Archive for September, 2015

I’ve been buried with work and have not had time to write, but that did not stop me from reading Ron Galperin’s audit report on change orders at Los Angeles World Airports, DWP and other departments.

The overhaul of the Tom Bradley International Terminal at LAX is $415 million, or 68%, over budget. The variance could get worse. It’s fortunate that the managers responsible for the project and general management do not fly the planes using the airport, or a disaster similar to the Asiana Flight crash at San Francisco International would be the standard fare.  The pilots of that flight failed to monitor the instruments; LAWA failed to monitor the construction budget.

The audit report faults LAWA’s lack of a formal policy.

That’s being very kind.

Even without a policy, it is pretty hard to miss a budget variance of that magnitude. I think almost all of us would know if our household spending was as awry….and we would take corrective actions. Even a poorly run business would know if it were materially off target on a key line item or project.

What this points to is a fundamentally deficient management culture, one that is effectively unethical, even if not criminally so.

A publicly-held corporation would be compelled to disclose this information to the shareholders.  It would be unwise to hide such a failure, because the analysts would surely discover it.  Investors do not like nasty surprises.

Obviously, no one at LAWA thought to escalate the effect of the spiraling costs and bother informing the public. If Ron Galperin had not authorized the audit, no one would have known.

Or maybe they felt it wasn’t necessary to do so. After all, it’s not as if it would come out of the responsible managers’ salaries. It might not even impact their annual bonuses.

Relying on an audit to identify major deficiencies is like relying on a lung cancer diagnosis to determine that smoking has been bad for your health.

If the City Council and mayor are serious about a “back to basics” approach of running Los Angeles, they would not only take immediate corrective action, but some heads at LAWA would roll down the runway at LAX.

Read Full Post »