United Nations Renovations: Best Practices Could Enhance Future Cost Estimates
Published: 2012-07-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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.
section_title: What GAO Recommends
paragraphs: 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.

section_title: Letter
paragraphs: 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.
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.
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.
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.
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.
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.
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. 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. 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.reported continued cost overruns associated with the CMP.
Since 2009, the UN has  Separately from the CMP, the UN General Assembly has stressed the  need for a long-term strategy to meet the office space needs of the UN.  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.
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.
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  General Assembly regarding CMP cost information.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.
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.
subsections: section_title: Background
subsections: section_title: Original Budget, Financing, Schedule, and Scope of the CMP
paragraphs: In 2001, we reported that the UN headquarters complex in New York  City—built largely between 1949 to 1952—no longer conformed to  current safety, fire, and building codes or to UN technology and security  requirements. 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.
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.
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.
section_title: Changes to the CMP Authorized by the UN General Assembly: 2006- 2009
paragraphs: 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  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.
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.  Associated costs cover a wide range of requirements, such as  broadcast equipment, new furniture, and additional staffing  requirements to manage information technology and security.  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  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.
section_title: Progress Made on CMP, but Two Building Renovations May Not Be Completed and Project Is Projected to Be Approximately $430 Million over Budget
paragraphs: 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.
subsections: section_title: Progress Made on CMP Renovations
paragraphs: 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.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.
According to the CMP office, the enhanced
Substantially completing the removal and replacement of the glass  curtain wall in the Secretariat Building, shown in figure 2.
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.
section_title: Renovations for Two Buildings May Not Be Completed
paragraphs: 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.  However, based on discussions between the UN and the United States,  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.
section_title: CMP Office Projects 2014 Completion, but Risks to Schedule Exist
paragraphs: 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 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.
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.
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:
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.
section_title: Projected Total CMP Cost Overruns Approximately $430 Million
paragraphs: 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.  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.
Projected CMP cost overruns increased significantly between May 2011  and February 2012. 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. 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.
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  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.
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  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. 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.
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.
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. State told  us that it is complying with these provisions.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.
section_title: Use of Best Practices May Address UN General Assembly Concerns Regarding CMP Cost Estimates
paragraphs: 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.
subsections: section_title: UN General Assembly Has Expressed Concerns Regarding CMP Cost Estimates
paragraphs: 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  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.
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  estimated cost overruns reported in March 2012. 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.
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.
section_title: Use of Best Practices in Future CMP Cost Reporting May Address UN General Assembly Concerns
paragraphs: 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,   These best practices include elements for documenting  and credible.and reporting cost estimates. For example, a cost estimate that is well- documented 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.
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.
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.
section_title: UN Considering Consolidation Building to Address UN Office Space Needs, but a Cost Estimate Has Not Been Completed
paragraphs: 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.
subsections: section_title: The UN Anticipates Office Space Needs at Its Headquarters Will Exceed Capacity by 2023
paragraphs: 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. 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.
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  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   Additionally, the Secretary-General’s report projects  enjoyed by the UN.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.
section_title: Consolidation Building Proposed as an Option to Address UN Long-Term Office Space Needs
paragraphs: 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.
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. 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.
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.
section_title: Cost Estimate for the Consolidation Building Not Completed
paragraphs: 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.
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.
section_title: Conclusions
paragraphs: 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  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.
section_title: Recommendations for Executive Action
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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.
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.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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  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- 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.
section_title: Appendix II: UN Tax Equalization Fund
paragraphs: 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. Unused TEF credits remain as a balance in a member state’s  TEF account.
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.
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. 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.
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  million credit from surplus funds in the TEF.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.
section_title: Appendix III: Comments from the Department of State
subsections: section_title: GAO Comments
paragraphs: 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.
section_title: Appendix IV: Comments from the United Nations
section_title: Appendix V: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: 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.
section_title: Related GAO Products
paragraphs: 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).