1. Audit of Water System Operations: Distribution 4C FIY Office of the City Auditor
or
DENTON Accountability • Transparency • Integrity • Quality
-40 The City of Denton's water distribution
infrastructure is generally maintained
- effectively. However, formalized asset
management planning and improved
DENTON record keeping would increase the
effectiveness of replacement
activities.
Additional staff guidance for leak
repairs would ensure compliance with
the City's established practices and
` statutory requirements.
Audit of Water System
Operations
Distribution
Audit Team
City Auditor
Madison Rorschach, CIA, CGAP
Audit Staff
Neeraj Sama, MBA
215 E. McKinney St., Denton, TX 76201 • (940) 349-7228
Audit of Water System Operations: Rate Structure June 2021
Table of Contents
Auditat a Glance .........................................................................................................3
Introduction ...................................................................................................................4
Management Responsibility......................................................................................4
Audit Objectives, Scope, and Methodology..........................................................4
Findings & Analysis........................................................................................................6
Formal Asset Management Plan May Improve Replacement Planning.............. 6
Replacement Project Management Process Seems Adequate; Critical
Documentation Not Maintained..............................................................................8
Moratorium Checks and ROW Permit Requirements Not Established ................ 10
Replacement Project Material & Labor Costs Not Effectively Reconciled ........ 13
Replacement Project Infrastructure Not Capitalized Timely ............................... 15
Leak Repair Timeliness Can't Be Determined Due to Data Limitations, Lack of
Parameters................................................................................................................ 17
Additional Guidance Would Improve Compliance with Established Practices
and Requirements for Minor Maintenance........................................................... 20
Safety Assurance Activities Generally Seem Effective......................................... 22
Appendix A: Management Response Summary.....................................................25
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Audit of Water System Operations: Rate Structure June 2021
Audit at a Glance
Why we did this Audit: What we Found:
The City maintains about 630 miles This audit generally evaluated the City's water
of water lines that distribute treated distribution maintenance activities including,
water to customers. In order to infrastructure replacement projects and leak repairs.
effectively provide water service, Findings about each of these operational areas are
the Water Department must summarized below:
adequately maintain, replace, and Infrastructure Replacement Projects. The Department
repair these water lines to minimize has generally designed an effective process to
water losses and ensure continual identify and carry out small water line replacement
service. This audit project was projects; however, documentation of some critical
included on the City's fiscal year steps in this process is not well maintained.
2020-21 Audit Plan as approved by Furthermore, the Department has not established
the City Council. This report details processes to ensure proper communication with
findings and recommendations other stakeholders in the small water line
from phase two of the project. replacement process such as the Streets and Public
What we Recommend: Works Inspections Divisions.
In addition, replacement project costs for labor and
Recommendation 1 & 2 materials are not adequately reconciled by the
Develop a formal asset Water Department to ensure new infrastructure value
management plan & ensure is accurately calculated. Similarly, coordination issues
replacement projects are and lack of guidance on defined time periods for
adequately documented. closing projects may be delaying the capitalization of
Recommendation 3 & 4 replacement project infrastructure.
Clarify process for moratorium Leak Repairs. The Water Department does not
checks and right of way permits proactively identify leaks in the distribution system
with the Streets and Public Works and instead generally relies on resident reports. Due
Inspections Division. to data limitations, it is not possible to determine how
Recommendation 5 & 6 quickly a leak is repaired after a report is received. In
Refine processes to reconcile addition, the Department has not established
replacement project labor & parameters around how quickly repairs should be
material costs. made or to help prioritize repair work.
Recommendation 7 & 8 Finally, while some standard operating procedures
Ensure replacement project have been developed, there are inconsistencies in
infrastructure is capitalized timely. how leak repair activities are documented,
Recommendation 9 & 10 potentially leading to quality issues.
Develop formal parameters for leak
repair timeliness and prioritization.
Recommendation 1 1 & 12
Formalize guidance for staff on how
to complete work orders and
comply with safety requirements.
Audit report translations may be requested by emailing InternalAudit@CityofDenton.com.
Audit of Water System Operations: Distribution July 2021
Introduction
The Internal Audit Department is responsible for providing: (a) an independent
appraisal' of City operations to ensure policies and procedures are in place and
complied with, inclusive of purchasing and contracting; (b) information that is
accurate and reliable; (c) assurance that assets are properly recorded and
safeguarded; (d) assurance that risks are identified and minimized; and (e)
assurance that resources are used economically and efficiently and that the
City's objectives are being achieved.
The Internal Audit Department has completed a performance audit of the City's
water distribution infrastructure projects and maintenance activities. We
conducted this performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Management Responsibility
City management is responsible for ensuring that resources are managed
properly and used in compliance with laws and regulations; programs are
achieving their objectives; and services are being provided efficiently,
effectively, and economically.
