The project seemed simple: Replace a door to a file room.
Following the rules, the California Board of Equalization requested a cost estimate for the project from the real estate unit that oversees state building construction and maintenance. This is what came back:
Replacing the door – $3,000.
Project management, architectural, and construction inspection services, plan review services by the Division of the State Architect and plan review and inspection services by the Office of the State Fire Marshal – nearly $14,000.
The door was never built, but those figures highlight how California’s state bureaucracy pumps up the cost of even the most simple projects, according to a new report by State Auditor Elaine Howle. Furthermore, taxpayers shell out more for the Real Estate Services Division to manage projects than when the work is contracted out to private sector firms, the report states, and receive sub-par results in return.
Real Estate Services, a unit within the state Department of General Services, charged $182 per hour in fiscal 2014-15, “or $46 more than the $136 average hourly rate of 26 private firms that conduct similar work for the state,” according to Howle’s report.
The reason for the higher cost remains a mystery. The division has not performed, the audit states, “an adequate analysis to fully explain the reasons for this difference.” It doesn’t have goals for delivering projects on time or on budget estimates, doesn’t track backlogs or their causes and “has not clearly set expectations” for project managers to communicate cost or time changes to departments relying on the division for services.
Auditors scrutinized 25 projects managed by the division. Of those, four lacked either time frame or cost estimates and the remaining 21 projects “frequently” exceeded stated delivery or budget goals.
For example, auditors noted that the division estimated it would take 5 1/2 years to renovate the historic State Library and Courts building. The project took nine years. (A freeze on bond financing problems accounted for one year’s delay.)
Several factors contributed to slowdowns, auditors found, including design deficiencies, inadequate planning, site conditions and plan changes requested by client departments.
General Services agreed with the audit’s findings and said that it will follow with its recommendations to better track projects and use available data to figure out the causes of project delays and cost overages and fix them.
And that $17,000 BOE door replacement? The board, auditors learned, “chose to forgo this project because of the high cost estimate.”