Project Execution

Definition

Each year, the City reports the anticipated cost and schedule of each transportation project when it publishes that year's Capital Improvement Program (CIP).

The CIP also includes each project's fiscal and physical progress.

The funding of each project is approved by City Council in accordance to the City Charter.

Thus, the City's plans and project execution are governed by the City Charter and reported to the public.

The CIP reflects both the fiscal status and the physical progress of each project.

Omaha's Capital Inprovement Program (CIP), page 2

The Council shall not appropriate in any budget or during any budget year any money for any capital improvement project which has not been referred to and reported on by the Planning Department as to conformity to the master plan.

Omaha City Charter

Status

The City's actual project execution is terrible, making the CIP is nearly meaningless. Most CIP projects are years behind schedule, vastly over budget, or even cancelled without explanation.

Here are three studies that show how the City ignores the plans published in the CIP.

1. The CIP as a 6 Year Plan

Every 4 years or so, the City asks voters to approve the use of property taxes for Street Bonds and the City lists the projects slated to receive the Street Bond funds over the next 6 years. Does the City follow through and use the Street Bonds as planned? Let's look at the 2006 Street Bond issue:

  1. Only 5 project were built within 25% of their budget
  2. 7 projects overran by 30.8 million (using nearly 5 times their budget), and 23 unplanned project received 17.3 million.
  3. To make up for part of this 48 million cost overrun, 19 project were cancelled or delayed and funded by future bond issues (most of these projects eventually overran their budget as well, but the next bond issue covered that red ink)

Here's the graph:

So it is evident that the City did not use the 2006 Street Bonds as planned.

2. The CIP as a 1 Year Plan - 2016 Street Bonds

Perhaps it is unfair to ask the City to budget 6 years ahead. Let's look at the Appropriations for the budget year 2016 (published in August 2016) and see how they compare to the actual Expenditures (reported a year later in August 2017):

  1. Not a single project proceeded as planned.
  2. 5 projects overran by 4.3 million (using over 4 times their appropriations), and 5 other unplanned projects received 1.4 million of funds.
  3. 24 projects were delayed or cancelled.

Here's the graph:

Half way through the budget year of 2016, the City was incapable of predicting their expenditures with any accuracy. Or, to look at it another way, appropriations are meaningless: funds are diverted throughout the year without any explanation or recorded process.

3. The CIP's as a 1 Year Plan - All reported years

Perhaps the year 2016 was an outlier and the other years are better. Let's combine the data for all the years reported by the City to see how well, on average, the City can look ahead one year:

The results are the same. No matter how you look at the numbers:

  • The City does not follow its plans
  • To pay for unplanned projects and huge cost overruns on a few projects, the City delays many other projects and pushes their cost to future bonds.

So the City's budget and appropriations are nearly meaningless. Chances are projects will be delayed many years and cost twice as much.

Sample Project Delay and Overrun

Here is an example of a project delay and overrun:

So this project has been continuously pushed back for 14 years, and is now scheduled to complete 11 years behind schedule and 61% over budget (final cost = 236,000 + 17,846,000).

Wouldn't it be nice if the CIP reported this information? But all we see on the 2018 CIP is this:

Along with details about the future cost of 17,846. No mention that the project has been delayed and will cost more than intended.

Action

The CIP must include:

  • Each project's original schedule and original budget
  • Compare that to the current schedule and estimated cost (cost to date + current budget)
  • And explain variances
  • When projects receive more than their appropriated funds, there should be a published process to account for it, and a note should be included in the CIP.

It is normal for variances to occur. By publishing these variances, the City's cost and schedules will improve, and the City will no longer act as if there are no budget and time limits, and that appropriations can be diverted without any accountability.