    District of Columbia: Status of the New Convention Center Project
    (30-NOV-01, GAO-02-182R).

    The Washington Convention Center Authority (WCCA) Act of 1994
    authorizes WCCA to construct, maintain, and operate the new
    convention center as well as maintain and operate the existing
    convention center. This report reviews information related to (1)
    the status of the new convention center project as of July 2001
    and (2) the Guaranteed Maximum Price (GMP) agreement. The revised
    GMP has not yet been set due to lack of agreement between WCCA
    and the construction manager on the project schedule and the
    estimated cost of pending charges. The GMP--which covers most of
    the hard costs of actual construction, such as masonry,
    carpentry, and metals, but excludes what are referred to as
    soft-cost items--is based on a set of agreed-upon assumptions
    regarding work quantities and unit costs of performing such work.
    The GMP amount of $500.6 million will be adjusted to  differences
    from the baseline assumptions as the project progresses. As of
    July 2001, WCAA's monthly report shows that the total estimated
    construction cost is approximately $778.2 million, including a
    $14.6 million contingency amount as a cushion against unforeseen
    future increases. This represents a $64.2 million, or nine
    percent, increase over the original estimate of $714 million.
    WCCA included a project contingency of $30.5 million in the
    September 1998 cost estimate. The estimated project cost of
    $778.2 million as of July 2001 does not include ongoing
    negotiations between WCCA and the construction manager regarding
    their cost estimates for pending changes and different estimates
    for the substantial and final completion dates of the new
    convention center.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-02-182R
        ACCNO:   A02529
      TITLE:     District of Columbia: Status of the New Convention Center
    Project
         DATE:   11/30/2001
      SUBJECT:   Construction costs
    	     Convention facilities
    	     Cost analysis
    	     Facility construction
    	     Future budget projections

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    GAO-02-182R

    GAO- 02- 182R Status of New Convention Center

    United States General Accounting Office Washington, DC 20548

    November 30, 2001 The Honorable Constance A. Morella Chairwoman Subcommittee
    on the District of Columbia Committee on Government Reform House of
    Representatives

    Subject: District of Columbia: Status of the New Convention Center Project
    Dear Madam Chairwoman: You asked us to provide information on the status of
    the new convention center project. The Washington Convention Center
    Authority (WCCA) Act of 1994 authorizes WCCA to construct, maintain, and
    operate the new convention center as well as maintain and operate the
    existing convention center. As agreed with your office, we reviewed
    information related to (1) the status of the new convention center project
    as of July 2001 1 and (2) the Guaranteed Maximum Price (GMP) agreement. 2

    Specifically, our objectives were to provide information regarding the
    status of (1) the new convention center project and GMP negotiations, (2)
    estimated costs through July 2001 and how they compare to the original
    budget, including information on the completion schedule and any change in
    project contingency amounts, (3) ongoing construction, including the effect
    of the April 2001 steel collapse on the estimated costs and project
    schedule, and (4) financing sources. In order to meet those objectives, we

    * held discussions and obtained information from WCCA officials;  reviewed
    WCCA and construction manager (CM) progress reports, visited the

    construction site, and compared WCCA?s current estimates for the project
    with the original cost estimates of September 1998; 3  reviewed budget
    documents and held discussions with WCCA officials to obtain

    reasons for variations in the most recent cost estimates and the original
    estimates; and  reviewed the financing plan to determine whether it covers
    the remaining estimated

    project costs. 1 This was the most recent information available at the time
    of our review. 2 The most recent information available for the GMP agreement
    was from September 2001. 3 WCCA considers the September 1998 estimate to be
    the original estimate.

    GAO- 02- 182R Status of New Convention Center Page 2 We conducted our work
    from April through October 2001 in accordance with generally

    accepted government auditing standards. On September 18, 2001, we briefed
    the staff of your Subcommittee on the preliminary results of our review. We
    agreed to provide you the briefing materials along with a formal transmittal
    letter and to update the briefing document with any available additional
    information. This letter transmits material from that briefing, with data
    updated through July 31, 2001, the most recent information available at the
    time we prepared this report. The updated briefing slides are included in
    enclosure 1.

