Federal Real Property: GSA Could Better Identify Risks of Unforeseen Conditions in Repair and Alteration Projects
Released: 2016-03-17T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: GSA annually spends hundreds of millions of dollars making major and minor repairs and alterations to the more than 1,500 federally owned buildings that it holds. GAO's past work has indicated that GSA sometimes encounters “unforeseen site conditions”—conditions that are different from what was expected—in performing this work. Unforeseen conditions can add both time and cost to repair and alteration projects. GAO was asked to review issues related to tenant repair and alteration projects. This report addresses (1) information about the extent, impact, and cause of unforeseen site conditions on selected projects, and (2) how GSA identifies and assesses the risks of unforeseen conditions.

GAO reviewed 18 non-generalizable repair and alteration projects funded from fiscal year 2010 to 2013, valued at $2 million or more; interviewed GSA project managers and contracting officers about these projects; reviewed project documents; and interviewed a non-generalizable sample of organizations and individuals knowledgeable about the construction industry (industry stakeholders).

section_title: What GAO Found
paragraphs: Both industry stakeholders and General Services Administration (GSA) officials told GAO that unforeseen conditions in repair and alteration projects are common. Such conditions, for example, included an unknown wood subflooring discovered during demolition work. Among the impacts identified by the stakeholders were increased project costs and schedule delays. In general, data are limited on unforeseen conditions since GSA does not analyze this type of information. Most of the repair and alteration projects GAO reviewed—11 of 18 projects--experienced an unforeseen condition. The overall impact of the unforeseen conditions on the 18 projects GAO reviewed was largely limited. On 9 of the 11 projects that experienced such conditions, the cost to remediate them accounted for 1 to 5 percent of the project's original construction contract award amount, and on one project the cost was approximately 6 percent. These amounts were below the typical 10 percent construction contingency GSA adds to project costs. Schedule impacts were also limited: 4 of the 11 projects experienced delays ranging from 23 to 105 days. GAO also found that three projects reviewed that did not experience unforeseen conditions were attached to larger projects that did experience these conditions. In two of these larger projects the cost increases from unforeseen conditions were about $2 million each. Incomplete building drawings and lack of building information were among the possible causes of the unforeseen conditions experienced in the projects GAO reviewed.

GSA has a variety of methods to identify and assess risks of unforeseen conditions. GSA's Project Planning Guide states that, among other things, facility condition assessments and site surveys should be conducted initially. GSA guidance also calls for preparation of a project management plan (PMP), which includes a risk assessment matrix. GAO found that, in general, GSA used at least one of its risk identification methods on the projects reviewed. For example, GAO found that GSA prepared PMPs for 13 of the 18 projects reviewed. Three of the remaining five projects were attached to larger projects that had PMPs and GSA was unable to provide a PMP for the other two projects. However, GSA's risk identification was sometimes inconsistent with unforeseen conditions that were actually experienced. For example, on 11 of the projects, GSA did not identify risks that later materialized during the project. The Standards for Internal Control in the Federal Government state that agencies should comprehensively identify risks using a variety of quantitative and qualitative methods. GSA officials told GAO that contract change orders are used to document unforeseen conditions that result in a change to the contract, but that these change orders are not analyzed to identify what role these conditions represent on projects or their causes or impacts. As shown in the projects GAO reviewed, unforeseen conditions can delay schedules and increase project costs—in some cases in the millions of dollars. Analyzing project information such as change orders would allow GSA to better know what role unforeseen conditions play in repair and alteration projects and the magnitude of this risk.

section_title: What GAO Recommends
paragraphs: GAO recommends that GSA develop and implement a plan for analyzing information it collects to identify the role of unforeseen conditions in repair and alteration projects and the specific causes and impacts of these conditions. GSA agreed with the recommendation and the agency stated it will develop a plan to address it.

section_title: Letter
paragraphs: The General Services Administration (GSA) annually spends hundreds of  millions of dollars making major and minor repairs and alterations to the  more than 1,500 federally owned buildings that it holds. These buildings  are used for a variety of purposes—from office space to warehouses— and are critical for federal agencies to fulfill their missions. Some of this  work is initiated by GSA and some at the request of tenant agencies.  GSA’s repair and alterations program has become increasingly important  over time as the inventory of buildings continues to age and deterioration  and deferred maintenance increase. GSA estimated that at the end of  fiscal year 2015 it had over $1.2 billion in deferred maintenance and  repair work. This figure is for deferred maintenance and repair work that  was categorized as needing to be performed immediately to restore or  maintain the building inventory in acceptable condition.

Our past work has indicated that GSA sometimes encounters “unforeseen  site conditions” in performing repair and alteration work. In general,  unforeseen site conditions are different from what was expected or what  may have been in a project’s plans or specifications. In some cases,  unforeseen site conditions are the result of greater than expected levels  of deterioration or the result of hazardous materials, such as asbestos, in  buildings. In other cases, such conditions may be the result of previous  repairs or alterations that were not recorded on building drawings. Once  unforeseen site conditions are encountered they can add costs to  projects, delay project schedules, or cause other changes. For example,  in February 2015, we reported that a courthouse modernization project  we reviewed was completed more than 6 months after originally planned  and required an additional $10 million in funds, in part, to address  unforeseen building conditions. In 2001, the GSA Inspector General’s  office, which reviewed 45 repair and alteration projects, reported that  unforeseen site conditions in 10 projects completed in fiscal years 1998  and 1999 accounted for about $22 million, or about 43 percent, of cost  growth on these projects.

You asked that we review issues related to tenant repair and alteration  work. This report addresses (1) information about the extent, impact, and  cause of unforeseen site conditions during repair and alteration projects  in federally owned buildings held by GSA and (2) how GSA identifies and  assesses the risks of unforeseen site conditions.

To identify information about the extent, impact, and cause of unforeseen  site conditions, we selected and reviewed 18 repair and alteration  projects across four GSA regions (Mid-Atlantic, Pacific Rim, National  Capital, and Northeast and Caribbean Region). The projects included  three prospectus projects and 15 reimbursable work authorization  (RWA) projects. The projects we reviewed had values of at least $2  million and received funding from fiscal year 2010 to fiscal year 2013.  We chose this period to help ensure that the projects selected had  progressed into the construction phase (where unforeseen site conditions  might be identified) and yet were recent enough that electronic records  were likely to be available. We excluded projects that from their  descriptions appeared to be for services and not construction, and we  excluded projects that appeared to involve multiple sites. The regions  selected accounted for the highest dollar amount of repair and alteration  projects. We interviewed GSA project managers and contracting officers  for these 18 projects and reviewed project documents to determine if the  projects had encountered unforeseen site conditions. We also interviewed  these officials to identify the nature of any cost, schedule, or scope  impacts from the unforeseen site conditions encountered. To identify the  causes of unforeseen site conditions we discussed with project managers  and contracting officers the actual unforeseen site conditions experienced  and their possible causes and coded these into categories of unforeseen  site condition causes. Finally, we contacted 19 organizations and  individuals with knowledge of or experience in the construction industry  (industry stakeholders) to obtain their views on unforeseen site  conditions. These industry stakeholders were selected based on asking  GSA officials who would be most appropriate to contact, asking industry  stakeholders about appropriate organizations or individuals to contact,  and obtaining referrals from various professional organizations. We  interviewed or received written responses to questions from 11 industry  stakeholders. The results of our work are not generalizable to the  universe of repair and alteration projects or the views of all industry  stakeholders.

