Resolution 2023-32526RESOLUTION NO. 2023-32526
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE
RECOMMENDATION OF THE FINANCE AND ECONOMIC
RESILIENCY COMMITTEE, AT ITS FEBRUARY 17, 2023
MEETING, TO APPLY A TIERED FEE STRUCTURE TO
ESTABLISH AN ALLOWANCE IN PROJECT BUDGETS TO
FUND GENERAL ADMINISTRATIVE AND OVERHEAD
EXPENSES OF THE OFFICE OF CAPITAL IMPROVEMENT
PROJECTS (CIP) AND ITS PROJECT MANAGEMENT,
ADMINISTRATION AND OVERSIGHT FUNCTIONS WITH A
YEAR-END RECONCILIATION TO ALLOCATE THE COST OF
ACTUAL LABOR HOURS SPENT PER PROJECT TO THE CIP
DEPARTMENT; AND FURTHER ACCEPTING THE
COMMITTEE'S RECOMMENDATION TO CHARGE THE
APPROPRIATE FUNDS TO DEFRAY THE COSTS OF PROJECT
OVERSIGHT FOR PROJECTS IN DEVELOPMENT, BUT NOT
YET BUDGETED, INSTEAD OF TREATING SUCH EXPENSES
AS GENERAL OVERHEAD COSTS.
WHEREAS, the Office of Capital Improvement Projects (CIP) provides project
development and construction program management services for major capital projects in the
City of Miami Beach; and
WHEREAS, the CIP department has 33 full time employees composed of senior
management, architects, engineers, construction managers (in different categories of experience
and responsibility), financial managers, field inspectors, and administrative personnel; and
WHEREAS, the departmental functions are divided into Project Development and Project
Administration. The Project Development function includes staff directly managing the capital
projects and represents 65% of the operating budget; and
WHEREAS, the Project Administration function includes staff providing indirect support to
the project managers including financial and administrative functions and represents 35% of the
operating budget; and
WHEREAS, CIP is currently managing approximately 50 active projects in the planning,
design, permitting and construction phases; and
WHEREAS, departmental functions include the selection and management of contractors
and consultants using a variety of project delivery methods including job order contracting, design -
build, construction management at risk, and design -bid -build; and
WHEREAS, CIP often also works on evaluation and development of projects that are not
yet defined capital projects; and
WHEREAS, in FY 2022, these tasks represented 25% of Development staff time
(expenses related to these projects should be charged to the respective operating funds: General
Fund, Enterprise Funds and Special Revenue Funds); and
WHEREAS, presently, project oversight costs for projects in development are treated as
general overhead, and therefore charged to budgeted capital projects; and
WHEREAS, at the June 22, 2022 City Commission meeting, a discussion on cost
allocations or percentages charged to capital projects to fund the operations of the CIP was
referred to the Finance and Economic Resiliency Committee (FERC); and
WHEREAS, on October 31, 2022, the item was presented at the FERC meeting to advise
that the Office of Management and Budget retained Matrix Consulting Group (Matrix) to conduct
an analysis of the current methodology being utilized to allocate the annual costs of the CIP
Department and discuss options for recovering costs from capital projects based upon best
practices, industry standards, and defensibility; and
WHEREAS, Matrix performed an analysis of the current CIP allocation methodology,
alternative options explored, and recommendations on the most practical and equitable
methodologies to allocate these costs, in alignment with best practices (Exhibit A); and
WHEREAS, the methodology recommended by Matrix on recovering the annual CIP
project management fee is based on actual labor hours spent by CIP staff managing the projects;
and
WHEREAS, Matrix has recommended the utilization of the same fiscal year's actual labor
hours spent per project to allocate the fiscal year-end costs of the CIP Department; and
WHEREAS, the charges to each project will be calculated based on the percentage of
labor hours associated to each project and applied to the full CIP Department Budget; and
WHEREAS, for existing and new potential projects, a tiered administrative percentage
structure that scales down as the project budget increases has been recommended to estimate
the administrative fee associated to managing the project; and
WHEREAS, this tiered structure is intended to address the inequity of utilizing a singular
percentage (i.e., 6.5%) across all projects, regardless of budget size, and to ensure that the
percentage charged for projects valued at less than $10 million better captures the actual cost of
oversight for such projects; and
WHEREAS, in addition, the Administration has recommended that the efforts spent on
evaluation and development of projects that are not yet defined capital projects, be budgeted as
chargebacks to the appropriate Fund based on the historical percentages above; and
WHEREAS, the actual charges for projects in development would be posted to the related
operating budget at year-end, based on Labor Hours described above; and
WHEREAS, the Finance and Economic Resiliency Committee discussed this item at its
February 17, 2023 meeting and passed a motion recommending that the City Commission adopt
a resolution to apply a tiered allocation methodology to determine charges against project
budgets, for budgetary purposes, to fund the cost of oversight by the Office of Capital
Improvement Projects for CIP projects, as well as to charge the appropriate Funds to defray the
costs of project oversight for projects in development, but not yet budgeted, instead of treating
these as general overhead costs.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that, following a duly noticed public
hearing on March 27, 2023, the Mayor and City Commission hereby accepts the recommendation
of the Finance and Economic Resiliency's recommendation to use a tiered fee structure, as noted
in the attached Exhibit "A", to establish an allwance in project budgets to fund general
administrative and overhead expenses of the Office of Capital Improvement Projects (CIP) and
its project management, administration and oversight functions with a year-end reconciliation to
allocate the cost of actual labor hours spent per project to the CIP Department, and
further,accepting the Committee's recommendation to charge the appropriate Funds to defray the
costs of project oversight for projects that are in development, but not yet budgeted, instead of
treating such expenditures as overhead costs.
