UNITED NATIONS

RENOVATIONS

Best Practices Could 

Enhance Future Cost 

Estimates

Report to Congressional Requesters

July 2012

GAO-12-795

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-795, a report to 

congressional requesters

July 2012

UNITED NATIONS RENOVATIONS

Best Practices Could Enhance Future Cost 

Estimates 

Why GAO Did This Study

In December 2006, the UN approved a 

$1.88 billion CMP to modernize its

headquarters in New York City by 

2014, with a scope to include the 

renovation of five buildings. Separately

from the CMP, the UN is also 

considering the option of a new office 

building, known as the consolidation 

building, to be located across the street 

from UN headquarters. As the UN’s 

largest contributor, the United States 

has a significant interest in these 

projects. GAO was asked to report on

(1) the extent to which the CMP is 

meeting its planned renovation scope, 

schedule, and budget; (2) the UN 

General Assembly’s evaluation of CMP 

cost estimates; and (3) the status of 

the consolidation building project.

To perform this work, GAO reviewed 

cost and schedule documents for the 

CMP, as well as planning and legal 

documents for the consolidation 

building; examined relevant UN 

financial documents and UN General 

Assembly resolutions, as well as 

GAO’s best practices for cost 

estimation; and met with officials from 

the Department of State (State), the 

UN CMP office and other relevant UN 

departments, and New York City. 

What GAO Recommends

The Secretary of State and the U.S. 

Permanent Representative to the 

United Nations should work with other 

member states to direct the CMP office 

and the UN to utilize best practices 

identified by GAO when developing 

cost estimates for the CMP and the 

consolidation building. State and the 

UN concurred with GAO’s

recommendations.

What GAO Found

The Capital Master Plan (CMP) has made progress, but may not deliver the 

project’s original scope, faces risks meeting its scheduled completion date, and is 

projected to be about $430 million over budget as of February 2012. Regarding

the project’s scope, the CMP office may not renovate the Library and South 

Annex—two of the five buildings in its original scope—due to the lack of a 

workable design solution to address security concerns. Related to schedule, the 

CMP office expects to complete the CMP in 2014, but reports that previous 

schedule delays have reduced its ability to respond to unforeseen events without 

affecting the project’s end date. According to the CMP office, the project’s 

approximately $430 million in projected cost overruns are due to a number of 

factors, including about $266 million in direct project costs and over $164 million 

from scope additions authorized without a corresponding increase in budget by 

the United Nations (UN) General Assembly. The CMP office has proposed 

financing options that could address a portion of these cost overruns. However, 

even if approved, an additional member assessment may be needed. One option 

for funding the U.S. portion of an additional member assessment is the use of 

credits attributable to the United States in the UN Tax Equalization Fund (TEF)—

a fund used to reimburse U.S. nationals working at the UN for taxes paid on their 

UN salaries. According to the UN, as of May 2012, the balance of TEF credits 

attributable to the United States stood at $120.9 million. 

After evaluating the CMP’s cost estimates, the UN General Assembly issued a 

resolution in April 2012 stating that the estimates lacked transparency, 

timeliness, and clarity. For example, the UN General Assembly expressed 

concern about the lack of clarity regarding the renovation of the Library and 

South Annex buildings. Specifically, member states inquired about the schedule 

for the two buildings and why renovations to the buildings were delayed. To 

address these concerns, the UN General Assembly requested that the CMP 

office improve reporting on projected CMP cost increases. While the UN General 

Assembly resolution did not specifically identify how the CMP office should report 

its future cost estimates, GAO has identified best practices for high-quality and 

reliable cost estimates. For instance, a well-documented cost estimate should 

describe in detail how the estimate was developed and the methodology used. 

Applying these best practices, as appropriate, could address the concerns raised 

by the UN General Assembly regarding the CMP’s cost estimates. 

To address its future office space needs, the UN is considering the option of a 

new building that would be separate from the CMP, but it does not have an 

estimate of the project’s costs. The UN estimates that by 2023 its office space 

needs will have exceeded the capacity of its current real estate portfolio, primarily 

due to expiring leases. As a potential solution, the City and State of New York

have proposed the construction of a new building known as the consolidation 

building. The UN has indicated its willingness to consider this proposal, but has 

not entered into any formal agreements. The current lack of a cost estimate for 

the consolidation building makes its cost implications for the UN and its member 

states unclear. GAO has previously reported that cost estimates are critical to 

program success, such as informed resource investments.

View GAO-12-795. For more information, 

contact Thomas Melito at (202) 512-9601 or 

melitot@gao.gov, or David Wise at (202) 512-

2834 or wised@gao.gov.
Page i GAO-12-795 UN Renovations

Letter 1 

Background 3

Progress Made on CMP, but Two Building Renovations May Not Be 

Completed and Project Is Projected to Be Approximately $430 

Million over Budget 7

Use of Best Practices May Address UN General Assembly 

Concerns Regarding CMP Cost Estimates 19

UN Considering Consolidation Building to Address UN Office 

Space Needs, but a Cost Estimate Has Not Been Completed 24

Conclusions 28

Recommendations for Executive Action 29

Agency Comments and Our Evaluation 29

Appendix I Objectives, Scope, and Methodology 31

Appendix II UN Tax Equalization Fund 34

Appendix III Comments from the Department of State 37

Appendix IV Comments from the United Nations 40

Appendix V GAO Contacts and Staff Acknowledgments 41

Related GAO Products 42

Tables

Table 1: Projected Completion Dates for Key CMP Activities 11

Table 2: Factors Contributing to CMP’s Projected Cost Overruns of 

Approximately $430 Million, as of February 2012 13

Table 3: CMP Cost Estimates 15

Contents
Page ii GAO-12-795 UN Renovations

Table 4: Estimated CMP Cost Overruns after Utilizing Financing 

Options and Proposed Reductions in Project Scope, as of 

February 2012 18

Table 5: UN General Assembly Concerns, Specific Issues Raised, 

and Additional Information Related to the CMP February 

2012 Cost Updates 21

Table 6: UN General Assembly Concerns Regarding the CMP’s Cost 

Estimates as Related to Best Practices 23

Table 7: Best Practices for a High-Quality and Reliable Cost 

Estimate 28

Table 8: Credits in the UN Tax Equalization Fund Attributable to 

the United States, 2001-2009, as Reported by the UN 35

Figures

Figure 1: UN Headquarters Complex in New York City 5

Figure 2: Glass Curtain Wall of the Secretariat Building, as of May 

2012 9

Figure 3: Ceiling Conditions in the Basement of a UN Building 

before and after Renovation 16

Abbreviations

CMP Capital Master Plan

State Department of State

TEF Tax Equalization Fund

UN United Nations

UNDC United Nations Development Corporation

USUN U.S. Mission to the United Nations

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-12-795 UN Renovations

United States Government Accountability Office

Washington, DC 20548

July 25, 2012

The Honorable Richard G. Lugar

Ranking Member

Committee on Foreign Relations

United States Senate

The Honorable Susan M. Collins

Ranking Member

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Ileana Ros-Lehtinen

Chairman

Committee on Foreign Affairs

House of Representatives

In December 2006, the United Nations (UN) approved a $1.88 billion 

Capital Master Plan (CMP) to renovate and modernize its headquarters 

complex by 2014.1 To support the CMP, the United States has provided 

approximately $388 million in assessed contributions to the UN. In 

addition to the $388 million, $100 million in UN credits attributable to the 

United States were also used to support the project. Renovations to the 

UN headquarters complex began in 2008. We have periodically reviewed 

UN efforts to develop and implement the CMP and reported on the 

progress of the project.2 In our most recent report in 2009, we reported 

that the CMP was on schedule, but $97.5 million over budget, and that 

the UN was considering adding $206.6 million in related costs to the CMP 

without a corresponding increase in budget.3

 

1

G.A. Res. 61/251, UN GAOR, 61st Sess., UN Doc. A/RES/61/251 (2006).

Since 2009, the UN has 

reported continued cost overruns associated with the CMP.

2

For a list of previous reports we have issued on the planning and progress of the CMP, 

see Related GAO Products at the end of this report. 

3

GAO, United Nations: Renovation Still Scheduled for Completion in 2013, but Risks to Its 

Schedule and Cost Remain, GAO-09-870R (Washington, D.C.: July 30, 2009). When we 

reported in July 2009, the CMP was scheduled to be completed in 2013.

 
 

Page 2 GAO-12-795 UN Renovations

Separately from the CMP, the UN General Assembly4 has stressed the 

need for a long-term strategy to meet the office space needs of the UN.5

This report provides information on the progress of the CMP and the 

status of the UN consolidation building. Specifically, we examine (1) the 

extent to which the CMP is meeting its planned renovation scope, 

schedule, and budget; (2) the UN General Assembly’s evaluation of CMP 

cost estimates; and (3) the status of the consolidation building project.

The UN leases over 2 million square feet of office space in multiple 

locations in New York City. In 2011, the City and State of New York 

authorized the construction of a new office building for UN personnel to 

be located across the street from the UN headquarters complex. This 

building, known as the consolidation building, would allow the UN to 

consolidate a portion of its personnel from leased space in various 

locations in New York City into one office building. While the project is still 

in its early stages, the United States, as the largest contributor to the UN, 

has significant financial interest in whether this project proceeds.

