, permissions, and approvals from the County and other entities for all Project Work.” Under Project Tasks by the County, the PMP states “the County shall, with WMATA support, review and approve project design submissions.” Project Tasks for the County also includes “review contractor submittals for approval and provide Engineering and Design services for the Project.” The PMP also states: “WMATA will administer and manage the construction of the above Project and direct WMATA staff to provide engineering, architectural and systems engineering support, all on a cost reimbursable basis” and then states “Arlington County has procured and contracted with its on‐call General Architectural and Engineering Consultant.”


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The terms “with County support” and “with WMATA support” are never clearly defined. As previously discussed as it related to the permit issue, this lack of clarity resulted in delays and issues of identifying responsibility. While the PMP, the Agreement and the Specifications documents provided guidance on the responsibilities of each party, it appears there were separate discussions on shifting some of these responsibilities. However, the original agreements were never revised to reflect these changes. This resulted in both parties not having a clear understanding of their roles.

There was miscommunication between the parties regarding ultimate project responsibilities with WMATA personnel insisting the County took over the engineering review responsibilities to save costs. However, from interviews with County DES staff, it appears they understood that WMATA was responsible for the engineering requirements on the project.

It is further documented that County Project Resources to be supplied include periodic administrative and management support of the Project tasks, and assurance of an independent review of design submissions and Project documents. While WMATA claimed that retaining the design firm, HOK to perform the design reviews necessary during construction prevented an independent review because HOK was the original design firm and was thereby reviewing their own work. The County believes HOK’s involvement was necessary and common practice, especially since there were issues with execution in the construction.

4. Review of project delivery timeline. Describe and diagram the project timeline through delivery. What were

the key reasons for the delayed delivery? The original Project Management Plan submitted by WMATA per the Phase Two Agreement indicates an estimated total calendar days to complete the 3 bus shelters of 270 days from Notice to Proceed to Completion (90 days to order/procure long‐lead items and 90 days each to construct the three prototype stops, noting that there would be a construction work overlap on up to two sites at a time to allow it to be completed within 270 days). There was no documentation provided that indicated a revision to this schedule subsequent to the termination of the Phase Two Agreement, when the scope of work was reduced from three prototypes to one. There were also no delay claims submitted by the contractor, Potomac Construction. The timeline is diagramed in Appendix B. Key reasons for the delay, which are not all inclusive, included: VDOT review delays, permit delays because of disagreement over who had responsibility for obtaining, disagreements between County and WMATA project management personnel over required documentation, turnover and downsizing of personnel involved in the Project, and processes as described throughout this report. Additionally, numerous delays were caused by errors in actual construction performance in accordance with designs and specifications including:

Concrete pours cancelled due to incorrect concrete mix ordered or layout errors

Curb poured at the incorrect height had to be removed and redone

Panels fabricated at the incorrect height had to be reordered

Glass ordered did not contain the required self‐cleaning coating and had to be reordered

Conduit stubs installed incorrectly had to be removed


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Project structure was fabricated with the inability to conceal the wiring within the structure causing a change in the design

Lack of coordination on the size of the screenwall pockets to allow installation of the lighting fixtures required a revision to the lighting fixture specification

5. Review and classification of project costs (i.e., project management, construction management, construction, and project administration). What were the key cost drivers of the project?

Procedures related to review and classification of project costs can be found in the next section of this report.

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FINANCIAL REPORT

COLUMBIA PIKE PROTOTYPE SUPER STOPS FINANCIAL REPORT ‐ FINDINGS

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The following is a summary of general findings noted related to the financial information for this project.

1) The original scope of the project was for three Prototype Super Stops. The original proposed budget was $2,000,000 to WMATA in County funding and $150,000 for County project management. The official notice to proceed was sent from the County to WMATA dated March 21, 2011, indicating a lump sum base cost of $1,997,904. Another letter was sent from the County to WMATA dated December 22, 2011 which requested the termination of all site preparation work related to the Dinwiddie East and Dinwiddie West Super Stops, other than the fabrication of the canopies. Based on the results of our inquiries with both parties as well as review of documentation, it does not appear that the original budget was amended for the revision of the scope of the work detailed in the December 22, 2011 letter. The original notice to proceed remained in effect from the date it was issued through the life of the project. While it would appear the removal of the site work for two stops would result in a lower base cost than originally quoted, no official communication was made by the County to WMATA requesting a proposal for a deductive change order. We find that the County should have requested a proposal for the deductive change order, and then should have proceeded with negotiations and ultimately execute the change order according to the terms of the agreement, or exercise any other owners rights under the agreement if negotiations were not successful.