    Results in Brief

    The revised GMP has not yet been set due to lack of agreement between WCCA
    and the CM on the project schedule and the estimated costs of pending
    changes. The GMP- which covers most of the hard costs of actual construction
    such as masonry, carpentry, and metals, but excludes what are referred to as
    soft- cost items 4 -is based on a set of agreed- upon assumptions regarding
    work quantities and unit costs of performing such work. The GMP amount of
    $500.6 million will be adjusted to reflect scope of work differences from
    the baseline assumptions as the project progresses. WCCA and the CM are
    continuing to negotiate the adjustment to the GMP.

    As of July 2001, WCCA?s monthly report shows that the total estimated
    construction cost 5 for the project is approximately $778.2 million,
    including a $14.6 million contingency amount as a cushion against unforeseen
    future increases. This represents a $64.2 million, or 9 percent, increase
    over the original September 1998 estimate of $714 million and an increase of
    $21.4 million since we reported to the Subcommittee last year. 6

    The increase in the total construction project estimate results from the
    following. The estimated hard costs have increased by $57.8 million since
    project inception due to increases in the metro station upgrade, vendor-
    provided equipment, utility work costs, removal of contaminated soil, and
    items within the GMP. The estimated other costs have increased by $24.9
    million due to design fees, consulting and inspections, the metro station
    upgrade, and other project costs. The estimated project contingency,
    discussed later in this letter, has decreased by $15.8 million and estimated
    additions to the WCCA project budget have decreased by $2.7 million.

    WCCA included a project contingency of $30.5 million in the September 1998
    cost estimate. This original project contingency amount, earmarked for cost
    increases both inside and outside of the GMP, has been used for known cost
    increases. As of May

    4 Soft costs are construction- related costs such as design fees, legal
    costs, and consulting and inspections. 5 Includes (1) the GMP, (2) hard
    costs managed outside of the scope of the GMP, and (3) other costs as of
    July 2001. 6 District of Columbia: Status of the New Convention Center
    Project (GAO/ AIMD- 00- 262, Aug. 30, 2000).

    GAO- 02- 182R Status of New Convention Center Page 3 2001, $28.3 million of
    the original $30.5 million contingency had been used, leaving a

    contingency balance of $2.2 million. The project contingency was increased
    by $15.7 million in June 2001. In July 2001, $3.3 million of the estimated
    contingency was used for hard- cost and soft- cost line item increases
    resulting in a net balance of $14.6 million. As discussed later in this
    letter, estimated financing sources still exceed WCCA?s estimated project
    costs by $37.5 million as of July 2001.

    The estimated project cost of $778.2 million as of July 2001 does not
    include ongoing negotiations between WCCA and the CM regarding their cost
    estimates for pending changes and different estimates for the substantial
    and final completion dates of the new convention center. Substantial and
    final completion dates for the new convention center range from early 2003
    at earliest to mid- 2004 at latest, respectively. The CM is reporting that
    the estimated pending changes are $135.2 million as of July 2001. These
    items are subject to negotiations between WCCA and the CM. WCCA told us that
    as of July 2001, the additional cost to the GMP could be a 2 to 3 percent
    increase over the existing GMP estimate ($ 519.4 million), which could
    result in a $10.4 million to $15.6 million increase.

    In response to a draft of this briefing, WCCA?s Managing Director/
    Development stated that the CM has agreed in principle to withdraw
    approximately $109 million associated with pending changes recently shown in
    the CM?s job status reports when the GMP is reset. According to WCCA, the
    remaining $26 million will be resolved with the subcontractors in due
    course, and the reset GMP will include funding reserves for those pending
    amounts that were not released. To the extent that pending changes are
    settled for more than the reserves in the GMP, WCCA will be responsible for
    such increases. WCCA has stated that based on the status of negotiations and
    WCCA?s current estimate, it is believed that the project?s total budget
    after being adjusted to reflect the reset GMP will be within the funding
    sources available to WCCA for this project.