Audit Objectives, Scope, and Methodology
The Internal Audit Department has completed an audit of the City's water
system distribution infrastructure projects and maintenance activities. This report
is intended to provide assurance that the City's water distribution infrastructure is
effectively constructed and maintained.
This report is the second phase in an audit project series covering water system
operations. Phase One Rate Structure was published in June 2021 and Phase
Three Production is expected to be published in September.
Audit fieldwork was conducted during March, April, May, and June 2021 . The
scope of review varied depending on the procedure being performed. The
following list summarizes major procedures performed during this time:
I The City of Denton's Internal Audit Department is considered structurally independent as
defined by generally accepted government auditing standard 3.56.
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Audit of Water System Operations: Distribution July 2021
➢ Reviewed documentation to develop criteria including industry standards,
best practices, policies, and procedures;
➢ Developed process narratives to identify current control activities in water
distribution maintenance and capitalization processes that were certified
by Water Department and Finance Department staff;
➢ Interviewed Water Department and Finance Department staff and
reviewed policies and procedures pertaining to water distribution projects;
➢ Interviewed Safety Department staff and examined safety measures and
standards observed in water distribution maintenance projects' job sites;
➢ Reviewed a statistical sample2 of 262 work orders to verify the timeliness
and effectiveness of leak repairs;
Reviewed six water distribution small water line replacement projects
completed since March 2020 to analyze and verify the management and
administration of those projects;
➢ Reviewed project closure and capitalization details of 21 small water line
replacement projects completed since November 2018 to verify that the
completed projects were timely closed and capitalized;
➢ Reviewed small water line replacement project documentation to
determine that moratorium check and right of way permit requirements
are being followed; and
➢ Reviewed small water line replacement project records to verify that
material and labor costs are regularly reconciled to ensure accurate cost
allocation.
2 This sample size provides with 95 percent confidence that the true population mean is within ±5
percent of the sample estimate.
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Audit of Water System Operations: Distribution July 2021
Findings & Analysis
The City of Denton's water distribution system currently consists of a water line
network that provides water service to approximately 140 square miles. The
City's Water Department is generally responsible for maintaining the water lines
within this service area. Water distribution maintenance3 is generally broken into
two categories as shown in Figure 1 :
Figure 1: Water Distribution Maintenance Activities
Water Distribution
Maintenance
Activities
Major Main Minor Maintenance
tenance
Water - • • fire hydrant
In-house replacement of
six to 12 inch water break repairs, water main
distribution lines • • service taps, •
repair
During fiscal year 2019-20 and fiscal year 2020-21, the Department completed
19 water line replacement projects with a total capitalized value of $2.61 million
and repaired almost 500 water line breaks.
This audit generally evaluated the City's water distribution maintenance
activities including small water line replacement projects and water line leak
(i.e. from breaks or cuts) repairs - fire hydrant repairs, main and service taps, and
valve repairs were not reviewed.
Formal Asset Management Plan May Improve Replacement Planning
The Government Finance Officers Association best practices recommend that
local governments adopt formal policies for their capital improvement and
asset replacement activities. Additionally, the Environment Protection Agency
recommends that water utilities conduct asset management activities through
an asset management program and have an asset management plan covering
asset replacement and funding planning.
3 Water lines greater than 12 inches are generally replaced as part of the City's capital
improvement process, which is managed by the City's Capital Projects Delivery Division of the
Engineering Department.
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What We Found
• The Water Department utilizes a geographic information-based asset
management and capital planning software, as an asset management
program for water line replacement projects.
o The asset management program recommends rehabilitation actions
for each section of water line based on predefined parameters
including: break rates, location information, condition score, criticality
score, and risk score.
o The Water Department's asset management program is administered
by an asset management group consisting of Water Department staff.
The asset management groups activities are generally overseen by the
asset management committee, which includes a Deputy Director and
Water Department Managers.
• The Water Department's asset management and replacement activities
appear to generally align with the Environmental Protection Agency's best
practices on asset management except for formal financial and strategic
planning.
o Asset management related activities broadly cover asset inventory
planning, condition assessment, critical assets identification,
replacement planning and performance tracking.
o The asset management program has not been formally adopted
through an asset management plan covering that covers financial
and strategic planning aspects.
o The costs of replacement projects are generally recovered through the
City's water revenues. Budgeting for these projects is included in the
City's annual budgeting process.
• According to Water Department staff, the amount of water line to be
replaced is planned annually based on historical data and replacement
capacity.
o The Water Department planned to replace 16,000 linear feet of small
waterlines during fiscal year 2020-21 with an estimated cost of $27.2
million.
o The Water Department appears to have replaced 19,473 and 12,875
liner-feet of water lines during fiscal year 2019-20 and fiscal year 2020-
21, respectively.
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Why It Matters
Adopting a comprehensive asset management plan would help increase the
effectiveness of the asset management program by providing clear guidance
to staff about the strategic and financial objectives of asset management and
replacement activities.