To evaluate the extent to which the CMP is meeting its planned 

renovation scope, schedule, and budget, we analyzed CMP planning, 

schedule, and budget documents to compare current planned scope, 

completion dates, and cost estimates to initial scope, schedule, and 

budget projections. Further, we examined other relevant CMP 

documentation, including information on risk assessments, monthly 

reports, and procurement information. We also reviewed financing 

proposals reported by the CMP office, the Financial Rules and 

Regulations of the UN, and UN Financial Reports and Audited Financial 

Statements. To examine the UN General Assembly’s evaluation of CMP 

cost estimates, we reviewed and analyzed CMP documents describing 

the project’s financial condition as of February 2012 presented to the 

UN’s Fifth Committee, which covers budget and administrative issues, as 

well as UN General Assembly resolutions pertaining to the CMP. We also 

analyzed how best practices for cost estimating from our Cost Estimating 

and Assessment Guide could potentially address issues raised by the UN 

 

4

The General Assembly is the UN’s main policy-making body and comprises all 193 

member states.

5

G.A. Res. 60/282, UN GAOR, 60th Sess., UN Doc A/RES/60/282 (2006). 
 

Page 3 GAO-12-795 UN Renovations

General Assembly regarding CMP cost information.6

We conducted our work from January 2012 to July 2012 in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and perform our work to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our objectives. We believe that the evidence obtained provides 

a reasonable basis for our findings and conclusions based on our 

objectives.

For these objectives, 

we also interviewed officials from the Department of State (State) and 

relevant UN offices, including the CMP office, Program Planning and 

Budget Division, Board of Auditors, and Office of Internal Oversight 

Services, as well as toured the CMP project site. To assess the status of 

the consolidation building project we reviewed planning and legal 

documents. We also interviewed officials from State, relevant UN offices, 

the UN Development Corporation, and the City of New York regarding 

plans for and the estimated cost of the consolidation building. Additional 

information about our scope and methodology is provided in appendix I.

In 2001, we reported that the UN headquarters complex in New York 

City—built largely between 1949 to 19527

—no longer conformed to 

current safety, fire, and building codes or to UN technology and security 

requirements.8

 

6

GAO, Cost Estimating and Assessment Guide, 

The UN General Assembly noted that conditions in the UN 

headquarters complex posed serious risks to the health and safety of 

staff, visitors, and tourists. Thus, in December 2006, after several years of 

design and planning, the UN General Assembly unanimously approved 

the CMP to renovate the UN headquarters complex, at a budget not to 

exceed $1.88 billion.

GAO-09-3SP (Washington, D.C.: Mar. 

2009).

7

Additional buildings in the complex, such as the Library and South Annex, were built 

between 1960 and 1982.

8

GAO, United Nations: Planning for Headquarters Renovation is Reasonable; United 

States Needs to Decide Whether to Support Work, GAO-01-788 (Washington, D.C.: June 

15, 2001).

Background 

Original Budget, 

Financing, Schedule, and 

Scope of the CMP
 

Page 4 GAO-12-795 UN Renovations

To finance the CMP, the UN General Assembly approved a strategy to 

assess member states for the cost of the CMP, under which they could 

choose to pay their assessment in either a lump sum or over a 5-year 

period, from 2007 to 2011. CMP assessments, whether collected as 

lump-sum or multi-year payments, were invested to earn interest income. 

The UN General Assembly also approved a $45 million working capital 

reserve to cover any temporary cash flow deficits. According to the CMP 

office, member states would receive this reserve back in the form of a 

credit at the end of the project’s construction phase. The United States 

chose to pay its assessment for the CMP in five equal payments of $75.5 

million per year starting in 2007, for a total of approximately $378 million. 

The United States also paid a separate assessment to the project’s 

working capital reserve of about $9.9 million in 2007. In the resolution 

approving the CMP, the UN General Assembly decided that, in the event 

of cost escalations over the approved budget of $1.88 billion, member 

states would be subject to a further assessment to meet the revised 

requirements of the CMP.

The UN General Assembly approved the completion of the CMP’s scope 

during the scheduled period of 2006 to 2014. This scope included the 

renovation of five buildings on the UN headquarters complex—the 

General Assembly Building, the Conference Building, the Secretariat 

Building, the Library, and the South Annex—as well as renovation of the 

basements connecting several of those buildings and the construction of 

a temporary conference building on the North Lawn of the complex. 

Figure 1 shows the existing buildings of the UN headquarters complex, 

along with the temporary conference building.
 

Page 5 GAO-12-795 UN Renovations

Figure 1: UN Headquarters Complex in New York City

To house UN staff during the renovation, the CMP included plans to lease 

swing space in nearby buildings. Additionally, the CMP included

landscaping, demolition of the temporary conference building, additional 

blast protection, measures to promote environmental sustainability, and 

improvements to the reliability and redundancy of headquarters systems 

such as emergency power.

In several resolutions, the UN General Assembly noted that it has the 

sole prerogative to decide on any changes to the CMP’s scope, budget, 

and implementation strategy. Since December 2006, the UN General 

Assembly has exercised this prerogative to make changes to the CMP or 

authorize changes proposed by the Secretary-General. These changes 

include:

• Accelerated Strategy IV: In December 2007, the UN General 

Assembly approved an expedited strategy for the CMP known as 

accelerated strategy IV. This approach approved the renovation to 

proceed in two concurrent phases: one to renovate the Secretariat 

Building and one to renovate the Conference Building, General 

Assembly Building, and other buildings. Under the previous approach, 

the UN had planned on renovating buildings in multiple phases, 

including renovating the Secretariat Building while it was 75 percent 

occupied. The accelerated strategy called for the temporary relocation 

Changes to the CMP 

Authorized by the UN 

General Assembly: 2006-

2009
 

Page 6 GAO-12-795 UN Renovations

of most of the staff of the Secretariat Building during the renovation—

which required the CMP office to increase the amount of leased swing 

space—and expedited the schedule for the Secretariat Building’s 

renovation by reducing construction time from 6 to 3 years. The 

strategy also affected the schedules for the construction of the 

temporary conference building, as well as the renovation of the 

Conference Building and General Assembly Building. The CMP office 

reported that such an implementation strategy would reduce risks 

associated with the CMP. The CMP office also estimated that the 

strategy would produce an estimated cost overrun of $190 million, 

which it would seek to reduce through the process of value 

engineering.9

• Associated Costs: In April 2009, the UN General Assembly decided 

that certain costs related to the CMP—known as associated costs—

would be financed from within the $1.88 billion CMP budget.10

Associated costs cover a wide range of requirements, such as 

broadcast equipment, new furniture, and additional staffing 

requirements to manage information technology and security.11

 

9

Value engineering is the process of reviewing a project’s objectives and design, and 

finding ways to achieve the same objectives at a lower cost. In February 2009, the CMP 

office informed the UN Advisory Committee on Administrative and Budgetary Questions 

that the decision to renovate the Conference Building in a single phase was the most 

significant change to the scope of the project resulting from value engineering. The 

Committee noted that some of the savings identified by the CMP office through value 

engineering actually resulted from external, market-related factors.

According to CMP officials, these costs were originally expected to be 

funded by UN program offices through the regular UN budget 

process. Therefore, the CMP office’s original cost estimates for the 

CMP did not include new furniture or equipment except where the 

equipment was part of the permanent infrastructure of the UN. For 

instance, according to the CMP office, the original CMP scope only 

provided for furniture for three new mid-sized conference rooms and

supplemental office furniture associated with swing spaces. While 

associated costs are funded from within the CMP budget, UN 

departments other than the CMP office manage these costs. For 

example, the UN Department of Safety and Security manages costs 

10The resolution also noted that the CMP office entered into commitments for associated 

costs absent the formal approval of the UN General Assembly.

11Other associated costs requirements include moving supplies and services, archive 

space, and storage facilities.
 

Page 7 GAO-12-795 UN Renovations

related to security. Prior to the UN General Assembly’s decision on 

associated costs, the CMP office reported that the CMP budget could 

not absorb associated costs without exceeding $1.88 billion. However, 

the UN General Assembly argued that the CMP office could realize 

further cost reductions that would enable the CMP to absorb 

associated costs.

• Secondary Data Center: In April 2009, the UN General Assembly 

requested that the CMP partially absorb costs associated with a 

secondary data center, including leasing a commercial facility and 

establishing a service delivery agreement to provide equipment and 

services. The secondary data center serves as a backup system to 

enable the UN to respond to emergency situations that may impair 

operations of critical elements of its information and communications 

technology infrastructure and facilities. In resolutions in April 2009 and 

December 2009, the UN General Assembly requested that the CMP 

budget absorb $16.7 million to fund the secondary data center.12

While the CMP nears completion of the renovation of two of the five 

buildings, the project has suspended the originally planned renovation of 

two buildings, faces risks meeting its 2014 completion date, and is 

projected to be approximately $430 million over budget. The CMP office 

may not renovate two buildings that were originally part of the scope of 

the project, due to the lack of a workable design solution to address 

security requirements. In addition, the CMP office predicts that it will 

complete the CMP by the end of 2014, but risks, such as a compressed 

schedule with work yet to be contracted, exist. Moreover, as of February 

2012, the CMP office estimates that the project will be about $430 million 

over its approved budget of $1.88 billion—an increase of approximately 

53 percent (approximately $149 million) from its last reported estimate. 

