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January 27, 2015

FHWA Met Basic Requirements but Can Strengthen Guidance and Controls for Financial and Project Management Plans

Self-Initiated
Project ID: 
ST2015018
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The Federal Highway Administration (FHWA) provides financial assistance and oversight to States’ high-cost and complex major projects with an estimated cost of $500 million or more. In 2013, FHWA reported that States had 103 active major projects, totaling approximately $143.7 billion. States are required by Federal law to prepare project management plans and annual financial plans for each of their major projects. These plans are intended to provide timely information needed to effectively manage major projects’ scope, cost, and schedule, and ensure that projects meet applicable Federal requirements.

Based on our review of five major projects currently under construction or recently completed, we found that FHWA Division Offices ensured that States met basic requirements to submit initial financial plans, annual updates to financial plans, and project management plans—and that these plans contained basic cost, schedule, and funding elements. However, FHWA Division Offices did not consistently follow Agency guidance when evaluating the plans for the five major projects we reviewed. FHWA also lacked specificity in key areas of its financial plan and project management plan guidance used by Division Offices to help oversee State’s major projects. FHWA Division Offices and States associated with the five projects we reviewed identified contracting methods, project management tools, and provisions in the Moving Ahead for Progress in the 21st Century Act (MAP-21) that could help accelerate delivery, improve project management, and enhance oversight of major projects. FHWA concurred with all five of our recommendations to improve its oversight of major project financial plans and project management plans.

Recommendations

Open

Closed

Closed on 03.22.2018
No. 1 to FHWA

Develop and implement controls to ensure that FHWA reviews and accepts the initial financial plan before authorizing Federal funds for major project construction.

Closed on 02.08.2018
No. 2 to FHWA

Develop and implement controls to ensure that all Division Offices follow FHWA's financial plan and project management plan guidance when overseeing major projects. Specifically, these controls should ensure that: a) cost estimate reviews assess all major project cost elements, and these cost elements are documented in detail; b) any changes to major project costs between the cost estimate review workshop and the approval of the initial financial plan are documented; c) States submit integrated project schedules that clearly identify the project's critical path, and FHWA uses them to monitor project progress; and d) annual financial plan updates provide updated information on project risks and mitigation strategies.

Closed on 09.18.2017
No. 3 to FHWA

Develop and implement controls to ensure that FHWA Division Offices verify that there is reasonable assurance of sufficient toll-based financing, if applicable, before accepting a project's initial financial plan.

Closed on 11.28.2017
No. 4 to FHWA

Clarify financial plan guidance by: a) defining when States are required to develop baseline project cost estimates and baseline project schedules, as well as specify the level of detail required for these baselines; and b) defining when guidance requirements apply to specific project delivery methods or projects involving alternative financing mechanisms, such as TIFIA loans.

Closed on 11.28.2017
No. 5 to FHWA

Strengthen project management plan guidance by: a) defining what constitutes a significant change that would trigger a project management plan update, including examples; and b) requiring periodic, documented assessments of States' implementation of their project management plans to ensure that States fulfill commitments detailed in their plans.