Additionally, having formal guidance on asset management activities would
help Water Department staff retain institutional knowledge and promote
consistency when planning for asset replacement.
Recommendation:
1. Develop and adopt a formal, comprehensive asset management plan,
including the annual asset replacement planning considerations and
strategic and financial planning objectives.
Water Department Comments: There is an asset management program
(Software) that the City currently uses to develop a list of annual asset
replacement projects. This program does not include strategic and financial
planning. Water Utilities staff will develop and adopt a comprehensive asset
management plan that includes strategic goals and financial planning
objectives to guide the long-term maintenance plan.
Replacement Project Management Process Seems Adequate;
Critical Documentation Not Maintained
The Project Management Body of Knowledge - PMBOK - provides best
practices on project management including five basic process groups and ten
knowledge areas typical of almost all projects. In general, the project
management process includes: initiating, planning, executing, controlling &
monitoring, and closing. PMBOK recommends the following knowledge areas for
effective administration of projects:
Integration Resources
Scope ➢ Communication
Time ➢ Risk
Cost ➢ Procurement
Quality ➢ Stakeholders
What We Found
• The Water Department has developed a capital improvement process guide
for small water line replacement projects. Based on this guide, staff should
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Audit of Water System Operations: Distribution July 2021
also document critical process steps in replacement projects as outlined in
Figure 2.
Figure 2: Water Line Replacement Project Critical Steps
Plan Revise Schedule
-Field Assessments Project Scope -Moratorium Check
• .- - -nt -Assess OPCC
Committee-Asset Management 0 *Committee Review -Design Request
Review
.-. -
RecordDesign-Material 6 •0 Design Process
List Items -Call Line Locate -. Design
-Bacteriological Reports -TraPlanning
-Request ..
o Based on a comparison of PMBOK's best practices to the process
guide and other Water Department activities, the process followed for
managing replacement projects generally aligns with PMBOK's
recommended knowledge areas and project management process.
• Small water line replacement projects are managed and tracked in the
Water Department's work order system and the City's collaborative work
management software. The Engineering Design Division designs plans for
these replacement projects.
• Based on a review of six small water line replacement projects completed
since March 2020, some project documentation needed for quality and
monitoring assurance was missing.
o Documentation relating to the 30-60-90 project design process and the
project completion walkthrough process could not be obtained.
o In addition, some documentation was not centrally stored in the
Department's work order system or work management software.
According to Water Department staff, the City is working to implement
a new construction management software, which can centrally track
and store project documentation.
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Audit of Water System Operations: Distribution July 2021
• Established traffic impact planning was followed for all reviewed projects by
submission of a Utilities Traffic Impact Information Sheet (UTILITIIS).4
Why It Matters
PMBOK's methodology is recognized as an industry best practice for project
management. In general, the Water Department appears to have designed a
water line replacement project management process that follows this
methodology. That being said, without documenting critical steps in this process,
it is difficult to determine if projects were administered per the established
capital improvement project guide.
Specifically, ensuring the results from the final walkthrough are documented and
these punch list items are completed is essential for quality assurance. Similarly,
the capital improvement process guide calls for a 30-60-90 design process,
which is generally used to help focus design review by providing increasing
detail at each level. Ensuring that design plans and reviews are documented at
each of these stages should help to timely resolve any discrepancies found
during the process and save time and City's resources.
Recommendation:
2. Instruct Water Department staff to execute and maintain project documents
for the steps and activities prescribed under the capital improvement
process guide. Consider designating a central repository to facilitate
document retention.
Water Department Comments: Water Utilities staff is currently working on
implementing Procore (software) to manage the in-house asset replacement
projects. Once implemented, project documents, review's, approvals,
walkthrough, etc. can be documented and stored at a central location for
easy access in the future.
Moratorium Checks and ROW Permit Requirements Not Established
Checking street moratorium and obtaining right of way - or ROW - permits are
important steps in planning water line replacement projects. City ordinance
requires every party, external or internal, to apply for a ROW permit if they plan
to engage in construction, excavation, or occupy a work area within or upon
any right of way.
4 Utilities Traffic Impact Information Sheet (UTILITIIS) is a form to be filled out in the Department's work management
software for traffic impact planning for construction activities.
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Additionally, the City's Streets Department currently places a moratorium on
streets that have recently been improved. These moratoriums are intended to
prevent the accelerated deterioration that comes when a street is cut into and
patched. Streets current practices state: "Utilities should request authorization to
be able to construct in [moratorium] areas." In general, construction activities
are not permitted for projects under moratorium streets unless there is an
emergency.
What We Found
• The Water Department does not obtain ROW permits for small water line
replacement projects.
o A ROW permit was not obtained for any of the 21 completed projects
reviewed.
o According to Water Department staff, a ROW permit is not required to
be obtained for small water line replacement projects; however,
based on discussion with Public Works Inspections staff, who issue right
of way permits, it is unclear why these projects would be exempt from
the ordinance requirements.
o Water Department staff do generally obtain ROW permits for planned
minor maintenance activities.