According to the CMP office, a number of factors, such as unforeseen 

conditions and complexities in the basements and Conference Building, 

contributed to the increase in projected cost overruns. The CMP office 

has proposed options to address a portion of these cost overruns; 

however, even if approved, additional funding will be needed to address 

the remainder. The United States could potentially use credits it has with 

the UN to fund an assessment related to the CMP.

 

12The UN General Assembly also requested that the support account for peacekeeping 

operations absorb approximately $4.2 million in costs associated with the secondary data 

center.

Progress Made on 

CMP, but Two 

Building Renovations 

May Not Be 

Completed and 

Project Is Projected to 

Be Approximately 

$430 Million over 

Budget 
 

Page 8 GAO-12-795 UN Renovations

The CMP office has nearly completed the first two building renovations of 

the CMP—the Secretariat and Conference Buildings—which began in 

2010. By February 2013, both buildings are scheduled to be completely 

renovated and back in use. Specifically, the CMP office plans for the 

Secretariat Building to be primarily reoccupied and in use by November 

2012. The CMP office predicts completion of the renovation of the 

Conference Building by the end of 2012, with the building reoccupied and 

in use in February 2013. The CMP office has reported a number of other 

achievements of the CMP, such as:

• Modernizing 1 million square feet in the basements, including 

installation of chilled water piping, electrical conduit and wire, 

telecommunication conduit and copper cable.

• Redesigning the Conference Building to take into account enhanced 

security upgrades.13 According to the CMP office, the enhanced 

security upgrades include two major activities: structurally enhancing 

the Conference Building and associated basements to withstand blast 

threats and installing protective structures, including bollards and 

gates, along the perimeter of the UN complex. The CMP office 

anticipates that the enhanced security upgrades will be completed by 

2014.

• Substantially completing the removal and replacement of the glass 

curtain wall in the Secretariat Building, shown in figure 2.

 

13The United States and the UN reached an agreement in January 2011 on the design 

requirements for more stringent security measures than those originally planned for the 

CMP. In 2010, the CMP office, in consultation with the UN Department of Safety and 

Security, undertook additional studies to examine the effect on UN facilities of potential 

vehicle-borne explosive devices. As a result of these studies, the UN decided to 

implement enhanced security upgrades for the CMP. The United States did not object to 

the UN’s use of up to $100 million in credits attributable to the United States from the UN 

Tax Equalization Fund to fund the upgrades. Noting this funding, the UN General 

Assembly decided that the costs related to the enhanced security upgrades would not be 

recovered through an assessment imposed on member states.

Progress Made on CMP 

Renovations 
 

Page 9 GAO-12-795 UN Renovations

Figure 2: Glass Curtain Wall of the Secretariat Building, as of May 2012

The UN General Assembly has requested that the CMP office provide 

information on contracts awarded for the CMP. The CMP office posts 

information on contract awards on the UN Procurement Division and CMP 

websites. According to the CMP office, 85 percent of the value of CMP 

contracts has gone to U.S. firms.

Security requirements and concerns have led the CMP office to suspend 

originally planned renovations for two buildings—the Library and the 

South Annex. In 2010, UN security studies found these buildings to be 

vulnerable to vehicle blast threats. As of April 2012, CMP officials stated 

that they lacked a workable design solution to address these security 

concerns. Specifically, according to CMP officials, the only solution to the 

risk of blast threats would be to close a nearby highway exit ramp.14

 

14In October 2011, the CMP office reported that the options regarding the future of the 

Library and South Annex were (1) moving the off-ramp, (2) closing the off-ramp, (3) 

closing the Library and South Annex upon completion of the CMP, or (4) assuming that no 

solution would be found and demolishing the buildings.

However, based on discussions between the UN and the United States, 

Renovations for Two 

Buildings May Not Be 

Completed 
 

Page 10 GAO-12-795 UN Renovations

the CMP office does not view this outcome as likely. To renovate the 

Library and South Annex to the required security standards, CMP officials 

told us that they would have to demolish the buildings and begin new 

construction. CMP officials also told us that since they do not have a 

viable renovation option for these buildings, they have not updated their 

initial design and cost estimates. Absent a solution to the security 

vulnerabilities of the Library and South Annex, CMP officials told us that 

only limited use of the buildings would be possible. In May 2012, the CMP 

office reported that it plans to consult with UN departments affected by 

the suspension to determine where to relocate functions impacted by 

potentially not renovating the buildings.

The CMP office expects to complete the CMP by 2014, but its schedule 

faces risks, such as a compressed schedule with some work yet to be 

contracted. As of February 2012, the CMP office estimates completing 

renovations by mid-2014, about 1 year behind the schedule it reported in 

October 2008. As shown in table 1, while the completion date for the 

project is still estimated to be mid-2014, the projected completion dates 

for key CMP activities have experienced delays for various reasons.

CMP Office Projects 2014 

Completion, but Risks to 

Schedule Exist
 

Page 11 GAO-12-795 UN Renovations

Table 1: Projected Completion Dates for Key CMP Activities

Activity

Date as of October 

2008 (Accelerated 

Strategy IV)

Date as of 

February 2012

Approximate 

delay of Reasons for delays

Basements Early 2011 Mid-2014 a 39 months Delayed due to unexpected 

complexities in basement 

conditions.

Conference Building Mid-2011 Late 2012 15 months Delayed due to enhanced 

security upgrades.

Secretariat Building Early 2012 Mid-2012 3 months Delayed due to the delay in the 

construction of the temporary 

conference building. 

Library Early 2013 ——————- ——————- Suspended pending resolution of 

the security issue.

General Assembly 

Building

Mid-2013 Mid-2014 12 months Delayed due to enhanced 

security upgrades to the 

Conference Building.

South Annex 

b

Early 2012 ——————- ——————- Suspended pending resolution of 

the security issue.

Completion of CMP 

Activities

Mid-2013 Mid-2014 12 months

Source: GAO analysis of CMP data.

a

The CMP office did not report a completion date for the basements as of October 2008. We have 

included the completion date reported in the original schedule as of October 2006.

b

According to the CMP office, it cannot begin renovations to the General Assembly Building until it 

completes renovations to the Conference Building. 

CMP officials attribute schedule delays mostly to enhanced security 

upgrades added to the CMP in 2011. We reported in 2009 that security 

upgrades to the CMP represented a key risk to the project’s progress.15

According to the CMP office, despite delayed start dates for a number of 

activities, the CMP office has maintained a 2014 project completion date. 

However, the CMP office faces two key risks related to meeting this date: 

According to the CMP office, implementing enhanced security upgrades 

to address security issues resulted in a delay of about 1 year in the 

schedule of the Conference Building. Although it reported a mid-2011 

completion date as of October 2008, the CMP office now estimates that 

the Conference Building renovation will be completed in late 2012.

 

15GAO-09-870R. The CMP office’s risk register identified the risk of security upgrades to 

the CMP as having a low probability of occurring, but a significant impact if it did occur.
 

Page 12 GAO-12-795 UN Renovations

• Compressed schedule. CMP officials noted that maintaining the 2014 

project completion date while experiencing delays to the start dates 

for several projects has created a compressed schedule, which 

reduces the ability to develop workaround solutions if problems arise. 

For example, CMP officials identified the completion of the 

Conference Building renovation as a “critical path” of the project’s 

schedule, because renovations to the General Assembly Building 

cannot begin until those to the Conference Building are completed. 

Once the CMP office moves conference functions back into the 

Conference Building, it will reconfigure the temporary conference 

building to house the functions of the General Assembly Building 

while the General Assembly Building undergoes renovation. 

Previously, as a result of delays in the Conference Building’s 

schedule, the CMP office delayed the completion date of the General 

Assembly Building from mid-2013 to mid-2014. CMP officials said that 

the amount of time that the Conference Building renovation can be 

delayed without impacting the overall project’s completion date is 

minimal.

• Work yet to be contracted. The CMP office has yet to contract work 

for various remaining parts of the project and thus does not have 

agreed upon completion dates with the contractors that will be doing 

the work. For instance, as of March 2012, the CMP office reported 

that it had not committed any funds for the renovation of the General 

Assembly Building. CMP officials told us that conditions in the General 

Assembly Building—such as the potential for asbestos and 

weaknesses in the building’s concrete slab—also constitute potential 

risks. Additionally, the CMP has not fully contracted for renovation 

work in the basements. CMP officials have noted that renovation in 

the basements is linked to the overall renovations, as the basements 

house the infrastructure for the UN complex. CMP officials have 

described the work in this area as highly complex and have noted that 

to date it has taken longer than expected.
 

Page 13 GAO-12-795 UN Renovations

As of February 2012, the CMP office projected total cost overruns of 

about $430 million over the CMP’s approved budget of $1.88 billion.16

Table 2: Factors Contributing to CMP’s Projected Cost Overruns of Approximately $430 Million, as of February 2012

According to the CMP office, the estimated cost overruns result from a 

number of factors, including about $266 million in direct project costs and 

about $164 million in scope additions authorized by the UN General 

Assembly to be financed from within the project’s approved budget, as 

shown in table 2.