    According to WCCA officials, the April 2001 collapse of steel roof trusses
    was caused by improper stabilization of one truss, coupled with a strong
    wind. WCCA has reported that the collapse will have little or no impact on
    the costs or the project schedule because the builders? insurance covered
    the costs of the damaged and replacement steel and the schedule acceleration
    necessary to overcome any delays. According to WCCA officials, the facility
    is 46 percent complete versus the 51 percent expected by September 2001. In
    response to a draft of this briefing, WCCA?s Managing Director/ Development
    stated that the variance is the result of the following two issues: (1) the
    CM deferred the construction of the middle building until the north building
    was completed and (2) for various reasons that WCCA could not control, the
    metro station upgrade work was started later than anticipated.

    Finally, WCCA?s estimated financing sources available to complete the new
    convention center project are $815.7 million. As of July 31, 2001, WCCA has
    received $770.9 million in funding and anticipates receiving an additional
    $44.8 million. The majority of the anticipated funding consists of three
    components: vendor reimbursements not yet negotiated, federal highway funds,
    and equity contributions from dedicated tax revenues. Equity contributions
    not yet received represent the estimate of dedicated taxes to be collected
    in fiscal year 2002 above the amounts needed to fund operations of the
    existing convention center and debt service on the bonds of the new
    facility. In

    GAO- 02- 182R Status of New Convention Center Page 4 response to a draft of
    this briefing, WCCA?s Managing Director/ Development stated that

    WCCA will make the equity contribution of $10 million in November 2001,
    which would increase funding received to $780.9 million and decrease the
    remaining anticipated funding to $34.8 million.

    WCCA officials acknowledge that recent events, such as the terrorist attacks
    of September 11, could adversely affect the amount of dedicated taxes
    collected if any period of national and international economic uncertainty
    is prolonged. In response to a draft of this briefing, WCCA?s Managing
    Director/ Development stated that the District of Columbia?s Office of Tax
    and Revenue is responsible for estimating WCCA?s share of the dedicated tax
    receipts. A new forecast, reflecting the impact of the events of September
    11, has not yet been submitted to WCCA. As of July 31, 2001, estimated
    financing sources were $815.7 million and total estimated project costs were
    $778.2 million, which left an estimated residual of $37.5 million. WCCA
    officials told us that they remain confident that the $815.7 million in
    financing would be sufficient to cover the currently estimated construction
    costs of $778.2 million. As stated earlier, negotiations between WCCA and
    the CM about the pending changes were ongoing at the time this report was
    being finalized.

    We provided WCCA a copy of the transmittal letter and slides for comment.
    WCCA generally agreed with the contents of the briefing slides. WCCA also
    provided some technical comments and clarifications which we have
    incorporated as appropriate throughout the briefing slides.

    As you have requested, we will continue to keep you apprised of information
    on (1) changes in cost estimates and the adequacy of project financing to
    cover any increases, (2) progress of WCCA efforts toward reaching agreement
    with the CM on the GMP, (3) the final settlement amount for the value of
    potential change orders reported by the CM, (4) determination of the actual
    completion date for the new convention center, and (5) any ongoing
    differences between WCCA and the CM regarding the above.

    We are sending copies of this report to Senator Robert Byrd, Senator Mike
    DeWine, Senator Richard J. Durbin, Senator Mary Landrieu, Senator Joseph I.
    Lieberman, Senator Ted Stevens, Senator Fred Thompson, Senator George V.
    Voinovich, Representative Dan Burton, Representative Chaka Fattah,
    Representative Joe Knollenberg, Delegate Eleanor Holmes Norton,
    Representative David R. Obey, Representative Todd R. Platts, Representative
    Henry Waxman, and Representative C. W. (Bill) Young in their capacities as
    Chair or Ranking Minority Member of Senate and House Committees and
    Subcommittees. Copies will be made available to others upon request.

    This letter will also be available on GAO?s home page at http:// www. gao.
    gov.

    GAO- 02- 182R Status of New Convention Center Page 5 If you have any
    questions, please contact me at (202) 512- 9450, or by e- mail at

    steinhoffj@ gao. gov or Jeanette M. Franzel, Acting Director, at (202) 512-
    9471. Key contributors to this letter were Keith A. Thompson, Terrell G.
    Dorn, Arkelga L. Braxton, Maria D. Edelstein, Julia J. Ziegler, and Bridget
    A. Skjoldal.

