Kennedy Center: Improvements Needed to Strengthen the Management 
and Oversight of the Construction Process (05-SEP-03,		 
GAO-03-823).							 
                                                                 
In the mid-1990s, John F. Kennedy Center for the Performing Arts 
(Kennedy Center) officials recognized a need for additional	 
parking and better site access. As a precursor to a planned	 
project to construct an 8-acre plaza and two additional buildings
at the site, the Kennedy Center is currently in the process of	 
constructing a garage expansion and site improvement project. GAO
did this study because of congressional concerns over project	 
delays and costs as well as challenges that the Kennedy Center	 
faces as it pursues this major construction effort. GAO's	 
objectives were to (1) compare the garage expansion and site	 
improvement project's current costs, time frames, and scope with 
the estimates provided to congressional stakeholders in 1997 and 
1998 and (2) identify what challenges the Kennedy Center faces in
managing large construction projects.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-823 					        
    ACCNO:   A07172						        
  TITLE:     Kennedy Center: Improvements Needed to Strengthen the    
Management and Oversight of the Construction Process		 
     DATE:   09/05/2003 
  SUBJECT:   Construction costs 				 
	     Data collection					 
	     Facility construction				 
	     Human resources utilization			 
	     Parking facilities 				 
	     Planning						 
	     Projections					 
	     Federal facility planning				 
	     Policies and procedures				 

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GAO-03-823

                                       A

Report to the Subcommittee on Economic Development, Public Buildings, and
Emergency Management, Committee on Transportation and Infrastructure,
House of Representatives

September 2003 KENNEDY CENTER Improvements Needed to Strengthen the
Management and Oversight of the Construction Process

GAO- 03- 823

Contents Letter 1

Results in Brief 2 Background 4 Garage Expansion and Site Improvement
Project Estimates 6 Kennedy Center Faces Challenges in Managing Its
Construction Program 11

Conclusions 14 Recommendations 14 Kennedy Center Comments 15 Objectives,
Scope, and Methodology 15

Appendixes

Appendix I: Kennedy Center*s Projected Revenue from Parking Spaces
Constructed in the Garage Expansion 17

Appendix II: Agency Comments from the John F. Kennedy Center for the
Performing Arts 18 Tables Table 1: Summary of the Kennedy Center*s Garage
Expansion and

Site Improvement Project*s Estimated Cost, Scope, and Schedule 8 Table 2:
Project Scope of the Kennedy Center Site Improvements 9

Figure Figure 1: The John F. Kennedy Center for the Performing Arts*
Building and Site 6

This is a work of the U. S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
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separately.

Letter

September 5, 2003 The Honorable Steven C. LaTourette Chairman The
Honorable Eleanor Holmes Norton Ranking Minority Member Subcommittee on
Economic Development, Public Buildings, and Emergency Management Committee
on Transportation and Infrastructure House of Representatives This report
responds to your request that we review certain aspects of the John F.
Kennedy Center for the Performing Arts* (Kennedy Center) garage expansion
and site improvement project. The Kennedy Center facility, which opened in
1971 in Washington, D. C., was established as both a

national cultural arts center and a memorial to the 35 th President. In
1994, responsibility for management of the Kennedy Center facility was
transferred from the Department of the Interior to the Kennedy Center,
which has a Board of Trustees and a management staff headed by the Kennedy
Center President. In the mid- 1990s, on the basis of a survey of patrons,
Kennedy Center officials sought to provide additional parking and improve
access to the Kennedy Center site. To address these needs, the Kennedy
Center is currently constructing a garage expansion and site improvement
project that will create 525 new parking spaces and, among other things,
make improvements to the sidewalks, roads, and landscaping and to the
marble walkways and exterior wall coverings. In addition, over the next 10
years, the Kennedy Center plans to pursue a major expansion that includes
the following: an 8- acre plaza that is intended to improve

pedestrian access and link the center to the surrounding area, two new
buildings to house administrative offices and arts education programs,
facilities for free outdoor performances, and exhibition space to educate
the public about the history of performing arts in America.

As agreed with your offices, our objectives were to (1) compare the garage
expansion and site improvement project*s most recent costs, time frames
for completion, and scope with the estimates provided to Congress in 1997
and 1998 and (2) determine what challenges, if any, the Kennedy Center
faces in managing large construction projects. To do this work, we
analyzed project documents; examined existing policies and procedures, the
organization structure, and construction data systems; and interviewed
Kennedy Center and U. S. Army Corps of Engineers officials.