Dollars in millions

Category Description Estimate 

Percent 

of total 

Direct costs of the CMP • Includes renovation costs, swing space estimates, contingency, and 

price escalation. Renovation costs include construction, professional 

fees, and management costs.

$265.7 62.0

Associated costs • In April 2009, the UN General Assembly decided that associated costs 

would be financed from within the $1.88 billion CMP budget.

• The estimate for associated costs covers the period of 2008 to 2013. The 

majority of the associated costs relate to the renovation of the Secretariat 

Building and the Conference Building, with the main cost drivers 

pertaining to the purchase of furniture and the permanent broadcast 

facility and media asset management system.

146.8 34.0

Secondary data center • In April 2009, the UN General Assembly requested that the CMP partially 

absorb costs associated with a secondary data center.

• The costs of the secondary data center are shared between the regular 

budget and the peacekeeping support account—80 percent to 20 

percent, respectively—on the basis of the proportion of capacity used. 

The CMP office finances the 80 percent share.

17.4 4.0 a

Source: GAO analysis of CMP office data and UN General Assembly resolutions.

a

The total estimated cost for the secondary data center is $20.7 million, with costs shared between 

the CMP budget and peacekeeping support account. The total cost funded by the CMP budget, as of 

February 2012, is $17.4 million. The UN General Assembly requested that the support account for 

peacekeeping operations absorb approximately $4.2 million in costs associated with the secondary 

data center. The CMP office has received about $3.3 million and expects to receive another $0.9 

million from the peacekeeping support account to fund the secondary data center.

 

16The total cost overrun estimate includes a combination of accrued costs for work already 

completed and projected costs for work not yet contracted. For example, the CMP has 

awarded large contracts for ongoing work in the Conference Building, Secretariat Building, 

and basements. As a result, some portions of the total projected cost overruns for the 

CMP, such as swing space and asbestos costs, are actual costs. However, the estimated 

cost overruns also include a number of projected costs, such as those for the General 

Assembly Building, where the CMP office has yet to award contracts. 

Projected Total CMP Cost 

Overruns Approximately 

$430 Million
 

Page 14 GAO-12-795 UN Renovations

Projected CMP cost overruns increased significantly between May 2011 

and February 2012.17 The UN General Assembly described the increase 

as “sudden and unexplained.” In October 2011, the CMP office reported 

that it had committed 84.5 percent of the CMP funding against the original 

$1.88 billion budget, which significantly reduced the risk of unexpected,

adverse events during the remainder of the project.18 As shown in table 3, 

estimated cost overruns increased by approximately 53 percent (roughly 

$149 million) between May 2011 and February 2012, driven primarily by 

direct costs to the CMP.

 

17The CMP reported cost estimates as of May 2011 in its ninth annual progress report on 

the CMP, which was published in October 2011.

18The CMP office reported similar information in 2009 when changing its budget reporting 

by combining the cost estimates for contingency and escalation. The CMP office reported 

that it combined the accounts because it had less uncertainty about the timing and risks of 

the project. Similarly, in September 2007, in remarking on accelerated strategy IV, the 

CMP office reported that it would know almost all of the contract values within the first 3 

years of the project, greatly reducing the financial risks to the UN.
 

Page 15 GAO-12-795 UN Renovations

Table 3: CMP Cost Estimates

Dollars in millions

Category

As of 

May 2011

As of 

February 2012 Change

Direct costs to the CMP $2,004.5 a $2,153.5 $149.1

Associated costs 146.8 146.8 - 

Enhanced security upgrades 99.6 b 99.6 - 

Secondary data center 20.7 20.7 - 

Total costs 2,271.5 2,420.6 149.1

Less

UN General Assembly approved budget and other funding 1,990.5 c 1,990.7 0.2

Total projected cost overruns 281.0 429.9 148.9

Source: GAO analysis of CMP office data.

a

Direct costs to the CMP include costs for CMP swing space rent after October 2012.

b

The CMP received “up to” $100 million to fund the enhanced security upgrades. While the CMP 

reports $99.6 million in costs for these updates, it applies the entire $100 million as part of its 

available funding. As a result, the total projected cost overruns are understated by $0.4 million.

c

Other funding includes voluntary contributions, $100 million to fund enhanced security upgrades, and 

$3.3 million in funding from the peacekeeping support account to support the secondary data center. 

A $0.2 million increase in voluntary contributions accounts for the difference between the amount of 

funds in May 2011 and February 2012.

Although the increase in estimated cost overruns reported in February 

2012 are attributable to the direct costs of the CMP, a portion consists of 

costs added to the CMP over time by the UN General Assembly without a 

corresponding increase in the CMP budget—such as associated costs 

and the secondary data center. CMP officials told us that they assume 

responsibility for direct costs of the CMP—which include renovation, 

swing space, contingency, and escalation—but have no control over 

additional related costs added to the CMP. In explaining the reasons for 

the estimated cost overruns directly attributable to the project, the CMP 

office cited several factors, including the following:

• Asbestos abatement. According to the CMP office, when the 

renovations began, the volume of asbestos found far exceeded its 

expectations. Moreover, new regulations enacted by New York City in 

2010 made the abatement of that asbestos even more complicated 

and expensive.

• Unforeseen conditions in the Conference Building. The CMP office 

reported that the actual construction of the concrete floor slabs in the 

Conference Building differed from the original design drawings. The 
 

Page 16 GAO-12-795 UN Renovations

construction of the concrete floor slabs required the CMP office to 

amend the design of the Conference Building. As of March 2012, the 

CMP office reported that it expected to find similar conditions in the 

General Assembly Building.

• Complexities in the basements. The CMP office noted that work in the 

basements was more complex than expected due, in part, to limited 

documentation of the basement infrastructure and relocation of 

essential mechanical systems. For instance, the CMP office reported 

that UN documentation did not account for the large quantity of 

existing telephone, electrical, and security cables in the ceilings of the 

basements. According to the CMP office, each of these cables had to 

be individually tested to ensure that the CMP office did not remove 

active infrastructure, which was a labor-intensive process. Figure 3 

shows examples of ceiling conditions in the basements before and 

after CMP renovations.

Figure 3: Ceiling Conditions in the Basement of a UN Building before and after Renovation

To address cost overruns of the CMP, the CMP office recommended that 

the UN General Assembly endorse two financing proposals. Specifically, 

the CMP office proposed utilizing the working capital reserve fund and the 

interest income on CMP funds. As of February 2012, $45 million was 

available in the working capital reserve fund and the interest income 

amounted to $107.2 million. As of May 2012, the UN General Assembly 

Proposals to Address Cost 

Overruns Exist, but New 

Member Assessment May 

Be Needed
 

Page 17 GAO-12-795 UN Renovations

had not made a decision to approve the use of these funds, but the 

Advisory Committee on Administrative and Budgetary Questions had 

reviewed and supported the proposals.19

The CMP office is also exploring options to further address estimated cost 

overruns by not fully renovating two buildings included in the original CMP 

renovation scope. With no solution to the security issues related to the 

Library and South Annex, CMP officials told us that they would propose 

limiting the scope of the renovations to these buildings. Rather than 

renovating as originally planned, the renovations to the Library and South 

Annex would only include connecting them to new building systems, such 

as heating and air conditioning. Based on the original cost estimate for 

these buildings, the CMP office estimates that not fully renovating the two 

buildings would eliminate $65 million in planned work, which could be 

applied to address projected cost overruns of the CMP. CMP officials also 

told us that they plan to explore additional opportunities to reduce work 

and achieve savings related to site landscaping and the General 

Assembly Building, but have not estimated the potential savings of these 

options. As shown in table 4, combining the proposed financing options 

with reductions in the project’s planned scope would still leave the project 

with a shortfall of $212.7 million.

If the UN General Assembly 

approves the utilization of the working capital reserve fund and the 

interest income, these funds will cover about a third of the projected cost 

overruns, but cost overruns in the amount of approximately $277.7 million 

will still not be addressed.

 

19Although the UN General Assembly did not make a decision on whether the CMP office 

could utilize the working capital reserve or interest income in the March 2012 resumed 

session, the General Assembly did authorize the Secretary-General to enter into 

commitments of up to an additional $135 million for resources required for the CMP 

project through 2012. The UN General Assembly did not identify a source of funding for 

the $135 million in new commitment authority for the CMP. According to UN officials, the

eventual funding could be sourced through the use of the working capital reserve and 

interest income on the CMP, or it could be sourced from an assessment on member 

states.
 

Page 18 GAO-12-795 UN Renovations

Table 4: Estimated CMP Cost Overruns after Utilizing Financing Options and 

Proposed Reductions in Project Scope, as of February 2012

Dollars in millions

Category Estimate 

Projected cost overruns of the CMP $429.9

Working capital reserve (45.0)

Interest income from CMP funds (107.2)

Reduction in renovation scope of Library and South Annex (65.0)

Total estimated CMP cost overruns 212.7

Source: GAO analysis of CMP office data.

Another potential financing option is an additional member assessment. 

In the resolution approving the CMP, the UN General Assembly decided 

that, in the event of cost escalations over the approved budget of $1.88 

billion, member states would be subject to a further assessment to meet 

the revised requirements of the CMP. The actual amount of such an 

assessment would depend on the decisions of the UN General Assembly 

regarding proposed financing and reduced scope options. The U.S. share 

of any future assessment would be 22 percent.