    Sincerely yours, Jeffrey C. Steinhoff Managing Director Financial Management
    and Assurance

    Enclosure

    GAO- 02- 182R Status of New Convention Center Page 6 Enclosure I

    1

    District of Columbia Government: Status of the New Convention Center Project

    Financial Management and Assurance Team

    Briefing for the Staff of the Subcommittee on the District of Columbia

    GAO- 02- 182R Status of New Convention Center Page 7 Enclosure I

    2

    Introduction

    * You asked us to provide periodic status reports on the construction of the
    new convention center. As agreed with your staff, this update on the new
    convention center?s status will include:

     the status of the Guaranteed Maximum Price (GMP),  the changes in
    Washington Convention Center Authority

    (WCCA?s) estimated project costs,  the change in project contingency
    amount,  the status of ongoing construction, and  the status of financing
    sources.

    GAO- 02- 182R Status of New Convention Center Page 8 Enclosure I

    3

    Objectives

     Our objectives were to:

     Determine the status of the new convention center project and GMP
    negotiations.

     Provide information on estimated costs through July 2001 and how they
    compare to the original budget, including information on the completion
    schedule and project contingency amounts.

     Provide information on the status of ongoing construction, including the
    effect of the April 2001 steel collapse on the cost and project schedule.

     Provide information on whether the financing plan will, in all likelihood,
    cover estimated project costs.

    GAO- 02- 182R Status of New Convention Center Page 9 Enclosure I

    4

    Background

     The Washington Convention Center Authority Act of 1994 authorizes WCCA to
    construct, maintain, and operate the new convention center as well as
    maintain and operate the existing convention center.

     The WCCA?s Managing Director/ Development oversees the contract and the
    construction with the assistance of the program manager, which is made up of
    primarily three consulting groups and several subcontractors.

     The construction manager (CM) is responsible for the construction of the
    new convention center.

    GAO- 02- 182R Status of New Convention Center Page 10 Enclosure I

    5

    Background

     The architect/ engineering team is composed of three principal
    architectural firms and several subcontractors that designed the new
    convention center.

     The new convention center plans call for a total of 2.3 million gross
    square feet, including about 730,000 square feet of prime exhibit space. The
    current convention center has 800,000 square feet, with 381,000 square feet
    of prime exhibit space.

     Based on the amount of prime exhibit space, the new convention center is
    projected to rank sixth in size in the United States when completed.

    GAO- 02- 182R Status of New Convention Center Page 11 Enclosure I

    6

    Scope and Methodology

     To determine the status of the new convention center project and its
    estimated costs and financing plan, we

     Held discussions with and obtained information from various officials of
    WCCA, and its representatives.

     Reviewed WCCA and CM progress reports, visited the construction site, and
    compared WCCA?s July 2001 unaudited cost estimates for the project with the
    cost estimates as of September 1998. 1

    1 WCCA considers the September 1998 estimate to be the original estimate.

    GAO- 02- 182R Status of New Convention Center Page 12 Enclosure I

    7

    Scope and Methodology

     Reviewed budget documents and held discussions with WCCA officials to
    obtain reasons for variations in the most recent cost estimates and the
    original estimates.

     Reviewed the financing plan to determine whether it covers the remaining
    estimated project costs.

    We conducted our work from April through October 2001 in accordance with
    generally accepted government auditing standards and considered the results
    of our most recent work, which were reported to you last year. 2

    2 District of Columbia: Status of the New Convention Center Project
    (GAO/AIMD-00-262, Aug. 30, 2000).

    GAO- 02- 182R Status of New Convention Center Page 13 Enclosure I

    8

    Results in Brief

     As of November 13, 2001, WCCA and the CM were continuing to negotiate the
    project schedule and estimated costs.

     As of July 2001, the GMP estimate, which includes most but not all of the
    hard costs related to the facility, was approximately $519.4 million. The
    current estimate represents a $18.8 million increase over the original GMP
    amount of $500.6 million.

     The CM has identified an additional $135.2 million in potential changes to
    construction costs that are subject to negotiation. WCCA has estimated that
    after negotiations, these costs could result in an additional 2 to 3 percent
    increase to the GMP costs ($ 10.4 million to $15.6 million).