To identify how GSA identifies and assesses the risks of unforeseen site  conditions, we reviewed documents related to GSA’s capital-planning  process and project management requirements. We also reviewed  planning and risk assessment documents for the projects we reviewed.  We assessed whether or not GSA’s practices and procedures on the 18  projects we reviewed generally used a risk assessment tool as part of the  project development process. We also interviewed officials in GSA  headquarters and five regional offices (the four regions associated with  the projects we reviewed plus one additional region) to discuss how GSA  identifies and assesses risks on repair and alteration projects. The  analysis of the risk assessment process and use of risk assessment tools  included a review of documentation related to the project and GSA  processes but was primarily focused on the project management plan as  this was the key document that includes a risk assessment. Our analysis  of project risks and causes of unforeseen site conditions included a  comparison of the possible causes of unforeseen site conditions that  were experienced on the 18 projects we reviewed and whether those  same causes were identified as part of project planning. As part of  evaluating how GSA identifies and assesses project risks to determine if  improvements could be made, we reviewed Standards for Internal Control  in the Federal Government and GAO’s Cost Estimating and Assessment  Guide: Best Practices for Developing and Managing Capital Program  Costs (Cost Guide). The Standards for Internal Control in the Federal  Government provides the overall framework for establishing and  maintaining an effective internal control system and, among other things,  the Cost Guide addresses generally accepted best practices for ensuring  credible program cost estimates and the role of risks and risk assessment  in developing cost estimates. Appendix I contains a more complete  discussion of our objectives, scope, and methodology and appendix II  provides a brief description of the projects we reviewed.

We conducted this performance audit from February 2015 to March 2016  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: In fiscal year 2014, GSA had over 1,500 federally owned buildings in its  inventory. These buildings are occupied by a wide variety of federal  agencies and are used to fulfill agency missions. In some instances,  these buildings are old and in significant need of repair, renovation, or  modernization. For example, according to GSA, the average age of its  inventory is 49 years, and funding difficulties have led to deterioration of  an already aged portfolio. In addition, GSA reports that more than a fourth  of its inventory of federally owned buildings is listed in or eligible for the  National Register of Historic Places, the nation’s listing of historic  properties, and approximately half of this inventory is more than 50 years  old. We have previously reported that deferring maintenance and repair  can reduce the overall life of federal facilities, lead to higher costs in the  long term, and pose risks to safety and agencies’ missions.

GSA addresses the need for repairs and alterations in the buildings in its  inventory through its repair and alteration program. The program is  implemented through repair and alteration projects in all 11 of GSA’s  regional offices. In fiscal year 2015, about $800 million was appropriated  from the Federal Buildings Fund (FBF) to perform major and minor  repairs and alterations. This is down slightly from the $1.1 billion  appropriated in fiscal year 2014. GSA can make repairs or alterations on  its own initiative or at the request of tenant agencies. Repairs or  alterations made on GSA’s own initiative can be classified as “major”— that is, exceed the current $2.85 million threshold requiring preparation of  a prospectus that is submitted to Congress for approval—or “minor.”  Minor repair or alteration projects are those projects where the  construction costs exceed $25,000 but are less than the prospectus level  threshold. According to GSA officials, major repair and alteration projects,  among other things, primarily focus on reducing the agency’s real  property footprint, achieving energy savings, and improving the condition  of and protection of public assets and occupants’ health and safety. Minor  repair and alteration projects primarily focus on building repairs and  equipment and other replacement issues and funding is requested as a  lump sum dollar amount for the program. Financing for GSA-initiated  repair and alteration work comes from the FBF. The FBF is a fund that  is primarily financed by rents received from other agencies and it was  authorized and established by the Public Buildings Act Amendments of  1972. Instead of GSA’s receiving direct appropriations, the FBF  operates as the primary means of financing the operating and capital  costs associated with federal space, although GSA sometimes receives  supplemental appropriations to meet repair or new construction needs,  such as appropriations received from the American Recovery and  Reinvestment Act of 2009. Congress exercises control over the FBF  through the appropriations process that sets annual limits—called  obligational authority—on how much of the fund can be obligated for  various activities.

Repair and alteration work is also performed at the request of tenant  agencies. This work is done under an RWA. RWA work can range from  installation of equipment and security upgrades to major renovations of  buildings. According to GSA’s RWA National Policy Document, to be  accepted by GSA, an RWA must meet certain criteria, including that there  is a bona fide need for the work, there is a preliminary scope of work that  clearly describes the objectives and requirements of the customer  request, a cost estimate, and proper funding certification and client  signature. According to the RWA National Policy Document, the signed  RWA authorizes GSA to execute the scope of the client agency request  based on the authorized amount. The work is done on a reimbursable  basis, and GSA bills the client agency as expenses are incurred. RWAs  can be amended for changes in scope of work or authorized amounts as  long as funding is legally available for that purpose. The RWA National  Policy Document indicates there are four categories of RWAs— severable, non-severable, recurring, and non-recurring. Non-recurring  RWAs, those RWAs that, according to GSA would be applicable to repair  and alteration work, are established to cover an indefinite period that  must not exceed 5 fiscal years from the end of the last year in which  authority to obligate funds is available. In fiscal year 2014, GSA accepted  about 3,400 RWA projects in federally owned buildings held by GSA with  a total value of about $670 million. In general, about 75 percent of these  projects were less than about $80,000; however, about 2 percent of the  projects were valued at $1.9 million or higher.

Planning and executing repair and alteration projects follows a process  which is prescribed by GSA and other federal requirements. In general,  this process has five phases: (1) pre-project planning, (2) project  development and design, (3) contracting, (4) construction, and (5) project  closeout (see fig. 1). GSA officials told us that, with the exception of  certain checklists, prospectus-level RWA projects are treated the same as  regular capital projects.

The following briefly describes these five phases:

Pre-project planning: According to GSA’s Project Planning Guide,  the pre-project planning phase is where GSA develops the contextual  knowledge of its inventory, facilities, budgets, and stakeholders. This  is to enable GSA to identify potential projects, alternative solutions,  and implementation strategies. Among other things, this phase would  include facility condition and other special studies to assess the  condition of GSA’s inventory and identify repair and alteration needs.

Project development and design: This phase is where GSA begins to  develop a repair and alteration project in more detail, to refine options,  and to develop project management plans (PMP). According to GSA  officials, project development also includes risk assessment, including  documentation of known and likely unknown conditions. GSA’s  Project Planning Guide indicates both a feasibility study, which  defines project goals, scopes customer need, and assesses  alternatives, and a program development study, which reviews  previous project assumptions, plans, and budgets and proposes a  construction budget and implementation strategy, would be prepared.  In addition, cost estimates are to be completed, an initial Capital PMP  is to be prepared, and preliminary design concepts are to be  developed. A Capital PMP is a document that, among other things,  defines the goals of a project and the organization required to  accomplish the goals, as well as target budgets and schedules.  According to GSA, the PMP should also set forth the acquisition  strategy for the project and identify any constraints or risks associated  with the project.