PASSED and ADOPTED this a7 day of h�a�c� 2023.
Dan Gelber, Mayor
ATTEST:
'MAR 3 1 2073
77tl
RaJ6e1 E. Granado, City Clerk
'.INCORPORATED'
`• �..2e
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
City Attomey t /k Date
Resolutions - C7 J
MIAMI BEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Alina T. Hudak, City Manager
DATE: March 27, 2023
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF
THE FINANCE AND ECONOMIC RESILIENCY COMMITTEE, AT ITS
FEBRUARY 17, 2023 MEETING, TO APPLY A TIERED FEE STRUCTURE
TO ESTABLISH AN ALLOWANCE IN PROJECT BUDGETS TO FUND
GENERAL ADMINISTRATIVE AND OVERHEAD EXPENSES OF THE
OFFICE OF CAPITAL IMPROVEMENT PROJECTS (CIP) AND ITS
PROJECT MANAGEMENT, ADMINISTRATION AND OVERSIGHT
FUNCTIONS WITH A YEAR-END RECONCILIATION TO ALLOCATE THE
COST OF ACTUAL LABOR HOURS SPENT PER PROJECT TO THE CIP
DEPARTMENT; AND FURTHER ACCEPTING THE COMMITTEE'S
RECOMMENDATION TO CHARGE THE APPROPRIATE FUNDS TO
DEFRAY THE COSTS OF PROJECT OVERSIGHT FOR PROJECTS IN
DEVELOPMENT, BUT NOT YET BUDGETED, INSTEAD OF TREATING
SUCH EXPENSES AS GENERAL OVERHEAD COSTS.
SUPPORTING SURVEY DATA
FINANCIAL INFORMATION
No fiscal impact.
Applicable Area
Citywide
Is this a "Residents Right Does this item utilize G.O.
to Know" item, pursuant to Bond Funds?
City Code Section 2-14?
No Yes
Strategic Connection
Organizational Innovation- Ensure strong fiscal stewardship.
Legislative Tracking
Page 317 of 1292
Office of Management and Budget
Sponsor
Commissioner David Richardson
ATTACHMENTS:
Description
❑ Memo - Accept Recommendation of the FERC to Apply a Tiered Administrative Structure to
Recover C I P Costs
❑ Exhibit A
❑ Resolution
Page 318 of 1292
MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Honorable Mayor Dan Gelber and Members of the City Commission
FROM: Alina T. Hudak, City Manager
DATE: March 27, 2023
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE FINANCE
AND ECONOMIC RESILIENCY COMMITTEE, AT ITS FEBRUARY 17, 2023
MEETING, TO APPLY A TIERED ALLOCATION METHODOLOGY FOR
CAPITAL IMPROVEMENT PROJECTS, AS WELL AS CHARGING FOR
PROJECTS IN DEVELOPMENT, BUT NOT YET BUDGETED, TO
APPROPRIATE FUNDS INSTEAD OF TREATING AS OVERHEAD COSTS.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
STRATEGIC PLAN SUPPORTED
Organizational Innovation — Ensure strong fiscal stewardship
BACKGROUND
On June 22, 2022, a discussion on cost allocations or percentages charged to capital projects to
fund the operations of the Office of Capital Improvement Projects (CIP) was referred to the
Finance and Economic Resiliency Committee (FERC).
On October 31, 2022, the item was presented at the FERC meeting to advise that the Office of
Management and Budget retained Matrix Consulting Group (Matrix) to conduct an analysis of the
current methodology being utilized to allocate the annual costs of the CIP Department and discuss
options for recovering costs from capital projects based upon best practices, industry standards,
and defensibility.
At the February 17, 2023 Finance and Economic Resiliency Committee meeting, the Committee
discussed this item and passed a motion recommending the City Commission adopt a resolution
to apply a tiered allocation methodology for CIP projects, as well as charging for projects in
development, but not yet budgeted, to the appropriate funds, instead of treating these as
overhead costs.
OVERVIEW
CIP provides project development and construction program management services for major
capital projects in the City of Miami Beach. The CIP department has 33 full time employees
composed of senior management, architects, engineers, construction managers (in different
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Accept Recommendation of the FERC to Apply a Tiered Administrative Structure to Recover CIP Costs
Page 2
categories of experience and responsibility), financial managers, field inspectors, and
administrative personnel.