    GAO- 02- 182R Status of New Convention Center Page 14 Enclosure I

    9

    Results in Brief

     As of July 2001, WCCA?s current total estimated construction cost, which
    includes the GMP, hard costs, and other costs, was approximately $778. 2
    million. This represents a $64.2 million increase over the September 1998
    estimate of $714 million and an increase of $21.4 million over the estimate
    at the time of our August 30, 2000, report.

     Based on information provided by WCCA officials, the April 2001 collapse
    of steel roof trusses was caused by improper stabilization of one truss
    coupled with a strong wind.

     WCCA has reported that the collapse of the steel roof trusses will have
    little or no impact on the costs or the project schedule because it is
    largely covered by insurance.

    GAO- 02- 182R Status of New Convention Center Page 15 Enclosure I

    10

    Results in Brief

     WCCA and the CM have different estimates for the substantial and final
    completion dates.

     WCCA?s July 2001 report shows substantial and final completion dates will
    be February 4, 2003, and May 7, 2003, respectively.

     The CM report 3 shows dates about 5 to 6 months later, and 13 to 14 months
    later, respectively, depending on the effect of design delays.

    3 This information was contained in the CM?s July 2001 report, which
    indicates that these dates are based on information as of March 2001.

    GAO- 02- 182R Status of New Convention Center Page 16 Enclosure I

    11

    Results in Brief

     As of July 31, 2001, estimated financing sources of $815.7 million were
    available to complete the new convention center project. WCCA officials said
    they believe this amount will be sufficient to cover estimated construction
    costs of $778.2 million as of July 2001.

     As of July 31, 2001, WCCA had received $770.9 million in funding and
    anticipated receiving an additional $44.8 million.

     WCCA stated that it will make an equity contribution of $10 million in
    November 2001, which will increase the funding received to $780.9 million
    and decrease the future anticipated funding to $34.8 million.

    GAO- 02- 182R Status of New Convention Center Page 17 Enclosure I

    12

    Results in Brief

     The WCCA acknowledges that in light of recent events, such as the
    terrorist attacks of September 11, the amount of dedicated taxes estimated
    to be collected could be adversely affected during a prolonged time of
    national and international economic uncertainty.

     We requested comments on a draft of these briefing slides from WCCA?s
    Chief Financial Officer and Managing Director/ Development, who generally
    agreed with the contents of the briefing. They also provided technical
    comments and clarification which we have incorporated throughout the
    briefing slides.

    GAO- 02- 182R Status of New Convention Center Page 18 Enclosure I

    13

    Status of the Guaranteed Maximum Price (GMP)

     As of November 13, 2001, the GMP had not yet been set, and WCCA and the CM
    are continuing to negotiate. Under the terms of the construction management
    services agreement between WCCA and the CM, the CM originally submitted a
    GMP proposal to WCCA in the amount of $500.6 million on May 22, 1998.

     The GMP proposal includes actual construction costs such as site work,
    concrete, and metals but excludes soft- cost items. 4 It is based on a set
    of agreed- upon quantity and unit price assumptions. The original GMP amount
    of $500.6 million will be adjusted to reflect quantities and costs that
    differ from the baseline assumptions as the project progresses.

    4 Soft costs are construction costs that are not related to the physical
    structure of the facility, such as design fees, legal costs, and consulting
    and inspections.

    GAO- 02- 182R Status of New Convention Center Page 19 Enclosure I

    14

    Status of the Guaranteed Maximum Price (GMP)

     The GMP provides the basis for WCCA and the CM to negotiate the final
    price. As of July 2001, the GMP estimate had been adjusted to $519.4
    million. WCCA and the CM continue to negotiate the effect of revisions on
    the GMP.

     The delay in resetting the GMP is mainly due to lack of agreement between
    WCCA and the CM on the project schedule and total estimated cost.

    GAO- 02- 182R Status of New Convention Center Page 20 Enclosure I

    15

    Status of the Guaranteed Maximum Price (GMP)

     WCCA and the CM monthly reports for July 2001 show the following:

     As of July 2001, the CM had approximately $135. 2 million in submitted and
    unsubmitted change orders pending, which were not included in the July 2001,
    $778 million construction cost estimate. These items are subject to WCCA and
    the CM negotiating a reset GMP.