Contracting: Acquisition planning begins in the early stages of project  development and GSA’s Project Planning Guide recommends that as  part of the feasibility study an implementation plan be prepared that  identifies the best strategy for procuring a project. During the  contracting phase, GSA solicits bids for architect/engineering services  and repair and alteration work, evaluates these bids, and awards  contracts.

Construction: This phase is when the repair and alteration work is  done. Construction includes construction of building and site  improvements, arranging for utilities, and preparing for building  occupancy. According to GSA officials, when unforeseen site  conditions are discovered they are documented through contract  change orders and modifications if they require a change to the  contract. GSA uses both an electronic system and paper records to  record contract changes. Contract change orders and modifications  are also recorded in GSA’s electronic project management system.

Project closeout: Project closeout is when the work is completed, final  payments are made, and contracts are closed. GSA’s Acquisition  Manual requires that appropriate steps be taken to ensure that  physically completed projects are formally closed out in accordance  with FAR and GSA requirements. Project closeout includes filing as- built drawings in project records. In January 2015, GSA began  implementation of a Central Facilities Repository, which will be used  to house project documents, including as-built drawings and other  building information.

To help address unexpected events or circumstances, including  unforeseen site conditions, repair and alteration projects may include  construction contingencies. According to GSA, contingencies are a part of  total estimated project costs and cover costs that may result from  incomplete design, unforeseen and unpredictable conditions, or  uncertainties concerning project scope. GSA officials said contingencies  are held by the owner (GSA) and are not part of the contract price at  award. GSA currently recommends a 10 percent construction contingency  for repairs and alterations and a 7 percent construction contingency for  new construction. Contingencies are also applied to RWA projects, and  according to GSA, prospectus-level repair and alteration RWAs would  generally have a 10 percent construction contingency.

section_title: Unforeseen Site Conditions Are Common, but Impacts on Reviewed Projects Were Limited
subsections: section_title: Both Industry Stakeholders and GSA Officials Told Us Unforeseen Site Conditions Are Common in Repair and Alteration Projects
paragraphs: According to industry stakeholders we interviewed, unforeseen site  conditions are common in repair and alteration projects. Ten of the 11  stakeholders told us that unforeseen site conditions were very prevalent,  and the other stakeholder said unforeseen site conditions were somewhat  to very prevalent. Some of the stakeholders said the older the building the  more likely unforeseen site conditions would be encountered. Officials  from the Architect of the Capitol said they run into unforeseen site  conditions on most of their projects. Officials from the U.S. Postal Service  also said unforeseen site conditions are prevalent and most often  appeared in paving projects, in underground storage tanks that were  leaking, and in roof replacements with deteriorated decking. The industry  stakeholders we interviewed identified the main types of unforeseen site  conditions as: environmental hazards (such as asbestos and lead-based  paint), and conditions being different than in building drawings or items  not located where they were expected to be. Stakeholders also told us  impacts of unforeseen site conditions are generally cost increases and  schedule delays but the impacts can vary depending on the project. For  example, one industry stakeholder told us typical impacts include costs,  increased time and schedule delays, as well as the need for greater  resources to mitigate impacts. Another stakeholder told us the impacts of  unforeseen site conditions depend on how prepared the property owner is  to address the condition and what was and was not planned for.

GSA has also reported that unforeseen site conditions are common in  repair and alteration projects. As noted earlier in this report, in 2001 the  GSA Office of Inspector General examined 45 prospectus-level repair and  alteration projects and found that in 10 projects completed in fiscal years  1998 and 1999 unforeseen site conditions accounted for about 43 percent  of the cost growth in these projects. Officials in four of the five GSA  regional offices we contacted described unforeseen site conditions as  very prevalent and officials in one regional office said they were  somewhat to very prevalent. Officials in this office went on to indicate that  unexpected asbestos, lead, and mold can be found anytime during  construction. The GSA officials identified hazardous materials as being  one of the main types of unforeseen site conditions found.

Although industry stakeholders and GSA told us unforeseen site  conditions are common in repair and alteration projects, data on the  overall extent and impacts of unforeseen site conditions are limited. For  example, as discussed in more detail below, GSA officials told us that the  agency tracks but does not analyze project change orders to determine  whether they resulted from unforeseen site conditions.

section_title: Most Projects We Reviewed Had Unforeseen Site Conditions, but Cost and Schedule Impacts Were Largely Limited
paragraphs: Most of the projects we reviewed had unforeseen site conditions.  Specifically, unforeseen site conditions were encountered in 11 out of the  18 repair and alteration projects, including two of the three prospectus  projects and nine of the 15 RWA projects (see table 1). As shown in  table 1, the types of unforeseen site conditions varied. For example, in  one prospectus project we reviewed—a project to, among other things,  build a Pavilion at the Daniel P. Moynihan U.S. Courthouse in New York  City—GSA discovered that the existing wall in the plaza area was  reinforced concrete rather than a standard concrete masonry unit, which  was what the building drawings indicated. The reinforced concrete made  demolition of the wall more difficult and, according to the project manager,  GSA spent approximately an additional $70,000 to pay for more labor to  demolish the wall.

However, despite the prevalence of unforeseen site conditions in our  selected projects, our review showed that the overall impact of these  conditions appeared largely limited. On nine of the 11 projects we  selected that experienced unforeseen site conditions, the cost for  remediating those conditions accounted for 1 to 5 percent of the project’s  original construction contract award (see fig. 2). On one of the 11  projects—a prospectus project to, among other things, modernize the  heating, ventilation, and air-conditioning system at the New Executive  Office Building in Washington, D.C.—the cost for addressing unforeseen  site conditions was approximately 6 percent of the original construction  contract award. All of the reported costs for remediating unforeseen site  conditions on the projects we reviewed were below the typical 10 percent  construction contingency that GSA attaches to repair and alteration  projects. In addition, the impacts on project schedules also appeared to  be limited. Three of the 11 projects that encountered unforeseen site  conditions experienced schedule delays. These ranged from 23 to 105  days due to the unforeseen site condition. For example, in an RWA  project to replace power generators at a Social Security Administration  center in Maryland, GSA encountered an unidentified masonry wall buried  in the ground which interfered with the planned installation of wiring. As a  result of this unforeseen condition, GSA issued a contract change order,  which, among other things, called for the contractor to remove the wall.  The removal added 23 days to the project’s schedule. In another project  for the Social Security Administration, the existence of conduits in the  ceiling that were unexpected led to a 75-day delay in the project  schedule. Although only 3 of the 11 projects we reviewed appeared to  experience schedule delays based on the records we reviewed,  unforeseen site conditions may have caused additional delays. For  example, some GSA project managers and contracting officers we  interviewed said that extensions due to unforeseen site conditions can  sometimes be absorbed into other project delays. As a result, it is not  clear how much of a delay, if any, can be attributed to some unforeseen  site conditions.

