Audit of the City’s Capital Improvement Program Development and Evaluation

The Office of Inspector General (OIG) conducted an audit of the development and evaluation of the City’s Capital Improvement Program (CIP), a five-year plan for infrastructure spending. Our objective was to determine if the City develops and evaluates its CIP in accordance with leading practices outlined in the United States Government Accountability Office’s (GAO) Executive Guide: Leading Practices in Capital Decision-Making. Specifically, we examined whether the City,

  • aligns capital improvement decisions with organizational goals;
  • selects capital projects using an investment approach; and
  • evaluates historic outcomes and incorporates lessons learned into the capital decision-making process.

OIG surveyed four departments that are responsible for more than 98% of planned CIP allocations—Department of Water Management, Chicago Department of Aviation, Chicago Department of Transportation, and Department of Assets, Information and Services—and found that their capital decision-making practices largely follow GAO’s guidance on CIP development and evaluation. In some cases, external funding sources, such as state and federal grants and loans, impose requirements that align with the leading practices.

GAO recommends that organizations monitor results after project completion, evaluate goal achievement using performance measures, and incorporate lessons learned into future capital decision-making. The City does not consistently follow these practices. Without evaluating results using performance measures, departments may not be able to establish—indeed, they may not even know—whether their projects have achieved goals, met needs, or used resources efficiently. A department that does not use performance measures may neglect to preserve information regarding underperforming vendors that could help inform future contracting efforts.  

Because OBM informs departments of their capital budgets and compiles their capital plans, it could play a more active role in defining Citywide standards, increasing transparency, and maximizing public engagement in the capital budgeting process. The City does not publicly share information about the project selection process; thus, Chicagoans are not fully informed of the justifications for selected and non-selected projects, and cannot assess whether the City adequately took into account equity considerations. OBM informed OIG that it intends to improve CIP development and evaluation.

As OBM strives to improve the City’s CIP processes, it should define, standardize, and document Citywide processes aligned with GAO leading practices, thereby providing a strong framework for capital decision-making independent of external funders’ requirements. Specifically, OBM should guide departments to,

  • conduct comprehensive needs assessments to identify capital assets necessary to meet both program-specific and general City goals;
  • maintain inventories of capital assets that include updated status reports on their conditions;
  • compare current assets to needed assets and determine how to bridge the gap, including consideration of alternative approaches such as public-private partnerships;
  • establish review and approval frameworks, with pre-defined project ranking and selection criteria, that are both generally applicable and particular to each major program;
  • create multi-year plans that anticipate future resource needs and implementation priorities;
  • use performance measures to evaluate the results of completed projects in relation to general and program-specific goals; and
  • engage in post-completion evaluation processes that include sharing lessons learned within and across departments.

OBM should monitor departments’ adherence to this guidance and provide further support and direction as needed. Additionally, to promote transparency and public engagement, OBM should,

  • provide more information online about capital project selection criteria, project results, and opportunities for public input.
  • provide more information online about capital project selection criteria, project results, and opportunities for public input.

In response to our audit finding and recommendations, OBM stated that it agrees and has incorporated some of the recommendations into its 2021-2025 CIP, released in November 2020. OBM intends to increase transparency by publicly sharing selection criteria and identifying additional opportunities for public engagement and input. OBM will also increase departmental coordination by facilitating “discussions with and between the responsible departments” and establishing “a process and protocol for this review.”