     As of July 2001, WCCA told us that there could be an additional 2 to 3
    percent risk factor of potential increase to the GMP cost. Those percentages
    applied to the July 2001 GMP amount ($ 519.4 million) could result in a
    $10.4 million to $15.6 million increase.

    GAO- 02- 182R Status of New Convention Center Page 21 Enclosure I

    16

    Status of the Guaranteed Maximum Price (GMP)

     In response to a draft of this briefing, WCCA?s Managing Director/
    Development stated that the CM agreed in principle to withdraw $109 million
    of the pending changes when the GMP is finalized. The remaining $26 million
    in changes will be resolved with the subcontractors in due course. The final
    GMP will include funding reserves for pending amounts that were not
    released.

     WCCA?s Managing Director/ Development stated that to the extent that
    changes are settled for more than the amount included in the GMP, WCCA will
    be responsible for such increases. Based on the status of the negotiations,
    WCCA believes that the project?s total budget, after being adjusted to
    reflect the reset GMP, will be within the funding sources available to WCCA
    for this project.

    GAO- 02- 182R Status of New Convention Center Page 22 Enclosure I

    17

    Estimated Cost

     As of July 2001, WCCA?s current total estimated construction cost was
    approximately $778. 2 million, which represents a $64.2 million increase
    over the September 1998 estimate of $714 million (see tables 1 and 2). Also,
    this represents a $21.4 million increase since our August 30, 2000, report.

    GAO- 02- 182R Status of New Convention Center Page 23 Enclosure I

    18

    Estimated Cost Table

    as of September 1998 and July 2001 (Dollars i n thousands)

    Project component Estimate as of 9/1998 Esti mate as of 7/2001 Incr ease
    (decrease) Percent of change

    WCCA-estimated hard costs 5 $505,600 $563,422 $57,822 11.4 WCCA-estimated
    other costs 118,903 143,815 24,912 21.0 Conti ngency 30,497 14,634 (15,863)
    (52.0) Estimated additions to WCCA project budget 59,000 56,338 (2,662)
    (4.5) Total esti mated constructi on costs 714,000 778,209 64,209 9.0 Table
    1: Compari son of WCCA' s Unaudi ted Esti mated Costs for the New Conventi
    on Center

    5 Hard costs are construction costs related to the physical structure of the
    facility, such as masonry, concrete, and structural steel.

    Source: WCCA records.

    GAO- 02- 182R Status of New Convention Center Page 24 Enclosure I

    19

    Table 2: Changes in Estimated Construction Costs

    $500,000 $540,000

    $580,000 $620,000

    $660,000 $700,000

    $740,000 $780,000

    $820,000 1998 1999 2000 2001

    Years Doll ars in thousands

    Total estimated construction costs

    Source: WCCA records.

    GAO- 02- 182R Status of New Convention Center Page 25 Enclosure I

    20

    WCCA?s Total Estimated Project Costs and Changes

     The estimated hard costs 6 have increased by $57. 8 million since the
    project?s inception.

     Included in the increase is $27. 2 million, which is attributable to the
    following:

     Metro station upgrade,

     Vendor- provided equipment (audio- visual, telecommunications, and food
    service), and

     Utility work costs that were not included in the original scope of the
    project.

    6 This increase includes $18.8 million of settled and estimated changes thus
    far under the GMP plus an additional $39 million which, while also managed
    by the CM, is controlled outside of the scope of the GMP.

    GAO- 02- 182R Status of New Convention Center Page 26 Enclosure I

    21

    Estimated Costs

     Approximately $11.8 million of the hard- cost increase resulted from the
    need to remove more contaminated soil than was originally anticipated.

     The remaining $18. 8 million in hard- cost increases to the GMP represent
    WCCA?s estimate of potential cost increases for changes and revisions to
    trade line items such as concrete, masonry, metals, and carpentry.

    GAO- 02- 182R Status of New Convention Center Page 27 Enclosure I

    22

    Estimated Costs

     Estimated other costs have increased by $24.9 million since the project?s
    inception and are attributable to increases in:

     Design fees,

     Consulting and inspections, and

     Other project costs.

    .

