PWCFinal Review Project Control Policies PDF

PRICM/ATERHOUsE(gOPERS 0
RAPID TRANSIT - PROJECT 2000

Review of Project Control Policies,
Procedures and Systems
FINAL REPORT
May 14, 1999

PRICFWATERHOUSE(gIJPERS U
RAPID TRANSIT PROJECT 2000 -
Review of Project Control Policies, Procedures and Systems
Table of Contents
Page
Executive Summaiy 1
Main ~
2
Project Management Plan I~~LUIIIIU~UUUL1UU~
Policies and Procedures 1~Dpnmmn..Ao4.,.....
a..,na.n.,nt.aIauhAa .2
ov~ivma ziuuuu~uuauuu~ —
I,fln fill VIflIA

4
I r5LrUUI4L~’LLUR 5
Background and lii UU~t ---~ 5
Scope of Wnrk 3
Approach and ~ ~,• aat~I,o

Report ~“‘~ 7
A. ProjectManagement a‘~‘~‘a.... . .7
B. Policies and Procedures .10

Design Managemer’ EL .10
Schedule Managemerin.
Budget and Cost Manage—~— uE.~uuL
.11
.14
I
Contract Managemont .19
C. Project Management ~ysterns.... .21
Contract Management .... .. .24
Tools and Special Applications .25
Primavera Enterprise Access Kit (PEAK) .25
Discoverer .26
Excel
Conclusion RegardingTools and Special Applications 26
Report Conclusion 27
Appendix I List ofPersons
— — ....
.. .V5~ FV~l4. 28
Appendix II— List of~ ...
20
Appendix Ill—Additional notes and UuITi 36
Project Policies and Procedures Review Detail 36
Communications (Procedur- ~‘ .37
Cost Control (Procedure 7) ‘37
Forecast to Complete (Procedure 8) .38
Variance Analysis (Procedure iP’ I,, .39
Contingency Management (Procedure 12) .40
Cost I Schedule Integration (Procedure IAI -I 40
Contract Closeout (Procedure ~‘ Al
PRICEWATERHOUSE(~X3PERS 0
Executive Summary
Rapid Transit Project 2000 Ltd. (RTP2000) is a Companies Act company. Its only shareholder is the
L provincial government. The mandate of the corporation is to deliver planning and construction for
major public transit infrastructure projects. This presently includes the construction of one project and
the planning for subsequent projects.
RTP2000 engaged PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”, or “PwC”) in late March

1999 to carry out abusiness review ofthe Project Management Plan and the related policies, procedures
and systems that have been put in place for planning, control and reporting to management during
design and construction ofthe Columbia Street-Lougheed-Vancouver Community College (Columbia-
Lougheed-VCC) SkyTrain extension. The business review was scheduled at this time because the
project is completing its set-up phase and is about to begin construction.
Our findings and recommendations from this review are set out in this report. PwC was also asked to
review the arrangements in place for governance ofthe project. Our findings and recommendations in
this matter will be presented separately and directly to the Board ofDirectors.
PwC carried out thebusiness review of theproject management plan, policies, procedures and systems I
approach through selected document reviews and keyparticipant interviews. By agreement, the
approach was a high-level managerial business review rather than an extensive detailed audit, technical
review or certification process. As a Companies Act company, RTP2000 is required to. undergo.-an
annual audit, which will be conducted later in the year by KPMG.
Our assessment ofthe current situation with respect to the Project Management Plan, the policies and
procedures, and the related systems and the recommendations for improvement are set out in the main
body of this report. Overall, there are many strengths in the arrangements which have been, and are
being, put in place for planning and control ofthe project. The RTP2000 organisation, staffing and
operations appear to have evolved as one would expect and as are largely appropriate for such a project
under these circumstances. However, there are several specific areas where we believe improvements
1
PRICEWATERHOUSE(~DPERS U
should be made to the current arrangements. A summary ofthe key recommendations in each area is set
out below for consideration and action by RTP2000.
Main Recommendations
PwC has identified a number of areas in which RTP2000 should make changes that will enable better
management ofthe project throughout its life. Thirty recommendations have been made. Twelve of
these recommendations are considered crucial to the success ofthe project and are listed below. The
remaining recommendations are more routine in nature, addressing issues ofefficiency and streamlining.
All recommendations are summarised in Appendix II— List ofRecommendations.
Project Management Plan Recommendations

1. Revise project procedures to incorporate the concept ofAuthorisations for Expenditures (AFEs) as
described in the PMP. This concept authorises the project to spend the contract value plus a small
percentage ofadditional money for variations by delegating to project management the ability to
make quick decisions when necessary for project operations. The AFE value cannot be exceeded
without returning to the approval authority.
2. Freeze project scope and finalise procedures for scope changes. Scope changes should be clearly
differentiated from changes, or change orders, within the existing and approved project scope. For
example, adding a station is a scope change; adding an escalator within the New Westminster station
is a change order or a use ofcontingency. The PMP identifies the Board, as having final authority
•over scope changes. It does not specify which scope changes are significant enough to warrant
Board attention nor does it indicate a process for tracking and assessing project scope changes. The
project procedures do not clearly and sufficiently address the subject ofscope control.
Policies and Procedures Recommendations

3. Fully implement efforts to expand the Scope Split Matrix developed for the Bombardier E&M
contract so that other keydesign and construction interfaces, such as between the guideway and
stations, are included.
2
PRICEVVATERHOUSE~43PERS U
4. Adjust the project schedule as needed, then baseline the schedule as soon as practical after the three
remaining major contracts are awarded. Once the schedule is baselined, all schedule reporting
should be done in comparison to the baselined schedule.
5. Commence full monthly reporting cycles and processes including detailed schedule and cost reports
by all keyparticipants. We understand that current reporting has nearly involved all participants and
processes, but that a full detailed cycle has not yet been completed. This should be done starting at
the end ofApril, even ifthe project schedule has not been baselined. This monthly reporting cycle
should include: (1) following all procedures for gathering project status and forecast to compete
from contractors and contract managers, (2) rigorous checking and scrubbing ofinformation to
minimise errors and omissions (3) inputting into P3, and (4) generation ofall existing and new
monthly schedule status and variance reports.
6. Revise and refine the Work Breakdown Structure (WBS) as planned and implement the new
guidelines before thenew major contracts are loaded into the system.
7. Complete and adoptmissing procedures as soon as possible, including procedures for Cashflows,
Schedule and Earned Value.
8. Apply requirements and discipline to have all invoices exactly match valid purchase orders as far as
possible ahead ofrising volume and new major contracts.
Systems Recommendations
9. Align P3 and Oracle resource coding so that actual data can be downloaded from Oracle to
P3 without extraordinary manipulation.
10. Link task manager information in P3 for automatic uploads into Oracle.
11. Review P3 system security and system file access and, where possible, put in place standard P3,
server, directory and file protections to minimise system interruptions from unauthorised or
inadvertent access.
3
PRICEVVATERHOUsEeDPERS U
12. Put draft set ofcontract management reports into production as soon as possible. Further changes to
the reporting package should not be made for formatting, but should only be considered where the
reports do not meet fundamental data needs.
Conclusion
Although the project has evolved to a reasonable state at this point in its life cycle, the next two to three
months of fine-tuning will be critical to ensuring the project will eventually be able to successfully
manage to its schedule and budget. Fine tuning organisational effectiveness, policies, procedures and
system functionality ahead ofincreasing business volumes, pressures and major contracts will be a
significant challenge. It is this stage in RTP2000’s evolution where much ofproject management’s
effectiveness will be determined. -
Implementation ofthe recommendations in this report will enhance RTP2000’s capability to properly
plan and control the Columbia-Lougheed-VCC SkyTrain Extension Project. Appropriate action plans
should be established to carry out implementation, and suitable arrangements should be made to ensure
the agreed actions have been properly carried out.
.1
4
PR1CMATERHOUSE(~&X3PEPS U
Introduction
~ Background and Purpose