The adopted FY 2023 Operating Budget for the department is $5,838,000. The budget includes
salaries and benefits in the amount of $4,950,000 (85% of the total budget), operating
expenditures in the amount of $233,000 (4% of the total budget) and other departmental internal
charges in the amount of 655,000 (11% of the total budget). The full FY 2023 CIP operating
budget is funded by chargebacks to capital projects managed by the department.
The departmental functions are divided into Project Development and Project Administration. The
Project Development function includes staff directly managing the capital projects and represents
65% of the operating budget. The Project Administration function includes staff providing indirect
support to the project managers including financial and administrative functions and represents
35% of the operating budget. CIP is currently managing approximately 50 active projects in the
planning, design, permitting and construction phases. Departmental functions include the
selection and management of contractors and consultants using a variety of project delivery
methods including job order contracting, design -build, construction management at risk, and
design -bid -build.
It is important to note that CIP often also works on evaluation and development of projects that
are not yet defined capital projects. In FY 2022, these tasks represented 25% of Development
staff time (expenses related to these projects should be charged to the respective operating funds:
General Fund, Enterprise Funds and Special Revenue Funds). In the past, this effort has been
treated as overhead, and therefore charged to budgeted capital projects.
ANALYSIS
Matrix performed an analysis of the current CIP allocation methodology, alternative options
explored, and recommendations on the most practical and equitable methodologies to allocate
these costs, in alignment with best practices (Exhibit A).
The City's current methodology includes direct and indirect support for management of a Capital
project based on a project management fee of 6.5% of the total project budget. The fee is charged
on a yearly basis based on the percentage of completion of the projects during each fiscal year.
Fifty percent of the fee is charged during the design phase and 50% during the construction
phase. This chargeback to projects fully funds the costs of the CIP Department each year.
Five alternative methodologies were explored to calculate the program management fee to
determine the most appropriate, justifiable and defensible and in use by other agencies. These
options included direct level of effort in the management and support spent by CIP staff on Capital
projects, projects expenditures, total projects budget for all capital projects managed by the CIP
department, and a combination of labor hours and project expenses and total budgets. Below is
a recap of the other alternatives considered:
Labor Hours - In 2022, CIP staff tracked labor hours spent on individual projects. This
methodology calculates the CIP project management fee based on total hours spent per project
and presumes that the more hours spent managing a project, the more direct and indirect cost
the project should bear.
Project Expenses — This methodology calculates the CIP program management fee based on the
total expenditures incurred in each active capital project being managed in CIP. This option
assumes that the project with larger expenditures required more staff oversight and support
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Accept Recommendation of the FERC to Apply a Tiered Administrative Structure to Recover CIP Costs
Page 3
compared to those with minimal expenditures.
Project Budget — This methodology calculates the CIP program management fee based on the
total project budget to approximate the proportion of direct and indirect costs that should be borne
by each project.
The other two alternatives explored include a combination of Labor Hours, Project Expenses and
Project Budget.
The methodology recommended by Matrix on recovering the annual CIP project management fee
is based on actual labor hours spent by CIP staff managing the projects. Matrix has recommended
the utilization of the same fiscal year's actual hours spent per project to allocate the fiscal year-
end costs of the CIP Department. The charges to each project will be calculated based on the
percentage of labor hours associated to each project and applied to the full CIP Department
Budget.
Matrix has also provided recommendations for budgetary purposes of future CIP program
management fee.
Option 1 — Update the indirect estimated percentage to federal de-minimis rate of 10%. This is
only for budgetary purposes to ensure that the City has sufficient funding set aside to cover the
CIP Department Budget. The actual charges will be based on Labor Hours described above.
Option 2 — Develop a tiered administrative percentage structure
For existing and new potential projects, a tiered administrative percentage structure that scales
down as the project budget increases has been recommended to estimate the administrative fee
associated to managing the project. This tiered structure should address the inequity issue of
utilizing a singular percentage and also demonstrates how the current 6.5% was insufficient to
capture project support for projects valued at less than $10 million. The actual charges will be
based on Labor Hours described above.
Tier 1: Up to $1 M = 15% of project cost
Tier 2: $1 M - $1 OM = 10% of project cost
Tier 3: $1 OM - $25M = 5% of project cost
Tier 4: $25M+ = 2% of project cost
In addition, the Administration recommends that the efforts spent on evaluation and development
of projects that are not yet defined capital projects, be budgeted as chargebacks to the appropriate
Fund based on the historical percentages above. The actual charges will be posted to the related
operating budget at year-end, based on Labor Hours described above.
Finally, it is recommended that CIP continue to monitor actual Labor Hours related to these efforts
to review and update these percentages in the next 3 years.
CONCLUSION
The Administration recommends that this tiered administrative structure be used for budgetary
purposes and that the methodology to recover costs be used based on the labor hours spent on
an annual basis and updated as necessary. In addition, for projects that are in development, but
not yet budgeted, CIP should charge the appropriate fund, instead of treating these expenditures
as overhead costs.