Three of the RWA projects we reviewed were associated with larger  projects that experienced unforeseen site conditions. None of the three  RWA projects had unforeseen site conditions, but unforeseen site  conditions were experienced in the three larger projects. The following  provides information about these projects:

One of the RWAs we reviewed was attached to a prospectus project  to renovate the St. Elizabeth’s Campus in Washington, D.C., for the  Department of Homeland Security. The RWA was to complete, among  other things, tenant-requested improvements to building 49 on the  campus. GSA officials told us the RWA we reviewed did not  encounter any unforeseen site conditions. However, they also told us  the building where the tenant improvements were being made had  undergone extensive renovations prior to the start of the RWA project.  GSA officials said that this earlier work essentially eliminated the risks  of unforeseen site conditions on the RWA project since the building  was gutted as part of the prospectus project. As part of the larger  prospectus project, GSA encountered unforeseen site conditions,  which included steel beams that were buried in the ground under the  building. According to the GSA officials, the beams were unforeseen,  deteriorated, and had to be replaced. GSA also abated lead-based  paint and asbestos in the building prior to the start of the RWA project.  GSA officials said remediating these unforeseen site conditions cost  about $2.4 million. The estimated construction cost for the renovation  work conducted as part of the prospectus project was $84.3 million.

One RWA project called for an upgrade of security and other  equipment for the Department of Homeland Security’s Customs and  Border Protection at the San Ysidro Land Port of Entry in San Diego,  California. This project was attached to a larger prospectus project to  reconfigure and expand the entire land port of entry. According to the  project manager, GSA did not encounter unforeseen site conditions  during the RWA project we reviewed, but unforeseen site conditions  were encountered on the prospectus project. This included greater  than expected contaminated soil conditions that needed to be  remediated. The remediation added almost $2 million to the cost of  the prospectus project, which had an estimated site development cost  of about $287 million.

A third RWA project called for the renovation of spaces occupied by  the U.S. Marshals Service at a federal building in Honolulu, Hawaii.  This RWA was attached to a larger project to modernize the building  funded through the American Recovery and Reinvestment Act of  2009. According to a GSA official, there were no unforeseen site  conditions associated with the RWA project but unforeseen site  conditions were experienced in the larger project. The project  manager told us the cost to address the unforeseen site conditions  was paid for from the larger project. Among the unforeseen conditions  experienced were additional electrical conduits in the ceiling that were  not on as-built drawings and were not discovered until the ceiling was  demolished. The project manager estimated the cost to remediate the  unforeseen site conditions was approximately $168,000.

section_title: Incomplete Building Drawings and Lack of Building Information Were among the Possible Causes of Unforeseen Site Conditions in Projects We Reviewed
paragraphs: There can be a variety of causes for unforeseen site conditions in repair  and alteration projects. For example, 5 of the 11 industry stakeholders we  interviewed cited old, inaccurate, or not up-to-date building drawings as a  cause of unforeseen site conditions. Among other causes cited by the  stakeholders were the level or type of building maintenance, lack of  information about previous renovations, construction, or use of hazardous  materials, and an insufficient number, type, or scope of environmental  tests or surveys. Some of the causes these stakeholders cited were  similar to the possible causes of unforeseen site conditions we identified  in the projects we reviewed based on project records and discussions  with GSA officials (see fig. 3). For example, as the figure shows, for  projects we reviewed, incomplete building drawings and lack of building  information were among the possible causes for unforeseen site  conditions. We also identified access issues, tenant alterations, and a  building not built up to code as possible causes. We did not identify such  things as hazardous materials, naturally occurring site conditions, and  other causes (“other”) mentioned by industry stakeholders.

We found that incomplete, inaccurate, or out-of-date building drawings— including as-built, electrical, and mechanical drawings—were the possible  cause for the unforeseen site conditions in 9 of the 11 projects we  reviewed that encountered unforeseen site conditions. For example, in  an RWA project to build out a mobile workplace at the headquarters of  the U.S. Agency for International Development in Washington, D.C., GSA  encountered a sprinkler main and storm pipe that were placed lower in a  portion of the ceiling than other pipes. According to a GSA official, the  height of the water main and pipe were not shown in the building’s  mechanical and electrical drawings. Furthermore, the pipes were not  identified during a building survey. According to the official, that section of  the water main and pipe were the only ones that were lower than the rest  of the main and pipe in the ceiling. This unforeseen site condition caused  GSA to redesign that section of the office to have the ceiling lowered by 6  inches in order to accommodate the system and pipe.

In addition, lack of information about buildings was also a top possible  cause. For 9 of the 11 projects we reviewed that encountered unforeseen  site conditions, the possible cause was lack of information about a  building’s condition. We defined this category to include unforeseen site  conditions that resulted from such things as poor building records, as well  as inadequate surveys and testing. For example, one RWA project we  reviewed was for the renovation of the U.S. Forest Service Headquarters  in Washington, D.C. to allow Forest Service staff to vacate leased space  and consolidate in the headquarters building. According to project  officials, during demolition, GSA discovered wood subflooring, and that  the subflooring lacked fire retardant. Prior to demolition, GSA was not  aware of the existence of the wood subflooring, because the wood floor  was hidden by carpet. In addition, the building being renovated was built  in 1880, and, according to the PMP, original construction documents were  not available. In general, project officials said that there was no  information available that would lead them to know that wood subflooring  existed and that they did not expect to encounter wood subflooring.  Remediation of the unforeseen site condition included installation of fire  retardant on the floor and installation of a smoke detection system. GSA  officials noted this project finished on schedule and within budget and any  additional costs or time delays were absorbed by the schedule and  budget contingencies.

The possible causes of the remaining unforeseen site conditions were  tenant alterations unknown to GSA (2 out of 11 projects), a building’s not  being originally built up to code (2 of 11 projects), and difficulty faced by  GSA in accessing the building for surveying and testing (4 out of 11  projects).

section_title: GSA Has a Variety of Methods to Identify and Assess Risks of Unforeseen Conditions but Risk Identification Could Benefit from Analysis of Project Information
subsections: section_title: Variety of Methods Are Available to Identify and Assess Potential Project Risks and GSA Generally Used These Methods on Projects We Reviewed
paragraphs: GSA policies and procedures describe a variety of methods available to  identify and assess potential risks on repair and alteration projects. These  methods are used throughout the planning and execution of projects. The  following describes some of the methods and tools used by project  phase.

Pre-project planning: GSA’s Project Planning Guide describes that  during the pre-project planning phase GSA is to assess the condition  of its facilities and prepare building reports and other studies (e.g.,  historic preservation plans) to establish project requirements. The  Project Planning Guide also describes how site surveys and various  tests may be conducted to identify possible project risks, such as  hazardous materials. GSA officials told us reviews, employing private  sector peers, are established during this phase, to assess the project  team’s cohesion and the quality of communications to ensure that any  issues that may arise during the project can be timely resolved so  they do not turn into unforeseen conditions. Tools available during this  phase include facility condition assessments and site surveys.