Rapid Transit Project 2000 Ltd. (RTP2000) engaged PricewaterhouseCoopers LLP
[ (“PricewaterhouseCoopers”, or “PwC”) in late March 1999 to carry out a business review ofthe project
management plan and the related policies, procedures and systems that have been put in place for
planning, control and reporting to management during design and construction ofthe Columbia Street-
F Lougheed-Vancouver Community College (Columbia-Lougheed-VCC) extension ofthe SkyTrain. The
[ business review was scheduled at this time because the project is completing its set-up phase and is
about to begin construction.
Our findings and recommendations from this review are set out in this report. PwC was also asked to
review the arrangements in place for governance ofthe project. Our findings and recommendations with
L respect to governance will be presented separately and directly to the Board ofDirectors.
PwC carried out the business review ofthe project management plan, policies, procedures and systems
approachthrough selected document-reviews and key participant interviews. The approach was a high-
level managerial business review rather than a more extensive detailed audit, technical review or
certification process. As a Companies Act company, RTP2000 is required to undergo an annual audit,
which will be conducted later in the year by KPMG.
Scope of Work
Our work included a review ofthe completeness, adequacy and technical co-ordination of approved and
drafted policies and procedures, a review ofthe Project Management Plan and examination ofthe
integrated Primavera and Oracle systems. A review ofthe planned flow ofdata and information to
project taskmanagers, and a review ofthe Bombardier vehicle contractwith regard to contract
requirements for reporting from the contractor were also part ofthe assignment.
I
I
PRKYVVATERHOUSE(~JJPERS U
Approach and Worksteps
PwC carried out the business review ofthe project management plan, policies, and systems through
selected document reviews, system demonstrations and 23 key participant interviews. The worksteps
for the review which were set out in our proposal ofMarch 9, 1999 were:
Review the draft Project Plan — including overall contract management strategy and earned-value management
strategy.
Review the approved and draft Policies and Procedures as documented in the draft manual. Ensure that they are
written to meet their stated goals and that they are aligned properly with the draft Project Plan.
Identify any areas where the Project Management Plan and the Policies and Procedures are misaligned.
Examine the Integrated System, including a review of planned data flows and information to project managers.
Assess whether the Policies and Procedures accurately describe the Integrated System. Confirm that the data
generated by the Integrated System are technically co-ordinated with the Policies and Procedures. Identify gaps
between the Integrated System and the Policies and Procedures. Make recommendations for achieving
alignment of the Policies and Procedures and the appropriate elements of the Integrated System. I.
Review major contracts, particularly. the Bombardier vehicle contract, to ensure the contract requirements for
reporting from the contractor are consistent with the procedures and systems established by:RTP2000.
Throughout the review, we have assessed the various elements of the planning and control activities
against major project management best practices, and have incorporated these best practices in our
recommendations where appropriate.
Recommendations
improvements that presented in this report
project management andwere developed
the Board maytoconsider
providefor
project managementPwC
implementation. withbelieves
possible
that the recommendations developed in this effort and presented in this report can benefit the project;
however, the decisions to implement any ofthe recommendations and the effectiveness ofthe
implementations, are RTP2000 project management’s responsibility.
6
PRICEI/VATERHOUsE@PERS U
Report Content
The business review results are presented in this report in which we first deal with issues related to the
Project Management Plan, then with Policies and Procedures; and finally with Systems related to
J~ supporting the planning and reporting activities.
A. Project Management Plan
The ProjectManagement Plan (PMP) for the Columbia-Lougheed-VCC SkyTrain Extension ofthe
Rapid Transit Project was still in draft format at the time ofour review. The PMP is ahigh level outline
ofhow the project will function. It essentiallyprovides background to the project and an explanation of
the basic processes that will govern management operations ofthe project.
The PMP is typically developed prior to the project procedures. However, dueto the rapid start ofthis
project, this PMP was developed in parallel with many ofthe project procedures. In general the project
functions described in the PMP are consistent with the requirements in the project procedures but there
are several notable exceptions.
The first exception is in the concept ofthe Commitment Recommendation Authorisation,(CRA).

According to the PMP, upon contract award a Commitment Recommendation Authorisation (dRA) is
created to provide a control on the total contract value. The CRA is equal to the contract estimate plus a
• provision for variation. No changes can be made to the contractprice.that;exceeds the CRA value
without returning to the approval authority. Elsewhere in the PMP the CRA is referred to as an
Authorisation for Expenditure (AFE). We found neither ofthese terms referred to in the project
procedures, nor is there provision in the procedures for this concept.
The second exception is the concept ofa Work Authorisation ChangeNotice (WACN). The WACN is
available to provide temporary approval for changes. This might be used when a large change order is
required but dueto lengthy review and approval in some situations immediate action is required to keep
the project on schedule. In this case a WACN would be approved on a not-to-exceed basis for some
portion ofthe required work while final approval is processed through the contract change order process.
There is no mention ofthis concept in the project procedures.
7
PRICCVl/ATERHOUSEEXJPERS U
The third exception is the concept ofclaims management. This is mentioned briefly in the PMP and not
at all in the procedures. RTP2000 contract administrators do have a plan to deal with claims by entering
L them into the Oracle system as a Miscellaneous Quote (MQ). This method will ensure that the claims
are immediately recognised as a commitment to the project. Individual contract administrators will keep
track oftheir contract and claim issues. This procedure may artificially increase commitments until the
claims are resolved; however, that may serve as an incentive to resolve the claims in a timely manner.
A fourth exception is the concept of scope control. The PMP identifies the Board as having final
L authority over scope changes. It does not specify which scope changes are significant enough to warrant
Board attention nor does it indicate a process for tracking and assessing project scope changes. The
L project procedures do not clearly and sufficiently address the subject ofscope control.
The PMP also shows detailed requirements for contractors with respect to the information they include
L in their reporting to the Rapid Transit Project Office (RTPO). Review ofthe Bombardier vehicles
ontract shows that this contract does not include these provisions. While it is important that the vehicle
contract contain reporting requirements, it is muchmore important that the design / build contracts
U contain additional detail on contractor reporting requirements. We have been advised by the RTPO that
the contracts currentlyin negotiation for the three design / build contractors are more detailed in
describing the requirements that will support the~project reporting needs.
Lastly, the PMP indicates that schedule control will be performed using an earned value approach for
design. The PIVIP makes reference to the establishment ofdesign budgets in hours. This is a sound
~ approach and will work with design that is within the control ofRTP2000. However, in the case of
lump sum design or design / build contracts, it may not be practical, as typically lump sum contracts
• only report percent complete and translate that into cost. It is unlikely that the contractor will provide
labour detail in this environment.
We Recommend that the Project:
1. Revise procedures to incorporate the concept ofAuthorisations for Expenditures (AFEs) or

Commitment Recommendation Authorisations (CRAs) as described in the PMP. This concept
8
pR1CCVVATERHOUSE(~DPERS U
authorises the project to spend the contract value plus a small percentage ofadditional money for
variations by delegating to project management the ability to make quick decisions when
necessary for project operations. The AFE value cannot be exceeded without returning to the
approval authority.
2. Revise procedures to incorporate the concept ofa Work Authorisation ChangeNotice (WACN).
El A WACN might be exercised when a large change order is required but due to lengthy review
and approval some immediate action is required to keep the project on schedule. We also
[ recommend that the ability to approve a WACN be restricted because this mechanism for change
should not be used often.
3. Incorporatethe concept and methods ofclaims management into procedure 19, Contract
L Administration Changes. Claims management is mentioned briefly in the PMP and not at all in
-
the procedures. The contract administrators do have a plan to deal with claims by entering them
El into the Oracle system as MQ but this will only track potential cost changes; MQs will not help
the project manage the claims themselves.
4. Review the three design/build contracts and all othermajor contracts for the reporting
requirements that they impose on the contractors. Both the PMP and the procedures describe
detailed requirements for contractors with respect to the information they include in their
reporting to the Rapid Transit Project. It is our understanding that the contracts currently in
negotiation for the three design / build contractors are more detailed in describing the -
requirements which will support the project reporting needs.
5. Freeze project scope and finalise procedures for scope changes. Scope changes should be clearly
differentiated from changes, or change orders, within the existing and approved project scope.
For example, adding a station is a scope change; adding an escalator within the New
Westminster station is a change order or a use of contingency. The PMP identifies the Board as
having final authority over scope changes. It does not specify what scope changes are significant
enough to warrant Board attention nor does it indicate a process for tracking and assessing
9
PRICEWATERHOUSE(4~PERS U
project scope changes. The project procedures do not clearly and sufficiently address the subject
ofscope control.
B. Policies and Procedures
Design Management
Design for the Rapid Transit Project will be conducted by design consultants and by design or design /
r build contractors. Engineering design will be managed by Engineering Co-ordinators who are tasked
with managing the co-ordination between contracts within their respective segments. The Rapid Transit
[ Project is planning to maintain control of the interface between design/build contractors rather than turn
control over to one ofthe contractors for co-ordination.
The contracting strategy ofusing three major design / build contractors (Bombardier for the E&M
contract, plus the guideway and tunnel contractors) will require additional design co-ordination by the
El project. Because much ofthe detailed design is taking place at the contractors’ offices, the project team
~ will need to either spend time in the offices ofthe design contractors, or develop additional procedures
for co-ordinating and controlling the detailed physical interfaces between contractors. To aid in E&M
~ contract negotiations and scope development for Bombardier, a scope split matrix was established to
govern the Bombardier scope ofwork. Project personnel plan to expand this document to govern and
[9 identif~’ the interfaces between the major contracts and use the matrix to co-ordinate design and
construction activities.
Other contracts covering special structures, stations and the maintenance yard will be designed in the
traditional manner, then bid for construction. Value engineering is planned to be performed with the
I guideway contract; whereby both the contractor and the project will benefit from realised cost savings.
[~ Separating the station core design and construction from the exterior station on Sapperton and Lougheed
Mall is expected to reduce the risk ofdelayed approval ofexterior station designs. However, this
process may make co-ordination ofthe design and construction more complex.
~ Engineering documentation is currently routed through document control for tracking and historical
records. A document control department manages this process using a custom Microsoft Access
10
PRJCEWATERHOUsEeXJPERS U
database. The document control system is modelled on the provincial government’s file index system
ARCS. The business process is modelled on BC Transit’s.
We share the concern of some senior project personnel as to the adequacy ofthis system for managing
and tracking design documentation and documentation associated with specific contracts. The
Document Control systems currently in place may serve as a central registry solution; however, they
may not manage documents adequately to meet the needs ofspecific contracts and issues related to
them. The Rapid Transit Project is studying thepossibility ofusing contract management software
S called Expedition to better manage contract and issue documentation.