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Accept Recommendation of the FERC to Apply a Tiered Administrative Structure to Recover CIP Costs
Page 4
Attachment:
Exhibit A — Matrix Consulting Group CIP Allocation Memo
ATH/JG/TOS
Page 322 of 1292
matrix �
consulting group
1650 S Amphlett Blvd., Suite 213
San Mateo, CA 94402
650.858.0507
January 6, 2023
SUBJECT: CAPITAL IMPROVEMENT PROGRAM (CIP) ALLOCATION TO CAPITAL
PROJECTS
The Matrix Consulting Group was retained by the City of Miami Beach to review the
current methodology used by the General Fund Capital Improvements Program (CIP) to
recover costs from Capital Projects. The City of Miami Beach currently assesses a 6.5%
fee to calculate the direct and indirect support associated with managing a capital
project. This methodology has been in existence for over 10 years and there is no
documentation behind the basis for this methodology. Therefore, the purpose of this
study is to discuss options for recovering costs from capital projects based upon best
practices, industry standards, and defensibility. The following memo provides a brief
overview of the methodology used to conduct the analysis, the current CIP allocation
methodology in place, the alternative CIP allocation options explored, the recommended
methodology, and future considerations.
I Methodology for Analysis
In this study the project team utilized a wide variety of data collection and analytical
techniques. The scope of work was accomplished through the completion of the
following activities:
• Conducted Interviews with City Staff: The project team met with CIP and Budget
staff to discuss the current methodology, its use, and application.
• Collected Data: The project team gathered information regarding the current
model, data factors such as labor hours, expenses, etc. as well as historical
information to conduct a trend analysis.
• Discussed Results with City Staff: The project team reviewed the results of the
analysis with CIP and Finance staff to determine if the proposed methodology was
able to capture support more accurately as well as meet the intended goals and
objectives of the study.
Matrix Consulting Group Page 1
Page 323 of 1292
CIP Cost Allocation City of Miami Beach, FL
The objective of this analysis is to provide a clear and transparent methodology for
allocating direct and indirect support to Capital projects.
2 Current CIP Allocation Methodology
The City of Miami Beach, financially and operationally, houses its Capital Project staff in
a program within the General Fund known as the Capital Improvement Program. This
program includes the cost of project managers that are directly working on projects as
well as the manager and support staff for those engineers. To recover the cost for the
direct and indirect support for capital projects, the City applies a percentage to each
capital project budget.
The City's current methodology is to calculate direct and indirect support for a Capital
project based upon 6.5% of the project's total budget. This 6.5% is used to charge the
total direct and indirect support. Of the total direct and indirect support calculated from
the 6.5%, 50% is charged during the design phase, and 50% during the construction phase.
This information is tracked in an excel spreadsheet and at the end of the fiscal year the
Capital Projects manager meets with staff and determines two components:
1. Current Phase of the Project: Design or Implementation
2. % of Phase Complete: Estimated percentage of the design or construction phase
that has been completed that year.
Based upon these two components, the annual direct and indirect cost is calculated for
each capital project. This ensures that each project only ever pays the total direct and
indirect cost initially estimated (6.5%) for that project, regardless of the actual direct or
indirect time spent by staff on that project. The goal is that the total direct and indirect
costs calculated for each project will equal the total annual expenses for the Capital
Improvement Program. Any gaps in funding are the responsibility of, and covered by, the
General fund.
As discussed in the introduction, the current methodology of 6.5%, and the 50% allocation
to design and construction phase is based upon institutional practice. There is no policy
and / or procedure documentation regarding the basis of the 6.5%, and why it was
allocated 50% to both the design and construction phase. Additionally, in the current
methodology, if a project does not officially start the design phase, no administrative fee
is applied, even if staff spend significant time on that project.
Matrix Consulting Group Page 2
Page 324 of 1292
CIP Cost Allocation Citv of Miami Beach, FL
3 Alternative CIP Allocation Methodologies
The primary purpose of this study was to evaluate alternative methodologies based upon
best practices, industry standards, and level of effort and support spent by Capital
Improvement Program (CIP) staff on Capital Projects. The project team explored five
different options:
1. Labor Hours: In 2022, CIP staff acquired a time tracking system in which staff were
able to code their time spent on individual capital projects. This methodology
looked at allocating the CIP costs based upon the total hours spent per project,
and presumes that the more hours spent on a project, the more direct and indirect
cost that project should bear.
2. Project Expenses: This methodology uses the total project expenses incurred in
the previous year to approximate the proportion of direct and indirect costs that
should be borne. This methodology presumes that projects that had larger
expenditures required more staff oversight and support compared to those with
minimal expenditures.
3. Project Budget: This methodology uses the total initial project budget to
approximate the proportion of direct and indirect costs that should be borne. This
methodology presumes that the larger the value of the project, the more overall
support is needed for that project.
