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.

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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.

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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.

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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.

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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.

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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.

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38

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. ***