1. Develop a final procedure for meetings on, and responding to, design issues that occur at the
interfaces between design/build contractors, and between design/build contractors and other
designers. This should be an active process, soliciting design status and detailed information
from the designers on a regularbasis as project management has initiated it, possibly every two
weeks, rather than waiting for the designers to identify possible conflicts or, worse, waiting until
the conflicts appear during construction. The project Design Manager would then chair a
periodic meeting focused on the resolution ofdesign interface conflicts.
2. Fully implement efforts to expand the Scope Split Matrix developed for the Bombardier E&M
contract so that other key design and construction interfaces, such as between the guideway and
stations, are included.
3. If the project acquires and uses Expedition for document management on this project, which we
agree with, we recommend that the software run via an internet server, so that nearly all criuical
documents are controlled, readily accessible, and in electronic form.
Schedule Management
The project planning and scheduling management processes were assessed through discussions with the
project controls personnel and review ofthe detailed project schedules, applicable procedures and 2
11
PRICEWATERHOUSEcOPEPS U
reports. All ofour review of schedule management was focused on the Columbia-Lougheed-VCC
SkyTrain Extension ofthe project. Future phases were not considered.
The detailed schedule is comprehensive including major activities in design, procurement, construction,
utility relocation, environmental permitting, and property acquisition. The portion ofthe schedule
encompassing the design / build contracts was initially developed independent ofthose contractors
based on information from other similar systems including the existing Vancouver SkyTrain, and
subsequentlyvalidated through discussions with them. We believe the schedule development process,
as we understand it has been sufficiently thorough with the right mix ofexpertise and experience to
produce a schedule that can be used as an appropriate management tool for the Columbia-Lougheed-
VCC SkyTrain Extension. We have also found that the project appears to have been appropriately
adjusting the schedule based on changes in major events, such as changes in contract award dates.
Several major activities essentially occurring outside the control ofthe project do pose some schedule
risk, including environmental permitting and property acquisition. Project management is, ofcourse,
aware ofthese risks and is actively managing both activities. We understand that the current plans for
environmental permitting and right-of-way acquisition have been discussed and agreed between
RTP2000 and the responsible outside agencies, and the project schedule has been prepared in
accordance with the proposed environmental approval and the proposed receipt ofauthority to obtain a~
statutory right-of-way.
There are additional schedule risks that are within the project’s control, primarily related to completion
ofthe major contracts including the guideway, tunnel, and E&M contracts. Some ofthese contracts
provide significant earlypayments to contractors. Having these contractors paid in advance of
performance or deliverypotentially reduces financial leverage ofRTP2000 over these contractors and
adds to schedule risk. The project will be required to pay additional attention to contractor management
activities to reduce the risk oflate contract completion on contracts with significant earlypayments.
Since the three major design I build contracts (Bombardier E&M, guideway and tunnel) have not yet
been awarded, the project schedule has been baselined to existing milestones without the advantage of
information from these major contracts. Project management wishes to perform construction against a
12
PRJCM/ATERHOUSEcDPERS U
realistic schedule, thus we believe a formal baselining can only occur once these major contracts are in
hand. The existing detailed schedule does show the plan, but does not show current status at the detail
The process for gathering current status and forecast to complete the major design / build contracts has
not been fully developed and exercised. Final timing and methodologies are still being worked out.
[ Consideration has been given to an electronic transfer ofdata between the critical large contractors and
the project. To this end, it is our understanding that the major contracts have specified the use ofP3
scheduling software for project planning. The only schedule reports produced to date show summary
information for activities relating to the completion ofthe Lougheed Mall and Vancouver Community
College segments. No other detailed schedule reports have been produced and approved.
The earned value performance measurement processes and procedures are being discussed by Project
Management and have not been finalised at the time ofthis report. Fundamental to finalising the earned
L value procedures is to clarify exactly what management objective or objectives the information is to
meet. To measure project performance using the earned value method, the project schedule and budget
LI must be baselined and progress information must be collected. As mentioned above, neither ofthese
elements has been baselined.
Earned value reporting will be especially complicated on this project. Since a majority ofthe project
[J will be performed using design / build contracts, costperformance for these major contracts will by
definition be as budgeted. These three contracts will be invoiced based on progress against a fixed cost,
U therefore actual costs for tasks will be unknown. The second issue is that the Bombardier vehicle
contract and any other large contract with major prepayment terms will mask the smaller contracts due
I to the significant differences between the earned progress and costs invoiced to date. The project team
should give significant thought about methods ofreporting performance in the most practical, useful and
H accurate way to meet the intended objectives and effects.
13
PRICEWATERHOUSE(4JPERS U
1. Adjust the schedule as needed, then baseline the schedule as soon as practical after the three
remaining major contracts are awarded. Once the schedule is baselined, all schedule reporting
should be done in comparison to the baselined schedule.
2. Commence full monthly reporting cycles and processes including detailed schedule and cost
reports by all key participants. We understand that current reporting has nearly involved all
participants and processes, but that a full detailed cycle has not yetbeen completed. This should
be done starting at the end ofApril, even ifthe project schedule has not been baselined. This
monthly reporting cycle should include: (1) following all procedures for gathering project status
and forecast to compete from contractors and contract managers, (2) rigorous checking and
scrubbing ofinformation to minimise errors and omissions (3) inputting into P3, and (4)
generation ofall existing and new monthly schedule status and variance reports.
3. Move quickly to define the details ofthe information coming from major contractors, whether or
not this information is being supplied electronically. We believe that the accuracy ofthe
i adjusted and baselined schedule and the subsequent schedule progress updates couldbe heavily
dependent on information provided by the new major contracts. Because ofthis dependency, it
is important to define the contractors’ requirements at the beginning ofthe contract period.
4. Load cost utilisation curves for major contracts into the scheduling system to increase accuracy
ofcash flow reporting.
5. Complete and adopt missing procedures as soon as possible, including procedures for Cashflows,
Schedule and Earned Value.
Budget and Cost Management
We reviewed the overall project budget and the budget categories defined by the Work Breakdown
Structure (WBS). We also reviewed the methods used by theproject to estimate costs and assign
budgets to the WBS categories and the plans that the project uses to update and modify its budgets. All
14
PRICE VATERHOUSE(~DPERS U
of our review ofbudget and costmanagement activity was focused on the Columbia-Lougheed-VCC
SkyTrain Extension.
We found that the project has used detailed historical costs, adjusted for inflation, to develop its
construction budgets and that a high proportion ofestimators and project personnel involved in the
budgeting have significant relevant experience. We also found that the project has developed adetailed
estimate ofother project costs such as communications, design, and project management.
We understand that the project is currently reviewing WBS budgets and the overall project budget with
the intent to modify them as needed to reflect actual contract pricing for themajor construction and
vehicle contracts. Because the project includes four major contracts and all four either have been or are
about to be awarded, we concur that this is an appropriate time to review the project budget, and to
reallocate it as needed.
The budget for Project 2000 is broken down into component costs through the WBS, a method of
assigning costs to identifiable, project-specific work items that can be measured and managed. Some
WBS categories include components ofthe entire project, such as the Systems or Design categories;
other WBS categories are geographic. MajorWBS categories may be broken down into subcategories,
depending on the complexity ofthe work or management requirements for additional detail. Use ofa
ork Breakdown Structure for project management and costmanagement is a best practice in the
construction industry.
Each WBS category has a budget; the sum ofall WBS budgets is the overall project budget. Budgets for
each WBS category have been entered into the Oracle system, and these WBS budgets form thebasis for
project financial and cost management and reporting. Costs and contractual commitments are collected
against the WBS budgets. Earned value cost reporting, when it starts, will determine the project percent
complete by measuring actual progress and actual cost for eachWBS category.
The WBS was developed early in the project, then used to structure cost reportingin the Oracle system
and schedule reporting in Primavera. Major contractors will be required to report their costs in
accordancewith. WBS categories to ensure that the project obtains adequate information on contractor
costs so the project can measure performance and reduce the opportunities for cost growth on contracts..
15
PRICEWATERHOUSE@PERS U
Typical WBS cost categories and subcategories are:
03 — Systems
0301 Trackwork
—
030101 Mainline trackwork

—
030102— Mainline Special trackwork

030103 LIM rail
—
0302 Train Control

-
0303 Power Supply & Distribution

-
0304 Security/Communications
-
0305 Testing & Commissioning

-
06— VCC to Grandview Cut (typical ofgeographical breakdown)