Project development and design: GSA uses this phase to begin  defining projects and their specifications as discussed earlier in this  report. To begin identifying potential project risks the Project Planning  Guide describes how GSA may conduct additional site surveys and  tests and develop the initial PMP. The PMP includes a risk  assessment that identifies and assesses potential risks to projects. In  addition, GSA is to prepare a feasibility study and a program  development study which, according to the Project Planning Guide,  includes an assessment of potential project risks. A Project Definition  Rating Index (PDRI) may also be prepared. GSA’s Capital Project:  PM Guide describes the PDRI as, among other things, a tool used to  identify a project’s readiness to move forward to the next phase, as  well as identify areas of risk that may require better definition and  possible mitigation. Finally, GSA’s Capital Investment and Leasing  Program Call—a document used to identify requirements for repair  and alteration projects to receive funding—requires various  documents and checklists, including an Environmental Review Sheet  and a Regional Office-Central Office Alignment checklist. These  documents and checklists further identify and assess potential project  risks. For RWA projects, GSA’s National Project Intake Guide,  describes an initial risk determination tool that is used to assist project  managers in assessing risks posed by a range of factors, including  project size and complexity. Tools available during this phase include  the PMP, feasibility study, program development study, PDRI, and  RWA risk determination tool.

Contracting: As part of this step, GSA officials told us that during  project planning architect/engineering firms are hired to identify  potential project risks through site investigations, preparation of  project specifications, and initial designs. GSA’s Capital Projects: PM  Guide states that GSA may also use Construction Managers to assist  project teams in evaluating project execution and identify potential  project risks. According to GSA officials, contract clauses are also  incorporated into construction contracts to address unforeseen site  conditions as they arise. Finally, construction contingencies are to be  added to project cost estimates to cover risks that are not identified or  mitigated in up-front planning. Tools available during this phase  include contract provisions and construction contingencies.

Construction: Risk identification and assessment during construction  includes monitoring project budgets and schedules for cost growth or  schedule delays and for “earned-value-management” purposes.  GSA’s Capital Projects: PM Guide states that project status reports  are prepared that include information on project spending and  progress in meeting project schedules. According to the guide, this  information is used to identify whether projects are experiencing  difficulties and, if so, why. GSA officials told us that contract change  orders and modifications are used to document unforeseen site  conditions. Finally, GSA officials told us that lessons learned  documents are sometimes prepared on repair and alteration projects.  According to GSA’s Project Management Practices Guide, lessons  learned documents should assess GSA’s risk response strategies.  Tools available during this phase include monthly status reports,  contract change orders and modifications, and lessons learned  documents.

Project closeout. GSA officials told us this step includes updating as- built drawings and filing them in project records. As mentioned, GSA’s  Project Management Practices Guide also describes how project  teams are to discuss projects and prepare lessons learned, including  an assessment of GSA’s risk response strategies. Tools available  during this phase include updated as-built drawings and lessons  learned documents.

Based on the interviews we conducted and project documentation we  reviewed, GSA generally used at least one of the methods or tools to  identify potential risks on 16 of the 18 projects we reviewed. To make this  determination we reviewed such documents as PMPs and feasibility  studies. GSA guidance calls for PMPs to identify constraints and project  risks and to be used continuously throughout a project to identify risks.  We found that, in general, GSA prepared PMPs for our selected projects.  For example, GSA prepared PMPs for 13 of the 18 RWA and prospectus  projects we reviewed. Five projects did not have PMPs—three were RWA  projects associated with larger projects and no separate PMP was  prepared for the RWA project, and for two projects, GSA officials were not  sure if a PMP was prepared and were unable to provide documentation of  a PMP. The project documents we reviewed generally discussed and  identified potential project risks, including sections of the PMP that  identified specific potential risks. Some of the projects we reviewed also  had other risk identification documents such as feasibility studies,  hazardous material surveys, and program development studies.

section_title: Although GSA Identified Risks on Projects We Reviewed, Identification of Unforeseen Site Conditions Were Inconsistent
paragraphs: Although GSA has risk assessment methods that were generally used on  the projects we reviewed, these methods had inconsistent results in terms  of identifying unforeseen site conditions that were later experienced.  Based on the risk assessment methods, GSA identified a range of risks  across the projects we reviewed and identified one or more types of  unforeseen site conditions on at least 16 projects (see fig. 4). However,  the risk assessment did not consistently identify the risk of specific  unforeseen site conditions that materialized during 11 of the projects.

The risks associated with unforeseen site conditions that GSA most often  identified on the projects we reviewed included: access issues (7 projects): limiting access to areas may limit building  information (for example, not being able to conduct site testing and  evaluation in an occupied space may lead to an unforeseen site  condition); presence of hazardous materials (9 projects); lack of accurate building drawings (4 projects); and other risks (11 projects), included risks that did not fall into other  categories, including risks from procurement and acquisition methods.

On 11 of the projects we reviewed that experienced an unforeseen site  condition, GSA did not identify risks that later materialized. For example,  an RWA project for the U.S. Marshals Service in Baltimore, Maryland, did  not identify risks, including a lack of accurate building drawings, and the  risk of tenant alterations in an occupied building, though these risks led to  several unforeseen site conditions throughout the building. Another RWA  project for the Social Security Administration in Richmond, California,  identified the risk of hazardous materials through site testing but did not  identify the risk of poor building drawings or a lack of access due to  continued occupation during design and construction work.

On five of the projects we reviewed that experienced unforeseen site  conditions, GSA identified risks, and the project experienced those  specific unforeseen site conditions later. For example, a renovation  RWA project for the U.S. Marshal Service in Baltimore, Maryland,  identified access issues early on as a risk to the project. According to  GSA officials, there were limitations to reducing or eliminating this risk  since the project was performed in a building with security concerns and  while still occupied. In addition, on a prospectus project at the Daniel P.  Moynihan U.S. Courthouse Building in New York City, an unforeseen site  condition was experienced related to inaccurate as-built drawings even  though the building drawings were reviewed in detail as part of a site  inspection.

On at least 16 of the projects, GSA both identified specific types of  unforeseen site conditions, and these projects did not subsequently  experience that type of unforeseen site condition during the project. For  example, the presence of hazardous materials was recognized as a risk  on nine of the projects, and none of these projects experienced an  unforeseen site condition caused by the presence of hazardous materials.  During a windows replacement RWA project for the Social Security  Administration in Woodlawn, Maryland, GSA identified issues related to  hazardous materials (asbestos) and re-scoped the project from replacing  windows to caulking the windows. GSA officials told us this change was  made so as not to disturb the asbestos. The re-scoping also resulted in a  lower-cost project.

section_title: Risk Assessment Could Benefit from Additional Analysis of Project Information
paragraphs: While GSA officials noted that risks are important and that the risk  assessment methods are designed to identify and assess risks  associated with repair and alteration projects, we found that GSA is not  analyzing project information it has available to identify risks that  materialized and their impact on project costs and schedules. A good  understanding of project risks and their impact on project costs and  schedules is important. Standards for Internal Control in the Federal  Government states that an agency’s approach to assessing risks should  comprehensively identify agency risks using a variety of quantitative and  qualitative methods and estimate the significance of those risks to help  decide how to manage those risks and plan what actions should be taken.  This approach is important in the context of repair and alteration projects  given that, as discussed earlier, risks from unforeseen site conditions, if  not mitigated, can increase project costs and potentially jeopardize  project schedules. Similarly, GAO’s Cost Estimation and Assessment  Guide states more specifically that agencies should, among other  things, conduct root cause analysis; develop a list of likely risks for  individual projects, including a list of emerging risk items that could impact  costs and schedule; and perform trend analyses and monitor project risks  to develop reliable and valid cost estimates. As discussed earlier in this  report, development of cost estimates is an integral part of GSA’s project  planning and execution process, as is establishing construction  contingencies to cover the cost of unexpected events, such as  unforeseen site conditions. Finally, the Project Management Institute’s  Global Standard: Practice Standard for Project Risk Management also  discusses the importance of identifying types of risks and their causes as  part of project planning and management, as well as the effects of these  risks on projects.