    GAO- 02- 182R Status of New Convention Center Page 28 Enclosure I

    23

    Change in Project Contingency Amount

     The project contingency is an estimate in the project?s budget that is
    earmarked for cost increases both inside and outside the GMP for which WCCA
    is responsible.

     As of May 2001, $28.3 million of the original $30.5 million estimated
    contingency had been used for specific purposes, leaving a contingency
    balance of $2.2 million.

     In June 2001, WCCA increased the contingency estimate by $15.7 million. In
    July 2001, $3. 3 million of the estimated contingency was used for hard-
    cost and soft- cost line item increases resulting in a net balance of $14.6
    million as of July 2001.

    GAO- 02- 182R Status of New Convention Center Page 29 Enclosure I

    24

    Status of Ongoing Construction

     WCCA officials provided the following information about the collapse of
    steel roof trusses:

     In April 2001, several steel roof trusses located in the Middle Building
    on the M Street side of the construction site collapsed (see figures 1, 2,
    and 3).

     The collapse has been attributed to improper stabilization of a truss
    coupled with a strong wind.

     WCCA suspended construction for a day to perform an assessment and
    investigation.

    GAO- 02- 182R Status of New Convention Center Page 30 Enclosure I

    25

    Status of Ongoing Construction

     The insurer agreed to cover the costs of removing damaged steel and
    installing replacement steel.

     WCCA reported that no time delays to the new convention center have
    resulted from the collapse.

     WCCA also reported that its loss from the collapse was the $10,000
    deductible that the insurance policy requires.

    GAO- 02- 182R Status of New Convention Center Page 31 Enclosure I

    26 Figure 1: Steel Collapse--April 2001

    A pictorial view of the collapsed steel with the North building in the
    background.

    GAO- 02- 182R Status of New Convention Center Page 32 Enclosure I

    27 Figure 2: Steel Collapse--April 2001

    A pictorial view of the collapsed steel from the 9th Street side.

    GAO- 02- 182R Status of New Convention Center Page 33 Enclosure I

    28 Figure 3: Steel Collapse--April 2001

    A close-up of one of the steel trusses involved in the collapse.

    GAO- 02- 182R Status of New Convention Center Page 34 Enclosure I

    29 7 Substantial completion is defined as obtaining occupancy permits for
    all three buildings and having those

    buildings available for operations, except for minor items identified by
    WCCA that have not yet been completed. 8 Final completion is defined as the
    completion of all three buildings and minor items identified by WCCA.

    Reported Status of Ongoing Construction  Date of completion

     WCCA?s July 2001 report shows that substantial 7 and final 8 completion
    dates for the Convention Center will be February 4, 2003, and May 7, 2003,
    respectively.

     The CM is reporting that the substantial and final completion dates are
    July 8, 2003, and November 6, 2003, respectively. The CM further states that
    if design delays continue, the substantial and final completion dates could
    be March 12, 2004, and July 11, 2004. This information was contained in the
    CM?s July 2001 report, which indicates that these dates are based on
    information as of March 2001. See table 3 for a comparison of completion
    dates.

    GAO- 02- 182R Status of New Convention Center Page 35 Enclosure I

    30

    Table 3: Comparison of WCCA and the CM Estimated Completion Dates

    Dates WCCA estimate CM estimate 1 CM estimate 2 a

    Substanti al completi on February 4, 2003 July 8, 2003 March 12, 2004 Final
    completi on May 7, 2003 November 6, 2003 July 11, 2004 a Est i mat e 2 consi
    der s the impact of continuing desi gn del ays .

    GAO- 02- 182R Status of New Convention Center Page 36 Enclosure I

    31

    Reported Status of Ongoing Construction

     WCCA has instructed the CM to prepare and forward to subcontractors a
    schedule that would result in completion of the new convention center within
    the WCCA- reported milestone. The CM has notified its subcontractors but has
    not entered into a contractual obligation with WCCA for this schedule.

     The CM partially attributes the projected delays to design changes,
    incomplete designs, and delays in shop drawings. The CM reports that these
    issues may result in increased costs and/ or time delays.

     WCCA officials stated that they do not agree with the CM?s assessment of
    the design delays or its estimated substantial and final completion dates.