0601 Property Acquisition
—
0602 Power & System Structures

—
0603 Site Work

—
0604 Guideway
— (typical)
060401 At-Grade Guideway
—
060402 Elevated Guideway beams

—
060403 Tunnels
—
060404 Special Structures

—
060405 Guideway Structure

—
0605 Environmental Protection & Mitigation

—
0606 Station Costs

—
46 Vehicles
-
61 -~Design
Based on recent developments with the pending major contracts, the current WBS is not completely
aligned with the contracting plan for the project. For example, much ofthe WBS is divided
geographically by segment. The contracting strategy, developed after the creation ofthe WBS, provides
for several large design/build contracts, which cover all geographic segments. It may not be meaningful
or even possible for these contractors to report against the geographic nature ofthe existing WBS.
Management reports are generated based on the WBS and associated project cost and expenditure
k information,.including financial reports, cash flow, budget status, project status, and forecast ofcost to
complete. Many project cost reports have been produced; however, some are still in development
including those organising management and reporting information by contract. Final report
development is now proceeding rapidly and co-ordination issues that were occurring at the beginning of
the report development effort appear to have diminished.
16
PRICMATERHOUSE(gOPERS U
Strict adherence to electronic matching ofinvoices to purchase orders is not yet fully implemented with
all vendors, although management intends in the near future to require that all contractors and suppliers
H ensure that they are precisely invoicing to a valid purchase order. Invoices are sometimes received for
payment without a purchase order having been generated. This is a failure ofstaff and contractors to
H follow the procedure rather than a technology or system issue. The result is a delay in payment ofthese
H invoices and extra

Management needswork for those
to provide responsible
direction for processingthe
and discipline invoice
with internal and and purchase
external order.
parties to set a good
example with respect to compliance procedures.
The approval ofinvoices is governed by the fiscal approval matrix. This matrix appears to be
satisfactory for the corporate office, but only two project individuals are authorised to approve project
invoices. Itis likelythere will be a significant number ofsmall invoices that may overwhelm the two
H project approval authorities and it may be appropriate to delegate some ofthis work .and responsibility to
contract management level personnel.
A second invoice approval issue is that because budget approvals and invoice approvals both presently
refer to the fiscal approval matrix, Board approval‘appears to be required for invoices over $5 million.
There will be monthly invoices this large for some ofthe major design / build contracts. This co-
ordination issue should be allowed for to ensure payment terms for theinvoices are met, rather than
delayed dueto the Board meeting schedule.
The project contingency management procedure allows use ofcontingencybased on the earned value of
progress to date. Without modification, this approach is not appropriate on this project because more
than halfofthe project budget is committed to three design / build and one vehicle contracts. It would
be expected that without modifying the approach a significant portion ofcontingency would be utilised
at contract execution with another significant portion committed near contract closeout.
February was the firstmonth’s data in which the forecast to complete process was performed. No
significant problems were encountered by the contract managers or the financial department in
achieving the required timeline for validation ofinvoices received or review ofthe forecast to complete.
17
PRICtWATERHOUSE(~X3PERS U
1. Revise and refine the WBS as planned and implement the new guidelines before the new major
contracts are loaded into the system. The original WBS was developed before the contracting
strategy was completed, so that some contracts cover multiple WBS categories in such a way that
cost management will be more difficult. For example, the guideway contract may not be
managed by RTP2000 on a geographical basis, but the WBS categories for this work are
assigned geographically.
2. Revise the WBS budgets and assign contingency as needed now that the major construction
contracts have been or are about to be awarded. The project has advised us that they intend to
complete a cost reforecast in April 1999. We also recommend that the reforecast include a
review ofbudgeted costs for all non-construction components ofthe project.
3. Significantly revise the procedure for contingency management. We believe that management
control ofcontingency use is an important method ofproject cost management, and that the
existing contingency procedure will not assist project management in this task. The current
contingency management process allows contingencyuse based on the earned value ofprogress
to date. This approach is not realistic on this project because more than half ofthe project
4
4
budget is committed to three design I build and one vehicle contracts. I
4. Incorporate specific requirements for monthly reporting ofincreases and decreases to the project
contingency into the revised contingencyprocedure. Also, the approval authority for
contingency use should be broadened to include more people that just the CFO.
5. Invoice approval authorities should be expanded for project personnel at the Burnaby office.
Currently, only two project individuals are authorised to approve project invoices. It is likely
there will be a significant number ofsmall invoices that may overwhelm the two project
approval authorities and may be more appropriate for contract management level personnel.
6. Invoice approval procedures should be modified so that the project is not required to gain Board
approval for routine invoices. Currently, Board approval will be required for invoices over $5
18
PRICEWATERHOUsE(4~PERS U
million. There will be monthly invoices larger than $5 million for some ofthe major design /
build contracts. We agree that the Board should approve large contracts, large contract change
orders, Authorisations for Expenditure, and scope changes. However, once the expenditure or
contract has been approved by the Board, we recommend that contract execution, including
payment oflarge invoices, be delegated to the project.
7. Apply requirements and discipline to have all invoices exactly match valid purchase orders as far
as possible ahead ofrising volume and new major contracts.
Contract Management
The contracting strategy employed on theRapid Transit Project (three major design I build fixed price
contracts) necessitates careful attention to several key processes which will facilitate the contract
5
management activities ofthe project.
The Rapid Transit Project has chosen to directlymanage the contractors (instead ofusing the services of
a general contractor) therebyplacing a premium on activities which aid in the co-ordination ofthe
design and construction contractors. Additional complexity is introduced due the number ofmajor
contractors (in. particular the design / build contractors) whose activities must be carefully co-ordinated
to ensure a smooth construction sequence.
To accomplish this co-ordination, the Rapid Transit Project holds weekly co-ordination meetings
(design schedule, WBS, budget) with the intention ofexpanding attendance as contractors come on
board. A “scope split responsibility matrix” has been developed to clarify responsibilities of
Bombardier in the E&M contract. It is the intention ofthe project to expand this matrix to include at a
minimum the other major design / build contracts. The resulting master document is intended to provide
various project personnel (segment co-ordinators, engineering co-ordinators, construction manager,
the
ility coordinator, etc.) and contractorswith an essential tool for understanding and optimising all
project contractual interfaces.
The Rapid Transit Project is also planning for electronic data transfer ofproject status information from
the three design/build contractors. Discussions were conducted during contract negotiations and it is our
19
PRICEVVATERHOUSI3(JxJPEPS U
understanding that the contractors are willing and able to comply. To ensure seamless integration the
project is drafting an Inter-contractor/client system co-ordination plan and system integration manual.
L These should ensure the technology employed by the various groups is compatible and meets
operational and management needs.
It is also our understanding that the three design / build contractors have been notified of, and will agree
L to, reporting requirements which support the project’s cost detail (by WBS) and schedule detail.
[ Reporting and invoicing will need to match the WBS task level ofdetail. It is our understanding that the
three contractors have agreed to invoice to this level of detail. Contractors must also be educated
[ regarding the required invoice format and that invoices submitted without a valid P0 will be rejected.
This latter condition should alleviate the problem ofinvoice submittal prior to generation ofa P0.
Managing project costs at the contractor level is essential to adequate contract management. The project
is currently finalising project cost reports, which among other things will group costs by contractor. It is
also likelythat contract managers may desire an ad hoc reporting capability. The project has decided to
utilise the Discoverer tool and has sent five personnel for formal training.
There is concern byproject technical support personnel that the Discoverer program may be too
complicated and time consuming for an extensive rollout on the project. However, we believe that with
appropriate training, policy and procedure set-up, and disciplined implementation, the Discoverer tool
will be a valuable asset to project management.

Develop and test the electronic data transfer as soon as possible. This is especiallytrue ofthe
l. transfer ofschedule information which will be immediately required upon contract execution.
The adoption ofPrimavera Expedition opens a number ofpossible avenues of communication,
which need to be worked out as soon as possible. Should the project follow through with
adopting this software, immediate widespread implementation and training is essential.
20
PRICEWATERHOUsE(&DPERS U
2. We recommend the project deploy the Discoverer tool to contract managers and financial
department personnel who request it and provide the balance ofservice with trained MIS
consultants.
Executive Level Reporting Architecture

Regular weekly executive and project management meetings are held. Monthly Board meetings are also
conducted. Monthly and annual corporate calendars of critical dates and the sequencing ofrecurring
management meetings have not yet been developed.
1. We recommend that a basic architecture for staff and management meetings be put in place as
well as a schedule for report generation deadlines necessary to support the meetings. These
schedules are designed to lead up to and systematically support regularly scheduled Board and
governance meetings.
C. Project Management Systems
U The Rapid Transit Project has selected and installed Primavera Project Planner (P3) as the software for
detailed schedule development and to provide cost I schedule integration. The tasks performed in P3
include:
• detailed schedule development, tracking and reporting,

