Oregon Secretary of State Kate Brown issued this audit report, Oregon State Hospital Replacement: Good Construction Management Practices Help Protect State Investment, in May of 2009.
The Oregon Department of Human Services is in the early stages of constructing two new state psychiatric facilities to replace the outdated Oregon State Hospital. The Oregon State Hospital Replacement Project (OSHRP) is expected to cost approximately $458 million.
Given the large size of this state investment, we performed this audit to provide early feedback on how well the department is controlling project costs and risks. Specifically, we reviewed whether the department has processes to ensure contract payments, amendments and change orders are in line with applicable rules, contract terms and best practices. We also reviewed whether contractor selections were in accordance with public improvement contract laws.
We found the department has implemented good contract management practices that should help protect the state’s investment by controlling costs and risks. The department performed three main actions that led to its success to date:
1. Assembled an experienced project team
2. Established clear expectations with project contractors
3. Managed contracts to control project costs and risks. We also found that the department selected its contractors in accordance with public improvement contract laws.
The Department of Human Services generally agrees with the audit conclusions included in the report.