• During the project planning phase, Water Department staff check
moratorium conflicts on a GIS map for the streets involved in proposed water
line replacement projects. Based on the review of moratorium information
available in the GIS map for 21 small water line replacement projects
completed since November 2018:
o Of the 21 projects, only two were at locations under a moratorium.
According to Water Department staff, in one of these instances the
moratorium was not identified before the project was initiated. For the
other project, Water Department staff stated they received approval
from Streets as the project was an emergency; however, there was no
documented evidence of this discussion or approval.
o There is currently no formal process or procedure for the Water
Department to receive documented approval to conduct work on a
moratorium road with the Streets Division for planned projects.
Development of this kind of process was originally recommended to
the Water Department as part of the 2019 Audit of Utility Street Cuts,
which reviewed the moratorium process for water distribution minor
maintenance activities.
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Why It Matters
The City requires all work in the right of way to be permitted in order to ensure
that the safe passage of pedestrian and vehicular traffic is maintained to the
greatest extent possible. While the City's right of way ordinance does provide
some exemptions to this requirement, it is unclear how small water line
replacement projects qualify for one of these exemptions. For that reason, it is
important to clarify if a right of way permit is necessary for water line
replacement projects and, if so, that staff apply for these permits properly and in
a timely manner.
Additionally, newly improved streets are placed under a construction
moratorium in an effort to preserve their useful life, as any excavation weaken
the street's integrity. For this reason, non-emergency work on water lines under
moratorium streets should be minimized as much as possible and emergency
work should be clearly communicated. Without proper documentation or a
formalized process for approving construction on moratorium streets, it is unclear
if all stakeholders were informed and approved of weakening the City's streets
infrastructure.
Recommendations:
3. Clarify if the Water Department is required to obtain right of way permits for
its small water line replacement projects by consulting with the Public Works
Inspections Division and the City Attorney's Office. If right of way permits are
required for small water line replacement projects, incorporate this step into
the water capital improvement process guide.
Water Department Comments: Water Utilities staff will consult with Public
Works staff and the City Attorney's office to determine a path forward on the
right-of-way permit requirement for replacing water infrastructure.
4. Document and track formal approval from the Streets Division to perform
water distribution projects on water lines under moratorium streets. For
emergency projects, the Water Department should ensure that the Streets
Division is notified even if formal approval is received after the fact.
Water Department Comments: Water Utilities staff is currently working on
implementing Procore (software) to manage the in-house asset replacement
projects. Once implemented, the clearance of streets under moratorium can
be obtained from the Streets department through the RFI process in the
software.
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Audit of Water System Operations: Distribution July 2021
Replacement Project Material & Labor Costs Not Effectively
Reconciled
Labor and material costs are major components of in-house water distribution
project costs, which are ultimately capitalized as assets in the City's accounting
records. Material usage and labor hours should be regularly reconciled to
ensure project costs are accurate and labor and materials are used efficiently.
What We Found
• Material for small water line replacement projects is generally obtained from
the City's Warehouse Division.5
o Materials needed for each project are determined by the crew leader
based on the project plans. This materials list is then approved by the
Field Service Supervisor and forwarded to the Warehouse.
o According to Water Department staff, crews then pick up materials
from the Warehouse during construction as needed and do not collect
material that will not be used in the project; however, there is currently
no process to reconcile the materials used in the projects to those in
the Department's work order system for each project.
o Each month, Warehouse staff do send a report of issued materials to
the Water Department. According to Water Department staff, this
report is used to ensure materials are charged to the correct account
and job code in the City's financial system.
• Daily, each crew leader records labor hours in the work order of their active
project. Water crew members separately complete a physical timesheet,
which is used by the Water Department's Administrative Assistant to record
labor hours to each project in the City's time and attendance tracking
software. The Field Service Supervisor verifies that labor hours in the time
tracking software are accurately allocated to each project.
o Based on a review of randomly selected crew members' 20 days' work
hours in 14 cases, work hours were not appropriately logged in the
work order system or were inaccurately allocated to projects in time
and attendance tracking software in those cases.
5 Occasionally materials needed that are not in inventory are ordered through the standard
procurement process.
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• The City generally owns the equipment used in small water line replacement
projects, and a process is in place to record the equipment used for the
assigned project.
Why It Matters
Inaccurately recording material and labor costs lead to inaccurate project cost
estimation and reporting.
Specifically, reconciling materials used to those ordered for each project would
ensure that material costs have been correctly recorded in each replacement
project and that any unused material is accurately reported and returned.
Additionally, it would also help identify any discrepancies between estimated
project costs and costs associated with used materials. While only collecting
materials when they are needed does provide some assurance that materials
are not wasted, it does not completely ensure that all materials collected are
needed and recorded for each project.