4. 75% Labor Hours and 25% Project Expenses: This is a hybrid methodology, which
weights labor hours at 75% and Project Expenses at 25%. This presumes that the
primary level of support is determined based upon hours spent by project staff, but
that there is some component of weight that should be based upon those projects
that expended significant monies the previous year.
5. 75% Labor Hours and 25% Project Budget: This is also a hybrid methodology
approach, which weights labor hours at 75%, and Project Budget at 25%. This
presumes that the primary level of support is determined based upon hours spent
by project staff, but that there is some component of weight that should be based
upon the overall dollar value of the project, as the larger the project, the larger the
level of oversight and support is needed.
These five different methodologies were reviewed with City CIP and Finance staff to
determine which most appropriately reflected the level of effort spent by staff. All five
methodologies are justifiable and defensible and in use by other jurisdictions.
Matrix Consulting Group Page 3
Page 325 of 1292
CIP Cost Allocation Citv of Miami Beach, FL
A Recommended Methodology
Based upon the analysis conducted, the project team recommends that the City consider
Option #1: Labor Hours, as the recommended methodology. This methodology best
reflects the level of effort based upon actual staff hours that are spent on an annual basis
in managing the projects. The following table shows the annual labor hours spent in
support of each current CIP project, and the resulting percentage of support:
Table 1: Labor Hours by Project
Labor
% of
Project Name
Hours
Support
_ _
2 WAY CONVERSION 42ND ST. SHERIDAN
0.00
0.00%
23 ST. STREETSCAPE IMPROVEMENTS
249.50
0.99%
41 STREET CORRIDOR IMPROVEMENTS
610.50
2.43%
500-600 ALTON PARK
296.00
1.18%
72 ST. COMMUNITY COMPLEX
885.75
3.52%
BAY GARDEN MANOR LINK
144.00
0.57%
BAY WALK 1 OTH TO 12TH STREET - MARINA
119.00
0.47%
BAYSHORE 8D - SUNSET ISLANDS 3 & 4 NEIGHBORHOOD IMPROVEMENTS
288.75
1.15%
BAYSHORE NEIGHBORHOOD - CENTRAL BAYSHORE SOUTH
26.00
0.10%
BAYSHORE SUNSET ISLANDS 3 & 4 - UTILITY UNDERGROUNDING
8.00
0.03%
BAYVIEW TERRACE LINK
142.00
0.56%
BAYWALK PEDESTRIAN BRIDGE
250.50
1.00%
BISCAYNE BEACH ADDITIONAL PARKING
279.50
1.11%
BRITTANY BAY PARK
2,359.75
9.39%
CHASE AVE/34 ST. SHARED USE PATH
379.45
1.51 %
COLLINS PARK PARKING GARAGE / COLLINS PARK ANCILLARY
260.50
1.04%
COLLINS PARK PERFORMING ARTS VENUE - ROTUNDA
310.40
1.23%
CONVENTION CENTER - CARL FISHER
1,178.50
4.69%
DADE BOULEVARD SHARED USE PATH
175.25
0.70%
FIRE STATION #1
714.75
2.84%
FIRST STREET STORMWATER IMPROVEMENTS
0.00
0.00%
FLAMINGO PARK - PHASE I - PI (OLD)
922.10
3.67%
FLAMINGO PARK MASTER PLAN
809.50
3.22%
FLAMINGO YOUTH CENTER FACILITY
66.00
0.26%
INDIAN CREEK ST. DRAINAGE IMPROVEMENTS - PHASE III
2,627.25
10.45%
KAYAK LAUNCH DOCKS (DICKENS)
0.00
0.00%
LINCOLN ROAD WASHINGTON AV TO LENOX AV / CONV. CTR LINCOLN RD
CONNECTION / LINCOLN RD BOLLARDS
403.75
1.61 %
LOG CABIN
0.00
0.00%
LUMMUS PARK / OCEAN DRIVE CORRIDOR
70.00
0.28%
MARINE PATROL FACILITY
95.25
0.38%
MAURICE GIBB PARK
724.00
2.88%
MIDDLE BEACH RECREATIONAL CORRIDOR PH 3
1,388.55
5.52%
NOBE OCEANSIDE PARK BEACHWLK
0.00
0.00%
NORTH BEACH ENTRANCE SIGNS
242.50
0.96%
NORTH BEACH OCEANSIDE PARK RENOVATION
2,060.95
8.20%
NSPYC EXTERIOR CAFE AND RESTROOMS
244.50
0.97%
OCEAN RESCUE NOBE FACILITY
62.50
0.25%
Matrix Consulting Group
Page 4
Page 326 of 1292
CIP Cost Allocation City of Miami Beach, FL
Labor
% of
Pro ect Name
Hours
Support
PALM & HIBISCUS ISLANDS ENHANCEMENT
PALM & HIBISCUS LANDSCAPING - CIP
107.50
0.43%
PAR 3/ BAYSHORE PARK
825.75
3.28%
PARKING GARAGE AT PARKING LOT P16
0.00
0.00%
PINE TREE DRIVE & 46TH STREET CIRCLE
286.50
1.14%
PRIDE PARK / CONVENTION CENTER PARK
478.20
1.90%
RUE VENDOME PUBLIC PLAZA
107.10
0.43%
SHANE WATERSPORT SEAWALL & DOCK RAMP
196.50
0.78%
SHARED PATH ON PARKVIEW ISLAND PARK (73RD-77TH)
0.00
0.00%
SOUTH BAY CLUB LINK
152.50
0.61 %
STILLWATER ENTRANCE
132.45
0.53%
STORMWATER PUMP STATION AT 19TH STREET EAST OF MERIDIAN
48.75
0.19%
SUNSET HARBOR PUMP STATION #3 SCREEN
63.50
0.25%
SUNSET ISLANDS 1 & 2 GUARDHOUSE
66.00
0.26%
SURFACE LOT 01 A - PENRODS AT ONE OCEAN DRIVE
79.00
0.31 %
SURFACE LOT 9D (P86) - 6976 INDIAN CREEK DR.