    GAO- 02- 182R Status of New Convention Center Page 37 Enclosure I

    32

    Status of Ongoing Construction

     WCCA officials stated that as of September 2001, the construction of the
    new convention center was 46- percent complete as opposed to the planned 51-
    percent completion as of this date.

     In response to a draft of this briefing, WCCA?s Managing Director/
    Development stated that the variance is the result of the following two
    issues: (1) the CM deferred the construction of the middle building until
    the north building was completed and (2) for various reasons that WCCA could
    not control, the metro station upgrade work was started later than
    anticipated.

    GAO- 02- 182R Status of New Convention Center Page 38 Enclosure I

    33

    Status of Ongoing Construction

     Metro station

     As of July 2001, WCCA estimated project costs related to the metro station
    were $33.4 million.

     In comparison, the Washington Metropolitan Area Transit Authority (WMATA)
    estimated costs of approximately $29 million to $30 million. WMATA?s funding
    for the station is solely from the congressional contribution ($ 25 million)
    and interest earned from that contribution. The intent of WMATA?s plans and
    estimates is to eliminate any potential need for supplemental funds from
    WCCA.

     WCCA officials stated that the estimated $4 million difference between the
    WCCA and WMATA estimates was attributable to: (1) WMATA scope work that
    required coordination with WCCA, such as slurry wall construction, and (2)
    the external part of the station, which is outside of WMATA?s scope but
    within WCCA?s plans.

    GAO- 02- 182R Status of New Convention Center Page 39 Enclosure I

    34

    Financing

     WCCA?s estimated financing sources to complete the new convention center
    were $815.7 million as of July 31, 2001.

     As of July 31, 2001, WCCA had received $770.9 million in funding and
    anticipated receiving an additional $44.8 million, most of which is covered
    in three sources:

     $10 million of vendor reimbursements that have yet to be negotiated.
    Accordingly, final amounts can not be determined until these negotiations
    take place.

     $19.5 million of federal highway grants.

    GAO- 02- 182R Status of New Convention Center Page 40 Enclosure I

    35

    Financing

     $10 million in equity contributions, which represents the estimate of the
    amount of dedicated tax revenues that will be collected in fiscal year 2002
    above the amounts needed for operations of the existing convention center
    and debt service on the bonds of the new facility.

     In response to a draft of this briefing, WCCA?s Managing Director/
    Development stated that WCCA will make the equity contribution of $10
    million in November 2001, which would increase funding received to $780.9
    million and decrease the anticipated future funding to $34.8 million.

     Dedicated taxes are certain District sales and use taxes that are
    transferred to WCCA to construct and operate the convention center and
    redeem the bonds. These taxes consist of a 4. 45 percent hotel sales tax and
    a 1 percent restaurant tax and rental vehicle tax.

    GAO- 02- 182R Status of New Convention Center Page 41 Enclosure I

    36

    Financing

     The WCCA acknowledges that in light of recent events, such as the
    terrorist attacks of September 11, the amount of dedicated taxes estimated
    to be collected could be adversely affected during a prolonged time of
    national and international economic uncertainty.

     In response to a draft of this briefing, WCCA?s Managing Director/
    Development stated that the District of Columbia?s Office of Tax and Revenue
    is responsible for estimating WCCA?s share of the dedicated tax receipts. A
    new forecast reflecting the impact of the events of September 11 has not yet
    been submitted to WCCA.

     As of July 2001, estimated financing sources were $815. 7 million and
    total estimated construction costs were $778. 2 million, which leaves an
    estimated residual of $37. 5 million.

    GAO- 02- 182R Status of New Convention Center Page 42 Enclosure I

    37

    Financing

     WCCA has stated that the funding sources are sufficient to cover its
    current estimated construction costs of $778.2 million to complete the new
    convention center. However, as stated previously the negotiations are
    ongoing regarding the pending changes and the GMP.

    GAO- 02- 182R Status of New Convention Center Page 43 Enclosure I

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    Agency Comments

     WCCA generally agreed with the contents of our briefing slides. WCCA
    provided some technical comments and clarifications which we have
    incorporated as appropriate throughout the briefing slides.

    (194037)
    *** End of document. ***