Similarly, effectively reconciling labor hours in the work order system to those in
the City's time keeping system would help the Water Department ensure project
costs are accurate.
Recommendations:
5. Consider implementing a reconciliation process to verify and confirm that
the materials obtained were used for the correct project and recorded in the
work order system and to ensure that any unused material is accurately
reported to Warehouse and returned.
Water Department Comments: Water Utilities will develop and implement a
process to confirm that the material checked out from the warehouse is
tracked and allocated to the appropriate project.
6. Evaluate opportunities to streamline the process of recording and allocating
water crew labor hours to projects. If a more streamlined process cannot be
implemented, ensure labor hour discrepancies between the work order
system and time keeping system are minimized.
Water Department Comments: Water Utilities staff will work on evaluating
opportunities for streamlining the allocation of labor hours to the appropriate
replacement project.
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Audit of Water System Operations: Distribution July 2021
Replacement Project Infrastructure Not Capitalized Timely
Project closure and asset capitalization are the final steps of small water line
replacement projects. Ideally, an asset should be capitalized when it is placed
in service and the economic benefit of that asset is being received. Therefore,
water project closure requests should be communicated as soon as a project is
completed, enabling the Finance Department to initiate the capitalization
process timely.
What We Found
• After completing a small water line replacement project, a Water
Department project manager is required to submit a project closure request
to the Finance Department. In order to complete a replacement project, not
only does the water line have to be replaced, but all costs associated with
the right of way restoration must also be finalized.
o Of the 21 reviewed projects with complete water line replacement
since November 2018, six closure requests have not yet been submitted
to the Finance Department. These projects have been open after the
replacement was finished between three and 22 months.
o Based on review of the 15 capitalized projects, it takes an average of
eight months from water line replacement completion for Water
Department staff to request project closure. The time taken from water
line replacement to closure request to capitalization for these projects
is illustrated in Figure 3.
Figure 3: Timeliness of Replacement Project Capitalization6
80%
N
60%
I 3 40%
O N
0%
IL Less than 3 Less than 6 Less than 9 Less than 1 Year Greater than 1
Months Months Months Year
■Time from Replacement to Closure Request
■Time from Closure Request to Capitalization
e The timeliness presented here are based on the estimated project end dates recorded in the Department's work
management software.
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o There are currently no guidelines to define how long it should take after
the water line replacement is complete before requesting the project
be closed.
• In general, it took the Finance Department less than three months to
capitalize water projects after receiving a closure request as illustrated in
Figure 3.
o According to the Finance Department, sometimes capitalization may
be delayed due to a higher number of transactions involved in closing
the project or because additional capitalization information may be
needed from the Department.
• According to Finance's Budget Division staff, they generally discuss project
closures with the Water Department as part of the preparation for the
quarterly capital improvement project department presentation; however,
Finance's Accounting Division, which is responsible for closing and
capitalizing infrastructure projects, has not typically been included in these
meetings. The Accounting Division has developed a formal Project Closure
Request Form that must be submitted to initiate the closure and
capitalization process.
• Of the 15 capitalized projects, nine projects valued at around $2.5 million
had not been capitalized by the end of the applicable fiscal year.
o It should be noted that the City does not lose depreciation benefits if
expenses incurred under the project were not capitalized in the in the
fiscal year. In addition, project costs not yet capitalized are included
as construction work in progress in the City's financial statements.
o Furthermore, the City of Denton's independent auditor's report on the
comprehensive annual financial report for fiscal years 2017-18, 2018-19,
and 2019-20 did not identify any material misstatements.
Why It Matters
Timely capitalization of capital projects is crucial for effective record keeping
per government accounting standards. Based on discussions with Finance and
Water Department staff, most delays appear to be due to coordination issues
between the Water and Finance Departments during the closure and
capitalization process. Similarly, without guidelines for how quickly project
closure should be requested after the water line is replaced, the capitalization
process may be delayed as project managers shift their focus to other active
projects while restoration work is being completed and paid.
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Recommendations:
7. Streamline the communication process for the closure and capitalization of
water distribution projects between the Water and Finance Departments.
Water Department Comments: Water Utilities staff will work with Finance staff
to develop and implement a process for streamlining the closure and
capitalization of the replaced water assets.
Finance Department Comments: The Finance Department is now utilizing
Smartsheet software for tracking project maintenance requests. This includes
project set up, project funding, project closure, and fixed asset
capitalization in JDE. Finance maintains a database of all completed
requests and will be implementing a process to communicate with
departments monthly regarding job status.
8. Establish guidelines for how quickly a replacement project closure request
should be submitted to Finance after completing construction. While not all
projects may meet this guidance due to delays, guidance will help ensure
projects are closed as quickly as possible.
Water Department Comments: Water Utilities will work with Finance staff on
developing guidelines for closing a project in a timely manner.
