AOC and its major construction contractors have moved the CVC project forward since the Subcommittee’s June 14 hearing, although the majority of the selected milestones scheduled for completion by today’s hearing have not been completed on time. According to the construction management contractor, the base project’s construction was about 70 percent complete as of June 30, compared with about 65 percent as of May 31. The sequence 1 contractor, Centex Construction Company, which was responsible for the project’s excavation and structural work, has continued to address punch-list items, such as stopping water leaks. Although AOC had expected the sequence 1 contractor to complete the punch-list work and be off-site by June 30, some of this work remains to be done. The sequence 1 contractor has closed its on-site project office and plans to send workers back to the site to complete the remaining work. AOC has retained funds from the sequence 1 contractor that it believes will be sufficient to cover the cost of the remaining work. Furthermore, the sequence 2 contractor, which is responsible for the mechanical, electrical, plumbing, and finishing work, has continued to make progress in these areas, including erecting masonry block, placing concrete, and installing finish stone, drywall framing, plaster, and granite pavers. Many of the granite pavers that were installed on the plaza deck for the inauguration have to be replaced because of problems with quality or damage after installation. The sequence 2 contractor plans to replace these pavers when the plaza deck will no longer be needed for deliveries of construction materials. The sequence 2 contractor has also continued work on the utility tunnel, and in June, AOC executed a sequence 2 contract modification to construct the House connector tunnel. AOC expects this work to begin soon. As the Subcommittee requested, we worked with AOC to select sequence 2 milestones that the Subcommittee can use to help track the project’s progress from the Subcommittee’s May 17 hearing to July 31. We and AOC selected 22 milestones, of which 11 were scheduled for completion before June 14, 6 others before July 14, and 5 others before July 31. These milestones are shown in appendix 1 and include activities on the project’s critical path, as well as other activities that we and AOC believe are important for the project’s timely completion. As we reported during the Subcommittee’s June 14 hearing, AOC’s sequence 2 contractor completed 6 of the 11 selected activities scheduled for completion before that date—3 were completed on time and 3 were late. The remaining 5 activities had not been completed as of June 14. Of these 5, 4 have now been completed and as of July 12, 1 remained incomplete. In addition, as of July 12, the contractor was late in completing 1 of the 6 selected activities scheduled for completion between June 14 and July 14 and had not yet completed the remaining 5. AOC does not expect these delays to extend the project’s scheduled September 2006 completion date because it believes that the sequence 2 contractor can recover the lost time. A few months ago, AOC expected the utility tunnel to be operational in October 2005, but it extended that date to March 20, 2006, before the June hearing. The June schedule shows the tunnel being operational on March 7. The sequence 2 contractor has indicated that the impact of the October- to-March delay on CVC construction could be mitigated by using temporary dehumidification equipment, adding more workers to certain utility tunnel activities, or both. However, this mitigation approach would increase the government’s costs. We previously identified the utility tunnel as a project schedule and cost risk because of possible unforeseen conditions associated with underground work, and AOC and the sequence 2 contractor believe that such risk still exists with respect to the remaining tunnel work. Given this risk and the importance to the rest of the project of having the utility tunnel operational as soon as possible, AOC has asked the project team to explore options for accelerating the completion of the work necessary to begin the tunnel’s operations. We agree with AOC that delays in making this tunnel operational could have significant adverse effects on other project elements and that priority attention should be given to this area. Accelerating work may be cost-beneficial in this case. Since the June 14 hearing, the sequence 2 contractor has also encountered unforeseen conditions that, according to AOC’s construction management contractor, could delay the installation of stone on the Capitol’s East Front. Unless mitigated, this delay, in turn, could delay AOC’s estimated September 15, 2006, opening date. In fact, the June schedule shows a 24- day delay for this work, which is on the project’s critical path, and therefore pushes AOC’s scheduled date for opening CVC to the public to October 19, 2006. AOC and its construction management contractor are assessing the situation and expect to have more information on this problem within the next month. However, they believe that they will be able to recover the lost time by resequencing work, although they acknowledge that their mitigation approach would require sufficient stone to be available. The project has not been receiving