One potential option for funding all or part of an additional U.S. member 

assessment for the CMP would be using credits in the UN Tax 

Equalization Fund (TEF) account—a UN fund used to reimburse U.S. 

nationals working at the UN for U.S. taxes paid on their UN salaries. (For 

more information on the UN TEF, see appendix II.) According to the UN, 

as of December 31, 2011, there was a balance of $134 million in TEF 

credits attributable to the United States. This balance remained after the 

UN applied $100 million in TEF credits attributable to the United States to 

fund the enhanced security upgrades to the CMP in 2011. Congress has 

since passed legislation related to the use of TEF credits. The 

Consolidated Appropriations Act of 2012, passed in December 2011, 

required that TEF credits shall only be available for the United States’ 

assessed contributions to the UN and shall be subject to the regular 

notification procedures of the Committees on Appropriations.20

 

20Pub. Law No. 112-74, 125 Stat. 1168.

State told 
 

Page 19 GAO-12-795 UN Renovations

us that it is complying with these provisions.21 For instance, in January 

2012, the U.S. Mission to the UN requested that the UN apply $13.1 

million of TEF credits attributable to the United States toward the United 

States’ regular UN budget assessment for calendar year 2011. After the 

application of these credits, the balance of TEF credits attributable to the 

United States stood at $120.9 million, as of May 2012. However, under 

this policy, TEF credits could be used to fund cost overruns of the CMP if 

the cost overruns are funded through a member assessment as called for 

by the resolution approving the CMP.

In April 2012, the UN General Assembly issued a resolution expressing 

concerns regarding the transparency, timeliness, and clarity of the CMP’s 

February 2012 cost estimates. To address these concerns, the UN 

General Assembly requested that the CMP office improve reporting on 

the underlying causes of the projected CMP cost increases. While the UN 

General Assembly resolution did not specifically identify how the CMP 

office should report its future cost estimates, we have identified best 

practices associated with high-quality and reliable cost estimates. 

Applying these best practices, as appropriate, may address the UN 

General Assembly’s concerns regarding CMP cost estimates.

After evaluating the CMP office’s February 2012 cost information, the UN 

General Assembly reported a number of concerns with these estimates, 

such as a lack of transparency, timeliness, and clarity. For example, with 

regard to transparency, member states inquired why the CMP office did 

not include $38 million in increased swing space leasing costs in earlier 

CMP cost estimates. The CMP office noted that it negotiated swing space 

leases for a period longer than necessary to mitigate the risk of CMP 

schedule delays. The CMP office did not include these costs in its earlier 

estimates because it assumed these leases could be terminated early or 

 

21It is unclear whether these provisions are relevant to the use of existing TEF credits 

attributable to the United States. According to State, once the United States provides 

assessed contributions to the UN, the organization legally controls them. While State 

officials said that the UN generally weighs U.S. preferences regarding the use of TEF 

credits it has contributed to the organization, ultimately the use of these credits is at the 

sole discretion of the UN. However, State officials told us that they will not endorse the 

use by the UN of TEF credits attributable to the United States for any purpose other than 

assessed contributions and that it is unlikely that the UN would act unilaterally to use TEF 

credits for a purpose to which State objected. UN officials confirmed this statement.

Use of Best Practices 

May Address UN 

General Assembly 

Concerns Regarding 

CMP Cost Estimates

UN General Assembly Has 

Expressed Concerns 

Regarding CMP Cost 

Estimates
 

Page 20 GAO-12-795 UN Renovations

used by other UN departments in the event the CMP project no longer 

needed the swing space. According to the CMP office, in a healthy rental 

market, early termination or subleasing is common; however, the 

economic downturn prevented it from taking such actions. In addition, 

member states inquired about the main factors that led to the projected 

increase in cost overruns. According to the CMP office, a key factor of the 

projected cost overruns was increased asbestos abatement costs related 

to asbestos found in the basements and Conference Building in late 

2011. However, the CMP office had previously reported that all asbestos 

was abated from Conference Rooms 1-3 of the Conference Building in 

February 2011. Further, the 2011 CMP annual report considered the 

abatement of asbestos and the removal of obsolete materials from the 

Secretariat and Conference Buildings a significant achievement. For

additional information regarding the concerns of the UN General 

Assembly and issues raised by member states, see table 5.
 

Page 21 GAO-12-795 UN Renovations

Table 5: UN General Assembly Concerns, Specific Issues Raised, and Additional Information Related to the CMP February 

2012 Cost Updates

Concern expressed by the UN 

General Assembly Specific issues raised Additional information

Lack of transparency and timely 

information on budget, forecasts, 

and projected cost overruns

• The factors that led to the 

increase in cost overruns of 

the CMP.

• The CMP office provided qualitative explanations of the 

differences between planned and actual costs for major 

renovation activities, such as buildings and swing space. 

However, it did not quantify individual cost drivers for 

major renovation activities, nor did it clearly identify what 

parts of its estimates were based on actual versus 

projected costs.

• The original budget for swing 

space rent.

• The CMP office reported a budgeted swing space 

estimate of $464 million, as of February 2012. However, 

this estimate is $74 million higher than what the CMP 

office reported when it proposed accelerated strategy IV 

in 2007. 

Lack of transparency and timely 

information on risks

• The volume, value, and 

reasons for change orders 

within the CMP.

• The CMP office presented information on the reasons for 

change orders, such as field conditions. Member states 

expressed interest in more details, such as which UN 

departments requested changes. Moreover, the UN 

Board of Auditors reported that the CMP office cost 

estimate did not include a robustly calculated estimate for 

the cost of all change orders.

• The potential for costs of the 

enhanced security upgrades 

to exceed the budgeted 

projection.

• The CMP office reported that it does not expect any cost 

overruns for the enhanced security upgrades. However, 

the CMP office reports that it is developing a total cost 

estimate and awaiting approval for portions of the 

upgrades. The UN Board of Auditors reported that the 

cost of enhanced security upgrades is high-risk, given 

third party approvals.

Lack of clarity regarding the 

renovation of the Library and South 

Annex

• The cost estimates, delayed 

schedules, and prospective 

plans for the Library and 

South Annex.

• The CMP office reported that reducing the scope of the 

renovations to the Library and South Annex would result 

in an estimated $65 million savings. However, the UN 

Board of Auditors has reported that the original budgets 

for the CMP do not clearly identify the costs for these 

buildings. 

Source: GAO analysis based on information provided by the CMP office and UN General Assembly resolution A/RES/66/258.

Officials from the U.S. Mission to the UN (USUN) also raised concerns 

with the explanation of the projected CMP cost overruns, both during and 

at the conclusion of the March 2012 session. For example, a U.S. 

representative at the March 2012 session asked about the amount and 

utilization of the remaining contingency fund for the CMP. While the CMP 

office reported that $89.1 million remained in funds for contingency and 

price escalation, this amount was as of May 2011, before the increase in 
 

Page 22 GAO-12-795 UN Renovations

estimated cost overruns reported in March 2012.22 Moreover, USUN 

officials told us that despite the briefings and information provided by the 

CMP office, there was still insufficient information as to why and when the 

projected cost overruns occurred.23

While CMP officials told us that they could not currently quantify the 

individual cost drivers of the $149 million increase in projected cost 

overruns that occurred between May 2011 and February 2012, they 

stated that the February 2012 estimates were the best available. Further, 

they noted that it is difficult to attribute the causes for cost overruns to 

specific buildings. For example, asbestos abatement is a campus-wide 

activity that affects the cost of all building renovations.

After evaluating CMP cost estimates, the UN General Assembly issued a 

resolution in April 2012 requesting that the CMP office produce additional 

reporting related to CMP costs. Specifically, the UN General Assembly 

requested more information on the underlying causes of the projected 

cost increases and practical options to address them.

While the UN General Assembly resolution did not explicitly identify how 

the CMP office should report future cost information, we have found that a 

high-quality and reliable cost estimate should exhibit certain best 

practices, including being comprehensive, well-documented, accurate, 

and credible.24

 

22We previously reported that the CMP office changed its budget reporting by combining 

its cost estimates for contingency and escalation. While both categories account for 

uncertainties, combining them can reduce the transparency of how these funds are being 

used.

These best practices include elements for documenting 

and reporting cost estimates. For example, a cost estimate that is welldocumented and accurate should allow for the cost estimate to be traced 

back to and verified against its sources and explain the variances 

between planned and actual costs.

23Over the years, we have reported that many programs overrun their budgets due, in 

part, to difficulties estimating program costs. While not an exact comparison, we reported 

that cost estimates for the Capital Visitor Center rose from $303.5 million in 2003 to $621 

million in 2007 due to uncertainties related to the preliminary nature of the design work, 

the unknown scope of pre-construction requirements, and security adjustments to the 

design after the events of September 11, 2001.

24GAO-09-3SP. 

Use of Best Practices in 

Future CMP Cost 

Reporting May Address UN 

General Assembly 

Concerns 
 

Page 23 GAO-12-795 UN Renovations

These best practices may also help address some of the concerns raised 

by the UN General Assembly regarding the CMP’s cost estimates. For 

example, using the best practices associated with a well-documented 

cost estimate can improve an estimate’s transparency, by capturing in 

writing such things as the source of the data used, the calculations 

performed, and the rationale for choosing particular estimating methods. 

