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HomeMy WebLinkAbout03.a. Receive 2024 Permitting Resource Management Review and Biannual Findings ReportingPage 1 of 12 Item 3.a. F__1_448�411C_S0 September 3, 2024 TO: ADMINISTRATION COMMITTEE FROM: BENJAMIN JOHNSON, INTERNALAUDITOR I DIVERSITY, EQUITY,AND INCLUSION OFFICER REVIEWED BY: PHILIPLEIBER, DEPUTYGM -ADMINISTRATION ROGER S. BAILEY, GENERAL MANAGER SUBJECT: RECEIVE 2024 PERMITTING RESOURCE MANAGEMENT REVIEW AND BIANNUAL FINDINGS REPORTING Enclosed is the 2024 Permitting Resource Management Review final report. The objective of this engagement was to review the business structure of the permitting function, identify any gaps, and make general recommendations where appropriate. This engagement aims to consider the management of resources on the organizational level with respect to the permitting function. Internal Audit employed several techniques to develop a best practice model, including survey data from sister agencies, industry standards, internal metrics, and feedback from Central San leadership. It is important to clarify that this engagement was not a formal audit. Instead, Internal Audit collaborated with workgroup staff and leadership to develop a project addressing the organization's immediate needs from both customer service and staffing perspectives. The recommendations in this report are intended to guide prudent decision -making by leadership. They are general in nature and do not specify formal remediation deadlines or responsible parties. Ultimately, this report offers stakeholders a broad overview of the dynamics within this critical business line, with the goal of identifying opportunities for improvement. Also included is the Biannual Findings Report ending Q2 2024. There are four findings open, which were identified in Phase 1 of the Capital Projects audit. Strategic Plan Tie -In GOAL ONE: Customer and Community Strategy 1— Deliver high -quality customer service GOAL FOUR: Governance and Fiscal Responsibility Strategy 1 - Promote and uphold ethical behavior, openness, and accessibility, Strategy 3 - Maintain financial stability and sustainability September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 3 of 50 Page 2 of 12 GOAL SEVEN: Innovation and Agility Strategy 1 - Leverage data analytics to become a more efficient utility, Strategy 3 - Be adaptable, resilient and responsive ATTACHMENTS: 1. 2024 Permitting Resource Management Review F I NAL Report 8.19.24 2. Central San Internal Audit Findings Report 3. Presentation September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 4 of 50 Page 3 of 12 Attachment 1 110ENTRAL SAN INTERNAL AUDIT REPORT DATE: August 19, 2024 TO: Greg Norby, Deputy General Manager, Operations Danea Gemmell, Planning & Development Services Division Manager Kevin Mizuno, Finance Division Manager Damasio Zepeda, Senior Engineer Kim Stahl, Development Services Supervisor FROM: Benjamin Johnson, Internal Auditor I Diversity, Equity, and Inclusion Officer SUBJECT: 2024 PERMITTING RESOURCE MANAGEMENT REVIEW FINAL REPORT Enclosed is the 2024 Permitting Resource Management Review FINAL Report. The objective of this engagement was to review the business structure of the permitting function, identify any gaps, and make general recommendations where appropriate. This engagement aims to consider the management of resources on the organizational level with respect to the permitting function. Internal Audit employed several techniques to develop a best practice model, including survey data from sister agencies, industry standards, internal metrics, and feedback from District leadership. It is important to clarify that this engagement was not a formal audit. Instead, Internal Audit collaborated with workgroup staff and District leadership to develop a project addressing the organization's immediate needs from both customer service and staffing perspectives. The recommendations in this report are intended to guide prudent decision -making by District leadership. They are general in nature and do not specify formal remediation deadlines or responsible parties. Ultimately, this report offers stakeholders a broad overview of the dynamics within this critical business line, with the goal of identifying opportunities for improvement. Internal Audit would like to thank leadership and staff for their partnership during the length of this project. If you have any questions, please contact me at (925) 229-7120. Benjamin Johnson, Internal Auditor I Diversity, Equity, and Inclusion Officer Enclosure cc: Roger S. Bailey, General Manager Philip Leiber, Deputy General Manager, Administration September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 5 of 50 Page 4 of 12 2024 PERMITTING RESOURCE MANAGEMENT REVIEW FINAL REPORT DATE: August 19, 2024 INTRODUCTION Audit Objective The objective of this engagement was to review the business structure of the permitting function, identify any gaps, and make general recommendations where appropriate. Background The permitting workgroup, comprised of five team members, provides high quality customer service consistent with the District's compliance and regulatory needs. The