0.00
0.00%
SURFACE LOT AT BISCAYNE BEACH / BISCAYNE BEACH SEAWAL
1,004.10
3.99%
TENT CANOPY FOR NORTH SHORE BANDSHELL
0.00
0.00%
VENETIAN ISLANDS BP13C
331.00
1.32%
WATERWAY RESTORATION
93.00
0.37%
WEST AVENUE PHASE II IMPROVEMENTS
1,465.35
5.83%
TOTAL
25,140.65
100.00%
Based upon staff time and effort, Indian Creek (10%), Brittany Bay Park (9%), North Beach
Oceanside Park Renovation (8%), West Avenue Phase II Improvements (6%), Middle
Beach Recreational Corridor (6%), and Palm & Hibiscus Enhancements (5%) represent the
largest proportion of staff support. The remaining projects all have less than 5% of the
total staff support on an individual project basis.
Recommendation #1: The City should utilize the same fiscal years' actual hours spent
per project to allocate the fiscal year-end costs of the Capital Improvement Program to
each project. For example, FY22 Year -End Actual Capital Improvement Program Costs
should be allocated based upon FY22 hours spent per project.
Once the recommended methodology has been determined, the City will take the actual
FY21-22 Expenditures for the Capital Improvement Program and allocate them based
upon the percentage of hours associated with each project. The following table shows by
major cost category the total actual expenditures for FY21-22:
Table 2: Expenditures by Cost Category
Category
Salaries and Benefits
Telephone
FY21-22 Actuals
$4,269,340
$11,643
Matrix Consulting Group Page 5
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CIP Cost Allocation City of Miami Beach, FL
Category
FY21-22 Actuals
Postage and Shipping
17
Rent -Building & Equipment
$67,881
Printing
$112
Contract Maintenance
$98,158
Supplies - Office
$6,138
Other Operating Expenditures
$3,852
Other Contractual Services
$8,080
Dues & Memberships
$918
Training & Awards
$2,290
Uniform Expense
$1,400
Central Services -Internal Svc
$8,000
Property Mgmt-Internal Svc
$70,000
Fleet Management -Internal Svc
$74,000
Self Insurance -Internal Svc
$229,000
Applications/ Computer Hardwar
$248,000
OIG Funding
$2,000
Motor Vehicles_
$272,545
TOTAL
$5,373,373
Approximately $4.2 million of the $5.4 million in expenses is related to Personnel
expenses. These personnel are directly spending time on managing, reviewing, and
designing capital improvement projects. The next largest component of expenses are in
relation to the internal service funds ($631,000). The $5.4 million is allocated to projects
based upon percentage of (labor hour) support. The following table shows by project, the
total recommended CIP Charges:
Table 3: Recommended CIP Project Charges
Project Name _
2 WAY CONVERSION 42ND ST. SHERIDAN
23 ST. STREETSCAPE IMPROVEMENTS
41 STREET CORRIDOR IMPROVEMENTS
500-600 ALTON PARK
72 ST. COMMUNITY COMPLEX
BAY GARDEN MANOR LINK
% of Allocated
Support CIP Charges
0.00%
$0
0.99%
$53,326
2.43%
$130,484
1.18%
$63,265
3.52%
$189,314
0.57%
$30,777
BAY WALK 1 OTH TO 12TH STREET - MARINA
0.47%
$25,434
BAYSHORE 8D - SUNSET ISLANDS 3 & 4 NEIGHBORHOOD IMPROVEMENTS
1.15%
$61,715
BAYSHORE NEIGHBORHOOD - CENTRAL BAYSHORE SOUTH
0.10%
$5,557
BAYSHORE SUNSET ISLANDS 3 & 4 - UTILITY UNDERGROUNDING
0.03%
$1,710
BAYVIEW TERRACE LINK
0.56%
$30,350
BAYWALK PEDESTRIAN BRIDGE
1.00%
$53,540
BISCAYNE BEACH ADDITIONAL PARKING
1.11%
$59,738
BRITTANY BAY PARK
9.39%
$504,355
CHASE AVE/34 ST. SHARED USE PATH
1.51 %
$81,101
COLLINS PARK PARKING GARAGE / COLLINS PARK ANCILLARY
1.04%
$55,677
COLLINS PARK PERFORMING ARTS VENUE - ROTUNDA
1.23%
$66,343
CONVENTION CENTER - CARL FISHER
4.69%
$251,884
DADE BOULEVARD SHARED USE PATH
0.70%
$37,457
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Citv of Miami Beach, FL
Pro'ect Name
FIRE STATION #1
FIRST STREET STORMWATER IMPROVEMENTS
FLAMINGO PARK - PHASE I - PI (OLD)
FLAMINGO PARK MASTER PLAN
FLAMINGO YOUTH CENTER FACILITY
INDIAN CREEK ST. DRAINAGE IMPROVEMENTS - PHASE III
KAYAK LAUNCH DOCKS (DICKENS)
LINCOLN ROAD WASHINGTON AV TO LENOX AV / CONV.