Table 6 shows how the concerns of the UN General Assembly regarding 

the CMP’s cost estimates could be addressed by using our best 

practices, as well as the potential benefits of this approach.

Table 6: UN General Assembly Concerns Regarding the CMP’s Cost Estimates as Related to Best Practices

Concern

Related best 

practice Specific element of best practice Potential benefit

Lack of transparency 

and timely information 

on the budget, 

forecasts, and 

projected cost 

overruns

Comprehensive Document all cost-influencing ground 

rules and assumptions in the estimate.

Clearly documenting the ground rules 

and assumptions of a cost estimate 

provides a basis for areas of potential 

risk to be resolved.

Accurate Document, explain, and review the 

variances between planned and actual 

costs.

Properly explaining the variance between 

planned and actual costs allows 

estimators to determine the quality of 

their estimates and how the project has 

changed over time.

Regularly update the cost estimate to 

reflect significant changes in the program 

so that it always reflects current status.

Updating an estimate allows estimators 

to analyze changes in program costs and 

provide decision makers with accurate 

information for assessing alternative 

decisions.

Lack of transparency 

and timely information 

on risks

Credible Conduct a risk and uncertainty analysis 

that quantifies the imperfectly understood 

risk and identify these effects of changing 

key cost driver assumptions and factors.

A risk and uncertainty analysis can help 

managers determine a level of funding to 

hold in reserve to cover costs resulting 

from uncertainties.

Lack of clarity 

regarding the 

renovation of the 

Library and South 

Annex

Well-documented Describe in sufficient detail the 

calculations performed and the estimating 

methodology used to derive each 

element’s cost in the documentation.

Documentation can help validate and 

defend a cost estimate.

Source: GAO analysis of UN General Assembly resolution A/RES/66/258 and GAO Cost Estimating and Assessment Guide, 

GAO-09-3SP. 

CMP officials told us that they plan to present the additional information 

requested by the UN General Assembly in fall 2012. Applying these best 

practices, as appropriate, may help the CMP office as it prepares updated 

cost materials.
 

Page 24 GAO-12-795 UN Renovations

To address its future office space needs, the UN is considering the option

of a new building that would be separate from the CMP, but it does not 

have an estimate of the project’s costs. The UN estimates that its office 

space needs will exceed the capacity of its current real estate portfolio by 

2023, due primarily to expiring leases. As a potential solution, the City 

and State of New York have proposed the construction of a new office 

building, to be located across the street from UN headquarters, known as 

the consolidation building. This proposal requires UN General Assembly 

approval, but the UN has not entered into any formal agreements 

regarding the building and the current lack of a cost estimate makes its 

cost implications for the UN and its member states unclear. We have 

previously reported that reliable cost estimates are critical to program 

success, including informed resource investments.

In September 2011, the Office of the Secretary-General completed a 

report on future office space accommodation needs for UN headquarters. 

The study estimates that, as of 2014, its real estate portfolio in New York 

will consist of approximately 3.4 million square feet of space—about 39 

percent owned and 61 percent leased.25 The UN headquarters campus 

comprises the majority of the UN’s owned space, with office space in the 

Secretariat Building, Conference Building, Library, basements, and 

General Assembly Building. The UN also leases space in various 

locations around its headquarters campus to accommodate staff that 

cannot be housed in its owned space.26

However, due to the combination of expiring leases and estimated staff 

growth, the Secretary-General’s report estimates that by 2023 the UN’s 

office space needs will exceed the capacity of the owned and leased 

buildings currently in its real estate portfolio. Leases for the UN’s two

largest leased office spaces expire at the end of March 2018, with options 

to extend to the end of March 2023, but no renewal options beyond that 

date. The UN Development Corporation (UNDC)—a public benefit 

 

25The UN chose the year 2014 as the starting point for its long-term space needs 

assessment. According to the UN, the organization plans to vacate temporary swing 

spaces leased for the CMP prior to 2014. Therefore, it did not include these leased spaces 

in its assessment.

26The CMP plans to renovate office space owned by the UN on its headquarters campus. 

However, even after the UN completes the renovation of these buildings, it will still require 

additional office space to accommodate its headquarters staff.

UN Considering 

Consolidation 

Building to Address 

UN Office Space 

Needs, but a Cost 

Estimate Has Not 

Been Completed 

The UN Anticipates Office 

Space Needs at Its 

Headquarters Will Exceed 

Capacity by 2023
 

Page 25 GAO-12-795 UN Renovations

corporation of the State of New York whose mission is to provide office 

space and other facilities to help meet the current and future space needs 

of the UN—constructed these buildings in 1976 for use by the UN. The 

buildings provide approximately 670,000 square feet of office space, 

housing about 2,500 staff. The UN currently leases these buildings at 

below-market rates. According to the Secretary-General’s report, 

renegotiating the leases beyond 2023 would likely result in lease rates set 

at market rates, rather than the favorable below-market rates currently 

enjoyed by the UN.27 Additionally, the Secretary-General’s report projects 

that headquarters staff levels will increase from 10,711 in 2014 to 11,911 

in 2023. Using the report’s estimate that each additional staff person 

requires an additional 250 square feet of space per person, this increase 

will require an additional 300,000 square feet of office space. We have 

not independently verified the report’s per person space estimate. 

However, in October 2011, the UN’s Advisory Committee on 

Administrative and Budgetary Questions found that a more in-depth and 

comprehensive analysis of the factors affecting the UN’s space 

requirements was needed.

The City and State of New York have initiated a proposal to construct a 

new office building—known as the consolidation building—that could help 

the UN address some of its long-term office space needs, but the UN has 

not entered into any agreements on the proposal. In July 2011, the 

Governor of the State of New York signed legislation authorizing the City 

of New York to transfer parkland to UNDC to construct a new office 

building for the UN as large as 900,000 square feet and located across 

the street from UN headquarters. In October 2011, key officials of the City 

and State of New York entered into a memorandum of understanding 

(MOU) regarding the consolidation building. The MOU, to which UNDC 

consented, obligates UNDC to specific actions, including initial funding for 

and issuance of bonds to finance the project. Per the MOU, the property 

will not convey to the UN until UNDC and UN reach agreement on the 

terms, with a deadline of December 31, 2015. According to UNDC 

officials, they would like to receive agreement from the UN by early 2014.

 

27The UN has estimated that the market rates for the space effective in 2023 would be 

$77 per square foot.

Consolidation Building 

Proposed as an Option to 

Address UN Long-Term 

Office Space Needs
 

Page 26 GAO-12-795 UN Renovations

UN officials told us that they were informed of the MOU by UNDC officials 

shortly before it was finalized and signed, but have not entered into a 

formal agreement regarding the consolidation building. UN officials stated 

that they did not see the MOU prior to the City and State of New York 

signing it in October 2011 and therefore had no input to the document. 

Moreover, while the UN is not a party to the MOU, the document contains 

requirements to which the UN must agree for the consolidation building to 

move forward. For example, the UN would have to agree to lease the new 

office building from UNDC, potentially in a lease-to-own or similar 

arrangement. UN officials expressed concern that some of the terms of 

the MOU could increase costs and risks to the UN. For instance, 

according to UN officials, leasing the building would likely require the UN 

to pay an amount roughly equivalent to the bonds issued by UNDC to 

design and construct the consolidation building.28

 

28UN officials told us the MOU may also require them to cover $73 million in funds used to 

acquire the land on which to construct the consolidation building.

UN officials told us that 

since they will not know the potential lease costs until the bonds are 

issued, they would like the option to opt out of the project upon review of 

the potential costs. Additionally, according to the MOU, as a condition of 

agreeing to lease the consolidation building, the UN would have to extend 

the leases at two of its largest leased spaces at increased rental rates 

and with additional costs. For instance, according to the terms of the UN’s 

current lease, its rates will increase from $27.50 per square foot (about 

$18.2 million per year) to $30 per square foot (about $19.8 million per 

year) if the organization exercises the option to extend its lease from 

2018 to 2023. However, according to UN officials, under the MOU, the 

UN would have to extend the leases from 2018 to 2023 and its rates 

could rise to market rates, estimated by the UN to be approximately $77 

per square foot. Additional costs include an amount equal to real estate 

taxes attributable to the space, which UN officials said was not originally 

included in the lease renewal terms. Finally, UN officials cited concerns 

related to “risk sharing” in the proposal. Specifically, officials expressed 

concern that the proposal places the entire risk for the cost of the project 

on the UN, rather than sharing the risk between the UN and UNDC. UN 

officials told us that they continue to discuss the consolidation building 

and its potential costs with UNDC officials. However, as of June 2012, the 

UN had not entered into a formal agreement regarding the consolidation 

building.
 

Page 27 GAO-12-795 UN Renovations

UN officials told us that the UN General Assembly’s Fifth Committee, 

which reviews administrative and budgetary issues, plans to discuss 

options related to the consolidation building at its fall 2012 session.

While the UN has held discussions with UNDC, neither organization has 

completed a cost estimate for the consolidation building. In October 2011, 

the UN’s Advisory Committee on Administrative and Budgetary Questions 

reviewed the Secretary General’s office space study. The committee 

noted that future UN space requirements could vary significantly 

depending on the underlying assumptions for estimating staff growth and 

space allowance per person, as well as alternative workplace policies. 