GSA’s risk assessment methods for the most part are focused on  identifying risks associated with individual projects and not identifying the  risks related to change orders on a program-wide basis, or necessarily  the cause of certain types of risks. GSA officials told us they use  contract change orders and modifications to document unforeseen site  conditions resulting in a change to the contract, and they track these for  individual projects to assess project status in terms of budgets and  schedules. They also told us they document reasons change orders or  modifications are made using a findings-of-fact form. However, GSA  officials also told us they do not analyze change orders or modifications to  identify the primary causes of cost growth or schedule delays on repair  and alteration projects, nor do they analyze the findings of fact to identify  the primary reasons change orders or modifications were made.  Furthermore, GSA officials told us this information is not used to identify  types of risks experienced on repair and alteration projects or their impact  on costs and schedules. GSA officials told us there are challenges to  using contract change orders and modifications to identify the specific  role unforeseen site conditions or other types of risks play in projects.  Challenges include the inability to conduct searches of change orders,  modifications, or findings of fact forms. According to GSA officials, neither  the electronic project management system nor the electronic acquisition  data system that GSA uses to record change orders and modifications,  are structured to permit searches to identify instances where unforeseen  site conditions were the reason for a change order or modification.

Supporting documents which could indicate the possible cause of change  orders or modifications also cannot be searched. Despite these  challenges, GSA officials said they would be open to analyzing contract  change orders and modifications, particularly if the analysis was focused  on a sample of change orders and modifications and not all of them. One  official told us such an analysis could help GSA identify when unforeseen  site conditions occur and what their impact was during certain phases of  projects. According to this official, most unforeseen site conditions are  discovered during the demolition phase of projects after construction  contracts have been awarded.

Although the projects we reviewed largely had limited cost impacts  resulting from unforeseen site conditions, change orders, including those  from unforeseen site conditions, can impact the cost and schedule of  repair and alteration projects. For example, during our design work for  this study, we reviewed the renovation of the Department of Commerce’  headquarters building in Washington, D.C. This is an ongoing prospectus  project with an estimated construction cost of $651 million. Unforeseen  site conditions, including the presence of asbestos and lead paint, were  experienced on this project and increased project costs by roughly $3  million. Also during the renovation of the Department of Interior’s  headquarters building in Washington, D.C., another ongoing prospectus  project we reviewed during our design work, contract change orders  related to unforeseen site conditions resulted in $3 million in increased  costs. The prospectus project had a current estimated construction cost  of $282 million. GSA officials told us that unforeseen site conditions are  driven by, among other things, the age of buildings. Therefore, as GSA’s  average building age increases the risk of unforeseen site conditions and  their related costs can be expected to increase. GSA officials also told us  that unforeseen site conditions are a major driver of project risk in repair  and alteration projects.

We have previously reported that risk assessments allow project  managers to identify and manage risks related to project’s costs,  schedules, and other aspects and that assessing and mitigating risks  reduces the probability of later encountering problems that can cause  cost increases and schedule delays. Analyzing contract modifications  and change orders to identify the causes of project cost growth and  schedule delays would not only allow GSA to better know what role  unforeseen site conditions play in project cost growth or schedule delays  but also the magnitude of this type of risk. This information would then  allow GSA to potentially better target these conditions in its risk  assessments and potentially reduce the probability of encountering this  risk in future repair and alteration projects. This approach will be  important as the federally-owned buildings in GSA’s inventory continue to  age and the probability of unforeseen site conditions increases.

section_title: Conclusions
paragraphs: GSA’s repair and alteration program serves an important function in  maintaining the inventory of federal buildings and facilities, and this  program will continue to increase in importance as GSA’s inventory ages  and continues to deteriorate. Repairs and alterations are expensive (over  $1.2 billion to address immediate deferred maintenance and repair needs  as estimated by GSA), and, therefore, it is imperative that the program  operate as efficiently and effectively as possible and that costs, schedule  delays, and project changes are minimized to the greatest degree  possible. This strategy includes identifying and assessing major types of  risks to projects, including those from unforeseen site conditions. Both  industry stakeholders and GSA officials have said that unforeseen site  condition risks are common, particularly in aging buildings, and can lead  to increases in project costs and schedule delays. Of equal importance is  identifying and understanding the cause of unforeseen site conditions,  such as poor quality building drawings, so these causes can be  addressed and not lead to unforeseen site conditions in the future.

GSA has risk assessment methods that consider potential risks, including  those from unforeseen site conditions. GSA also has a number of tools,  such as PMPs and project-rating indexes that help the agency identify  and assess risks. However, GSA can improve how it identifies types of  project risks and minimize their impacts on repair and alteration projects.  In particular, GSA can better analyze the information it has available, like  contract change orders and modifications, an approach that would allow a  more comprehensive identification of types of project risks, the role these  risks play in repair and alteration projects, and the impacts these risks  have on project costs, schedules, or scope of work. GSA is also not  assessing the information it has available to identify the cause of  unforeseen site conditions and identifying steps that could be taken to  address these causes in order that they do not lead to unforeseen site  conditions in the future. Such an analysis could also have broader  benefits, including allowing GSA to identify if unforeseen site conditions or  other types of risks are common to particular types of projects or  locations, and if there are common causes for certain types of risks. This  type of analysis would better inform GSA’s risk assessments and help  minimize cost and other project impacts from unforeseen site conditions  or other types of risks.

section_title: Recommendation for Executive Action
paragraphs: To improve risk assessments for repair and alteration projects, we  recommend that the Administrator of GSA develop and implement a plan  to periodically analyze information GSA already collects, for example,  based on a representative sample of repair and alterations projects, in  order to:  identify the specific impacts unforeseen conditions have had on  project costs, schedules, and scope of work; analyze the causes of these conditions for those projects that experienced unforeseen site conditions; and identify actions that will be taken to address the potential causes of unforeseen site conditions.

section_title: Agency Comments
paragraphs: We provided a draft of this product to GSA for comment. In its written  comments reproduced in appendix III, GSA agreed with the  recommendation and said it will develop a plan to address it. GSA also  provided technical comments that were incorporated, as appropriate.