CONNECTION / LINCOLN RD BOLLARDS
LOG CABIN
LUMMUS PARK / OCEAN DRIVE CORRIDOR
MARINE PATROL FACILITY
MAURICE GIBB PARK
MIDDLE BEACH RECREATIONAL CORRIDOR PH 3
NOBE OCEANSIDE PARK BEACHWLK
NORTH BEACH ENTRANCE SIGNS
NORTH BEACH OCEANSIDE PARK RENOVATION
NSPYC EXTERIOR CAFE AND RESTROOMS
OCEAN RESCUE NOBE FACILITY
PALM & HIBISCUS ISLANDS ENHANCEMENTS
PALM & HIBISCUS LANDSCAPING - CIP
PAR 3/ BAYSHORE PARK
PARKING GARAGE AT PARKING LOT P16
PINE TREE DRIVE & 46TH STREET CIRCLE
PRIDE PARK / CONVENTION CENTER PARK
RUE VENDOME PUBLIC PLAZA
SHANE WATERSPORT SEAWALL & DOCK RAMP
SHARED PATH ON PARKVIEW ISLAND PARK (73RD-77TH)
% of Allocated
Support CIP Charges
i4%
--$ 765
0.00%
$0
3.67%
$197,083
3.22%
$173,016
0.26%
$14,106
10.45%
$561,529
0.00%
$0
CTR LINCOLN RD
SOUTH BAY CLUB LINK
STILLWATER ENTRANCE
STORMWATER PUMP STATION AT 19TH STREET EAST OF MERIDIAN
SUNSET HARBOR PUMP STATION #3 SCREEN
SUNSET ISLANDS 1 & 2 GUARDHOUSE
SURFACE LOT 01 A - PENRODS AT ONE OCEAN DRIVE
SURFACE LOT 9D (P86) - 6976 INDIAN CREEK DR.
SURFACE LOT AT BISCAYNE BEACH / BISCAYNE BEACH SEAWAL
TENT CANOPY FOR NORTH SHORE BANDSHELL
VENETIAN ISLANDS BP13C
WATERWAY RESTORATION
WEST AVENUE PHASE II IMPROVEMENTS _
TOTAL
1.61 %
$86,294
0.00%
$0
0.28%
$14,961
0.38%
$20,358
2.88%
$154,742
5.52%
$296,778
0.00%
$0
0.96%
$51,830
8.20%
$440,492
0.97%
$52,258
0.25%
$13,358
5.20%
$279,669
0.43%
$22,976
3.28%
$176,490
0.00%
$0
1.14%
$61,234
1.90%
$102,207
0.43%
$22,891
0.78%
$41,998
0.00%
$0
0.61 %
$32,594
0.53%
$28,309
0.19%
$10,419
0.25%
$13,572
0.26%
$14,106
0.31 %
$16,885
0.00%
$0
3.99%
$214,609
0.00%
$0
1.32%
$70,745
0.37%
$19,877
5.83%
$313,193
100.00%
$5,373,373
The $5.4 million expenditures associated with the Capital Improvement Program are
allocated proportionately based upon actual labor hours. Therefore, projects such as
Indian Creek (10% of support) receive approximately $561,000 in allocated CIP Charges.
It is important to note that this table identifies the total costs allocable and associated
with each project. However, not all current and future capital projects may be able to
afford the total identified charge. To ensure that the methodology is fair and defensible,
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CIP Cost Allocation City of Miami Beach, FL
the costs must be allocated without regard to funding limitations associated with
projects. The costs are the maximum justifiable charges to each project. If a project
cannot afford that charge, the City must find an alternative means to subsidize that
project.