Leak Repair Timeliness Can't Be Determined Due to Data Limitations,
Lack of Parameters
The bulk of minor maintenance activities include water line leak repairs. During
the past three years, about 800 work orders relating to water main break and
service line repairs were created and completed. The leak repair process is
briefly outlined in Figure 4.
Figure 4: Minor Maintenance Process
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Audit of Water System Operations: Distribution July 2021
•Report Water LeakUtility Disp. Dep. •Water Crews Complete
Incident via Phone or
Engage Denton Leak Repair
-Supervisor Verifies Work
-Create Work Order Order
-Admin.Asst Closes Work
Order
Denton Water
Resident -..
In order to ensure that reported leak incidents are timely completed, there
should be parameters around how quickly water leak repairs are completed
after being reported that are tied to the type and urgency of each work order.
What We Found
• Water leak incidents are generally reported by Denton Residents to City staff
via phone calls or through the City's 'Engage Denton' web portal. According
to Water Department staff, a work order should be created for all reported
leaks in order to tracked and manage work; however based on a review of a
statistical sample of 262 work orders, it is unclear how quickly after a leak is
reported it is repaired.
o Based on a review of work order creation dates to repair completion
dates, almost one fourth of work orders are created after the repair is
complete as shown in Figure 5, indicating that the work order was not
created on the same day that the leak was reported.
Figure 5: Time Between Repair Completion and Work Order Creation
<3 Days
A 11%
Repair >3 Days
Completed 20%
on Same
Day
45% Repair
Completed
Before
24%
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o According to Water Department staff, leak repair requests are
generally completed as quickly as possible on a first-come, first-serve
basis. Formal parameters for how quickly leak repair work orders should
be created and completed after being reported have not been
established.
• Based on review of a statistical sample of 262 work orders created from 2018
to 2021 , water leaks generally only take one day to repair after work is
begun.
o Leak repairs for 74 percent of work orders were completed on the
same day the crew started repairing the leak and another 23 percent
were completed within seven days.
• Similarly, guidelines for categorizing repair work as general or emergency
have not been defined. Instead, work orders are automatically categorized
by the work order system depending on the nature of work selected.
o About 93 percent of reviewed leak repair work orders were
categorized as emergencies. According to Water Department staff,
emergency work orders for repairing major leaks are completed as
soon as possible; however, as previously discussed, due to data issues,
it is difficult to tell how quickly after being reported these leaks were
repaired.
• Water Department staff do not have a process to proactively identify leaks in
the water distribution system.
o According to Denton's 2019 Water Loss Audit,7 real losses (i.e. from line
breaks or leaks) accounted for about 9 percent of water produced. In
addition, the Audit calculated that Denton's water system had an
infrastructure leakage index$ of 2.13, which is within the appropriate
target range for the City based on American Water Works Association
guidance.
Why It Matters
Establishing parameters for when leak repair work orders should be created and
completed would help staff prioritize repair work and further minimize the City's
real water losses. It would also help regulate the time taken in restoration work
and permit inspections, benefiting the residents.
7 The Water Loss Audit is generally completed each year by Water Department staff. Results for
this Audit were not independently verified as part of this audit.
8 The infrastructure leakage index is a ratio of estimated unavoidable real losses based on the
water system's design to calculated real losses. For example, an index of three would mean real
losses are three times higher than unavoidable real losses.
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Additionally, establishing criteria for general and emergency work orders would
help staff assign and complete work orders by priority according to the nature
and urgency of the repair work.
Recommendations:
9. Establish parameters for how quickly leak repair work orders should be
created and completed.
Water Department Comments: Water Utilities will work on developing an
appropriate level of service plan that will establish the parameters and
timeframes for minor maintenance activities.
10.Define criteria for general and emergency work orders to help further
prioritize repairs.
Water Department Comments: Water Utilities will work on developing criteria
for defining general and emergency work orders to help prioritize repairs.
Additional Guidance Would Improve Compliance with Established
Practices and Requirements for Minor Maintenance
In order to be a work order system effective, work orders should contain
complete information about the job performed for review.
What We Found
• Performing a leak repair includes various activities such as obtaining a right of
way permit, calling a utility line locate9 and arranging street restoration work.
As per the work order approval process followed, once the water crew
completes the work order, a Field Service Supervisor reviews the work order
to verify the job completed.
• Based on a review of sample 262 work orders, it was observed that support
documentation for leak repair activities is not consistently attached with work
orders.
o About 11 percent of work orders did not have any pictures of the job
site or work performed. Job site pictures are essential to verify that
completed work is adequate before the supervisor closes the work
order as they are not always onsite.
o Right of way permit details are not available in the work order system
for about 25 percent of work orders. The Water Department has
9 The Texas One-Call law requires everyone digging 16 inches or deeper at any site using mechanical equipment to call
811 Line Locate at least two working days before beginning excavation.
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recently started recording and tracking the right of way permit based
on work order number.
o About 47 percent of work orders did not have documentation
indicating that a utility line locate call was made.
o About 32 percent of work orders did not have attached
documentation showing that contracted right of way restoration had
been paid. Based on a review of ten randomly selected work orders,
the invoices were paid according to the contracts executed with the
contractors.
