INTERNAL AUDIT REPORT
Capital Project Audit
Capital Project Prioritization Process
April 2025-April 2026

Issue Date: May 20, 2026
Report No. 2026-08

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Project Prioritization

TABLE OF CONTENTS

Executive Summary ................................................................................................................................................. 3
Background ............................................................................................................................................................. 4
Audit Scope and Methodology ............................................................................................................................... 5
Schedule of Observations and Recommendations ................................................................................................ 6
Management Response and Action Plan ............................................................................................................... 7
Appendix: Risk Rating s ............................................................................................................................................ 8

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Project Prioritization

Executive Summary
We completed an audit of the Port of Seattle's (Port) Capital Project Prioritization Process for the period
April 2025 through April 2026. The objective was to evaluate how the Port prioritizes capital projects by
assessing the adequacy and effectiveness of capital project evaluation and planning processes within
the Aviation and Waterfront Project Management (Maritime) divisions, including the identification and
management of related risks. The audit also identified best practices and opportunities for improvement.
The Aviation division engaged external consultants in 2025 to assess its capital governance processes
and has implemented several key process improvements, which we verified. The Maritime division
stated that it is actively reviewing its procedures and developing enhancements. Both divisions should
be acknowledged for their commitment to strengthening governance and for management's support of
these initiatives.
Controls within the Aviation division operated effectively and aligned with established policies and
procedures. However, in the Maritime division, we identified opportunities to enhance or further develop
internal controls. These opportunities are summarized below and discussed in detail beginning on page
six of this report.
1. (Low) Maritime does not have a formal documented process for project intake, prioritization, or
approval within the Capital Improvement Plan. This makes it more susceptible to inconsistent
decision making, undocumented or poorly supported capital planning decisions, and misalignment
with strategic priorities.
It is important to formalize and document Maritime's project prioritization process. As the Port continues
to grow and expand its operations, a documented process will help assure alignment with the Port's
strategic priorities and will also mitigate risk.
We also identified opportunities to improve processes related to updating intake forms and explicit
Capital Improvement Plan alignment with the Century Agenda Key Performance Indicators (KPIs) and
Executive Director Priorities; these observations were communicated separately to Port management.

Glenn Fernandes, CPA
Director, Internal Audit

Responsible Management Team
Karen Goon, Deputy Executive Director
Wendy Reiter, Managing Director, Aviation
Eileen Francisco, Director AV Project Management Group
Stephanie Jones Stebbins, Managing Director, Maritime
Tin Nguyen, Chief Development Office, Maritime, Maritime Planning and Project Management
Janice Zahn, Chief Engineer, Engineering General Services

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Project Prioritization

Background
The Port generates more than $1 billion in annual operating revenues, incurs approximately $700 million
in operating and maintenance expenses, and invests approximately $1 billion in long-term infrastructure
projects annually. The Port is organized into three primary operating divisions: Aviation, Maritime, and
the Economic Development Division. Capital projects are delivered through the Aviation and Maritime
divisions. Assets previously acquired by the Economic Development Division have been reassigned to
Maritime for Capital Improvement Plan (CIP) purposes, and each division prepares a CIP on a five-year
planning cycle.
Aviation
The Aviation division's 2026-2031 CIP outlines planned investment at Seattle-Tacoma International
Airport (SEA) and categorizes more than 81 projects into High, Medium, and Low priority levels, with an
estimated project cost of approximately $7.5 billion. Major projects include the South Concourse
Evolution, Concourse A Building Expansion, SEA Gateway, C Concourse Expansion, and the SEA
Underground (STS) System Replacement.
Aviation has maintained a project prioritization framework since 2016. In 2025, the division engaged
external consultants to assess its capital governance structure and subsequently implemented several
key process improvements, which were verified during the audit.
Maritime
The Maritime division delivers capital projects supporting multiple lines of business, including Cruise,
Elliot Bay Fishing & Commercial Operations, Recreational Boating, Portfolio Management, and Marine
Maintenance. Maritime's 2026-2030 CIP includes over 170 large capital projects with an estimated value
of $610 million. Major ongoing projects include T117 Restoration, T91 NW Fender Replacement, T91
Berths 6 & 8, Fishermen's Terminal Maritime Innovation Center, Terminal 91 Uplands, P66 Shore
Power, and T106 Customs and Border Protection Office and Facility Renovation.
During the audit, Maritime stated that it is actively reviewing and updating its CIP procedures, with
planned implementation later this year. Since the work remains in progress, we were unable to verify
the revised procedures during the audit.