The committee also concluded that it was not fully convinced of the 

assumptions used to establish the baseline estimates of the UN’s future 

office space requirements. Moreover, the committee stated its desire to 

compare all potential options for future office space accommodation, and 

recommended that the Secretary-General complete a detailed cost 

analysis of the consolidation building comparing the potential cost of the 

building to other options.

We have previously reported that a reliable cost estimate is critical to the 

success of any program. Such an estimate provides the basis for 

informed investment decision making, realistic budget formulation and 

program resourcing, meaningful progress measurement, proactive course 

correction when warranted, and accountability for results. While the UN’s 

recommendations did not clarify what to include in the cost estimate for 

the consolidation building, our research has identified a number of best 

practices that form the basis of effective program cost estimating and 

should result in reliable and valid cost estimates that management can 

use for making informed decisions. As noted earlier, a high-quality and 

reliable cost estimate is comprehensive, well-documented, accurate, and 

credible. For example, a comprehensive cost estimate should include all 

life-cycle costs of a project, document all cost-influencing ground rules 

and assumptions affecting the estimate, and completely define the 

program and its schedule, among other best practices. See table 7 for the 

best practices associated with a high-quality and reliable cost estimate.

Cost Estimate for the 

Consolidation Building Not 

Completed 
 

Page 28 GAO-12-795 UN Renovations

Table 7: Best Practices for a High-Quality and Reliable Cost Estimate

Best Practice Best practice description

Comprehensive A comprehensive cost estimate should include costs of the program over its full life cycle, provide a level of 

detail appropriate to ensure that cost elements are neither omitted nor double-counted, and document all 

cost-influencing ground rules and assumptions.

Well-documented A well-documented cost estimate should capture in writing such things as the source and significance of the 

data used, the calculations performed and their results, and the rationale for choosing a particular estimating 

method. A well-documented estimate can be traced back to and verified against sources and should be 

reviewed and accepted by management.

Accurate An accurate cost estimate should be, among other things, unbiased, not overly conservative or optimistic, 

based on historical data reflecting most likely costs, and adjusted properly for inflation. An accurate estimate 

should be updated regularly to reflect the current status, such as material changes in and actual cost 

experiences of the program, and steps should be taken to minimize mathematical mistakes. Further, 

variances between planned and actual costs should be documented, explained, and reviewed.

Credible The cost estimates should discuss any limitations of the analysis because of uncertainty, or biases 

surrounding data or assumptions. Risk and uncertainty analysis should be performed to determine the level of 

risk associated with the estimate. Further, the estimate’s results should be cross-checked against an 

independent estimate.

Source: GAO analysis based on the GAO Cost Estimating and Assessment Guide, GAO-09-3SP. 

UN officials told us that they plan to conduct a cost analysis of the 

consolidation building. However, as of June 2012, the UN had not 

completed such an estimate. A cost estimate using our best practices 

could assist the UN in predicting the level of confidence in meeting the 

project’s budget by quantifying risks and uncertainties associated with the 

project. Such an estimate gives decision makers perspective on the 

potential variability of the estimate, should facts, circumstances, and 

assumptions change. We have found that, without the ability to generate 

reliable cost estimates, projects risk experiencing cost overruns, missed 

deadlines, and performance shortfalls. As a result, absent a completed 

cost estimate for the consolidation building, the potential cost implications 

for the UN and its member states are not clear.

As the CMP nears completion of the renovations of the Secretariat and 

Conference Buildings, the project is estimated to be approximately $430

million over budget and risks remain as some renovations have yet to 

begin. Financing options exist to address a portion of the projected cost 

overrun; however, the United States and other UN member states may be 

asked to provide an additional assessment to finance the remainder. 

Aware of this risk, the UN General Assembly has requested that the CMP 

produce additional reporting on its costs. We have found that the best 

practices of developing high-quality and reliable cost estimates help 

inform decisions to manage capital projects effectively. Given the cost 

Conclusions 
 

Page 29 GAO-12-795 UN Renovations

overruns and challenges of the CMP, as well as the risks and unknown 

costs associated with the UN’s potential consolidation building project, 

these practices should be used to enhance the CMP’s future cost 

estimates and to develop cost estimates of prospective projects to 

address the UN’s long-term space needs. Such an approach would likely 

improve the quality and reliability of cost information provided to the UN 

and its member states, as well as help decision makers evaluate costs 

and risks associated with these projects.

To improve the quality and reliability of information provided to the UN 

and its member states, we recommend that the Secretary of State and 

U.S. Permanent Representative to the United Nations work with other 

member states to take the following two actions:

1. Direct the CMP office to implement, as appropriate, GAO’s best 

practices for cost estimation when it updates information on CMP 

costs. 

2. Direct the UN to ensure the development of a cost estimate for the 

consolidation building utilizing GAO’s best practices for cost 

estimation.

We provided a copy of this report to State and the UN for review and 

comment. State and the UN provided written comments, which are 

reproduced in appendixes III and IV, and technical comments, which we 

have incorporated as appropriate.

State concurred with our recommendations and expressed its concern 

that projected cost overruns of the CMP had grown to approximately $430 

million. State also noted that it is not actively considering the use of TEF 

credits to address a U.S. share of a potential additional assessment for 

the CMP since member states have yet to decide on proposed funding 

options to address cost overruns. However, given that the estimated cost 

overruns of the CMP would still be approximately $212.7 million even if 

the UN approves the use of proposed funding sources, we maintain that 

an additional member assessment may be needed and that TEF credits 

attributable to the United States are a possible source of funding such an 

assessment. 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 30 GAO-12-795 UN Renovations

The UN noted that our report was an accurate assessment of the status 

of the CMP and that it provided constructive recommendations.

We are sending copies of this report to interested congressional 

committees, the Secretary of State, the U.S. Mission to the United 

Nations, and the UN. In addition, the report is available at no charge on 

the GAO website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

Thomas Melito at (202) 512-9601 or melitot@gao.gov, or David Wise at 

David Wise, (202) 512-2834 or wised@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix V. 

Thomas Melito

Director, International Affairs and Trade

David Wise

Director, Physical Infrastructure Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-12-795 UN Renovations

This report provides information on the progress of the United Nations 

(UN) Capital Master Plan (CMP) and the status of the UN consolidation 

building. Specifically, we examine (1) the extent to which the CMP is 

meeting its planned renovation scope, schedule, and budget; (2) the UN 

General Assembly’s evaluation of CMP cost estimates; and (3) the status 

of the UN consolidation building project.

To address our objectives, we reviewed and analyzed relevant planning, 

schedule, and budget documents related to the CMP, as well as relevant 

planning and legal documents related to the consolidation building. 

Additionally, we discussed the progress, plans, risks, and costs of the 

CMP and consolidation building project with officials from the Department 

of State’s (State) Bureau of International Organizations, the U.S. Mission 

to the UN, New York City, and UN offices, including the CMP office and 

Central Support Services. We also discussed efforts related to the 

consolidation building project with the UN Development Corporation, a 

public benefit corporation created to develop and operate office space for 

the benefit of the UN. We focused on these agencies because they are 

involved in the efforts of the CMP and the UN consolidation building 

project.

To examine the extent to which the CMP is meeting its planned 

renovation scope, schedule, and budget, we analyzed documents such 

as CMP annual reports, UN Board of Auditors reports on the CMP, and 

UN General Assembly resolutions. We compared current planned 

renovation scope, projected completion dates, and cost estimates with 

previously reported scope, schedule, and budget projections. For our 

baseline comparison, we referred to UN General Assembly resolutions 

that approved the planned renovation scope and schedule from 

accelerated strategy IV in 2007 and the $1.88 billion budget for the CMP 

in 2006. Further, we examined other relevant CMP documentation, 

including information on risk assessments, monthly reports, and 

procurement information. To understand the project’s cost estimates, we 

examined materials provided by the CMP office to the UN General 

Assembly’s Fifth Committee documenting the project’s financial condition 

as of February 2012, and analyzed reports on CMP progress and 

associated costs produced by the Advisory Committee on Administrative 

and Budgetary Questions and the Program Planning and Budget Division. 

We also discussed these costs and the CMP’s integrated master 

schedule with CMP officials. To understand options for funding projected 

CMP cost overruns, we reviewed UN Financial Rules and Regulations, 

UN Financial Report and Audited Financial Statements, and relevant 

congressional requirements in Appropriations Law, such as the 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 32 GAO-12-795 UN Renovations

Consolidated Appropriations Act of 2012. Further, we held discussions 

with officials from the CMP office, the UN Program Planning and Budget 

Division, UN Board of Auditors, and State’s Bureau of International 

Organizations to understand the various options that the United States 

could utilize to finance its portion of projected CMP cost overruns. We 

also traveled to New York City, New York, to tour the renovation sites and 

observe the progress of the CMP. During these visits, we met with 

officials from the CMP office, various UN departments—Program

Planning and Budget Division, Board of Auditors, Office of Internal 

Oversight Services—and the U.S. Mission to the UN to discuss the ways 

in which the CMP is meeting its planned renovation scope, schedule, and 

budget.