2) In addition to the $1,000,000 that the County advance funded to WMATA, the County received an

invoice dated March 22, 2012 which stated that an additional estimated cost to complete of $429,127 was owed to WMATA for the project completion of the Walter Reed Prototype Super Stop. The County disputed this invoice, indicating they had not received sufficient documentation for how the $1,000,000 provided by the County was drawn down and were not informed of what made up the balance of this final cost to complete. WMATA and County finance staffs conducted discussions about the total costs of the project. As a result of these discussions, it was agreed that a fair settlement of the total project funds due from the County for the project was determined to be $1,020,211. Including the accrued interest on the project (per the contract), the County provided total project funding of $1,010,202. As a result of the conclusions reached by the WMATA and County finance staffs and presented to the respective jurisdictions, WMATA issued a credit of $419,118 to the March 22, 2012 invoice leaving the County with a net balance due of $10,009. The amount due was paid by the County on September 2, 2014. Both parties have agreed that this payment constitutes the final transaction related to the Phase II agreement of the Columbia Pike Prototype Super Stop Project and both consider the project to be closed.

COLUMBIA PIKE PROTOTYPE SUPER STOPS SCHEDULE OF OVERALL PROJECT COSTS AND COST ALLOCATION

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Dinwiddie Total Walter Reed East + West

County costs to internal staff and outside vendors

ACG internal staff 50,555$ 50,555$ ‐

First Transit 179,373 179,373 ‐

HOK 76,333 76,333 ‐

ECS Mid‐Atlantic 8,378 8,378 ‐

Kaspar Wire Works 3,965 3,965 ‐

Total costs paid to internal staff and outside vendors 318,604 318,604 ‐

Contractor direct and indirect costs

Potomac Construction 17,342 17,342 ‐

Subcontractor Mark‐up 163,071 88,779 74,292

Redmon Group 51,639 28,937 22,702

Novum Structures 593,159 233,271 359,888

Signature Renovations 195,000 195,000 ‐

Total Potomac and Subcontractor Costs 1,020,211 563,329 456,882

Total Costs Incurred 1,338,815$ 881,933$ 456,882$

Additional Information

The balances above relate only to the Construction Phase of the Walter Reed Prototype Super Stop. The scope of this report only focuses on the construction phase.

As the general contractor, Potomac hired three subcontractors to complete the project. Two of the subcontractors incurred a portion of costs related to the two Dinwiddie stops. Costs related to the allocation of the Walter Reed and Dinwiddie Stops are based on estimates. These estimates were derived based on the information made available to us through the date of our report.

The original budget for the three Super stops was $2,150,000. $2,000,000 for WMATA's budget and $150,000 for Arlington County project management.

Arlington County project management costs shown above total $318,604. The increase in costs was due to the length of time it took to complete the project and the increased oversight the County provided to the project.

COLUMBIA PIKE PROTOTYPE SUPER STOPS SCHEDULE OF REVENUES AND EXTERNAL COSTS

17

REVENUE

Arlington County Funding 1,000,000$

Additional County Funding related to project closeout 10,009

Interest Earned on Funding 10,202

Total Revenue 1,020,211$

EXTERNAL COSTS

Potomac Construction Costs

Direct and Indirect costs 178,956$

Additional Cost ‐ Dominion meter 7,945

Credit for eliminating two stops (169,559)

Net Direct and Indirect Costs 17,342

Subcontractor markups 163,071

Net Potomac Construction Costs 180,413

Subcontractor Costs

Redmon Group 67,639

Novum Structures 671,755

Signature Renovations 504,876

Total Subcontractor Cost 1,244,270

Redmon Group (16,000)

Novum Structures (78,596)

Signature Renovations (309,876)

Total Subcontractor Credit (404,472)

