PURPOSE
This procedure explains how invoices should be designed along the lines of a Work Breakdown Structure (WBS) so that they meet the Bureau’s fiscal management and cost accounting requirements. It explains how invoices should be reviewed, disputes resolved, and ultimately approved. It explains how the Consultant’s utilization of all MBE/WBE/OBE subconsultants should be monitored.
REFERENCES
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RESPONSIBILITIES
Project Manager (PM): The PM is responsible for working out the appropriate accounting structure for the contract with assistance from the Bureau’s Administrative Services Division. The PM is to assist the Consultant in developing a standard invoice format that fits the City’s rules and the accounting requirements for the project. The PM is responsible for receiving the Consultant’s invoices, reviewing them, and submitting them to the Program Manager for approval.
Program Manager: The Program Manager is responsible for approving the Consultant’s invoices and forwarding them to the Office of Accounting for payment.
Administrative Services Division: The Administrative Services Division is responsible to assist the PM in developing the accounting structure and to act as the primary liaison with the Office of Accounting.
Board of Public Works, Office of Accounting: The Office of Accounting receives the Consultant invoice from the Program Manager and is responsible for both data entry into the Cost Accounting System and sending the approved invoice to the Controller for payment.
PROCEDURE
Work Breakdown Structure (WBS) and Consultant Cost Reporting in Invoices
The PM must work out a plan for how costs are to be tracked and allocated to various work orders, tasks and subtasks in performing the project’s work. This is performed in conjunction with the Administrative Services Division’s Financial Management Group. The general intent of the WBS is to implement a cost tracking and reporting structure on the project which allows the PM and the Program Manager to properly budget, track, and report costs for the work on the overall project. The Consultant’s work should be considered in developing this plan and both their budget and actual cost reporting and tracking should fit smoothly into it. The Program Manager should approve the final cost reporting and tracking plan.
Once the plan is developed, the PM must explain to the Consultant what cost reporting requirements must be satisfied when submitting their costs in their invoices. What this means in simple terms is, the PM will assist the Consultant in designing an invoice structure which reports costs in a way that fits into the project’s financial reporting plan.
For example, if the consultant is to work on several projects and is to perform cost reimbursement style services on multiple phases of the projects, then their invoices will most likely need to be broken down by work order and then by project phase. In that way, their reported costs can be compared to the individual budget for each task or phase as described in the contract and the Office of Accounting can enter the various amounts of their monthly invoice into the cost accounting system so that it will automatically calculate into the overall project budget reports.
If the Consultant resists in providing invoices as requested, the Program Manager should be consulted.
Reviewing Invoices and Resolving Invoice Disputes
The Consultant is to submit their invoices to the PM who is responsible for reviewing them. The following are key questions to consider in reviewing invoices:
Is the work described in sufficient detail so that what was done is in accordance with the WBS and invoice structure?
Was the work that was done appropriate under the terms of the contract, Task Orders, or other directives given to the Consultant by the PM?
Do other key City employees involved with the project concur with the Consultant’s statement of work and activities? For example, on a design contract, does the Project Engineer think that the invoice is appropriate? Or if the project is in construction, does the Bureau’s Construction Manager think that the invoice is appropriate?
Does the invoice contain the required backup as discussed in the contract or agreed to with the Consultant? For example, are miscellaneous expenditures for supplies and materials appropriately documented? Are travel expenses appropriate?
The Consultant is to report its MBE/WBE/SBE/EBE/DVBE/OBE Utilization Profile in each invoice (Attachment 6.9-1). Does the invoice contain the required Subconsultant Utilization Invoice Attachment documenting actual, to date participation compared to the plan contained in Exhibit C to the Contract? If participation is lagging, does the Consultant provide an explanation as required in the Attachment? If the Invoice Attachment is not submitted or no explanation is made that addresses the deviation, then the invoice is NOT TO BE PAID until the Consultant provides an explanation.
Mathematically, does the invoice correctly total the contained elements?
Is the Required Insurance valid? The PM may ask the Board of Public Works if the Consultant’s Insurance is valid.
If all elements of the invoice are acceptable to the PM, the invoice should be submitted to the Program Manager with the PM’s recommendation for approval. If acceptable, the Program Manager signs the invoice. The invoice is then submitted to the Office of Accounting for entry into the Cost Accounting System and payment by the Controller. Invoice information is input into the Personal Services Contract System (PSCS).
However, if there are items that are questioned, the Consultant should immediately be notified that the invoice is in question or disputed. The Consultant should be given the choice of either having the PM hold the invoice until the items in question are resolved or remove the disputed items and submit the remaining invoice for payment. This is done by making notations in red on the original invoice noting the deduction of questioned or disputed costs, and obtaining the signature of the PM. The reduced invoice is then processed through the Program Manager and the Office of Accounting. The disputed items, when resolved, should be included in the next or some future invoice. Invoice information, less questioned or disputed amounts, is entered into PSCS.
Finally, as an ongoing part of paying for Consultant services, the PM should be aware of the status of the approved and available funding for payment of the Consultant’s invoices.
Reviewing MBE/WBE/SBE/EBE/DVBE/OBE Utilization Profiles
The Standard Form Contract will require the Consultants to submit a “MBE/WBE/SBE/EBE/DVBE/OBE Utilization Profile – Invoice Attachment” form (Attachment 6.9-1) with each invoice. Attachment 6.9-2 is to compare the actual usage of subconsultants versus the planned usage as documented in Exhibit C of the contract. The Consultant is to list all of the subconsultants on the project and compare their actual versus planned usage. The PM is to verify that the Consultants are living up to the plan that they negotiated for their utilization of these subconsultants over the life of the contract. The data from the Utilization Profile in the invoice is to be input by the PM into PSCS each time an invoice is approved.
If the Consultant falls behind the original plan for subconsultant usage, the PM must either develop a remediation plan with the Consultant or be prepared to report to the Program Manager and the Board of Public Works why the Consultant did not use a subconsultant as originally planned. In some circumstances, the reasons for missing the original goals could be that the planned-for subconsultant work was never authorized or was completed by City forces. However, as soon as the circumstances become known, the PM must work with the Consultant to identify other activities that were planned for completion by the Prime Consultant and a subconsultant is able to perform. And then, if it is believed that the work can be adequately performed in this manner, the Consultant should be strongly encouraged to assign this work to a subconsultant in order to meet their “planned-for participation” levels.
If the Prime Consultant decided to do the work themselves or they didn’t like the work of the subconsultant, they cannot ignore their original plan to achieve a certain involvement. While the Consultants do not have to continue to use subconsultants that are not performing, they cannot ignore their original plan to achieve a certain involvement. In this case, they should find a replacement subconsultant. However, substitution of subconsultants requires Board of Public Works approval.
In situations where the Consultants are falling short of their planned-for utilization of subconsultants, the PM should bring this information to the attention of the Program Manager and aggressively work with the Consultant to see that the original plan is met.
Changes to Formal, Planned Participation Levels
Board of Public Works Policy, dated December 24, 2002 requires Board approval to change participation levels on a contract. Following discussions with the Bureau of Contract Administration’s Office of Contract Compliance, it has been decided how to interpret this policy statement. If there is such a change in the intended scope of work of the Consultant that there will be notable, unavoidable deviation from the original planned participation levels, then the proposed change in participation levels should have Board approval.
Adding Subconsultants
Subconsultants may be added to the personal services contract with the approval of the Engineer. The Consultant must provide an explanation in writing to the PM for adding the subconsultant. Once approved, the explanation is filed in the Program’s master contract files. As previously mentioned, Subconsultants can only be substituted with the Board’s approval.
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