Capitol Visitor Center: Effective Schedule Management and Updated Cost Information Are Needed
Published: 2005-06-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This testimony discusses the Architect of the Capitol's (AOC) progress in achieving selected project milestones and in managing the project's schedule since Congress's May 17 hearing on the project. We will also discuss the project's costs and funding, including the potential impact of schedule-related issues on the project's costs. Our observations today are based on our review of schedules and financial reports for the CVC project and related records maintained by AOC and its construction management contractor, Gilbane Building Company; our observations on the progress of work at the CVC construction site; and our discussions with CVC project staff, including AOC, its construction management contractor, and representatives of an AOC schedule consultant, McDonough Bolyard Peck (MBP). We did not perform an audit; rather we performed our work to assist Congress in conducting its oversight activities.
section_title: What GAO Found
paragraphs: In summary, AOC's sequence 2 contractor, Manhattan Construction Company, has met 3 of 11 significant milestones scheduled for completion by today's hearing. The sequence 2 contractor missed the other 8 milestones for several reasons, such as unforeseen site conditions and a design problem. AOC does not expect these delays to affect the CVC project's scheduled September 2006 completion date because AOC believes that the contractor can recover the lost time. Furthermore, certain utility tunnel work is scheduled for completion about 5 months later than previously reported, but AOC does not expect this delay to postpone the project's completion date because AOC plans to use temporary equipment that will allow the project to move forward but will also increase its costs. However, largely because of past problems and risks and uncertainties that face the project, we continue to believe that the project is more likely to be completed in the December 2006 to March 2007 time frame than in September 2006, as shown in AOC's schedule. AOC and its construction management contractor have continued their efforts to address two of the areas we identified during Congress's May 17 CVC hearing as requiring priority attention--having a realistic, acceptable schedule and aggressively monitoring and managing adherence to the schedule. But AOC has not yet developed risk mitigation plans or, as the Subcommittee requested, prepared a master schedule that integrates the major steps needed to complete construction with the steps needed to prepare for operations. Until recently, AOC did not have funding to continue contractual support it had been receiving to help plan and prepare for CVC operations. We continue to believe that these areas require AOC's priority attention and that the project's estimated cost at completion will be between $522 million and $559 million, and that, as we indicated during the May 17 hearing, AOC will likely need as much as $37 million more than it has requested to cover risks and uncertainties to complete the project. We believe that most of these additional funds will be needed in fiscal years 2006 and 2007, although exactly how much will be needed at any one time is not clear. We are recommending that this fall AOC update its estimate of the cost to complete the project.

section_title: Letter
paragraphs: We are pleased to be here today to discuss GAO’s ongoing work on the  progress of the Capitol Visitor Center (CVC) project. As requested, we will  focus our remarks today on the Architect of the Capitol’s (AOC) progress  in achieving selected project milestones and in managing the project’s  schedule since the Subcommittee’s May 17 hearing on the project. We will  also discuss the project’s costs and funding, including the potential impact  of schedule-related issues on the project’s costs. Our observations today  are based on our review of schedules and financial reports for the CVC  project and related records maintained by AOC and its construction  management contractor, Gilbane Building Company; our observations on  the progress of work at the CVC construction site; and our discussions  with CVC project staff, including AOC, its construction management  contractor, and representatives of an AOC schedule consultant,  McDonough Bolyard Peck (MBP). We did not perform an audit; rather we  performed our work to assist Congress in conducting its oversight  activities.
In summary, AOC’s sequence 2 contractor, Manhattan Construction  Company, has met 3 of 11 significant milestones scheduled for completion  by today’s hearing. The sequence 2 contractor missed the other 8  milestones for several reasons, such as unforeseen site conditions and a  design problem. AOC does not expect these delays to affect the CVC  project’s scheduled September 2006 completion date because AOC  believes that the contractor can recover the lost time. Furthermore,  certain utility tunnel work is scheduled for completion about 5 months  later than previously reported, but AOC does not expect this delay to  postpone the project’s completion date because AOC plans to use  temporary equipment that will allow the project to move forward but will  also increase its costs. However, largely because of past problems and  risks and uncertainties that face the project, we continue to believe that  the project is more likely to be completed in the December 2006 to March  2007 time frame than in September 2006, as shown in AOC’s schedule.  AOC and its construction management contractor have continued their  efforts to address two of the areas we identified during the  Subcommittee’s May 17 CVC hearing as requiring priority attention— having a realistic, acceptable schedule and aggressively monitoring and  managing adherence to the schedule. But AOC has not yet developed risk  mitigation plans or, as the Subcommittee requested, prepared a master  schedule that integrates the major steps needed to complete construction  with the steps needed to prepare for operations. Until recently, AOC did  not have funding to continue contractual support it had been receiving to  help plan and prepare for CVC operations. We continue to believe that  these areas require AOC’s priority attention and that the project’s  estimated cost at completion will be between $522 million and $559  million, and that, as we indicated during the May 17 hearing, AOC will  likely need as much as $37 million more than it has requested to cover  risks and uncertainties to complete the project. We believe that most of  these additional funds will be needed in fiscal years 2006 and 2007,  although exactly how much will be needed at any one time is not clear. We  are recommending that this fall AOC update its estimate of the cost to  complete the project.