To examine the UN General Assembly’s evaluation of CMP cost 

estimates, we reviewed and analyzed documents provided by the CMP 

office to the UN General Assembly’s Fifth Committee describing the 

project’s financial condition as of February 2012, UN General Assembly 

resolution 66/258 issued in April 2012, the 2011 CMP annual report 

proposing financing options, and the Advisory Committee on 

Administrative and Budgetary Questions report A/66/7/Add.11 on costs of 

the CMP. Further, we analyzed the extent to which best practices for cost 

estimating from our Cost Estimating and Assessment Guide could 

potentially address concerns raised by the UN General Assembly with 

regard to the cost information provided by the CMP office. We did not 

conduct a full assessment of the CMP’s February 2012 cost estimates, as 

(a) the estimates were updated projections provided in response to 

questions from the UN General Assembly’s Fifth Committee during 

briefings, rather than comprehensive cost estimates; and (b) the CMP 

office intends to provide a full report on the project’s costs, including new 

cost estimates, in fall 2012. Although we did not audit the CMP cost data 

and are not expressing an opinion on them, based on our examination of 

the documents received and our discussions with cognizant officials, we 

concluded that the data were sufficiently reliable for the purposes of this 

engagement. We also held discussions with officials from the CMP office, 

UN Program Planning and Budget Division, UN Board of Auditors, and 

the U.S. Mission to the UN on a number of factors affecting CMP cost 

estimates.

To examine the status of the UN consolidation project, we analyzed the 

memorandum of understanding (MOU) signed between the City and State 

of New York to identify actions required by the MOU. Additionally, we 

reviewed UN documents such as the Secretary-General’s Feasibility 

Study on the United Nations Headquarters Accommodation Needs 2014-
Appendix I: Objectives, Scope, and 

Methodology

Page 33 GAO-12-795 UN Renovations

2034 and a related report by the Advisory Committee on Administrative 

and Budgetary Questions to understand the UN’s long-term office space 

needs. We conducted interviews with officials from New York City, the UN 

Development Corporation, and the UN regarding negotiations related to 

the consolidation building and lease costs for buildings potentially 

affected. Further, we reviewed how our best practices for cost estimating 

could provide insight on potential project costs to inform UN decision 

making.

We conducted our work from January 2012 to July 2012 in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and perform our work to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our objectives. We believe that the evidence obtained provides 

a reasonable basis for our findings and conclusions based on our 

objectives.
Appendix II: UN Tax Equalization Fund

Page 34 GAO-12-795 UN Renovations

The United States annually pays assessed contributions to the UN 

General Fund to support the UN’s programs and activities. One of these 

activities is a staff assessment, which is an amount deducted from the 

gross pay of all UN employees and used to fund the UN Tax Equalization 

Fund (TEF). The UN established the TEF to equalize the net pay of all 

UN staff members whatever their national tax obligations. While most UN 

employees are exempt from paying income tax on their UN earnings in 

their home country, some UN employees, including U.S. nationals, are 

not. For member states that levy income taxes on the earnings of UN 

employees, such as the United States, contributions to the TEF are first 

used to reimburse UN employees for the taxes they paid on their UN 

income.1

The UN reports TEF credits on a biennial basis. According to U.S. and 

UN officials, various factors, such as modifications in U.S. tax laws or 

changes in the number of U.S. employees at the UN, can result in TEF 

credits or debits in a member state’s account. As shown in table 8, credits 

in the TEF attributable to the United States and reported by the UN rose 

by over $160 million between 2001 and 2009—from $17.6 million to $179 

million.

Unused TEF credits remain as a balance in a member state’s 

TEF account.

 

1

Member states that do not levy income taxes on the earnings of UN employees receive 

TEF credits as an offset against their mandatory UN assessments.

Appendix II: UN Tax Equalization Fund
Appendix II: UN Tax Equalization Fund

Page 35 GAO-12-795 UN Renovations

Table 8: Credits in the UN Tax Equalization Fund Attributable to the United States, 

2001-2009, as Reported by the UN

Dollars in millions

Biennium ending Amount of credits

Change from previous 

biennium

December 31, 2001

a

$17.6

December 31, 2003 $50.8 $33.2

December 31, 2005 $97.3 $46.5

December 31, 2007 $126.0 $28.7

December 31, 2009 $179.0 $53.0

Source: GAO analysis of UN Board of Auditors, Financial Report and Audited Financial Statements.

a

This table shows changes from previous biennium beginning with 2003.

If a member state’s TEF account has a balance, the Financial Rules and 

Regulations of the UN state that such a balance shall be credited against 

the mandatory assessed contributions due from that member state the 

following year.2 However, notwithstanding UN financial regulations that 

TEF credits should be applied toward a member state’s assessed 

contributions, TEF credits attributable to the United States were applied to 

fund enhanced security upgrades to the CMP. In October 2010, the UN 

requested State’s endorsement of the use of up to $100 million of TEF 

credits accrued in prior years. In a January 2011 letter to the UN, State 

acknowledged the UN’s use of up to $100 million in U.S. TEF credits 

described as “attributable to annual U.S. regular budget contributions” to 

fund the enhanced security upgrades.3

This transaction differs from previous uses of TEF credits. For example, 

State has previously requested that TEF credits be applied toward 

assessed contributions for the UN. Specifically, we reported that in 1997 

the U.S. payment for its regular budget assessment included a $27.3 

 

2

UN Regulation 4.12. United Nations, Financial Regulations and Rules of the United 

Nations, ST/SGB/2003/7. Mandatory assessed contributions include those in the UN 

regular budget, peacekeeping operation accounts, and international criminal tribunal 

accounts.

3

State also informed Congress of this pending transaction in letters sent in December 

2010.
Appendix II: UN Tax Equalization Fund

Page 36 GAO-12-795 UN Renovations

million credit from surplus funds in the TEF.4

 

4

GAO, United Nations: Financial Issues and U.S. Arrears, 

UN officials confirmed that 

TEF credits attributable to the United States were previously applied 

toward U.S. assessed contributions; however, they noted that in the case 

of the enhanced security upgrades the credits were used for a different 

purpose. 

GAO/NSIAD-98-201BR, 

(Washington, D.C.: June 18, 1998).
Appendix III: Comments from the Department 

of State

Page 37 GAO-12-795 UN Renovations

Appendix III: Comments from the 

Department of State

Note: GAO comments 

supplementing those in 

the report appear at the 

end of this appendix.
Appendix III: Comments from the Department 

of State

Page 38 GAO-12-795 UN Renovations

See comment 2.

See comment 1.
Appendix III: Comments from the Department 

of State

Page 39 GAO-12-795 UN Renovations

The following are GAO’s comments on State’s letter dated July 9, 2012.

1. We maintain that an additional member assessment may be needed 

and that Tax Equalization Fund credits attributable to the United States 

remain a possible source of funding for such an assessment. Given the 

Capital Master Plan’s (CMP) projected cost overruns of approximately 

$430 million, even if the United Nations (UN) General Assembly approves 

the use of proposed funding sources and reductions in planned 

renovations, the estimated cost overruns of the project would still be 

$212.7 million. In the event of cost escalations over the approved budget 

of the CMP, the UN General Assembly decided that member states would 

be subject to a further assessment. The U.S. share of any future 

assessment would be 22 percent. 

2. Our report makes clear that the CMP project is separate from the 

consolidation building proposal. However, we maintain that regardless of 

whether the UN directly manages the construction of the consolidation 

building, a sound cost estimate should be developed as the UN will be 

responsible for financing the building should it agree to its construction.

GAO Comments
Appendix IV: Comments from the United 

Nations

Page 40 GAO-12-795 UN Renovations

Appendix IV: Comments from the United 

Nations 
Appendix V: GAO Contacts and Staff 

Acknowledgments

Page 41 GAO-12-795 UN Renovations

Thomas Melito, Director, International Affairs and Trade, (202) 512-9601 

or melitot@gao.gov

David Wise, Director, Physical Infrastructure Issues, (202) 512-2834 or 

wised@gao.gov

In addition to the contacts named above, Maria Edelstein, Assistant 

Director; Biza Repko; Adam Yu; Mark Dowling; Debbie J. Chung; Jason 

Lee; and Karen Richey made key contributions to this report. Joshua 

Ormond provided technical assistance.

Appendix V: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 

Staff 

Acknowledgments 
Related GAO Products

Page 42 GAO-12-795 UN Renovations

United Nations: Renovation Still Scheduled for Completion in 2013, but 

Risks to Its Schedule and Cost Remain. GAO-09-870R. (Washington, 

D.C.: July 30, 2009).

United Nations: Renovation Schedule Accelerated after Delays, but Risks 

Remain in Key Areas. GAO-08-513R. (Washington, D.C.: April 9, 2008).

Update on the United Nations’ Capital Master Plan. GAO-07-414R. 

(Washington, D.C.: February 15, 2007).

United Nations: Renovation Planning Follows Industry Practices, but 

Procurement and Oversight Could Present Challenges. GAO-07-31. 

(Washington, D.C.: November 16, 2006).

United Nations: Early Renovation Planning Reasonable, but Additional 

Management Controls and Oversight Will Be Needed. GAO-03-566. 

(Washington, D.C.: May 30, 2003).

United Nations: Planning for Headquarters Renovation is Reasonable; 

United States Needs to Decide Whether to Support Work. GAO-01-788. 

(Washington, D.C.: June 15, 2001).

Related GAO Products

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