INTERNAL AUDIT REPORT 



Operational Audit- Capital 
Restroom Renovations Phase 3 Prototype Project 
July 2019 – December 2020 
Issue Date: May 27, 2021 
Report No. 2021-07

           Restroom Renovations Phase 3 Prototype Project 

TABLE OF CONTENTS 

Executive Summary ................................................................................................................................................. 3 
Audit Scope and Methodology ............................................................................................................................... 6 
Schedule of Findings and Recommendations ....................................................................................................... 7 
Appendix A: Risk Ratings ......................................................................................................................................... 8 














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           Restroom Renovations Phase 3 Prototype Project 
Executive Summary 
Internal Audit (IA) completed an audit of the Restroom Renovations Phase 3 Prototype Project for the
period July 2019 through December 2020. The audit was performed to assess the quality of the Port’s
monitoring of the Project, and to assure it was meeting project management standards in an efficient and
effective manner. 
We selected this project to audit based on the number of change orders (CO’s) and the delays in schedule
completion. Our sample for testing, included the largest dollar value change orders, ones that changed the
scope of the project, those that approved the extension of the contract, and those that were the result of
errors and omissions. 
The Port hired Architectural Alliance (AA) to furnish design services for the Restroom Renovations Phase 3 
Prototype project. AA subcontracted the estimate work to Faithful+Gould (F+G), who estimated the value of
the project at $1.86 million in July 2018. However, when the Project went to bid in July 2019, the Port
received two bids, the lowest being $3.08 million, which was approximately 65% higher than the engineer’s
estimate. When we interviewed the estimator at F+G, we were told that he believed that his estimate was
an accurate reflection of what the Project’s cost should have been for an airport in the Seattle market,
based on the 100% complete designs that he was provided, and that he stood by his estimate. F+G 
brought to our attention, that the mechanical/plumbing subcontractor was the same for both companies
who submitted bids. Furthermore, they mentioned that there is always a possibility that if contractors are
aware that there are few bidders, then it is likely that the bids will be higher. 
According to Port staff, a significant reason that the Project received higher bids than expected was
because only two bids were received, which had an impact on competitive pricing. Additional reasons Port
staff provided, include higher than anticipated bids from subcontractors, difficulty getting subcontractor bids
because of the logistics associated with working on the ramp level at the airport, and that the estimator was
not familiar with the Seattle market. The Port determined that because the two bids received were within
6% of each other, the low bid was an accurate reflection of the current construction market and PCL
Construction Services Inc. (PCL) was awarded the construction contract. Port staff did not contact the
estimator. 
The project delivery method was a design-bid-build with a lump sum contract. The final construction
contract total was $3.59 million, which included approximately $517,179 in change orders. The contract
required that PCL substantially complete the work no later than 225 days following the contract execution
date, which would have been June 6, 2020. During the course of the Project, there were 83 days approved
that extended the substantial completion date to August 28, 2020, which PCL met, and physical completion
was achieved on December 16, 2020. 
Overall, the Project team provided effective oversight throughout the Project, especially considering the 
unanticipated challenges encountered with COVID-19. The close proximity involved in this project made it
challenging to assure jobsite safety, however, the Construction team did a great job in making sure that 
good protocols were in place. They required the use of PPE such as N95 masks and coordinated frequent
safety inspection visits on-site to assure worker safety. Safety reports were obtained daily, which were very
thorough and detailed. 
We did identify the following opportunity where internal controls could be enhanced or developed. This 
opportunity is listed below and discussed in more detail beginning on page six of this report. 
1.   (Medium) The Port was overbilled approximately $12,314 through force account change orders. The
overbilling occurred because of incorrect labor hours and billing rates submitted by PCL for COVID-19
supervisors. 

Glenn Fernandes, CPA 
Director, Internal Audit 

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           Restroom Renovations Phase 3 Prototype Project 

Responsible Management Team 
Wayne Grotheer, Director, Aviation PMG 
Tina Soike, Chief Engineer and Director of Engineering Services 
Janice Zahn, Asst. Engineering Director- Construction 

















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           Restroom Renovations Phase 3 Prototype Project 
Background 
The purpose of the Project was to renovate and enlarge a public restroom at Concourse D, as it was 
old, outdated, and overcrowded. Additionally, because of passenger growth, the existing restrooms
were too small resulting in long lines during peak periods. As there were no vacant spaces on the
concourse level to add restrooms or increase existing restroom size, Phase 3 renovated the existing
public restrooms near Gate D6, that improved maintainability and accessibility.
The construction phase of the Project included FAA entitlement funding that covered approximately 75
percent of the cost of construction. The project was advertised on June 25, 2019 and two bids were
received on July 25, 2019. The low bidder, PCL Construction Services Inc. (PCL), submitted a bid for
$3,081,000, 65 percent over the Engineer’s Estimate of $1,862,000. The second bid was for
$3,190,000, 71 percent over the engineer’s estimate. We noted that both bidders utilized the same
mechanical/plumbing subcontractor in their bids. The two bids received were within 6 percent of each
other and the procurement team determined that PCL’s bid was an accurate reflection of the
construction market at that time and PCL was awarded the contract. 
The final construction contract total, as of the project completion date, was $3.59 million which
included $517,179 in change orders. The contract required that the contractor substantially complete
the work no later than 225 days following the contract execution date, which would have been June 6,
2020. During the course of the Project, there were an additional 83 approved days that extended
substantial completion to August 28, 2020. PCL met the required substantial completion date and
physical completion was achieved on December 16, 2020. 