core functions performed at the permit counter include: • Assisting the public with submitting and processing permit applications related to wastewater management, such as for construction projects, discharges, or modifications to existing facilities. • Reviewing permit applications to ensure they are complete and compliant with relevant regulations and assigning any relevant permit conditions. This includes assessing proposed plans, specifications, and environmental impact assessments for adherence to established standards. • Collecting permit fees in line with established schedules and regulations. This involves calculating fees based on project scope, type of activity, and regulatory requirements, and ensuring accurate documentation and accounting of fee transactions. • Providing responsive and courteous customer service to address inquiries, resolve issues, and assist applicants and permit holders throughout the permitting process. This includes handling phone calls, emails, and in -person inquiries, as well as coordinating with other departments or agencies as needed. • Generating reports and summaries on permit activities, including issuance, renewals, and compliance status, to support decision -making and regulatory oversight. • Updating billing system with new application data and parcel information, collecting water data and reviewing water meter information, administering rate information to perform production billing annually. • Educating the public about wastewater management practices, permit requirements, and environmental impact. Depending on the size and complexity of a plan submitted to the District, the time needed to research, review, and respond to a customer can be considerable. To complete plan reviews, the permit counter frequently collaborates with various workgroups, including those handling fee review, environmental review, development inspection, and right-of-way. Effective coordination among these groups is essential for meeting the turnaround times outlined in public -facing online resources. The permit counter aims to be a trusted partner with the public, curating a vast collection of knowledge and resources to meet the unique needs of each customer. 2024 Permitting Resource Management Review FINAL Report 08.19.24 September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 6 of 50 Page 5 of 12 While the leadership and staff in permitting recognize the consistent pressures of operational demands, a strong sense of teamwork persists, along with a willingness to take on additional responsibilities during organizational changes. For instance, they have absorbed external duties like overseeing regulatory compliance reviews of mainline processes and sewer billing. Additionally, a more thorough review of plans submitted for encroachment verification has contributed to the workload due to complexity of development and projects. However, these additional tasks may affect the timeliness of our customer service. In Q1 2024, the permitting function launched the Oracle Permitting and Licensing (OPAL) software to better align related business processes with the District's Oracle Fusion Cloud Enterprise Resource Planning software. In the following months, permitting staff identified numerous critical system gaps and bugs, while the accounting group observed improved efficiency in cash management. Both groups have since noted a gradual reduction in system issues leading up to Q3 2024. Project Scope Internal Audit reviewed the business design of the permitting function, with a focus on the following subprocesses: • Oracle permitting software implementation • District processing time management • Residential and commercial plan reviews • Encroachment verifications • Customer service interactions via walk-ins, email, phone, and potential online presence • Permit issuance at permit counter and via email • Public mainline extensions • Real property agreements coordination • Cash management This engagement was performed using the following methods: 1. Reviewed any available policies, guidelines, and procedures. 2. Interviewed and gathered input from workgroup leadership. 3. Interviewed staff and observed the processes within the scope of the project. 4. Analyzed the design of the business, including relevant processes with respect to meeting established operational objectives. 5. Reviewed internal output metrics and benchmarked data with sister agencies. 6. Crafted and communicated results of the review, including general recommendations, where appropriate. 