We will send copies of this report to appropriate congressional  committees and the Administrator of the General Services Administration.  In addition, we will make copies available to others upon request, and the  report will be 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  me at 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 IV.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this report were to (1) identify information about the  extent, impact, and cause of unforeseen site conditions during selected  repair and alteration projects in federally owned buildings held by the  General Services Administration (GSA) and to (2) determine how GSA  identifies and assesses the risks of unforeseen site conditions. The scope  of the work was limited to buildings and facilities that are federally owned  and held by GSA. We did not include leased buildings or facilities since  these could be owned or managed by private sector entities and may not  necessarily be under GSA’s jurisdiction related to repair and alteration  work. In addition, in order to determine how GSA identifies project risks  we focused on projects where GSA played a role in planning and  developing projects.

To identify information about the extent, impact, and cause of unforeseen  site conditions during selected repair and alteration projects, we selected  18 repair and alteration projects across four GSA regions (National  Capital, Northeast and Caribbean, Mid-Atlantic, and Pacific Rim). The  projects included three prospectus projects and 15 reimbursable work  authorization (RWA) projects. The prospectus projects were all those  projects that received an appropriation from fiscal years 2010 through  2013. The RWA projects also received funding over this period. We  chose this period to help ensure projects selected had progressed into  the construction phase (where unforeseen site conditions might be  identified) and yet were recent enough that electronic records were more  likely to be available. To select repair and alteration projects to review,  we applied four criteria: (1) project cost, (2) range of project years, (3)  projects in construction, and (4) geographic diversity.

There were a total of six prospectus projects that received funding from  fiscal years 2010 through 2013. These included the following:

East Wing Infrastructure Systems Replacements (Washington, D.C.)

New Executive Office Building (Washington, D.C.)

Eisenhower Executive Office Building (Washington, D.C.)

Daniel P. Moynihan U.S. Courthouse (New York, NY)

West Wing Design Phase II (Washington, D.C.)

West Wing/East Wing Infrastructure Systems Replacements  (Washington, D.C.)

After additional research and discussion with GSA, we excluded three  projects. This was because one of the projects was solely for design work  (West Wing Design Phase II), not construction. According to GSA, the  other two projects (West Wing Infrastructure Replacements and West  Wing/East Wing Infrastructure Replacements) were combined. We  selected the remaining projects for review.

The RWA projects we reviewed were selected based on a list of RWA  projects provided by GSA. According to GSA, the list was intended to be  all RWA projects between fiscal years 2010 and 2013 that were for tenant  repairs and alterations and were in federally owned buildings held by  GSA. GSA has different types of RWA projects. For purposes of this  study we reviewed A, B, and N-type RWAs. To select specific projects  we first reviewed the list to ensure no single RWA project was  represented multiple times in the data. We then combined and sorted the  cost information of all RWA and prospectus projects and excluded all  projects below a dollar-value cutoff ($2 million) and sorted the projects  into GSA regional offices. We selected the three regional offices that  accounted for the highest dollar amount of projects. Finally, we selected  all relevant prospectus projects (see discussion above) and randomly  selected 15 RWA projects from each of three regional offices. We  selected more RWA projects than we planned to review to account for  potential data reliability issues we might encounter. In selecting RWA  projects, we excluded projects that based on their descriptions appeared  to be for services and not construction, and we excluded projects that  appeared to involve multiple sites. We asked GSA to verify the final list of  RWA projects to, among other things, ensure they were in federally  owned buildings held by GSA. We made additional adjustments based on  GSA’s verification.

We interviewed GSA project managers and contracting officers for the  projects we selected and reviewed project documents to determine if the  projects encountered unforeseen site conditions. We also interviewed  these officials to identify the nature of any cost, schedule, or scope  impacts from the unforeseen site conditions encountered. Finally, we  reviewed project documents, including contract modifications, to obtain  information about the unforeseen site conditions encountered. This  included a description of the unforeseen condition, the cost to remediate  the condition, and any schedule delays experienced. Where applicable,  we asked GSA to clarify any discrepancies between what was in the  documentation provided and what we were told in interviews. To identify  the causes of unforeseen site conditions, we discussed with project  managers and contracting officers the actual unforeseen site conditions  experienced and their potential causes. Working independently, two  analysts then coded these potential causes into one of nine different  categories of unforeseen site condition causes—lack of building condition  information, hazardous materials, tenant alterations, lack of accurate  drawings, building not built up to code, technology changes over time,  naturally occurring site conditions, access issues, and other. These nine  categories were developed by reviewing the responses of (1)  knowledgeable GSA officials, (2) officials in two government agencies  (U.S. Postal Service and the Architect of the Capitol), and (3)  individuals/representatives who were knowledgeable and experienced in  private sector practices for repair and alteration projects. The results of  our work are not generalizable to the universe of repair and alteration  projects.

Finally, we contacted 19 organizations and individuals (referred to in this  report as industry stakeholders) with knowledge of or experience in the  construction industry (see table 2). These contacts included industry trade  associations as well as two construction companies that had done repair  or alteration work for GSA and two public sector organizations—Architect  of the Capitol and the U.S. Postal Service. Our selection of industry  stakeholders was based on three methods: (1) asking GSA officials who  would be the most appropriate to contact, (2) asking industry  stakeholders about appropriate organizations or individuals to contact,  and (3) obtaining referrals from various professional organizations. Of the  19 organizations and individuals contacted, we had an interview or some  other type of positive contact from 14 organizations/individuals. Of the 14  for which we had a positive contact, we had an interview or received  written responses to GAO questions from 11. In the interviews we  discussed such issues as the prevalence of unforeseen site conditions,  the types of conditions encountered, and the causes of unforeseen or  differing site conditions. We also discussed potential impacts on projects  such as cost increases or schedule delays. The results of our work are  not generalizable to the entire universe of industry stakeholders.

To identify how GSA identifies and assesses the risks of unforeseen site  conditions, we reviewed documents related to GSA’s capital-planning and  execution process and reviewed planning and risk assessment  documents for projects we reviewed. Among the planning and project  management documents we reviewed were GSA’s Capital Planning  Guide, Capital Projects: Project Management Guide, and Project  Management Practices Guide. We also reviewed GSA’s Fiscal Year  2017 Capital Investment and Leasing Program Call (Program Call),  GSA’s P-120, Project Estimating Guide (P-120), GSA’s RWA National  Policy Document, and National Project Intake Guide. The Program  Call document outlined the requirements that must be met for a project to  be considered for inclusion in GSA’s Capital Investment Program and the  P-120 document, among other things, discussed the technical and  administrative requirements for cost estimating and cost management  tasks involved with construction projects’ planning and execution stages.  GSA’s RWA National Policy Document states that it is the primary  resource within GSA for RWA policy and use of RWAs. The National  Project Intake Guide establishes national guidance for the intake of all  Public Buildings Service projects and, among other things, supplements  information in the Project Management Practices Guide. Finally, we  reviewed other GSA policy and procedure documents, including GSA’s  policy for using Project Definition Rating Indexes, GSA’s procedures for  environmental account coding, and GSA’s Initial Risk Determination tool.

