INTERNAL AUDIT REPORT 




Operational Audit 
Service Tunnel Renewal/Replacement Project 
November 2017 - March 2020 
Issue Date: March 23, 2020 
Report No. 2020-05 
INTERNAL AUDIT

Service Tunnel Renewal/Replacement Project 



TABLE OF CONTENTS 

Executive Summary ................................................................................................................................................ 3 
Background ............................................................................................................................................................. 4 
Appendix A: Risk Ratings ....................................................................................................................................... 6 
Appendix B: ............................................................................................................................................................. 7 












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Service Tunnel Renewal/Replacement Project 
Executive Summary 
Internal Audit (IA) completed an audit of the Service Tunnel Renewal/Replacement Project for the
period November 2017 through March 2020. The audit was performed to assess the quality of the
Port's monitoring of the project to assure it is meeting project management standards in an efficient
and effective manner. 
The SEA Airport service tunnel is located below the Airport arrivals drive and runs the full length of the
main terminal. The 2,500 foot long service tunnel was designed, constructed and commissioned in
phases between 1968 and 1974. The tunnel is an essential Airport facility and is structurally linked to
other critical Airport infrastructure. The roof of the tunnel forms the support for most of the Airport's
arrivals drive and portions of the departures drive. Additionally, the tunnel provides critical secured
access to the central heating plant and its supporting infrastructure. 
The project delivery method was a design-bid-build with a lump sum contract. As of March 2020, there
were approximately $1.9 million in change orders which have been covered through the original
project contingency of approximately $2.3 million. The current construction contract was $25.9 million
with an estimated contract completion date of August 02, 2020. 
We selected this project to audit based on the number of change orders. We selected the largest
dollar value change orders, ones that changed the scope of the project and those that were errors and
omissions. Based on our testing and work performed, we did not find any evidence that the change
orders were not justified. 
We noted that the Service Tunnel Project team worked collaboratively with the general contractor,
James D. Fowler Co., to assure the project ran smoothly and stayed within budget. We did note an
instance, through no fault of the Service Tunnel Project, where the Port incurred $160,000 in additional
costs because of another major project's schedule slippage. With multiple major capital projects
occurring concurrently at the SEA Airport, it is critical that each project stays on schedule. If one
project's schedule slips, it will often impact other projects and the Port will continue to incur additional
costs. Additional information is provided in Appendix B on page 7. 
We do not have any reportable issues; however, we did identify an opportunity to improve processes
related to the verification of financial reports submitted to the Port from the contractor, that we 
communicated to Port management separately via a letter. 


Glenn Fernandes, CPA 
Director, Internal Audit 



Responsible Management Team 
Wayne Grotheer, Director AVM PMG 
Nora Huey, Director Central Procurement Office 
Tina Soike, Chief Engineer and Director of Engineering Services 
Janice Zahn, Asst. Engineering Director- Construction 

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Service Tunnel Renewal/Replacement Project 
Background 
The SEA Airport service tunnel is located below the Airport arrivals drive and runs the full length of the
main terminal. The 2,500 foot long service tunnel was designed, constructed and commissioned in
phases between 1968 and 1974. The tunnel is an essential Airport facility and is structurally linked to
other critical Airport infrastructure. The roof of the tunnel forms the support for most of the Airport's
arrivals drive and portions of the departures drive. Additionally, the tunnel provides critical secured
access to the central heating plant and its supporting infrastructure, the central loading dock (used by
commercial delivery vehicles to support continuous 24-hour terminal operations) and the employee
busing operation. 
The service tunnel is an essential element of Airport infrastructure that had not been strengthened or
upgraded to current seismic building codes. Seismic standards had changed greatly since the
construction of the service tunnel, and an update was needed. Retrofitting the service tunnel should 
improve its survivability and strength, while also extending the service life of the facility. 
A 2009 study by Kennedy/Jenks indicated that each section of the service tunnel had seismic
deficiencies, with the transition structures between cast-in-place concrete sections and sections
supported by structural framing being the areas of greatest risk. The study also identified failing
expansion and construction joints that were causing water-related deterioration and damage to the
tunnel structure. 
The Service Tunnel Renewal/Replacement project was bid on April 11, 2017 and received two bids.
The low responsive bidder, James D. Fowler Co., submitted a bid for $23,963,900 which was greater
than the Engineer's estimate of $19,567,000. The second and remaining bid submitted was
$25,665,000. Port staff analyzed the low bid and concluded that it was competitively priced to the 
market conditions for a project of this type, size and complexity. The project delivery method for the
Project was a design-bid-build with a lump sum contract. 
As of March 2020, there were approximately $1.9 million in change orders and a current contract of
$25.9 million. The total cost of the  project, including design and the Port's soft costs will be
approximately $39.5 million. Substantial completion is anticipated to occur in August 2020. 