A
• maintenance of WBS level summary schedule loaded with budget, forecast, and actual
costs(received from Oracle) and progress,
• cash flow forecasting and reporting, and
• earned value calculation and reporting.
The Rapid Transit Project has also selected and installed Oracle Financials and Projects as integrated
software for budgeting, commitments (purchasing & change order) and cost control as well as project
accounting and financial reporting. The tasks performed in Oracle include:
21
I
pRJCEWATERHOUSE(~OPERS U
• purchase order creation through approval,
• request for changes (CCN, MQ, & FWO) creation through approval,
• invoice processing and approval,
• tracking ofcommitments, and
• (project cost and financial reporting with some special report processing and formatting
accomplished using Excel.
Our review ofP3 software included document reviews as well as discussions with key staff and
demonstrations ofthe process for transferring status information from the detailed schedule tothe WBS
level schedule. We did not note any significant issues or problems relating to the adequacy and
performance of P3 to handle these tasks. However, we were able to easily access sensitive P3 system
files, which we believe should be shielded from casual access. The personnel assigned to use the system
appear experienced with the P3 software and capable of utilising it for their respective tasks. Our review
ofthe Oracle I Oracle’s Activity Management Gateway (AMG) I Primavera Enterprise Access Kit
(PEAK) / P3 data transfer was through documentation reviews and a demonstration ofthe upload of
budget, forecast and WBS to Oracle and the download ofactual costs to P3. Our review of Oracle
systems included document reviews, discussions with major project participants regarding their dayto
ay use ofthe system, and for those who are recipients ofthe information discussions focused on how
the system supports their management ofthe project.
e transfer ofactual cost from Oracle to P3 is functioning but requires extraordinary manipulation via
IThxcel andthen into P3 duepartially to introduction ofresources from Oracle that do not tie to resources
P3. The budget as developed and loaded in P3 is not broken down in the same way as the Oracle
m
resources. As a result ofthe intent of Oracle utilising resources upon receipt ofactual costs, down load
factual cost information includes Oracle resources. Manipulation into P3 is currently required for each
task
code which has actual costs that month to ensure forecast to complete and cost at completion are
I
accurate. To prevent this P3 preparation manipulation the budget must be broken down into the Oracle
resources or the use ofthe resources in Oracle must be suspended or realigned with P3. Task manager
22
I
I
PRICEWATERHOUsEcXJPERS U
information is also not transferring from Oracle to P3 and as contract management reports are developed
further this may become a reporting issue for Oracle.
The critical need for a comprehensive set ofproject Contract Management reports is not yet fully met;
however, a final set ofdraft reports were being tested while this review was underway, in particular
reports supporting contract management. The criticality ofthese reports stems from a lack ofad hoc
reporting capability inherent with Oracle and the difficulty for many ofthe non-financial (contract
managers, engineers, etc.) personnel to directly retrieve relevant data from Oracle. Most project
personnel have little or no prior experience with Oracle.
After testing the systems and running them through the last few monthly cycles with live data, project
personnel have demonstrated that the integrity ofthe data in Oracle is sound and that the system is
] functioning adequately. End ofyear processing is underway without noted system problems, but the end
ofyear closing is not yet complete.
With the systems now functioning adequately, project management must now move to re-evaluatekey
accounting and systems roles and responsibilities to ensure that they have adequately cross-trained key
staff to handle unexpected absences and system emergencies. From our interviews it appeared that the
project does not presently have backup resources capable of handling month end closes and data uploads
and downloads between P3 and Oracle.
A Project Trainer is on staff and working on this project. System training documentation is on a server
library; however, the documentation-required for training appears to not yet be adequate for training and
needs to be appropriately updated and/or prepared. As system documentation reflects all the major
processing flows ofthe project, these same materials would be useful for the training needs ofall new
accounting and processing staff as well as all area supervisors, managers and Board members.
We Recommend that:
I. Align P3 and Oracle resource coding so that actual data can be downloaded from Oracle to
P3 without extraordinary manipulation.
23
PRICEWATERHOUSE(~DPERS U
2. Link task manager information in P3 for automatic uploads into Oracle.
3. Review P3 system security and system file access and, where possible, put in place standard P3,
server, directory and file protections to minimise system interruptions from unauthorised or
inadvertent access.
4. Put draft set ofcontract management reports into production as soon as possible. Further
changes to the reporting package should not be made for formatting, but should only be
considered where the reports do not meet fundamental data needs.
5. Critical accounting and system functions should be listed as soon aspossible by systems
management and the trainer should then develop and implementa training and cross training
schedule for key systems and system user people. The training plan should then be implemented
immediately to reduce the risk offunctional orprocedure breakdowns due to unexpected
absences ~orsystem failures.
6. The trainer should immediately review systems documentation with systems and accounting
management and identify what documentation will be needed for training. System management
should then set appropriate schedules and responsibilities for preparing needed documentation
updates and generation to meet training needs and schedules.
7. The trainer should develop abasic set ofpolicy, procedure and system documentation materials
touse as a standard general briefing and orientation package for new processing staff and all new
supervisors, managers and Board members.
Contract Management
The Oracle software has also been selected to serve the contract management and reporting functions.
The tasks performed in Oracle include:
• contract purchase order creation and approval, and
• request for changes (CCN, MQ & EWO) creation through approval.

24
PRICEWATERHOUSE(~XJPERS U
The Oracle review included document reviews and discussions with contract management and
L administration personnel regarding their day to day use ofthe system and Oracle’s ability to support
their management of the project.
At implementation the Oracle software was tailored for basic contract management requirements ofthe
Rapid Transit Project. The near term WBS restructuring and contract management system functions and
[
[ reporting have yet to be tested, but we concur with project participants who are satisfied that with WBS
adjustments that are being implemented, the contract management functions ofOracle should function
adequately and should meet their requirements.
As presented earlier in the “Contract Management” section, we recommend that the electronic data
transfer be developed and tested as soon as possible. This is especially true ofthe transfer ofschedule
[ information which will be immediately required upon contract execution. The adoption of Primavera
Expedition opens a number ofpossible avenues ofcommunication, which need to be worked outas soon
L as possible. Should the project follow through with adopting this software, immediate widespread
implementation and training is essential.
Tools and Special Applications
In addition to Oracle and Primavera Project Plannerthere are several special applications which are used
on the Rapid Transit Project.
Primavera Enterprise Access Kit (PEAK)
Primavera Enterprise Access Kit (PEAK) is a packaged software application used to link Oracle
Financials
The and Projects with Primavera Project Planner (P3). The tasks performed by PEAK include: (1)
transfer ofWBS, budget and forecast from P3 to Oracle, and (2) transfer ofactual cost from Oracle
The review ofPEAK included a demonstration ofthe process to update P3 and Oracle with the
respective information.
25
PR1CEWATERHOUSEcOPERS U
The PEAK software is straightforward but the documentation for this product has been shown to be
weak. For example, the copy function for P3 cannot be used. In its place the backup / restore function
must be used to ensure the ORA.P3 file is copied along with the other standard P3 files. This file is
critical to the seamless transfer ofinformation. The documentation mentions neither its importance nor
the fact that the copy function will not work in this situation.
Discoverer
The Discoverer software is used for the creation of ad hoc Oracle reports. The review consisted of
discussions with key financial personnel regarding their use ofthe system. Discoverer is not currentlyin
use with the project with the exception ofthe MIS consultants. This software is deemed as too time
consuming for mass application. Current plans are for purchase ofthe software and training to be
provided to limited keypersonnel only.
As presented earlier in the “Contract management” section, we recommend that the project deploy the
Discoverer tool to contract managers and financial department personnel who request it and provide the
balance of Discoverer support with MIS consultants. Although the development of standard reports is ~a
essentially complete, with such projects unique situations will arise whichwill necessitate ad hoc and
specialised reporting which Discoverer can help to satisfy
Excel
In addition to Excel’s standard functionality as a spreadsheet program, it is also used as a report writer
for Oracle. Most ofthe financial personnel are able to download data from Oracle into Excel for the
purpose
report. of creating custom reports. More manipulation is then required in Excel to produce the desired
Conclusion Regarding Tools andSpecial Applications

Other than the recommendation noted for Discoverer, the tools and special applications appear to be
evolving adequately for the project’s needs.
26
PRICEWATERHOUsE(&7DPEPS U
Report Conclusion
We have carried out our review ofthe current situation with respect to the Project Management Plan, the
policies and procedures, and the related systems and have set out our findings and recommendations for
improvements in this report. Overall, there are many strengths in the arrangements which have been,
and are being, put in place for planning and control ofthe Columbia-Lougheed-VCC SkyTrain
Extension project. However, there are several specific areas where we believe improvements should be
made to the current arrangements.
Implementation ofthe recommendations in this report will enhance RTP2000’s capability to properly
plan and control the Columbia-Lougheed-VCC SkyTrain Extension project. Appropriate action plans
should be established to carry out the implementation, and suitable arrangements made to ensurethe
agreed actions have in fact been properly executed.
PricewaterhouseCoopers
27
PRICEWATERHOUSEcDPERS U
Appendix I -- List of Persons Interviewed
Person Position
John Baldwin Business Development Consultant
Frank Blandford Schedule ManagementConsultant (Chief Scheduler)
Mike Byron Program Controller
Rodney Dawson Program Management Consultant
Gerard Dillon ChiefFinancial Officer
John Eastman Project Manager, Phase 1
Blair Fryer ProjectCoordinator
Linda Hard Systems Consultant
Doug Hinton Project Manager, Phase 2
George Hofsink Management Information Systems Consultant
Douglas Hoskin Contract Negotiator
Marc LeBlane Corporate Secretary
Miles Lippett Senior Contract Administrator
Jane O’Flaherty ProjectAccountant
Torn Parkinson Mark II Vehicles Consultant
Mario Pavlakovic Manager of Properties
Goran Serchrevic Cost Schedule Analyst
Brian Smith Decision Support Implementation and Management
Tony Steadman ~stiniator
Lecia Stewart President ~,ProjeetThrector
David Walker Program Controls Manager
Teresa Watts Director of Systems Design
Erik ~teway Oracle Systems Administrator
28
PRICIEWATERHOUsE(JXJPERS U
Appendix II -- List of Recommendations