2024 Permitting Resource Management Review FINAL Report 08.19.24 September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 7 of 50 Page 6 of 12 ENGAGEMENT RESULTS Summary Internal Audit's review of the permitting function's business structure reveals several opportunities for positive change, contingent on the future availability of District resources. The permitting workgroup not only maintains vital relationships with customers and internal stakeholders, but also consistently reports metrics for deliverables that significantly surpass those of sister agencies in key categories. Our current public engagement figures include: • Central San processes over 7,000 permitting applications annually, including more than 3,000 new applications (3,317 in 2023) and updates to existing ones. • Over the past seven years, the group averaged 1,832 permits processed each year. • Annually, the group handles around 3,000 in -person visits and responds to approximately 15,000 emails. • When fully staffed, the group dedicates 200 staff hours each week to serving the public. With guidance from workgroup leadership, the District benchmarked its key permitting metrics against five sister agencies in the Bay Area. The results revealed that the District consistently outperformed other local wastewater agencies in several areas: the number of new permit applications processed, the number of permits completed per full-time employee, and overall annual performance. While the closest figures from other agencies reported around 1,000 new applications and 700 permits processed annually, the District's results were significantly higher. Permitting teams across all agencies typically consisted of three to five employees. Despite ongoing operational challenges with the implementation of the Oracle Permitting and Licensing (OPAL) software, the permitting team remains highly committed to customer service excellence and adheres to established turnaround times. With support from the Information Technology team, the permitting workgroup has successfully reduced the number of outstanding critical system fix requests from double digits to single digits as of the date of this report. The OPAL software is still a work in progress on delivering an efficient and user-friendly platform. Oracle is looking at addressing some of its deficiencies over the next two years. When evaluating the annual output of this workgroup, analyzing the intersection of District -level resource management and business sustainability offers valuable insights for future planning and strategy. The District benefits from a skilled and experienced permitting staff, dedicated to meeting their established targets. Balancing customer and staff satisfaction remains a key objective, and achieving this harmony continues to be a goal the District strives to reach. General Currently, customers must submit physical plans for review, but they have Recommendations the option to email their simple and small plan sets if requested. As the landscape of customer demand continues to evolve after the changes introduced by the COVID pandemic, there may soon be opportunities to 2024 Permitting Resource Management Review FINAL Report 08.19.24 September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 8 of 50 Page 7 of 12 expand the permitting function's online presence, particularly in permit reviews. While optimizing OPAL to better serve the District remains a priority, a growing number of customers have expressed a desire to submit plans online and engage with staff remotely. If staff and leadership are confident in their ability to meet turnaround commitments, transitioning to a parallel electronic service through OPAL could be of value to ensuring business sustainability moving forward. Before this project began, it was generally expected that the permit counter remained open to customers during District -wide employee events like holiday parties and appreciation gatherings. However, after reviewing annual output figures and consulting with workgroup leadership, the Executive Team has formally recommended adjusting our business model to allow permitting employees to attend these events. Maintaining effective communication on such critical topics will help the District find meaningful solutions to both historical and future challenges. Additionally, the data gathered by workgroup leadership during this project may inform these ongoing discussions. Internal Audit recommends that the permitting workgroup and District leadership maintain open and regular communication about operational needs and their impact on customer service quality and staff. Given the high level of annual output and frequent public engagement, and considering future availability of District resources, there may be opportunities to further enhance the District's ability to provide a robust suite of services while more effectively distributing processing responsibilities among staff. Central to these discussions will be an evaluation of staffing levels, which may be considered low given the current output levels. Leadership's The challenges of working with the interim OPAL software and ongoing Response testing and training of staff is expected to last at least 1-2 more years as Oracle works to finish development on this relatively new product. Today's development projects are much more complicated than in the past, as many projects are redevelopments that have conflicts with existing utilities and the more challenging lots have not been cost effective until now. This results in longer turnaround times to resolve site problems. Staff is committed to enhancing the public experience for permitting, but likely will need additional resources to help address these continued challenges until OPAL is improved. Additionally, resources will be stretched with the next software initiative to replace and/or upgrade the billing system. - Danea Gemmell, Planning & Development Services Division Manager Internal Audit's Leadership's response appears to appropriately outline current business Response challenges and opportunities. Internal Audit is available to serve as a trusted advisor when considering future conversations around positive change. 