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Service Tunnel Renewal/Replacement Project 
Audit Scope and Methodology 
We conducted the engagement in accordance with  Generally Accepted Government Auditing
Standards and the International Standards for the Professional Practice of Internal Auditing. Those
standards require that we plan and conduct an engagement to obtain sufficient, appropriate evidence
to provide a reasonable basis for our findings and conclusions based on our engagement objectives.
We believe that the evidence obtained provides a reasonable basis for our findings and conclusions
based on our engagement objectives. 
Change order review 
Obtained an understanding of the project management team's review process. 
Verified accuracy and  allowability of a sample  of change orders, including; adequate
documentation,  allowability,  proper  approval,  and  compliance  with  general  condition
requirements. 
Pay Estimate Review 
Obtained an understanding of the project management team's review and approval of pay
estimates. 
Tied out total amount paid per the pay estimates to PeopleSoft financial reports. 
Assessed the overall "percent complete per pay estimate" for reasonableness. 
Verified compliance with retainage requirements. 
Small Business Utilization 
Obtained an understanding of the Port's monitoring of compliance with small business
utilization requirements. 
Verified compliance with requirements through document review, submitted reports and the
general contractor's job cost ledger. 
Monthly Amounts Paid to Subcontractor (MAPS) Reports 
Obtained an understanding of the Port's monitoring of MAPS reports. 
Compared the most recently submitted MAPS report to the general contractor's job cost
subledger report. 








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Service Tunnel Renewal/Replacement Project 

Appendix A: Risk Ratings 
Findings identified during the audit are assigned a risk rating, as outlined in the table below. Only one
of the criteria needs to be met for a finding to be rated High, Medium, or Low. Findings rated Low will
be evaluated and may or may not be reflected in the final report. 
Financial      Internal                                               Commission/
Rating                                   Compliance      Public 
Stewardship  Controls                                         Management 
High probability
Non-compliance
Missing or not                       for external audit   Requires
with Laws, Port
High       Significant     followed                          issues and / or     immediate
Policies, 
negative public     attention 
Contracts 
perception 
Partial              Potential for
Partial controls 
compliance with   external audit
Requires
Medium   Moderate                  Laws, Port       issues and / or
Not functioning                                          attention 
Policies             negative public
effectively 
Contracts          perception 
Functioning as
Low probability
intended but     Mostly complies                       Does not
for external audit
could be        with Laws, Port                       require
Low      Minimal                                    issues and/or
enhanced to     Policies,                            immediate
negative public
improve        Contracts                           attention 
perception 
efficiency 











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Service Tunnel Renewal/Replacement Project 
Appendix B: 
The Service Tunnel Project incurred additional costs of approximately $160,000 due to
schedule delays on the International Arrivals Facility Project. 







Temporary Bus Turnaround 
Source: Port of Seattle Construction Services 
The Service Tunnel Project (ST) and the International Arrivals Facility Project (IAF) were active
concurrently. For the Service Tunnel Project to remain on schedule, the IAF was expected to have the
south portal of the service tunnel open by the end of July 2018 so that buses had a turnaround outside
of the tunnel. Part of the IAF's scope was to construct a permanent bus turnaround which would be
located on the south end of the new IAF building. At the time, the buses used the loading dock area of
the service tunnel as a turnaround point. As the ST contractor approached completion of the north
end, the Port faced the potential that the ST contractor would need to postpone their work, which
would have cost the Port an estimated $5,000 per day for standby time or, incur additional costs for
the contractor to demobilize and then re-mobilize after the IAF contractor completed their portion of the
work. 
Discussions between the IAF and ST Project teams concluded that a temporary bus turnaround was
needed to prevent a delay with the ST Project. As the temporary turnaround was not in scope for
either project, Port management decided that the ST would pay for the temporary turnaround as it had
contingency money and there was an "add nothing to IAF" mandate. 
The ST contractor determined that the turnaround could be completed for approximately $240,000 and
would not require an extension to the ST's schedule. A time and materials change order was issued in
October of 2018 for the turnaround. After the ST's contractor completed the turnaround, the actual
cost came in at approximately $160,000. 




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