stone in the quantities set forth in the delivery schedule—a risk that we previously identified— and AOC and its contractors have been taking action to address this problem, but have not yet resolved it. Mitigating this potential delay in East Front stone installation could increase the government’s costs if the mitigation involves, among other actions, expediting the installation to recover lost time. Our May 17 and June 14 statements contained several observations on AOC’s management of the project’s schedules, including our view that problems in this area contributed to slippage in the project’s scheduled completion date and additional project costs associated with delays. The statements also discussed recommendations we had already made to AOC to enhance its schedule management. AOC had agreed with these recommendations and had generally begun to implement them, but we believed that it still needed to give priority attention to them to keep the project on track and as close to budget as possible. An updated discussion follows of the issues that need AOC’s priority attention, along with current information on the status of AOC’s actions to address these issues. Having realistic time frames for completing work and obtaining fully acceptable schedules from contractors. Over the course of the project, AOC’s schedules have shown dates for completing tasks that project personnel themselves considered optimistic or unlikely to be met. In addition, the master project schedule (prepared by AOC’s construction management contractor) that AOC was using in May 2005 (the April schedule that AOC said it would use as a baseline for measuring progress on the project) did not tie all interrelated activities together and did not identify the resources to be applied for all the activities, as AOC’s contract requires. During the Subcommittee’s June 14 hearing, AOC said that it would reassess the time scheduled for tasks by today’s hearing. Since the Subcommittee’s June 14 hearing, AOC’s construction management and sequence 2 contractors reviewed the reasonableness of the time scheduled for 14 critical or near-critical activities and determined that, in general, the time shown in the May 2005 schedule reasonably reflected the time required to perform 11 of these activities. In addition, the sequence 2 contractor agreed to provide more detail about the 3 remaining activities so that the reasonableness of the time scheduled for them could be reviewed later. Although the contractors’ review did not involve a detailed, data-based analysis of the time scheduled for activities using such information as crew size and worker productivity, AOC’s construction management contractor said that it would do such analyses in the future, as appropriate. The construction management contractor said it has not yet done such an analysis for stonework because, to date, less stone has been delivered to the site than was expected and more stone workers have been available than could be used, given the shortage of stone. In AOC’s view, this stone shortage has begun to delay important activities, and as we previously indicated, AOC is working with its contractors to resolve the problem. According to AOC’s construction management contractor, both the project’s May and June 2005 master schedules (1) reflect significant improvement in the linkage of interrelated tasks, although the contractor recognizes that more work needs to be done in this area and (2) generally provide sufficient information to manage the project’s resources. However, the contractor also recognizes the need for the sequence 2 and other contractors to continue adding more detail to the activities scheduled for some project elements, such as the exhibit and expansion spaces, so that more of the interrelated activities will be linked in the schedule. The contractor also said that it will be continuously reassessing the extent to which construction contractors identify the resources they plan to apply to meet scheduled completion dates, as contractually required. Both adding detail to activities and identifying the resources to be applied are helpful in assessing the reasonableness of the time scheduled and in managing contractors’ performance. The sequence 2 contractor has provided a separate schedule showing its target dates for adding more detail to 30 project tasks. On July 8, AOC’s construction management contractor accepted the April project schedule, subject to several conditions. Because the May 2005 master schedule for the CVC project contains additional detail on activities and information on resources to be applied, we agree with AOC’s construction management contractor that this schedule represents an improvement over earlier schedules. However, we still have concerns about the extent to which the schedule links related activities, which the construction management contractor has agreed to address, and about whether AOC’s September 15, 2006, target date for opening the facility to the public is realistic. For the following reasons, we continue to believe that the project is more likely to be substantially completed in the December 2006 to March 2007 time frame than by September 2006: Because of unforeseen site conditions and other problems, AOC’s construction contractors have had difficulty meeting a number of milestones.