Net Subcontractor Costs 839,798

Total External Costs 1,020,211$

Less: Subcontractor Credits for eliminating

two stops

COLUMBIA PIKE PROTOTYPE SUPER STOPS SCHEDULES OF COST ALLOCATIONS

18

Dinwiddie W Dinwiddie E Walter Reed Total

Set‐up and Installation

Analysis (one‐time) ‐$ ‐$ 5,374$ 5,374$

System design (one‐time) ‐ ‐ 4,405 4,405

Software programming (one‐time) ‐ ‐ 3,215 3,215

Project Management (one‐time) ‐ ‐ 4,053 4,053

Dinwiddie West Shelter 7,461 ‐ ‐ 7,461

Dinwiddie East Shelter ‐ 7,461 ‐ 7,461

Equipment (3 locations) 11,890 11,890 11,890 35,670

Total Cost 19,351 19,351 28,937 67,639 Credit ‐ remove 2 stops (8,000) (8,000) ‐ (16,000)

Revised Proposal ‐ Total Due 11,351$ 11,351$ 28,937$ 51,639$

Total estimated Direct Costs allocated to other stops 11,351$ 11,351$ ‐$ 22,702$


Costs related to the allocation of the Walter Reed and Dinwiddie Stops are based on estimates. These estimates were derived based on the information made available to us through the date of our report.

The analysis, system design, software programming and project management would have been expended whether the original agreement called for one stop or three stops, therefore, all of these costs were attributed to the completed stop (Walter Reed).

Credit applied is assumed to be for the installation of the other two stops, even though the amount of the credit is slightly more than the costs of the installation of the two stops.

Equipment was purchased for all three locations. The County has the equipment for the Dinwiddie stops in storage and it can be reused for future projects.


19

Novum Structures ‐ Estimated Cost Allocation

Dinwiddie W Dinwiddie E Walter Reed Total

Engineering 36,660$ 46,660$ 46,660$ 129,980$

Material 134,951 134,951 140,956 410,858

Installation 39,298 39,298 42,321 120,917

Design Coordination 3,333 3,333 3,334 10,000

Total Costs Incurred 214,242 224,242 233,271 671,755

Credits

Installation (39,298) (39,298) ‐ (78,596)

Revised Total Costs Incurred 174,944$ 184,944$ 233,271$ 593,159$

Total estimated Direct Costs allocated to other stops 174,944$ 184,944$ ‐$ 359,888$



The $10,000 design coordination did not break down which stop(s) it was incurred for, so the assumption was made to break it out evenly between all three stops.

The cost of materials for the stops was as indicated in the original Novum breakdown.

While the materials for one stop were placed in service, the County placed the pieces for the other structures in storage for a monthly storage fee. The County will retain a set of the canopy glass panels for replacement in the event of breakage and will dispose of the remaining steel components after meeting local, state, and federal requirements for disposal of surplus or obsolete property.


20

Signature Renovations ‐ Estimated Cost Allocation

Dinwiddie W Dinwiddie E Walter Reed TotalOriginal Proposal 154,938$ 154,398$ 195,000$ 504,876$

Credit - remove two stops (154,938) (154,398) ‐ (309,876)

Total Cost ‐$ ‐$ 195,000$ 195,000$

Total estimated Direct Costs allocated to other stops ‐$ ‐$ ‐$ ‐$



The contract with Signature did not provide enough detail to allocate the costs of each stop, but we made the assumption that the credit provided indicates the costs of each of the other two stops was $154,398.


21

MARKUP RELATED TO SUBCONTRACTOR COSTS

Redmon Group 51,639$


Signature Renovations 195,000

Total Direct Costs of Subcontractors 839,798

Job Office Cost Overhead (5.00%) 41,990

Total Field Costs 881,788

General and Administrative Overhead Costs (3.13%) 27,600

Subtotal 909,388

Profit (9.35%) 85,028

Subtotal with profit factor 994,416

Bond Cost (0.85%) 8,453

Total Direct Costs plus markup related to subs 1,002,869$

Net Markup on subcontractor costs 163,071$

Subcontractor Direct Costs related to Dinwiddie Stops

Redmon Group 22,709


Total Subcontractors Direct Costs related to Dinwiddie Stops 382,597$

45.56%

Total Markup allocated to Dinwddie Stops 74,292$

Percentage of total subcontractor direct costs related to Dinwiddie Stops


Subcontractor costs related to the Dinwiddie Stops are based on estimates. These estimates were derived based on the information made available to us through the date of our report.