Thirty draft recommendations have been made in this report. RTP management has responded by
committing to adopt each ofthese recommendations in whole. The recommendations are to be
implemented by May 31, 1999. What follows is a summary ofthe recommendations, as well a summary
of status on their implementation provided by RTP.
Recommendation Proposed Timeline RTP Management Responses:

Leader
1. Revise procedures to incorporate Dave 31 May AFE has been adopted as the terminology to
the concept of Authorisations for Walker describe the expenditure committed to the
Expenditures (AFEs) or contract estimate plus a provision for variation,
Commitment Recommendation Brian dispensing with the term Commitment
Authorisations (GRAs) as Smith Recommendation Authorisations (CRA).
described in the PMP. Contract management reports scheduled to go
into production the week of 19 April incorporate
the AFE.
RTP expects to update the procedures to
match accordingly by 31 May, subject to
RTP2000 Board approval. ‘4
2. Revise procedures to incorporate Dave The term WACN will not be used on this
the concept of a Work Walker project. The procedures for contract
Authorisation Change Notice 31 May administration and construction management
~WACN). Mike Byron include th~’use of a FWO(FieldWork Order)
which can provide approval and authorisation
of changes on a not-to-exceed basis, awaiting
Brian final approval. Management discussions are
Smith underway to confirm use of FWO or the
possible addition of a new form: AWA
(Advance WorkAuthorisation).
Regardless, the procedure will be revised by
31 May1999.
3. Incorporate the concept and Dave 31 May Claims management is mentioned briefly in the
methods of claims management Walker PMP and not at all in the procedures.
into procedure 19, Contract
Administration - Changes. Contract administrators have a plan to deal
with claims by entering them into Oracle
Financials as a Miscellaneous Quote (MQ).
The MQ will be used to track claims prior to the
issuance of a Change Order. Although PwC
noted that the tracking on a CCN (or MQ)
might artificially increase commitments, RTP
confirms that claims will be entered into the
system as soon as received.
29
PRICMATERHOUSE(gXJPERS U

Leader
The corresponding procedure will be updated

by3l May.
4. Review the three design/build Dave 31 May Three areas of project reporting are
contracts and all other major Walker paramount: Scope, Schedule and Cost. Frank
contracts for the reporting
requirements that they impose on Frank Blandford (Project Scheduler) John Eastman
the contractors. Blandford (Project
(Project Manager,
Manager, Phase
Phase 2)1) Doug Hinton
and Dave Walker
(Program Controls Manager) have confirmed
that their needs are being met in the bid
documents for the major contracts.
The Project Office will review reporting
requirements against the PMP in the week of 3
May.
Reporting requirements are expected to be
completed by the end of May.
5. Freeze project scope and finalise Dave 31 May The PMP identifies the Board of Directors as
procedures for scope changes. Walker having final authority over scope changes. It
Scope changes should be clearly
differentiated from changes, or Doug does not specify
significant enoughwhich scope Board
to warrant changes are
attention
change orders, within the existing Hinton nor does it indicate a process for tracking and
and approved project scope. assessing project scope changes.
The project procedures address the subject of
scop~ eontrol. The prbcedure will be matched
against the PMP by 31 May.
The Procedure is published as #26 in the
Proaram Controls Procedures and Guidelines.
Once the Project Budgethas been confirmed
and updated, the procedure will be formally
issued to project staff.
6. Develop a final procedure for Dave 31 May The Rapid Transit Project is planning to
meetings on and responding to Walker maintain control of the interface between
design issues that occur at the
interfaces between design/build John design/build contractors rather than turn control
contractors, and between Eastman over to one of the contractors for co-ordination.
design/build contractors and other Mike Byron A draft procedure on design management has
designers. been developed and is currently being
Jim Burke reviewed by project managers. It will require
input from design managers, and, once
finalised, will be formally issued.
7. Fully implement efforts to expand Dave 31 May Developing a procedure to address design
the Scope Split Matrix developed Walker issues and the preparation of a scope-split
for the Bombardier E&M contract matrix are to be implemented in tandem. An
so that other key design and expanded Scope-Split matrix to identify various
30
PRICEWATERHOUSEe77OPEPS U

Leader
construction interfaces, such as John contract responsibilities for all work items is
between the guideway and Eastman presently in a first-draft state, and in circulation
stations, are included. between senior project management staff.
Mike Byron Once the major contracts are awarded, this
Jim Burke scope-split matrix will be finalised and issued.
Another set of procedures has been developed
to address issues relating to construction
management and owners representatives. I
would anticipate these will be finalised by 31
May.
8. If the project acquires and uses Brian 31 May Project will be acquiring Expedition software.
Expedition for document Smith A plan to interface P3, Expedition and Oracle
management on this project, has been prepared. Implementation is
which we agree with, we scheduled to begin the week of 26 April.
recommend that the software run
via an internet server, so that Adoption of the software was affirmed in
nearly all critical documents are March. Implementation on the recommended
controlled, readily accessible, and platform will be adopted, since this architecture
in electronic form. is consistent with Project Office systems
architecture.
The focus of implementation will be on
deploying the contract issue management
toolset, not the document control features, nor
the software’s purported cost control features.
9. Adjust the schedule as needed, Frank 21 May Project managers report thatthe schedule is, in
then baseline the schedule as Blandford some menner, ~urrentIybaselined. Prevailing
soon as practical after the three
remaining major contracts are Dave thought at theformally
the schedule project office expects
after the awardtoofbaseline
three
awarded. Once the schedule is Walker major design-build contracts: Electrical and
baselined, all schedule reporting Mik Mechanical contract; Guideway contract; and
should be done in comparison to e Byron Tunnel contract. With each of the major
the baselined schedule. John contracts in place, a firm schedule can be
Eastman adopted, and the project can expect to
compare against a confident set of completion
dates.
10. Commence full monthly reporting Mike Byron 31 May Detailed cost reports are presently being
cycles and processes including
detailed schedule and cost Frank provided
commenced to managers. Thismonth-end.
with February process Further
reports by all key participants. Blandford calibration of these reports is currently
This should be done starting at Dave underway, and a battery of contract
the end of April, even if the project Walker management reports will go into production the
schedule has not been baselined. week of 19 April. Rigorous monthly schedule
This monthly reporting cycle reporting is to begin after the schedule has
should include: (1) following all been baselined.
procedures for gathering project
status and forecast to compete Monthly reporting of the schedule has been
from contractors and contract occurring since January 1999. The reporting
managers, (2) rigorous checking not only involves summary status schedule but
31
PRICEWATERHOUSEcDPERS U
Leader
and scrubbing of information to also specific detailed schedules as they relate

minimise errors and omissions (3) to Phase 1 of the project.
inputting into P3, and (4)
generation of all existing and new Fully implemented schedule reporting is
monthly schedule status and planned for the May month-end.
variance reports. Present procedures will be revised to outline
the types and detail levels of schedule
reporting that will be published for distribution
to the project staff on a monthly basis. This
procedure will be concluded on 31 May.
11. Move quickly to define the details Dave 21 May Details have been defined with respect to
of the information coming from Walker schedule and cost information on 201 and 203.
major contractors, whether or not They have not been defined on Bombardier as
this information is being supplied Mike Byron of yet. Information required will be accepted
electronically. John electronically only. Discussion continues as to
Eastman whether an EDI link will be established with
contractors, or whether data will be accepted
Frank simply on diskette.
Blandford
As mentioned earlier, the project expects to
finalise these reporting considerations during
contract negotiations with preferred proponents
in each contract instance.
12. Load cost utilisation curves for Dave 30 June This task is to be completed subject to the
major contracts into the Walker conclusion of the award of major contracts.
scheduling system to increase
accuracy of cash flow reporting. Mike Byron
Frank
Blandford
Goran
Serdaveric
13. Complete and adopt missing Dave 30 June Draft versions of each procedure have been
procedures as soon as possible, Walker prepared. Final versions of these procedures
including procedures for are expected to be issued by 30 June.
Cashflows, Schedule and Earned
Value.
14. Revise and refine the WBS as Mike Byron 31 May The WBS revision is presently underway. It is
planned. scheduled for completion on 31 May.
15. Revise the WBS budgets and Gerard 31 May WBS budget revisions and contingency
assign contingency as needed Dillon assignments will be presented to the
now that the major construction appropriate authority levels for approval within
contracts have been or are about 10 days of awarding the major design-build
to be awarded. contracts.
16. Significantly revise the procedure John 31 May The project agrees that further review of this
for contingency management. Eastman matter is required. Senior management
expects to complete its review of the
32
PWCM/ATERHOUSEcDPERS U

