Poor record keeping, sloppy accounting practices and lack of oversight have led to a projected $237 million increase in the cost of Denver International Airport’s hotel and transit center, according to the city auditor. The Denver Post has obtained a draft copy of city Auditor Dennis Gallagher’s performance review of DIA’s management of the project.

The audit, scheduled to be released to City Council members this month, excoriates airport managers for failing to control costs of its showcase project. The auditor projects the final cost at $737 million — $237 million more than the original $500 million budgeted in 2011 — and says it could go higher.

The report contains 11 recommendations designed to rein in the project and set up DIA for future success, including basic maintenance and organization of records, evaluation of additional costs that are not budgeted for, conducting periodic audits throughout the project, and a “close-out review” of all project records no later than three months before the project is completed to ensure there have been no overbillings.

Airport officials declined to discuss the draft audit or provide any response they made to the auditor.

“We don’t think the auditor would appreciate DIA sharing documents related to a draft report that isn’t even in its final state, especially before the Audit Committee has the opportunity to review,” spokeswoman Stacey Stegman said. “We’ll defer to the auditor on when they are comfortable with the release of documents related to their audits.”

Denis Berckfeldt, the auditor’s spokesman, said the airport has responded to the draft, but the auditor’s office is not free to release it. The office plans to release the final report, including the airport management’s responses, to City Council members Nov. 20.

The final report could change from the draft.

Among the reasons cited for the cost increases is the absence of an independent construction consultant overseeing the project, resulting in contract terms favoring general contractor Mortenson, Hunt and Saunders.

The contract provides incentives for on-time completion of the project — a bonus for the contractor calculated at 4.25 percent of the total project cost. This bonus, along with additional fees to cover overhead, results in a 6.75 percent profit margin, which the report calls “high and lucrative.”

Many of the draft audit’s findings echo previous stories in The Denver Post. The newspaper reported in March that the airport had excluded related costs from the project’s expanding budget and had trimmed its runway-repair budget and other long-term maintenance projects.

In April, The Post reported that the price of the project — featuring a 519-room Westin hotel, public plaza and train station — had risen again, to a total of up to $730 million, including related costs.

Among the auditor’s other draft conclusions:

• Disorganization caused poor oversight of invoices, which may have allowed billing errors to slip through the cracks.

• Related items ranging from relocated bridges to a lawsuit with the Regional Transportation District will add $130 million to the overall cost of the redevelopment program. That includes $2 million not yet budgeted, $450,000 of which is associated with a financial assurance consulting contract and $1.5 million for DIA salaries.

• Capital investments in airfield maintenance have fluctuated, raising some concerns about budget reductions in specific areas.

• Investments in the 20-year-old terminal complex have decreased.

• The airport “does not have operations maintenance plans in place, despite the fact that DIA is an aging facility.”

Part of the problem with the entire airport-redevelopment project, according to the audit, has been the musical-chairs aspect of the parties involved.

Santiago Calatrava, the internationally renowned architect chosen to design the project, bowed out. Parsons Transportation Group, a program manager “granted complete oversight of the project,” was replaced by Mortenson, Hunt and Saunders after its “burn rate — or the rate at which it spent money — was faster than was appropriate for the project,” the report says.

Kim Day, the airport’s CEO, replaced Stan Koniz, the airport’s chief financial officer, after he objected that DIA could ill afford to spend so much money on architectural features indirectly related to airport revenues. His successor, Patrick Heck, quit unexpectedly in September, leaving two people to share his duties until the airport replaces him.

The budgetary oversight of the project is handled by a three-person team, answering only to the DIA executive leadership team, according to the draft audit.

“The leadership team has some oversight of HTC (hotel and transit center) but very little control over it. Specifically, the day-to-day operations and decisions, including HTC budget decisions, are made by the HTC program managers,” the report states.

Program manager Stu Williams, technical deputy program manager Julie Wienberg and administrative deputy program manager Jacquie Rainey make up the team responsible for the planning and execution of the project, Stegman said in an e-mail.

“This includes day-to-day management of program activities including budget, schedule and quality,” Stegman said. “The program manager reports directly to the CEO and senior leadership, providing regular reports on the program status, including budget and schedule risks.”

An oversight committee provides checks and balances for the project and “all changes to scope and budget are reviewed monthly,” Stegman said.

Neither Parsons Transportation staffers nor their subcontractors have direct involvement in budgetary decisions. However, they do provide support in the form of inspections, construction management, quality control, design review and related functions, Stegman said.

In several places, the auditor’s report criticizes the absence of spending records. For example, it said that “according to two individuals with access to internal DIA discussions for which documentary records were not available, Parsons had been spending money on HTC at a rate that was unsustainable.”

Documents that could have been used to assess whether costs were reasonable were unorganized or, in some cases, not kept at all, according to the report.

DIA uses two systems to retain records and manage billing and invoicing: Aconex and Textura. Those systems at times do not track the same information, and there can be large gaps between when payments are made and when they are reported.

“The lack of organization and full project documentation … makes it difficult for third parties, such as auditors, and non-project personnel to review key project documents,” the report stated.

“(The airport) may have improperly paid contractors for items not allowed under the contract, paid more than the amount allowed under the contract, or paid for work that had yet to be completed,” the report said.

Day has acknowledged that project costs could reach $599 million, plus what she defined as $128 million in “related” costs for items such as relocated bridges, the RTD dispute, excavation and an extension of the train system carrying passengers to concourses.

Gallagher concluded it was impossible to determine the accuracy of the airport’s most recent estimate, partly because city officials responsible for spending DIA patrons’ dollars sensibly did not keep adequate records.

DIA originally hoped to complete the redevelopment project this year. It features a train station linking it to downtown Denver, an open-air plaza with restaurants and entertainment areas and a Westin hotel with conference center space for banquets, conventions and trade shows, as well as a restaurant, fitness center and indoor pool.

The auditor cautioned that the airport could have difficulty paying for important future maintenance projects because of the rising costs of the terminal project.

Those range from maintaining runways and taxiways outside the terminal to fire protection, electrical, heating and cooling system improvements within the 20-year-old building.

Given this array of needs, “we have concerns regarding the limited capital resources available, the competition for these resources and the lack of operational maintenance plans,” the report said.

David Olinger: 303-954-1498, dolinger@denverpost.com or twitter.com/dolingerdp