GOVERNANCE: Better Management of Reimbursable Projects Could Help the Company Consider Benefits and Recover its Costs

This report assesses the extent to which the company effectively manages reimbursable projects, including its use of controls to help it recover its costs.

We found that the company did not effectively and consistently manage the reimbursable projects we reviewed due to weaknesses in assessing project costs and benefits, managing its business relationships with key project partners, and implementing controls for successful cost recovery. These weaknesses contributed to disputes with project partners that led to cost overruns and project delays. In two projects we reviewed, we estimated the company will not recover more than $10 million because program managers were not fully implementing project management controls.

We recommended that the company require business cases to evaluate the costs and benefits of a project before accepting reimbursable requests; update its Engineering project management standards to specify key business partnering practices and hold project managers accountable for implementing them; and ensure that project managers implement the Engineering department’s project management controls to effectively recover costs.