Markup percentages for Job Office Cost Overhead, Field Costs, Profit, and Bond Costs were obtained directly from Potomac Construction’s final billing sheet.

COLUMBIA PIKE PROTOTYPE SUPER STOPS APPENDIX A – DIAGRAM OF ORGANIZATIONAL STRUCTURE

22

Arlington County

Director ‐ Arlington DOT

Transit Capital Project Manager

HOK Construction

Admin. Services

WMATA

Asst. General Manager,

Transit Infrastructure &

Engineering Services

General Contractor:

Potomac (concrete work)

Novum (fabrication) Signature (construction) Redmon (electronics)

subcontractors

WALTER REED PROTOTYPE SUPER STOP APPENDIX B ‐ TIMELINE

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Date Description

August 2000 Phase 1 Agreement to authorize WMATA to plan, design, and construct authorized projects to

enhance the Metrorail and Metrobus services

October 2002 Columbia Pike Community Design Charette

November 2003 ACG approved design contract with Hellmuth, Obata + Kassabaum (HOK)

August 2004 Contract implemented w/ HOK

November 2004 1st public meeting ‐ design workshop

October 2004 Columbia Pike Implementation Team (CMO appointed)

April 2005 Arlington County (County) Transportation Commission

November 2005 2nd public meeting entitled Design Workshop

June 2006 VDOT Architectural Review Board accepts project and begins review

June 2006 Arlington County Board approves FY07 ‐ FY12 Capital Improvement Plan

December 2006 VDOT (Richmond) Architectural Review Board begins project review

January 2007 VDOT (NOVA) begins project review

June 2007 County Board approves funding agreement with VDOT ($3,550,000)

July 2007 County approves sole source award to HOK to provide design and construction phase services for

3 prototype Columbia Pike Super Stops

November 2007 County Board approves Amendment to Phase 1 Agreement with WMATA adding Columbia Pike

Super Stops project

January 2008 Project Management Plan completed by WMATA as required by

Phase 1 Agreement

April 2008 Contract with HOK for construction admin services (approved in 7/07) signed

June 2008 County Board approves Phase 2 Agreement with WMATA authorizing

construction of 3 prototypes ($2,000,000). County Project Management

costs ($150,000)

September 2008 County Manager & WMATA General Manager approve Phase 2 Agreement construction contract

for 3 prototypes

April 2010 VDOT approves Columbia Pike Super Stop Project for construction

September 2010 County issues limited Notice to Proceed (NTP) authorizing WMATA to have

contractor/ fabricator of structures to begin submittals for approval from

designer HOK and initiate permit process

12/3/2010 WMATA issues an initial NTP to Potomac Construction

March 2011 County issues Full NTP to WMATA

6/1/2011 WMATA issues second NTP to Potomac Construction

September 2011 Construction begins

9/30/2011 ‐ 3/18/12 Work stoppage due to permit delays (See report)

10/28/2011 Concrete mix delay, however, resolved during permit delay

12/22/2011 County sends letter to WMATA terminating the Phase 2 agreement upon completion of the

Walter Reed stop

1/9/2012 County and WMATA staff met to discuss 12/22/11 letter

2/16/2012 County sends letter to WMATA to discuss termination of the Phase 2 agreement and repeating

request for detailed accounting and documentation

3/23/2012 Letter from WMATA to County w/ est cost to complete $429,127.07

March 2013 Water Reed Prototype Super Stop opened.

6/10/13 WMATA issues a third NTP to Potomac Construction

August 2014WMATA and County finance staffs conducted discussions about the total costs of the project. As

a result of these discussions, it was agreed that a fair settlement of the total project funds due

from the County for the project was determined to be $1,020,211. WMATA issued a credit of

$419,118 to the March 22, 2012 invoice leaving the County will a net balance due of $10,009. The

amount due was paid by the County on September 2, 2014.

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