• The Water Department has developed standard operating procedures for
performing minor maintenance activities that contain guidance and
instructions, including the steps, job procedures, and safety guidelines;
however, standard operating procedures for creating and completing
work orders for minor maintenance activities are in draft form and have
not yet been implemented. Additionally, these draft procedures do not
contain guidance on:
o Staff responsible for creation and closure of work order in the work
order system;
o Documentation to be attached to each work order such as number
and type of pictures, right of way permit information, and
restoration work invoices; and
o Steps and requirements for calling for a utility line locate.
Why It Matters
Supporting documents attached to leak repair work orders provide assurance
that the repair was completed following the City's established practices and
statutory requirements. Without a copy of the right of way permit or permit
number or a reference number for the utility line locate, it is difficult to determine
if leak repairs followed State and City regulations around construction work in
the right of way.
In addition, attaching all records relating to restoration work to each work order
would act as a repository for the Water Department staff for future reference
and tracking for timely completion and payment.
Finally, adopting formal standard operating procedure that incorporate the
requirements mentioned earlier would provide the Water Department staff with
institutional knowledge, facilitate consistency, help navigate emergency
situations and provide further clarity on water maintenance work and
responsibilities.
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Recommendation:
11.Finalize and implement draft standard operating procedures for creating
work order and documenting minor maintenance activities. Procedures
should cover staff responsible for creating, approving, and closing work
orders, information about utility line locates, and details of work order
supporting documentation attachments.
Water Department Comments: Water Utilities will develop and implement
standard operating procedures for creating work orders and properly
documenting the minor maintenance activities in Cityworks.
Safety Assurance Activities Generally Seem Effective
Best practices recommend that water utilities have a safety program based on
a 'Job Safety Analysis.' According to Occupational Health and Safety Standards,
job safety analysis means studying and recording steps and hazards involved in
a job and determining the best ways to perform the job to reduce or eliminate
these hazards.
Therefore, a job safety manual or standards based on job safety analysis as part
of the safety program would help the Water Department staff understand and
follow the safety measures and standards observed in the water distribution
maintenance projects.
What We Found
• The Water Department staff regularly attends safety training organized by the
Safety Department. The Safety Department has determined training needs
based on the job requirements and the risks involved in water distribution
maintenance projects.
o As part of the Safety Department's initiatives, a safety committee
consisting of Water and Safety Department staff has been formed that
meets monthly to discuss safety concerns, procedures, and initiatives.
o The Safety Department staff also regularly meets with Water
Department staff to discuss any safety concerns and get feedback.
• Safety on water distribution project job sites is monitored through safety
inspections carried out by the Safety Department.
o The assigned Safety Manager conducts weekly safety inspections at
water distribution project job sites to verify that work is appropriately
carried out to ensure the safety of water crews and residents.
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o Safety inspections are conducted using an inspection checklist. The
results of these inspections are generally discussed with the site crew
and supervisor onsite.
o Results of inspections are recorded in the City's collaborative work
management software, along with the discrepancies observed, and
corrective measures are taken.
• A job site safety practices and standards manual has not been developed to
aid water crews in complying with the safety checklist.
o The Safety Department is in the process of developing policies and
procedures to ensure safety in the City's operations.
o The safety inspections checklist created by Safety Department staff
appears to be in line with the activities undertaken in the water
distribution maintenance projects.
Why It Matters
Education and specialized safety training are important tools for making
construction crews aware of the hazards and safety procedures involved in their
jobs. If any safety incident happens at a job site, it may result in injury to City staff
and financial losses, and project delays.
The Safety Department provides knowledge and education to water crews
through safety training and safety inspection feedback. However, without a
construction project safety manual, water crew members may not know what
safety standards they are required to follow to reduce job site hazards and
avoid injury and loss.
A comprehensive safety manual describing the safety standards and
procedures would help provide clear guidance to water crews on how to
adhere to the safety measures incorporated in the compliance checklist utilized
by the Safety Department staff for water distribution maintenance projects
safety inspections.
Recommendation:
12.Develop a water distribution maintenance projects safety manual in
consultation with Safety Department for water crews' guidance. The manual
should for based on job safety analyses to reduce job site hazards and avoid
injury and loss.
Water Department Comments: Water Utilities will work with Safety staff on
developing a safety manual for water distribution maintenance projects.
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Audit of Water System Operations: Distribution July 2021
Safety Department Comments: The Safety Department will work with Water
Utilities to develop a safety manual that defines safe work practices and
standards to be used during work activities.