Leader
17. Incorporate specific requirements Gerard contingency management procedure, and

for monthly reporting of increases Dillon expects to present the Board with a resolution
and decreases to the project by3l May.
contingency into the revised Dave
contingency procedure. Also, the Walker
approval authority for contingency
use should be broadened to
include more people than just the Mike Byron
CFO.
18. Invoice approval authorities Mike Byron 28 May The project Controller will prepare a revised
should be expanded for project approval authority matrix for review by
personnel at the Burnaby office. management. Once ratified, it will be
presented to the Board for approval. This is
expected to be completed in time for the 20
May Board meeting.
19. Invoice approval procedures Dave 31 May Project procedures are in error. Contracts
should be modified so that the Walker exceeding $5 million require Board approval,
project is not required to gain not invoices. Procedures will be revised
Board approval for routine accordingly.
invoices.
20. Apply requirements and discipline Mike Byron Complete This is now in place. Staff have been briefed
to have all invoices exactly match on the need to follow these procedures.
valid purchase orders as far as
possible ahead of rising volume
and new major contracts.
21. Develop and test the electronic Brian 8 June Confirmation of successful data transfer took
data transfer as soon as possible. Smith place when the project first accepted its
financials and projects system.
Frank
Blandford Once the WBS is revised, and schedule input
from ‘the contractor with time lines and cash
forecasts are confirmed, project will undertake
a series of tests to affirm ‘the validity of the
data.
22. We recommend the project George 31 May Discoverer is planned for deployment to the
deploy the Discoverer tool to Hofsink Financial Department staff after the finance
contract managers and financial and contract management reports go into
department personnel who Brian production the week of 9 May. RTP is
request it and provide the balance Smith organised so that Management Information
of service with trained MIS Service (MIS) can provide data assembly and
consultants. reports design to users across the projects
under management by RTP quickly. This
process ensures that the design of reports is
consistent, invariably accurate, and that
contract administration and finance and
administration are co-ordinated in their
acquisition of reports.
It also anticipates cost savings by not
deDlovina exDensive tools to man~n~ra who
33
PRICEVVATERHOUSEcXJPERS U
Leader
are not expected to have adequate time to

organise their data and to prepare reports. At
the same time, it builds a strong information
management contingent within the project
office for the long-term.
23. We recommend that a basic Mike Byron 31 May The Project Controller and the Corporate
architecture for staff and Secretary will publish a schedule with
management meetings be put in Dave deadlines for management meetings and
place as well as a schedule for Walker reporting deadlines by 31 May.
report generation deadlines Elaine
necessary to support the
meetings. These schedules are Kozak
designed to lead up to and
systematically support regularly
scheduled Board and governance
meetings.
24. Align P3 and Oracle resource Brian 31 May RTP2000’s approach to meeting the forecast-
coding so that actual data can be Smith at-complete reporting cycle involves more work
downloaded from Oracle to P3
without extraordinary Erik that is presentlysome
consequence, envisioned by PwC.
manipulation As data
of the a is
manipulation.. Whiteway required before it can be transferred from
information in Charles Oracle Financials to P3. This process is
25. Link task manager Sutherland explained in Procedure #8 of the project
P3 for automatic uploads into controls procedure manual.
Oracle. Mike Byron Plans are currently underway to meet both
these objectives. The work is expected to be
complete as soon as the revisions of the WBS
are complete.
26. Review P3 system security and Erik 31 May At RTP ownership of all master files and
system file access and, where Whiteway related data are the domain of MIS. Systems
possible, put in place standard
P3, server, directory and file Charles are fully documented,
recovery along
data with
plan. ~Off-site a disaster-
storage is also in
protections to minimise system Sutherland place. One area identified as a weakness is
interruptions from unauthorised or ownership of the P3 files.
inadvertent access.
Erik Whiteway will work with project staff to
ensure that ownership of these files is clearly
noted for future for disaster recovery purposes,
and that file-based security is implemented by
30 April 1999.
27. Put draft set of contract Brian 14 May MIS has prepared sixteen draft reports at the
management reports into Smith direction of Contract Administration and
production as soon as possible.
Further changes to the reporting Finance. Gerard Dillon, Mike Byron, and Dave
package should not be made for Walker have approved them. These reports
formatting, but should only be are to go into production the week of 19 April.
considered where the reports do A final review to compare the approved reports
not meet fundamental data needs, with those recommended in the PMP is
currently underway. As a consequence of this
34
PRICEVVATERHOUsF(~fJPEPS U

Leader
review and at the direction of the project

manager (John Eastman) further reports may
be commissioned.
At present the infrastructure to speed up the
design and implementation of reports seems
firm. One of the remaining challenges appears
to be winning consensus from among users as
they review their reporting requirements.
28. Critical accounting and system Brian 30 June Comprehensive user documentation is
functions should be listed as soon Smith scheduled for completion 14 May.
as possible by systems
management and the trainer Mike Byron Cross training of systems people is complete.
should then develop and Further, service contracts to support
implement a training and cross application requirements and database
training schedule for key systems requirements are in place with Oracle
and system user people. Corporation and PwC respectively. This gives
the project confident backup on systems
29. The trainer should immediately support, as well as full disaster recovery.
review systems documentation A review of financial system user
with systems and accounting
management and identify what documentation is scheduled for the week of 31
documentation will be needed for May. Documentation is to be completed by 30
training. System management June. A full cycle of training has been
should then set appropriate completed with support staff and management.
schedules and responsibilities .for
preparing~ needed documentation
updates and generation to meet
training needs and schedules.
30. The trainer should develop a
basic set of policy, procedure and
system documentation materials
to use as a standard general
briefing and orientation package
for new processing staff and all
new supervisors, managers and
Board_members.
35
IJR1CEWATERHOUSEcDPEPS U
Appendix Ill — Additional notes and comments:

These are notes taken while reviewing the indicated documents. The notes are provided here as an extra
[ aid to whoever is assigned to updating the individual documents.
Project Policies and Procedures Review Detail