The following table details the current schedule and budget. 
Schedule (Per April 6, 2021 Trend Log) 
Original Contract Completion Date                       06/06/2020 
Approved Time Extension (Calendar Days)                      83 
Actual Substantial Completion Date                      08/28/2020 
Budget (Per 6, 2021 Trend Log) 
Original Contract Sum                                   $3,081,074 
Executed COs                                        $517,179 
Revised Contract Sum                                $3,598,254 
Original Contingency                                      $462,161 
Revised Contingency Total                               $522,161 
Remaining Contingency                                   $4,982 





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           Restroom Renovations Phase 3 Prototype 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. 
The period audited was July 2019 through December 2020 and included the following procedures: 
Project Cost Estimate 
• Obtained an understanding of the Port’s project cost estimate process. 
• Obtained  reasons from the Port  for bids coming higher than the engineer’s estimate for
construction costs. 
• Discussed the estimate with the estimators at Faithful+Gould. 
• Obtained and assessed the reasonableness of supporting documentation provided by both PCL
and the Port. 
Change Orders 
• Obtained an understanding of the Port's change order review process. 
• Verified approvals by required personnel (e.g. Port, Contractor, etc.) 
• Confirmed approved change order amounts tied to the Change Order Log. 
• Reviewed change orders for reasonableness and allowability. 
• Calculated proper markups (for force account CO's). 
• Tested subcontractor back-up including direct costs and inclusion of accurate markups. 
• Reviewed  supporting documentation,  supporting change order/claim submissions, specifically
error/omission, scope changes, and COVID-19 orders. 
COVID-19 Safety Plan 
• Obtained an understanding of the Port’s review, approval, and monitoring of contractor submitted
COVID-19 safety plans. 
• Reviewed COVID-19 safety plans in comparison to the State Directives. 
• Reviewed the Port’s process and performed testing to assure compliance with the plan. 







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           Restroom Renovations Phase 3 Prototype Project 
Schedule of Findings and Recommendations 
1) Rating: Medium 
The Port was overbilled approximately $12,314 through force account change orders. The
overbilling occurred because of incorrect labor hours and billing rates submitted by PCL for
COVID-19 supervisors 
The Port issued a letter on April 10, 2020 that stated requirements for COVID-19 Construction Jobsite
safety. One of the requirements of the letter directed contractors to hire a full-time COVID-19
Prevention Site Supervisor for every active Port construction project with a contract value of over $1
million. The prime contractor was to be reimbursed, based on the actual cost of the COVID supervisor,
plus applicable markups. 
We requested timesheets of the COVID Supervisors from PCL; these were additional documents that
are not usually provided to the Construction Management group. We noted that PCL billed the Port
based on a set rate instead of the actual costs incurred for the two COVID supervisors. As detailed in
the following table, the hourly rate billed by PCL for Supervisor 1 was less than they were entitled to.
For Supervisor 2, the hourly rate was not adjusted to actual costs which resulted in an overbilling.
Furthermore, there was one day where the Port was billed for an entire eight-hour day, while the
supervisor only worked six hours. 

Title             Hours   Actual   Billed     Correct   Rate      Hour    Markup   Overbilled/ 
Billed   Hours   Rate      Rate      Diff.      Diff.               (Underbilled) 
Supervisor 1      424      424   $107.31   $110.59   $ (3.28)   0       20%        $(1,668.86) 
Supervisor 2    348.5    346.5   $107.31    $74.30    $33.01   2       20%          13,983.09 
Total Overbilled                                                                  $12,314.23 
Source: Timesheets received from PCL, Daily Force Account Sheets, and Monthly summaries of the amount paid for COVID supervisors. 
Contractors have the primary responsibility to submit accurate documents and billings to the Port;
however, the Port also has a responsibility to review these documents to assure that they are
accurate. 
Recommendation: 
Construction Management should seek and recover any amount due to the Port from the overbilling. 
Management Response/Action Plan: 
A deductive change order has been executed to recoup the amount that was over billed by the
Contractor and we are expecting repayment in June. Additional controls have been added to the SOP
for Force Account work to specifically address verification of rates for non-labor (exempt) employees.
The Port will reiterate to all of our contractors the importance of verifying their information before
submitting to the Port. 
DUE DATE: Completed 



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           Restroom Renovations Phase 3 Prototype 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 for
intended but     Mostly complies                       Does not
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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