6 Future Recommendations
The focus of this analysis was the documentation of the current methodology and to
provide a basis for future operational improvements to the Capital Improvement
Program. The following subsections discuss two key future recommendations:
1 Admin Fee Projection
The current methodology of 6.5% allows CIP staff to build an admin fee projection into
the capital project budget. The proposed methodology is to recover CIP staff costs
annually based on historical project information. The City has two options as it relates to
projecting indirect costs for future capital projects:
• Option #1: Update the indirect estimated percentage to federal de-minimis rate
of 10%. This 10% should only be used to budget for indirect costs, while the actual
indirect charges to a project should never exceed the total amount calculated
based upon the recommended methodology. This ensures that the City has
sufficient funding set aside for indirect support, and that charges are based upon
a defensible methodology.
• Option #2: Develop a tiered administrative percentage. For existing and new
potential projects, the CIP Manager could utilize a tiered percentage structure that
scales down as the project budget increases to estimate the administrative fee
associated with managing that project.
Option #1 results in the City potentially not having sufficient funding or too much funding
on particular projects as it is an estimate that is not based upon the level of staff effort
needed. This option would also likely result in a similar situation as the current indirect
percentage methodology.
Therefore, it is recommended that for budgeting purposes for capital projects, as part of
the Capital Project Budget development, CIP staff should proceed with Option #2 and
develop a tiered administrative percentage structure. This will ensure that administrative
fees project the level of effort based upon the estimated complexity (dollar value) of the
project.
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The project team worked with City staff to estimate the level of staff effort that would be
needed through the life of a project depending upon different project cost estimates.
Based upon this, the project team developed the following tiered structure.
Table 4: Administrative Fee Tier Structure (Budgeting Purposes Only)
Tier Estimated Dollar Value Admin Fee
1 $0 - $1 million 15%
2 $1 million - $10 million 10%
3 $10 million - $25 million 5%
4 $25 million and above 2%
The administrative fee percentage would be recommended to start at 15% for projects
up to $1 million. The percentage would slowly scale down to 2% for projects greater than
$25 million. This tiered structure ensures that appropriate support costs are captured.
For example, for a $900,000 project the administrative fee would be $135,000 and for a
$30 million project, the administrative fee would be $600,000. The $135,000 may only be
needed for 1-1.5 years, whereas the $600,000 would last for the estimated 4-5 years for
the larger project.
This updated tiered structure addresses the inequity issue of utilizing a singular
percentage, and also demonstrates how the current 6.5% was insufficient to capture
project support for projects valued less than $10 million.
This exercise should only be for budgeting purposes. At year-end only the actual
estimated support based upon actual hours spent would be billed to the project.
Additionally, these percentages have been developed based upon staff annual estimates
of time, rather than actual staff time spent per project. As the City has only recently
started tracking time spent managing CIPs, these tiered percentages should be
reevaluated in 3-5 years, when additional and more accurate data is available on time
spent managing projects.
Lastly, while the current methodology also utilized a percentage based administrative fee,
it is recommended that this percentage based fee not be limited to being charged 50% in
the design phase and 50% in the construction phase. The percentage based
administrative fee will be used to set aside specific administrative funding for a project.
The year-end actual process will draw down from that funding the moment any time is
spent by staff on managing that project. If there is insufficient funding, it is recommended
that a budget amendment be submitted to ensure that each project is paying for their fair
share of administration costs.
Recommendation #2: A tiered administrative fee structure should be adopted for
budgeting purposes only. The structure should be as follows:
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- Less than $1 million = 15% administrative fee
- $1 m - $1 Om = 10% administrative fee
- $1 Om - $25m = 5% administrative fee
- $25m+ = 2% administrative fee
At the year-end, the support based on actual hours should be assessed to the project.
Recommendation #3: The tiered percentage structure should be reevaluated in 3-5
years once additional data is available on actual staff time spent managing projects.
Recommendation #4: The tiered administrative percentage should be used as an
administrative fee funding source and should be drawn down immediately based upon
actual hours spent rather than be limited to 50% during design and 50% during
construction phase.
2 Direct Staff Billing
The City of Miami Beach is unique compared to other jurisdictions in that engineers and
staff directly working on capital projects are charged to the general fund and their cost is
recovered from capital projects based upon an administrative fee. The industry best
practice for Capital Improvement Programs is to have engineers and staff directly
working on Capital Projects to bill directly to those capital projects. As part of this effort,
the project team contacted the City of Miami (as specifically requested by the City) to
determine their practice of charging to capital projects. The City of Miami also charges
its engineers directly to capital projects.
The proposed methodology shift of charging out CIP costs based upon the actual hours
spent essentially serves as a proxy for direct billing engineering staff. Even though it is
charged under the name of an administrative fee, this is truly the CIP direct and indirect
chargeback to projects. Therefore, by implementing the proposed methodology the City
is moving towards aligning with best practices. In the future, if there is an opportunity, it
is recommended that for any capital projects, engineers are directly budgeted in that
project at the beginning of the year rather than charged back to that project. This
mitigates the need for additional administrative work and is more cost effective and
efficient in the long run.
Recommendation #5: The City of Miami Beach should consider long-term where
appropriate to directly budget staff in capital projects at the beginning of a fiscal year.
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