PORT OF SEATTLE 
MEMORANDUM 

DATE:      October 21, 2014 
TO:       Audit Committee 
FROM:     Joyce Kirangi, Internal Audit Director 
SUBJECT:   Capital Projects Audit Engagement Update 

Over the next several years, the Port of Seattle plans to spend over $1 billion for a capital
construction program at Seattle-Tacoma International Airport. In accordance with our
2014 Audit Committee Work Plan, Internal Audit has started familiarizing itself with this
major capital program. 
We have obtained a broad understanding of critical activities of this capital program,
which encompasses many capital improvement projects. Costs will be incurred internally
within the Port. In addition, the Port will incur costs for work performed by contractors,
subcontractors, consultants, and  vendors. The complexity of this  program presents 
inherent risk exposures related to efficiency, effectiveness, cost, and compliance. In order
to mitigate those risks, Internal Audit plans to implement a long-term audit program, 
which will allow us to proactively examine various aspects of the high-risk areas
annually. We will conduct compliance audits of the outside parties when appropriate. We 
will also examine the effectiveness of Port processes over various aspects of this capital
program. 
The areas we select to audit and include in the Audit Committee work plan will be based
on the auditor's judgment and risk assessment. The auditor's judgment is informed by
various analyses and discussions with the Audit Committee, stakeholders, and Port
leadership. As we move forward with developing a long-term audit approach for the
Port's capital program, we will continue to seek your input. Your feedback is encouraged
and appreciated. 
Areas under consideration for detailed review include, but are not limited to: 
Contract Terms and Conditions           Construction Contract Methods and
Cost Allocation                          Procurement 
Commission Reporting                 Construction Management Controls 
Project Planning and Risk Assessment     Contractors' Compliance with
Project Cost and Schedule Estimation        Agreement Terms and Conditions 
Project Authorization                    Change Order Management 
Project Design and Review              Project Close-out 
Small Business Participation