subsections: section_title: Schedule Milestones and Management
paragraphs: AOC and its major construction contractors have made progress since the  Subcommittee’s May 17 hearing. As of May 31, the construction  management contractor reported that the CVC project’s construction was  about 65 percent complete. The sequence 1 contractor, Centex  Construction Company, which was responsible for the project’s  excavation and structural work, has continued to address punch-list items,  such as stopping water leaks that continue to appear in perimeter walls.  According to the construction management contractor, as of May 31, the  sequence 1 contractor had completed almost all of the items on the punch  list. AOC expects the sequence 1 contractor to be completely done with  this list and off site by June 30, although the contractor may have to return  later to address some issues. Furthermore, the sequence 2 contractor,  which is responsible for the mechanical, electrical, plumbing, and finishing  work, continued to make progress in these areas, including erecting  masonry block, placing concrete, and installing finish stone, sheetrock and  plaster, and granite pavers. The sequence 2 contractor also continued  work on the utility tunnel.
As the Subcommittee requested, we worked with AOC on the selection of  several sequence 2 milestones that the Subcommittee can use to help track  the project’s progress from the Subcommittee’s May 17 hearing to July 31.  These milestones are shown in appendix 1 and include activities on the  project’s critical path, as well as other activities that we and AOC believe  are important for the project’s timely completion. AOC’s sequence 2  contractor completed 3 of the 11 activities listed in appendix 1 as  scheduled for completion by today. The 11 activities include certain stone  work in the Great Hall, a portion of the masonry wall in the auditorium,  and certain utility tunnel work. According to AOC, the delays in 8 of these  activities were caused by a number of factors, such as unforeseen site  conditions, a design problem, and delays in completing certain masonry  work that had to be completed before other work could be done. AOC  does not expect these delays to postpone the project’s scheduled  September 2006 completion date because it believes that the sequence 2  contractor can recover the lost time.
Since the May 17 hearing, AOC learned that the utility tunnel, which was  expected to be operational in October 2005, is not now likely to be  operational until March 2006. According to AOC, this date slipped because  of unforeseen site conditions and the need to do certain work earlier than  originally anticipated. The sequence 2 contractor has indicated that the  impact of this delay on the project’s scheduled September 2006  completion date will be mitigated by the use of temporary  dehumidification equipment. However, this mitigation approach will result  in additional costs, as explained later in this statement. Also since the May  17 hearing, AOC’s contractors have updated the project’s master schedule,  and the new schedule shows seven paths that are critical or are within 15  days of being critical. For example, the updated schedule shows millwork  and finishing the auditorium to be within 10 days and 15 days,  respectively, of being critical. Having so many critical or near-critical paths  complicates schedule management and increases the risk of problems that  could lead AOC to miss its scheduled completion date.
In our May 17 statement, we provided several observations on AOC’s  management of the project’s schedules, including our view that problems  in this area contributed to slippage in the project’s scheduled completion  date and additional project costs associated with delays. We also  discussed recommendations we had already made to AOC to enhance its  schedule management. AOC had agreed with these recommendations and  had generally begun to implement them, but, it still needed, in our view, to  give priority attention to them to keep the project on track and as close to  budget as possible. A brief discussion follows of the issues that need  AOC’s priority attention and the current status of AOC’s actions to address  these issues.
