| | | | | | | | TO: | Finance and Economic Resiliency Committee Members
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| FROM:
| Alina T. Hudak, City Manager |
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| DATE: | October 31, 2022
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| SUBJECT: | DISCUSSION ON COST ALLOCATIONS OR PERCENTAGES TO CAPITAL PROJECTS TO FUND THE CAPITAL IMPROVEMENT DEPARTMENT AND ANY CHANGES RECOMMENDED BY THE COMMITTEE. |
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| | | | | | | | HISTORY:
| On June 22, 2022, a discussion on cost allocations or percentages charged to capital projects to fund the operations of the Office of Capital Improvement Projects (CIP) was referred to the Finance and Economic Resiliency Committee (FERC).
CIP provides project development and construction program management services for major capital projects in the City of Miami Beach. The CIP department has 33 full time employees composed of senior management, architects, engineers, construction managers (in different categories of experience and responsibility), financial managers, field inspectors, and administrative personnel.
The adopted FY 2023 Operating Budget for the department is $5,838,000. The budget includes salaries and benefits in the amount of $4,950,000 (85% of the total budget), operating expenditures in the amount of $233,000 (4% of the total budget) and other departmental internal charges in the amount of 655,000 (11% of the total budget). The full CIP operating budget is funded by chargebacks to capital projects managed by the department.
The departmental functions are divided into Project Development and Project Administration. The Project Development function includes staff directly managing the capital projects and represents 65% of the operating budget. The Project Administration function includes staff providing direct support to the project managers including financial and administrative functions and represents 35% of the operating budget. CIP is currently managing approximately 50 active projects in the planning, design, permitting and construction phases. Departmental functions include the selection and management of contractors and consultants using a variety of project delivery methods including job order contracting, design-build, construction management at risk, and design-bid-build.
Currently, a project management fee of 6.5% of the total project cost is added to the total of each project’s budget. The fee is charged on a yearly basis based on the percentage of completion of the projects during each fiscal year. This chargeback to projects fully funds the costs of the CIP Department each year.
The Office of Management and Budget (OMB) has retained the services of Matrix Consulting Group to review the current methodology being utilized to allocate the annual costs of the CIP Department. The consultant has been tasked with providing recommendations on the most practical and equitable methodologies to allocate these costs, in alignment with best practices.
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| | | | | | | | CONCLUSION:
| The Administration recommends that this item be re-heard by the FERC at its December 2022 meeting, once the study being conducted by Matrix Consulting Group has been concluded and recommendations made. |
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| | | | | | | | Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14? | | Does this item utilize G.O. Bond Funds? | | Yes | | No | |
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