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Project Prioritization

Audit Scope and Methodology
We conducted this performance audit in accordance with Generally Accepted Government Auditing
Standards and The Institute of Internal Auditors' Global Internal Audit Standards. These standards
require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit objectives. We believe the
evidence obtained meets this requirement and supports our audit objectives.
We used a risk-based, judgmental approach to select items for testing. As a result, the findings reflect
only the items tested and should not be interpreted as representative of, or extrapolated to, the entire
population.
The period audited was April 2025, through April 2026 and included applying the following procedures
to the Aviation and Maritime operating divisions for large capital projects over $300,000:
Evaluate the Port's intake and prioritization processes and related internal controls
•
•
•

•

Interviewed personnel to understand the intake workflow and prioritization methodology
Reviewed a sample of seven Aviation projects and five Maritime projects from each division's
Project Intake portal
Conducted walkthroughs of CIP development to confirm key steps and controls were in place
and reviewed key documents, including:
o Aviation's CIP 2026-2031
o Maritime's CIP 2026-2030
o Aviation Investment Committee agendas and minutes
o Commission meeting agendas and minutes (2025)
Assessed alignment of CIP submissions with the Executive Director Priorities for 2026 and the
Century Agenda KPIs

Assess the accuracy, consistency, and governance of project scoring and approval
•
•
•
•

Evaluated whether scoring assumptions were reasonable, documented, reviewed, and approved
Reviewed a sample of seven aviation and four Maritime projects from each division's CIP
Reperformed scoring for sampled projects to verify accuracy and consistency
Traced sample projects from the CIP to scoring approval documentation

Evaluate internal controls supporting risk monitoring and prioritization
•
•

Reviewed the backlog/queue and assessed how new or emerging risks influence prioritization
decisions
Identified best practices, opportunities to enhance controls, and improve overall governance

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Project Prioritization

Schedule of Observations and Recommendations
Rating: Low
OPPORTUNITY
Maritime does not have a formal documented process for project intake, prioritization, or
approval within the Capital Improvement Plan (CIP). This makes it more susceptible to
inconsistent decision making, undocumented or poorly supported capital planning decisions,
and misalignment with strategic priorities.
Intake Process:
Our evaluation of Maritime's intake process found that sampled projects included completed intake
forms with appropriate supporting documentation and met the criteria for Large Capital Projects. Each
intake also had a documented disposition, and the projects aligned with the Century Agenda KPIs,
Executive Director Priorities and broader strategic plans.
Although the intake workflow is performed consistently in practice, Maritime does not have a
documented Standard Operating Procedure (SOP) governing intake or prioritization process. The
absence of formal procedures reduces standardization across multiple lines of business and may lead
to errors, inefficiencies, or delays.
Scoring and Approval Process:
We determined that Maritime's scoring and approval process provides an informal structure for
approvals; however, key governance elements are absent. The division does not have a formal scoring
methodology, approval decisions are not documented in a standardized manner (relying instead on
notes in the Division Review), and no written policies or procedures exist to govern scoring or approval
activities.
Key controls:
We evaluated Maritime's project prioritization processes and identified several gaps related to the
absence of written policies, procedures, and a formalized process framework. While an informal process
exists, including risk monitoring, key process steps are not defined nor standardized. As a result, there
is no documented guidance governing the overall CIP project prioritization process.
These weaknesses reduce transparency, consistency and oversight, increasing operation risk. In
addition, aging infrastructure and broader economic instability heighten the need for a formalized
evaluation, prioritization, and approval framework to effectively mitigate emerging risks.
Recommendations:
To enhance transparency and accountability, Maritime should develop a formalized CIP governance
framework, including: a documented project intake process; a standardized scoring methodology; formal
approval requirement; and end-to-end policies and SOPs outlining roles, responsibilities, scoring
criteria, and documentation standards.

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Project Prioritization

Management Response and Action Plan
Maritime management acknowledges this low audit finding and is in the process of strengthening our
CIP governance structure and documentation with SOPs for planning and CIP development.
During our annual Maritime capital planning, we utilize a formal intake process to gather project needs
across the division. This intake process has been in use for small projects (below $300K) since 2018
and for large projects ($300K+) since 2022. Although the intake process has been formalized over the
years, we recognize the need to document the process along with our CIP development process.
We also agree with the need to strengthen our prioritization with consistent processes. Due to the
multiple business lines and competing diverse needs across the Seaport, a scoring system for
prioritization may not be appropriate for addressing this gap. As part of strengthening our CIP
governance structure, we will evaluate and implement a prioritization process that best allocates highest
needs with limited capital capacity.

DUE DATE: 12/31/2027

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Project Prioritization

Appendix : Risk Ratings
Observations identified during the audit are assigned a risk rating, as outlined in the table below. Only
one of the criteria needs to be met for an observation to be rated High, Medium, or Low. Low rated
observations will be evaluated and may or may not be reflected in the final report.
Rating

High

Medium

Low

Financial/
Operational
Impact

Internal
Controls

Compliance

Significant

Missing or
partial
controls

Non-compliance
with Laws, Port
Policies,
Contracts

Moderate

Partial
controls;
Not
functioning
effectively

Partial
compliance with
Laws, Port
Policies
Contracts

Minimal

Functioning
as intended
but could be
enhanced

Mostly complies
with laws, Port
Policies,
Contracts

8

Public
High probability
for external audit
issues and / or
negative public
perception
Moderate
probability for
external audit
issues and / or
negative public
perception
Low probability
for external audit
issues and/or
negative public
perception

Commission/
Management
Requires
immediate
attention

Requires
attention

Does not
require
immediate
attention