Having realistic time frames for completing work and obtaining  fully acceptable schedules from contractors. Over the course of the  project, AOC’s schedules have shown dates for completing tasks that  project personnel themselves considered unlikely to be met. In addition,  the master project schedule ( prepared by AOC’s construction  management contractor) that AOC was using in May 2005 did not tie all  interrelated activities together and did not identify the resources to be  applied for all the activities, as AOC’s contract requires. On June 10, the  construction management contractor told us that it had reassessed the  reasonableness of the activity durations and found that they reasonably  reflected the time required to perform the activities. Last week, AOC  provided us with a revised master schedule that the construction  management contractor said (1) reflected significant improvement in the  linkage of interrelated tasks and (2) provided sufficient information to  manage the project’s resources. AOC said that it planned to approve and  accept this schedule subject to several conditions. Although our initial  review of this revised schedule indicates that a number of improvements  have been made, we have not yet had time to fully evaluate it. We will have  a more complete assessment for the Subcommittee by its next CVC  oversight hearing. Furthermore, as we said during the May 17 hearing, we  continue to believe that AOC’s scheduled September 2006 completion date  is optimistic and that the project is more likely to be done in the December  2006 to March 2007 time frame, largely because of past problems, the risks  to the schedule identified during our assessment of it in early 2004, and  future risks and uncertainties facing the project. We plan to update our  risk assessment for AOC’s revised schedule and have our update  completed in September 2005. Our update will include a review of activity  durations.
Aggressive monitoring and managing contractors’ adherence to the  schedule, including documenting and addressing the causes of  delays, and reporting accurately to Congress on the status of the  project’s schedule. We noted in our May 17 testimony that neither AOC  nor its construction management contractor had previously (1) adhered to  contract provisions calling for monthly progress review meetings and  schedule updates and revisions, (2) systematically tracked and  documented delays and their causes as they occurred or apportioned their  time and costs to the appropriate parties on an ongoing basis, and (3)  always accurately reported on the status of the project’s schedule. AOC  and the construction management contractor have been working with the  schedule consultant to develop a new, systematic process for tracking,  analyzing, and documenting schedule progress and delays, addressing  schedule issues, approving proposed schedule changes, and reporting on  the schedule’s status. On June 7, AOC, the construction management  contractor, the sequence 2 contractor, and the schedule consultant  conducted the first monthly schedule status review session using the  newly developed approach. If effectively implemented and sustained, we  believe that this new approach should generally resolve the schedule  management concerns we previously raised, although it is not yet clear  how delays will be handled on an ongoing basis. We believe that the  successful implementation of this new approach, including the effective  handling of delays, depends heavily on the CVC project team’s continuous  commitment of sufficient skilled resources to schedule management. On  June 9, the construction management contractor told us that a project  control engineer who had been assigned temporarily to help manage the  project’s schedule would be working full time on the project starting June  13. We plan to closely monitor the implementation of this new approach,  including the resources devoted to it, the handling of delays, and the  accuracy of the information provided to Congress.
Developing and implementing risk mitigation plans. In the course of  monitoring the CVC project, we have identified a number of risks and  uncertainties that could have significant adverse effects on the project’s  schedule and costs. Some of these risks, such as underground  obstructions and unforeseen conditions, have already materialized and  have had the anticipated adverse effects. We believe the project continues  to face risks and uncertainties, such as unforeseen conditions associated  with the project’s remaining tunnels and other work, scope gaps or other  problems associated with the segmentation of the project between two  major contractors, and shortages in the supply of stone and skilled stone  workers. Although we have recommended that AOC develop and  implement risk mitigation plans for these types of risks and uncertainties,  AOC has not yet done so. AOC has agreed, however, to begin to do this  shortly, and, according to AOC’s CVC project executive, is exploring  possible approaches.
Preparing a master schedule that integrates the major steps  needed to complete CVC construction and the steps necessary to  prepare for operations. A number of activities, such as hiring and  training staff, procuring supplies and services, and developing policies and  procedures, need to be planned and carried out on a timely basis for CVC  to open to the public when construction is complete. Although AOC has  started to plan and prepare for CVC operations, as we indicated in our May  17 testimony, it has not yet developed a schedule that integrates the  construction activities with those activities necessary to prepare for  operations. The Subcommittee requested such a schedule during its April  13, 2005, hearing on AOC’s fiscal year 2006 budget request. Because of a  lack of funds, AOC had not been able to extend the work of a contractor  that had been helping it plan and prepare for operations. Last week, AOC  received the funding needed to re-engage this contractor, and AOC said  that it would be working with the contractor to continue planning and  preparing for CVC operations.