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Appendix A: Management Response Summary
The following summarizes the recommendations issued throughout this report. The
auditors found that staff and the Department were receptive and willing to make
improvements where needed. Management has provided their response to each
recommendation.
Develop and adopt a formal, Expected
comprehensive asset management plan, Completion:
1 including the annual asset replacement Concur Dec 2022
planning considerations and strategic and
financial planning objectives.
Water Department Comments: There is an asset management Responsibility:
program (Software) that the City currently uses to develop a Water Utilities
list of annual asset replacement projects. This program does
not include strategic and financial planning. Water Utilities
staff will develop and adopt a comprehensive asset
management plan that includes strategic goals and financial
planning objectives to guide the long-term maintenance
plan.
Instruct Water Department staff to execute Expected
and maintain project documents for the Completion:
2 steps and activities prescribed under the Concur September 2021
capital improvement process guide.
Water Department Comments: Water Utilities staff is currently Responsibility:
working on implementing Procore (software) to manage the Water Utilities
in-house asset replacement projects. Once implemented,
project documents, review's, approvals, walkthrough, etc.
can be documented and stored at a central location for easy
access in the future.
Clarify if the Water Department is required Expected
to obtain right of way permits for its small Completion:
water line replacement projects by September 2021
3 consulting with the Public Works Concur
Inspections Division and the City Attorney's
Office.
Water Department Comments: Water Utilities staff will consult Responsibility:
with Public Works staff and the City Attorney's office to Water Utilities
determine a path forward on the right-of-way permit
requirement for replacing water infrastructure.
Document and track formal approval from Expected
4 the Streets Division to perform water Concur Completion:
September 2021
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Audit of Water System Operations: Distribution July 2021
distribution projects on water lines under
moratorium streets.
Water Department Comments: Water Utilities staff is currently Responsibility:
working on implementing Procore (software) to manage the Water Utilities
in-house asset replacement projects. Once implemented, the
clearance of streets under moratorium can be obtained from
the Streets department through the RFI process in the
software.
Consider implementing a reconciliation Expected
process to verify and confirm that the Completion:
materials obtained were used for the July 2022
5 correct project and recorded in the work Concur
order system and to ensure that any
unused material is accurately reported to
Warehouse and returned.
Water Department Comments: Water utilities will develop and Responsibility:
implement a process to confirm that the material checked out Water Utilities
from the warehouse is tracked and allocated to the
appropriate project.
Evaluate opportunities to streamline the Expected
6 process of recording and allocating water Concur Completion:
crew labor hours to projects. July 2022
Water Department Comments: Water utilities staff will work on Responsibility:
evaluating opportunities for streamlining the allocation of Water Utilities
labor hours to the appropriate replacement project.
Streamline the communication process for Expected
the closure and capitalization of water Completion:
7 distribution projects between the Water Concur City wide-
and Finance Departments. January 2022
Water Department Comments: Water Utilities staff will work with Responsibility:
Finance staff to develop and implement a process for Water Utilities and
streamlining the closure and capitalization of the replaced Finance
water assets.
Finance Department Comments: The Finance Department is
now utilizing Smartsheet software for tracking project
maintenance requests. This includes project set up, project
funding, project closure, and fixed asset capitalization in JDE.
Finance maintains a database of all completed requests and
will be implementing a process to communicate with
departments monthly regarding job status.
Establish guidelines for how quickly a Expected
8 replacement project closure request Concur Completion:
January 2022
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Audit of Water System Operations: Distribution July 2021
should be submitted to Finance after
completing construction.
Water Department Comments: Water Utilities will work with Responsibility:
Finance staff on developing guidelines for closing a project in Water Utilities
a timely manner.
Establish parameters for how quickly leak Expected
9 repair work orders should be created and Concur Completion:
completed. July 2022
Water Department Comments: Water Utilities will work on Responsibility:
developing an appropriate level of service plan that will Water Utilities
establish the parameters and timeframes for minor
maintenance activities.
Define criteria for general and emergency Expected
10 work orders to help further prioritize repairs. Concur Completion:
January 2022
Water Department Comments: Water Utilities will work on Responsibility:
developing criteria for defining general and emergency work Water Utilities
orders to help prioritize repairs.
Finalize and implement draft standard Expected
operating procedures for creating work Completion:
11 orders and documenting minor Concur January 2022
maintenance activities.
Water Department Comments: Water Utilities will develop and Responsibility:
implement standard operating procedures for creating work Water Utilities
orders and properly documenting the minor maintenance
activities in Cityworks.
Develop a water distribution maintenance Expected
projects safety manual in consultation with Completion:
12 Safety Department for water crews' Concur July 2022
guidance.
Water Department Comments: Water Utilities will work with Responsibility:
Safety staff on developing a safety manual for water Water Utilities and
distribution maintenance projects. safety
Safety Department Comments: The Safety Department will
work with Water Utilities to develop a safety manual that
defines safe work practices and standards to be used during
work activities.
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