An Audit Report on Construction Management at the Texas Tech University System
August 2006
Report Number 06-050
Overall Conclusion
The Texas Tech University System (System) has project management controls that are sufficient to ensure that state laws and System requirements are met in the award of construction-related contracts. However, there are opportunities to strengthen these controls to ensure that all requirements are met consistently. For example:
- The System should improve documentation that supports the award of contracts for construction-related services. It did not have complete documentation for three of eight design services contracts auditors reviewed.
- The System should ensure that it executes contracts for design services with contractors before projects begin. For one design services contract auditors reviewed, the System paid the design professional $137,726 before the contract was executed.
A total of 26 construction projects were completed at Texas Tech University and the Texas Tech University Health Sciences Center between September 1, 2003, and April 10, 2006.
The System also should improve controls to ensure that construction projects are completed within budget and on time. For example:
- All eight contracts for design services that auditors reviewed exceeded their original contracted amounts. Original, negotiated contract amounts were exceeded by an average of 24 percent. In one case, the original contract amount of $1,978,000 was increased by $1,478,627.
- The System should document its change order process for construction projects. Although a process exists, the System should document it formally. Not documenting this process increases the risk that change orders could be handled in an inconsistent manner.
- The System should improve its review process to report and correct errors in contractor payments. For one design services contract that auditors reviewed, the System overpaid the design professional $30,393 because it did not identify an error on the invoice.
- The System should document agreements that create changes to construction-related contracts. Auditors noted changes to contract duration, warranty periods, and payment releases that the System and contractors agreed upon but did not formally document.
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