We assessed whether or not GSA’s practices and procedures on the 18  projects we reviewed generally used a risk assessment tool as part of  the project development process. The analysis of the risk assessment  process and use of risk assessment tools included a review of  documentation related to the project and GSA processes but was  primarily focused on the project management plan (PMP), which is a key  document that includes a risk assessment. Among the documents we  reviewed were PMPs, feasibility studies, and program development  studies. We interviewed GSA officials, both at headquarters and in five  GSA regional offices (the four regional offices associated with the projects  we selected plus Region 4, the Southeast-Sunbelt region), about GSA’s  overall risk assessment methods and tools. These regions were selected  since they accounted for about 80 percent of the funding for the RWA  projects from which we selected projects to review. We also interviewed  GSA project managers about how they identified and assessed risks for  the specific projects we reviewed.

Our analysis of project risks and causes of unforeseen site conditions  included a comparison of the possible causes of unforeseen site  conditions that were experienced on the 18 projects we reviewed with  whether those same causes were identified as part of project planning. As  discussed earlier, we discussed with project managers and contracting  officers the possible causes of unforeseen site conditions encountered  and coded the causes into nine different categories. We also reviewed  such documents as PMPs, feasibility studies, program development  studies, and hazardous materials studies for the projects that submitted  documentation to identify the potential project risks and their causes  identified during project planning. We then compared the potential project  risks identified during project planning with the actual unforeseen site  conditions and their potential causes that were actually experienced as  coded into the nine categories of causes. This resulted in a grouping of  projects based on whether or not project planning identified the risk and  whether or not they experienced a related unforeseen site condition. As  part of our analysis, we did not assess whether GSA did or did not comply  with its stated risk assessment methods or tools, use the appropriate risk  assessment tool or method, or correctly identify appropriate risks as part  of its assessment. We also did not assess whether or not additional risks  could or should have been identified by GSA as part of the risk  assessment process. Rather, we reviewed risk assessment documents,  such as PMPs and feasibility studies for each of our projects to determine  whether these documents were prepared and the types of risks identified.  In some instances, we used our professional judgement to determine the  type of risk identified by GSA based on the language or intent contained  in the source document.

As part of evaluating how GSA identifies and assesses project risks to  determine if improvements could be made, we reviewed Standards for  Internal Control in the Federal Government and GAO’s Cost Estimating  and Assessment Guide: Best Practices for Developing and Managing  Capital Program Costs (Cost Guide). The Standards for Internal Control  in the Federal Government provides the overall framework for  establishing and maintaining an effective internal control system for the  federal government. Among other things, the Cost Guide addresses  generally accepted best practices for ensuring credible program cost  estimates. It also discusses the role of risks and risk assessment in  developing cost estimates. Finally, we reviewed the Project Management  Institute’s (PMI) Global Standard: Practice Standard for Project Risk  Management. PMI is a not-for profit professional membership  organization for the project, program, and portfolio management  profession. Among other things, this organization issues standards and  conducts academic research to improve the profession of project  management. The Global Standard: Practice Standard for Risk  Management discusses principles of effective risk management, including  risk identification and risk assessment.

We conducted this performance audit from February 2015 to March 2016  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: Description of the General Services Administration’s (GSA) Repair and Alteration Projects GAO Reviewed
subsections: section_title: Location
paragraphs: Project cost  (in millions)

Washington, D.C.

New Executive Office Building   Washington, D.C.

section_title: Reimbursable work authorization projects GSA Region
paragraphs: Project cost  (in millions)

Washington, D.C.

Washington, D.C.

Washington, D.C.

Washington, D.C.

Renovation to upgrade all major building systems in  order to accommodate the consolidation and relocation  of employees from Rosslyn, Virginia, to Washington,  D.C.

Washington, D.C.

Construction of firing range  For Prospectus projects, project costs are the total amount appropriated or apportioned for the  project and for reimbursable work authorization projects, the project costs are the original award  amount and any amendments to the original award.

section_title: Appendix III: Comments from the General Services Administration

section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition the individual named above, other key contributors to this  report were Nancy Lueke, Assistant Director; Russell Burnett; Jenny  Chow; Richard Jorgenson; Hannah Laufe; Malika Rice; Amy Rosewarne;  Charles Schartung; and Crystal Wesco.


Question-summary annotations: questions: question: How prevalent are unforeseen challenges in repair and alteration projects?
answer: Both industry stakeholders and General Services Administration (GSA) officials told GAO that unforeseen conditions in repair and alteration projects are common.
child_questions: question: How do these challenges affect projects?
answer: Among the impacts identified by the stakeholders were increased project costs and schedule delays.
child_questions: question: How large are the cost impacts of these challenges?
answer: The overall impact of the unforeseen conditions on the 18 projects GAO reviewed was largely limited. On 9 of the 11 projects that experienced such conditions, the cost to remediate them accounted for 1 to 5 percent of the project's original construction contract award amount, and on one project the cost was approximately 6 percent. These amounts were below the typical 10 percent construction contingency GSA adds to project costs.

question: How large is the schedule impact of these challenges?
answer: Schedule impacts were also limited: 4 of the 11 projects experienced delays ranging from 23 to 105 days.

question: What are the causes of these unforeseen conditions?
answer: Incomplete building drawings and lack of building information were among the possible causes of the unforeseen conditions experienced in the projects GAO reviewed.

questions: question: How does GSA identify unforeseen conditions?
answer: GSA has a variety of methods to identify and assess risks of unforeseen conditions. GSA's Project Planning Guide states that, among other things, facility condition assessments and site surveys should be conducted initially. GSA guidance also calls for preparation of a project management plan (PMP), which includes a risk assessment matrix.
child_questions: question: How frequently does GSO use risk identification methods?
answer: GAO found that, in general, GSA used at least one of its risk identification methods on the projects reviewed.

question: To what extent are PMPs used?
answer: For example, GAO found that GSA prepared PMPs for 13 of the 18 projects reviewed. Three of the remaining five projects were attached to larger projects that had PMPs and GSA was unable to provide a PMP for the other two projects.

question: How consistent is GSA's risk identification with real-life scenarios?
answer: However, GSA's risk identification was sometimes inconsistent with unforeseen conditions that were actually experienced. For example, on 11 of the projects, GSA did not identify risks that later materialized during the project.

question: What effects can unforeseen conditions have on projects?
answer: As shown in the projects GAO reviewed, unforeseen conditions can delay schedules and increase project costs—in some cases in the millions of dollars. Analyzing project information such as change orders would allow GSA to better know what role unforeseen conditions play in repair and alteration projects and the magnitude of this risk.

questions: question: What are "unforeseen site conditions"?
answer: GAO's past work has indicated that GSA sometimes encounters “unforeseen site conditions”—conditions that are different from what was expected—in performing this work.
child_questions: question: Why are unforeseen conditions important to evaluate?
answer: Unforeseen conditions can add both time and cost to repair and alteration projects.

question: What was GAO asked to review?
answer: GAO was asked to review issues related to tenant repair and alteration projects.
child_questions: question: What does this report address?
answer: This report addresses (1) information about the extent, impact, and cause of unforeseen site conditions on selected projects, and (2) how GSA identifies and assesses the risks of unforeseen conditions.