Managing major capital projects: lessons learned from Milwaukee's 3rd district police station and data communications center.

• Author: Daun, Michael

Major capital improvement projects are usually accompanied by great anticipation, from the moment the project concept is first revealed until the ribbon is cut and the project is completed. As architectural renderings and models of the completed project are presented to the public, local officials and the media speak of the needs that will be fulfilled by the project and the benefits it will provide to the community. And while general cost estimates are normally provided, little, if any, attention is normally paid to the risks of substantial cost overruns or even project failure.

Most local government public works departments are well prepared to direct and oversee their own capital improvement projects, including street construction and repair, water and sewer construction and replacement, street lighting, and standard office and warehouse buildings. However, as capital projects extend into new communications or other advanced technologies, face "fast track" schedule requirements, or involve relatively new engineering design features, the standard budgeting and project management techniques often fall short.

Such was the case when the City of Milwaukee set out to build a new district police station and public safety data communications center. Because of scope creep, cost overruns, and project delays, one city alderman requested that the comptroller conduct a management audit of the project. This article reviews the findings of that audit, highlighting what went wrong and why and recommending specific actions local governments can take to avoid the problems experienced by Milwaukee. (1)

PROJECT HISTORY

In 1993, the police chief and his managers identified two increasingly urgent needs: (1) the need to replace and relocate an aging, inadequate police station in District 3 on the near north side and (2) the need to replace failing, unreliable data and phone communications and defendant identification systems. In 1996, the two projects were combined into a single project. The project ultimately expanded to include a new multi-level parking structure, an enhanced 911 system, two separate computer-aided dispatch systems, a new records management system, a citywide emergency operations center, and various off-site improvements.

Four city departments--the Police Department, the Fire Department, Public Works, and City Development--were involved in carrying out the project. City Development was to negotiate with existing property owners to acquire the site. Public Works was to administer the building construction and communications, and oversee the work of private vendors. The Police Department was to make final scope decisions and oversee the work of City Development and Public Works. The Fire Department was to work with the Police Department on shared user needs.

Public Works retained a construction manager to review the work of the general contractor, including any proposed change orders. Building construction began in 1999. As the project proceeded, a multi-level parking structure adjacent to the main building was added, as were the installation of emergency generators and the renovation of a radio shop at locations far removed from the project site. The building and parking structure were completed in late 2001.

In the end, Milwaukee had constructed a state-of-the-art police station and data communications center. According to the Police Department, the newly installed technology will significantly improve police response times and overall public safety operations. However, as of October 2003, certain technology components, including the computer-aided dispatching systems, were not fully operational. Moreover, the original 1994 project budget of $20.8 million had ballooned to an estimated $64.1 million by the end of 2003, leading to serious concerns about the city's ability to effectively manage major capital projects.

WHAT WENT WRONG

The final audit report, released in October 2003, found significant weaknesses in virtually every area of project management--project planning and definition, project budgeting, and ongoing oversight. Because the city did not clearly define the scope of the project before getting started, the project got bigger and bigger as time wore on. The completed project included a number of items that were not part of the original plan, including a multi-level parking garage, department-wide records management, offsite emergency generators, and a renovated radio repair shop. As a result, the project budget increased and the timeline was repeatedly extended, as shown in Exhibit 1.

Cost estimates for major pieces of the project were often not supported by adequate documentation or analysis. The original budget estimate reflected the costs of two separate building projects, not a combined...