2024 Permitting Resource Management Review FINAL Report 08.19.24 September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 9 of 50 Page 8 of 12 Attachment 2 Internal Audit Findings Report Current as of: 08.19.24 Prepared by: Benjamin Johnson, Internal Auditor I Diversity, Equity, and Inclusion Officei Risk Rating Total 1 - High Risk 2 2 - Moderate Risk 2 3 - Low Risk 0 Total 4 Finding Title Audit Name General Category of Observations Total Need for documentation of procedures or updates 1 Segregation of duties 1 IT -related controls 0 General process and/or control improvements 1 Automation opportunities 1 Finding Number Finding Description Risk Rating Observation (Residual) Category Division * Highlight Legend Past Due High Risk Closed Executive Owner Manager Report Date Due Date Date Closed Open 1 Engineering procedural 2023 Capital Projects Design -only Audit 1 There is a need to update the procedural Need for Capital Projects Norby Norby 11.03.23 06 :40 ct0 24 documentation is not documentation surrounding Capital's documentation 09.30.24 current contract/agreement origination and project of procedures or (Extended) management processes. updates 2 There is a need to 2023 Capital Projects Design -only Audit 2 There is an opportunity for Capital to formalize and 1 Segregation of Capital Projects Norby Norby 11.03.23 o6�3A24 standardize Capital enhance reporting of capital project activity so that duties 09.30.24 Projects' reporting to key there is a formal source of project -related reporting (Extended) stakeholders flowing through the Division to management and executive management. 3 Agreement/contract drafts 2023 Capital Projects Design -only Audit 3 Capital shares and edits contract/agreement drafts 2 General process Capital Projects Norby Norby 11.03.23 06.30i4 are edited and shared internally through email, which may cause version and/or control 09.30.24 internally via email, which control issues. improvements (Extended) may lead to version control issues 4 Key stakeholders do not 2023 Capital Projects Design -only Audit 4 Purchasing does not regularly report details surrounding 2 Automation Finance Mizuno Leiber 11.03.23 06.30 24 receive regular the status of contract/agreement processing efforts to opportunities 09.30.24 contract/agreement stakeholders across the District, which may impact (Extended) processing status updates projects that have more compressed timelines such as District emergencies and special needs. Closed in 2024 September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 10 of 50 Page 9 of 12 1 September 3, 2024 2024 Permitting Resource Management Review and Biannual Findings Reporting Administration Committee Benjamin Johnson Internal Auditor I Diversity, Equity, and Inclusion Officer Services Provided Assist with submission of permit applications Review applications and plans Collect permit fees Responsive customer service Generate activity reports Educate the public k Attachment 3 September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 11 of 50 1 PAUnkruent 3 Team Dynamics Five permitting team members when fully staffed Collaborate with various internal workgroups and local agencies Strong focus on customer service and often assist other workgroups Oracle system rollout has been challenging Leadership is strong and staff are dedicated/hardworking 3 Project Scope Oracle implementation Processing time management Plan reviews and encroachment verifications Customer service interactions Permit issuance Public mainline extensions Real property agreements coordination Cash management coordination with Accounting 4 1, �o Ali September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 12 of 50 2 PAU.sr.krne n t 3 Public Engagement Metrics -VVI '' The District annually outperforms sister agencies in the following key areas: Over 1,800 permits finalized Over 350 permits per FTE completed I 3,000 new applications processed The permitting team annually fields: 3,000 in -person visits 15,000 emails 5 Challenges and Opportunities Challenges Oracle implementation Rising number of redevelopments Staffing and related resources Opportunities Future consideration of resource allocation Online presence Streamlined Oracle system L September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 13 of 50 3 PAUnkruent 3 Biannual Findings Report: End of Q2 2024 As of August 19, 2024, all findings, except four identified in phase I of the capital projects audit, have been closed: 1— Update formal procedures 2 — Enhance reporting 3 — Contract drafting single source of truth 4 — Reporting Procurement's contract origination timeline All current findings have an extended due date of September 30, 2024. I r t N ,, M September 3, 2024 Regular ADMIN Committee Meeting Agenda Packet - Page 14 of 50 4