section_title: Project Costs and Funding
paragraphs: As we said during the Subcommittee’s May 17 hearing, we estimate that  the cost to complete the construction of the CVC project, including  proposed revisions to its scope, will range from about $522 million without  provision for risks and uncertainties to about $559 million with provision  for risks and uncertainties. As of June 10, 2005, about $483.7 million had  been provided for CVC construction. In its fiscal year 2006 budget request,  AOC asked Congress for an additional $36.9 million for CVC construction.  AOC believes this amount will be sufficient to complete construction and,  if approved, will bring the total funding provided for the project’s  construction to $520.6 million. Adding $1.7 million to this amount for  additional work related to the air filtration system that we believe will  likely be necessary brings the total funding needed to slightly more than  the previously cited $522 million. AOC believes that it could obtain this  $1.7 million, if needed, from the Department of Defense. AOC’s $36.9  million budget request includes $4.2 million for potential additions to the  project’s scope (e.g. congressional seals, an orientation film, and storage  space for backpacks) that Congress will have to consider when deciding  on AOC’s fiscal year 2006 CVC budget request.
AOC has not asked Congress for the additional $37 million ($559 million  minus $522 million) that we believe will likely be needed to address the  risks and uncertainties that continue to face the project. These include,  but are not limited to, shortages in the supply of stone and skilled stone  workers, unforeseen conditions, scope gaps, further delays, possible  additional requirements or time for life safety or security changes and  commissioning, unknown operator requirements, and contractor  coordination issues. These types of problems have been occurring, and as  of June 1, 2005, AOC had received proposed sequence 2 change orders  with costs estimated to exceed the funding available in fiscal year 2005 for  sequence 2 changes by about $400,000. AOC plans to help cover this  potential shortfall by requesting approval from the House and Senate  Committees on Appropriations to reprogram funds from other project  elements that it does not believe will be needed for those elements. AOC  can also request approval from these Committees to use part of $10.6  million that Congress approved for transfer to the CVC project from funds  appropriated for Capitol Buildings operations and maintenance.
For several reasons, we believe that AOC may need additional funds for  CVC construction in the next several months. These reasons include the  pace at which AOC is receiving proposed change orders for sequence 2,  the problems it is encountering and likely to encounter in finishing the  project, and the uncertainties associated with how much AOC may have to  pay for sequence 2 delays as well as when AOC will have fiscal year 2006  funds available to it. For example, AOC is likely to incur additional costs  for dehumidification if the expected delay in the utility tunnel cannot be  mitigated or AOC has to obtain temporary equipment to provide steam and  chilled water to CVC. AOC may be able to meet this need as well as the  other already identified needs by additional reprogramming of funds and  by obtaining approval to use some of the previously discussed $10.6  million. However, these funds may not be sufficient to address the risks  and uncertainties that may materialize from later this fiscal year through  fiscal year 2007. Thus, while AOC may not need all of the remaining $37  million we have suggested be allowed for risks and uncertainties, we  believe AOC is likely to need more funds in fiscal years 2006 and 2007 than  it has already received and has requested to complete the construction of  CVC’s currently approved scope, although the exact amount and timing  are not clear at this time. Effective implementation of our  recommendations, including risk mitigation, could reduce AOC’s funding  needs.
section_title: Recommendation for Executive Action
paragraphs: Given the development of a new project schedule, the pace at which  sequence 2 change orders are being proposed, and the risks and  uncertainties that continue to face the project, we recommend that, in the  September to November 2005 time frame, the Architect of the Capitol  update the estimated cost to complete the project. We believe that such  information will be useful to Congress as it considers AOC’s budget  request for fiscal year 2007 as well as any other requests AOC may make  for CVC funding. We expect to have our risk assessment of AOC’s new  project schedule done in September and believe that the information  developed during this assessment will be important in estimating future  costs. In addition, we believe that AOC will have more information on the  possible costs of sequence 2 delays by that time. AOC has agreed to do this  update.
Mr. Chairman, this completes our prepared statement. We would be happy  to answer questions that you or other Subcommittee Members may have.
section_title: Contacts and Acknowledgments
paragraphs: For further information about this testimony, please contact Bernard  Ungar at (202) 512-4232 or Terrell Dorn at (202) 512-6923. Other key  contributors to this testimony include Shirley Abel, Maria Edelstein,  Elizabeth Eisenstadt, Brett Fallavolitta, Jeanette Franzel, Jackie Hamilton,  Bradley James, Scott Riback, and Kris Trueblood.
section_title: Appendix I: Capitol Visitor Center Critical Construction Milestones May 2005-July 2005
subsections: section_title: Scheduled for completion between 6/15/05 and 7/31/05
paragraphs: construction management contractor for the actual completion dates.
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