Selected Rapid Transit Project procedures were reviewed to ensure they accurately reflected the systems
L and processes on the project and that project personnel were in compliance with the procedures. The
following procedures were reviewed:
1. Communications
2. Cost Control
3. Forecast to Complete
4. Variance Analysis
L 5.
6.
7.
Contingency Management
Cost / Schedule Integration
Contract Closeout.
~ During the course ofthe review, comments were also assembled for procedures not scheduled for
detailed review. There are three procedures, Cash Flow (Procedure 11), Schedule Control (Procedure
~ 13), and EarnedValue System (Procedure 15) that have not been finalised. We were not able to review
these procedures. All three are essential to the control ofthe project arid should be linalised as rapidly
L as possible.
As mentioned previously, theProcurement Procedure (Procedure 17) is not always being adhered to.
There are numerous instances of invoices received for work performed without a generation ofthe
purchase order. Management attention and training should be placed on this subject.
Our detailed comments on procedures are as follows.
36
-I-
PRJCEWATERHOUSE(JDPERS U
Communications (Procedure 3)
The purpose ofthis procedure is to provide guidance for internal communications management.
Included are discussions ofthe various communications media (paper, telephone, e-mail, and meetings),
[ what is documented for each, what forms are used and where the final documentation is stored.
[ This procedure is comprehensive and covers all major communications media commonlyused. There
appears to be an inconsistency with the Document Control (Procedure 4) procedure. There is no
[ mention in that procedure ofthe “record for discussion” which is the mechanism for documenting
telephone conversations.
The emphasis ofthis procedure is on the creation and routing ofpaper to document control for filing.
Even electronic mail, which is forwarded to document control, will be converted to hard copy for filing.
We recommend that the project investigate the practicality ofan electronic filing system in order to save
L space and to aid in document recall. Additionally, should the Expedition software be accepted for
document control, an electronic filing system is a requirement.
Cost Control (Procedure 7)
The purpose ofthe cost control procedureis to define the process to control costs through commitment
control procedures and forecasting costs to complete for the elements ofthe WBS. Included are
discussions ofthe roles and responsibilities ofkeyproject personnel, and explanation ofhow
1
commitments are monitored and information required on the monthly costreports.
The use ofthis procedure by contractmanagers is difficult due to current limitations in project cost
reporting. For example, the procedure requires the contract managers to check budget funds remaining
for a particular task number prior to making commitments. The contract managers have to acquire
budget status through a discussion with theproject cost department. Project cost reports are now being
finalised to provide this information to the contract manager.
The emphasis ofthis procedure is controlling costs at theWBS task number level ofdetail. This is
U important; however, it ignores additional important ways of reporting and controlling costs. For
37
PRICEWATERHOUSEGDPERS U
example, costs may be controlled at the contract level where the contract activities may span several
XVBS task codes. Managing at the contract level is essential when analysing total costs for a particular
contractor, analysing the effect or need for contract change orders, and reviewing contractor
performance. The project is aggressively developing cost reporting to support management at the
contract level.
Additionally, current cost reports emphasise summary collection ofinformation at WBS level 1 (03, 06,
11, etc.). There may be additional requirements to collect costs at WBS level 2 or level 3 across several
level 1 WBS codes. For example, property acquisition is a level 2 WBS included in the eight
geographic level 1 WBS codes.
We recommend that this procedure be updated to reflect the new cost reporting being finalised for the
I
project as well as the concept ofmanaging contractors at the contract level rather than the WBS task
level ofdetail.
Forecast to Complete (Procedure 8)
The purpose ofthis procedure is to define the process for compiling the Forecast to Complete (FTC) for
each WBS task code and to demonstrate how the calculation ofForecast at Completion (FAC) is made
4
for the project. - -
February 1999 was the first month in whichthe FTC procedure was exercised. It appears to have run
smoothly and conformed to the eight-day window specified in the procedure. It is likely, however, that I
signing the major design I build contracts will increase the complexity ofthis effort. In particular, each
contract manager will have to spend more time validating the accuracy ofinvoices received for each
WBS task code prior to the mechanics ofcalculating FTC. Additionally, as the contracts progress it will
become more complicated to accurately determine FTC due to a higher number ofrequest for changes
(RFC), claims and other information which would effect FTC.
The procedure mentions several types ofrequest for changes (RFC) including contract change notices
(CCN), Field Work Orders (FWO) and Notices ofClaim (NOC). The NOC request is not mentioned in
any other procedure, nor in the project management plan. According to the contracts department a claim
38
PRICEWATERHOUSEGXJPERS U
will be handled through the CCN documentation. Using the CCN to process claims has the advantage of
instant recognition ofa commitment and the disadvantage of losing the identity of claims since they
I
appear to the system as identical to a CCN.
Another type of RFC is also missing. The procurement procedures make allowance for a miscellaneous
quote (MQ). This is not mentioned is the FTC procedure.
There is also an inconsistency between the text description of the timeline and the graphical portrayal in
the procedure. For example, the text describes the FTC file as being transferred to the cost / schedule
person on the 5th day while the chart shows that transfer taking place on the 7~”.
As the complexity ofvalidating invoices and compiling the FTC increases over the life of the project, it
~ is recommended that careful attention is paid to the viability of the current timeline to ensure the FTC
process is not hurried unnecessarily. Additionally, the procedure should be updated to reflect current
procurement practices and inconsistencies with the procedure removed.
] Variance Analysis (Procedure 10)
~ The purpose ofthis procedure is to define how to review and analyse the Forecast at Completion (FAC)
for each WBS task code. This procedure is at ahigh level and again focussed at the WBS task level.
The contract managers should realise that there may be a significant number of variations from budget
when analysing costs at the task level. At the contract level, however, many ofthese variations will net
I The procedure also mentions the contract managers identifying variations as possible trends. No
explanation is given about what a “trend” is defined to be. Trend is an important concept in the
~ engineering and construction industry relating to the management of design changes. This project does
not have an established trend program and, because of the contracting strategy being used, may not
~ require a trend program.
39
PRJCEWATEHOUSE(gDPERS U
Contingency Management (Procedure 12)
The purpose of this procedure is to establish and control the use ofproject contingency.
E We recommend that the procedure for contingencymanagement be significantly revised. We believe

that management control ofcontingency use is an important method ofproject cost management, and
[ that the existing contingency procedure is not yet clear enough or complete enough to assist project
management in this task. The current contingency management process allows contingencyuse based
[ on the earned value of progress to date. This approach is not realistic on this project because more than
50% ofthe project budget is committed to three design / build and one vehicle contracts.
In the case of this project, it is expected that there will be heavy spending of contingencyin the
[ beginning and end ofthe major contracts. When the fixed price contracts are signed contingencymay
be spent for those contracts over the original budget. The amount spent is likely to exceed what has
L been earned to date on the project. Similarly, costs ofproperty aequisition that exceed budget may be
significant and may exceed the amount ofearned value on the project.
LI Contract closeout is the next time when contingency is likely to be spent rapidly. At this point, final
change orders and claims will be resolved, likelyincreasing the contract cost over original budget.
The procedure does not specifically addresshow the project contingency is managed. It does specify
[j at the CFO is responsible for authorising use ofproject contingency. It is recommended, however,
~ that contingency be under the control ofbroader authoritythanthe CFO. We recommend amonthly
meeting and monthly reporting ofcontingency changes, perhaps coincident with scope control meetings
d reporting, to discuss contingency release. A detailed accounting ofremaining contingency balances
I and reconciliations ofcontingencies used is contemplated but not yet fully implemented.
Cost I Schedule Integration (Procedure 14)
~ The purpose ofthis procedure is to define the process for development and updating the cost I schedule
database utilising the Oracle I P3 system.
40
PRICEWATERHOUSEcOPERS U
This procedure is accurate at a high level. More detailed procedures have been developed for step by
step actions required to transfer data between Oracle and P3. Not all ofthis procedure is being utilised,
however. Since a monthly reporting cycle has not officially commenced, standardised monthly reports
have not been created. Additionally, cash flow reports have only been generated at the project summary
level. Also, as the earned value process is not yet implemented, no earned value reporting has been
produced.
As mentioned in the systems section, the transfer ofactual cost from Oracle to P3 is functioningbut
requires additional manipulation in P3 due to introduction ofresources from Oracle. The budget as
developed and loaded in P3 is not broken down by the Oracle resources. As a result of Oracle utilising
resources upon receipt ofactual costs, down load ofactual cost information includes Oracle resources.
A manipulation is currentlyrequired for eachtask code which has actual costs that month to ensure
forecast to complete and cost at completion are accurate~ If the use ofresources in Oracle continues, the
process in P3 to accommodate this decision needs to be documented.
We recommend that a decision by the project be made regarding theutilisation ofresources in the
Oracle system. The impact on P3 must be quantified and a process be developed and documented to
compensate. Monthly reporting should also commence in order to be prepared for the commencement
of the major contracts.
Contract Closeout (Procedure 22)
The purpose ofthis process is to define the process for contract closeout and holdbackmanagement.
This procedure is described at a fairly high level and places apremium on contractor responsibility to
initiate closeout proceedings.
No major changes are required for this procedure.
41

PWCFinal Review Project Control Policies PDF

Uploaded by

Copyright:

Available Formats

PWCFinal Review Project Control Policies PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

PWCFinal Review Project Control Policies PDF

Uploaded by

Copyright:

Available Formats

PRICM/ATERHOUsE(gOPERS 0

RAPID TRANSIT - PROJECT 2000

May 14, 1999

Review of Project Control Policies, Procedures and Systems

I,fln fill VIflIA

Approach and ~ ~,• aat~I,o

B. Policies and Procedures .10

RTP2000 engaged PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”, or “PwC”) in late March

Project Management Plan Recommendations

Policies and Procedures Recommendations

~ Background and Purpose

A. Project Management Plan

The first exception is in the concept ofthe Commitment Recommendation Authorisation,(CRA).

We Recommend that the Project:

1. Revise procedures to incorporate the concept ofAuthorisations for Expenditures (AFEs) or

requirements which will support the project reporting needs.

B. Policies and Procedures

We Recommend that the Project:

Budget and Cost Management

Typical WBS cost categories and subcategories are:

030101 Mainline trackwork

030102— Mainline Special trackwork

0302 Train Control

0303 Power Supply & Distribution

0305 Testing & Commissioning

06— VCC to Grandview Cut (typical ofgeographical breakdown)

0602 Power & System Structures

0603 Site Work

060402 Elevated Guideway beams

060404 Special Structures

060405 Guideway Structure

0605 Environmental Protection & Mitigation

0606 Station Costs

H invoices and extra

We Recommend that the Project:

We Recommend that the Project:

Executive Level Reporting Architecture

C. Project Management Systems

• detailed schedule development, tracking and reporting,

• cash flow forecasting and reporting, and

• earned value calculation and reporting.

• purchase order creation through approval,

• invoice processing and approval,

• tracking ofcommitments, and

• contract purchase order creation and approval, and

• request for changes (CCN, MQ & EWO) creation through approval.

Tools and Special Applications

Primavera Enterprise Access Kit (PEAK)

Conclusion Regarding Tools andSpecial Applications

Appendix I -- List of Persons Interviewed

Appendix II -- List of Recommendations

Recommendation Proposed Timeline RTP Management Responses:

Recommendation Proposed Timeline RTP Management Responses:

The corresponding procedure will be updated

Recommendation Proposed Timeline RTP Management Responses:

and scrubbing of information to also specific detailed schedules as they relate

Recommendation Proposed Timeline RTP Management Responses:

17. Incorporate specific requirements Gerard contingency management procedure, and

are not expected to have adequate time to