Results in Brief As of July 2003, Kennedy Center officials estimated that
the garage expansion portion of the project would cost $45 million,
including revenue bond issuance costs and capitalized interest payments;
be completed in December 2003; and include 525 parking spaces. These
officials estimated that the site improvement portion of the project would
cost $43 million; be completed in the summer of 2004; and include various
improvements to the sidewalks, roads, and landscaping at the Kennedy
Center site. These

estimates vary substantially from estimates that Kennedy Center officials
provided to Congress in 1997 and 1998. At that time, Kennedy Center
officials estimated that the garage expansion would cost $25 million and
include between 900 and 1,000 parking spaces, and that the site
improvements would cost $3 million and include construction of a new
front- entry driveway. According to Kennedy Center officials, the initial
garage expansion estimates were preliminary in nature and were based on
some unrealistic assumptions related to comparable construction projects,
failure to consider the need for year- round operations, and construction
market conditions. In addition, Kennedy Center officials said that the
final

scope of the site improvements increased significantly from the early
estimates because they decided to accelerate the scheduling of some
planned repairs in hopes of expediting the work and reducing the number

of contractors, thus simplifying project coordination efforts. These
officials acknowledged that they should have done a better job of
informing Congress of the preliminary nature of the estimates and the
subsequent events in the planning and bidding phases of the project that
affected the costs, time frames, and scope. Kennedy Center officials said
they are now holding monthly meetings with congressional stakeholders
regarding the status of Kennedy Center projects.

The Kennedy Center faces certain challenges in managing large construction
projects. Specifically, the Kennedy Center lacks (1) adequate policies and
procedures for guiding the planning and management of the construction
process, (2) some timely construction data on schedules and costs for
effectively overseeing construction projects and measuring

results, and (3) key human capital resources and expertise that would be
highly beneficial in managing the construction process. Although it was
difficult to determine the extent to which these challenges have hindered
the Kennedy Center*s efforts on the garage expansion and site improvement
project, having adequate policies and procedures, timely data, and
qualified human capital would help to strengthen the Kennedy Center*s
construction program and reduce risks. Addressing these challenges will
become increasingly important as the Kennedy Center undertakes the larger,
more costly and complex plaza and buildings project. The critical
importance of having quality guidance, data, and human capital was
highlighted by the National Research Council in a 2000 report on federal
organizations, such as the Kennedy Center, that contract out for
construction management services to acquire and build facilities. 1 The
council found that having adequate plans, policies, and procedures;

timely and reliable data; and in- house staff with sufficient skills was
necessary for effective management and oversight of all phases of a
construction project. We are making recommendations to the Kennedy Center
President and Board of Trustees that are aimed at improving the policies
and procedures, data, and human capital efforts for the Kennedy Center*s
major construction projects.

In commenting on a draft of this report, the Kennedy Center generally
agreed with our findings and recommendations. Kennedy Center officials
stated that they found many of the recommendations helpful and that they
have initiated efforts to address them. Further, these officials provided
additional comments to clarify information regarding the project
estimates, project management data, and human capital resources, which we
have incorporated throughout the report. (See app. II for Kennedy Center

comments.) 1 National Research Council, Outsourcing Management Functions
for the Acquisition of Federal Facilities (Washington, D. C.: National
Academy Press, 2000). The council is the working arm of the National
Academy of Sciences and the National Academy of Engineering, and it
carries out studies to advise the federal government.

Background The John F. Kennedy Center for the Performing Arts, which was
established in 1964 as both a national cultural arts center and a memorial
to

the 35 th President, opened in September 1971 as an independently
administered bureau of the Smithsonian Institution. Shortly thereafter, in
1972, the Secretary of the Interior, through the National Park Service,
assumed responsibility for maintenance and all other services related to
the administration of the Kennedy Center facility. In 1994, legislation
was enacted that transferred responsibility for operations and maintenance
of the facility to the Kennedy Center Board of Trustees. 2 The 1994
legislation also required the Kennedy Center to develop and update
annually a comprehensive building needs plan that details the condition of
the Kennedy Center facility and planned renovations. The Kennedy Center
receives annual appropriations to fund operations and maintenance as well
as construction. For example, in fiscal year 2003, Congress appropriated
$16.2 million for the Kennedy Center*s operations and maintenance and
$17.5 million for construction. 3 The Kennedy Center has other sources of
funds to finance capital improvements in addition to annual
appropriations, such as charitable donations and the ability to borrow
funds. The John F. Kennedy Center Act, as amended, provides that no
changes may be made to the grounds of the Kennedy Center without the

approval of Congress and the Secretary of the Interior. The John F.
Kennedy Center Parking Improvement Act of 1997 gave the Kennedy Center
approval to design and construct the parking garage expansion and site
improvements. 4 2 The Kennedy Center Board of Trustees is composed of 36
general trustees who must be

U. S. citizens and who are appointed by the President of the United
States, 13 trustees designated ex- officio representatives of the
executive branch and other government branches, and 10 congressional
representative trustees. Each appointed trustee serves a term of 6 years.

3 P. L. 108- 7, 117 Stat. 11, 267, 550- 551 (2003). 4 20 U. S. C. 76i( b).

The garage expansion is being funded through a loan from the District of
Columbia, which issued revenue bonds to provide the related funding, 5 and
the site improvements are being funded through annual appropriations. To
maintain a separation between the appropriated and nonappropriated

funds, the Kennedy Center arranged for separate construction management
and general contractors for the two parts of the project* the parking
garage expansion and the site improvements. The Kennedy Center also
maintains separate accounting for the garage expansion and the site
improvements. To assist in the construction of the garage expansion, the
Kennedy Center has hired a construction management firm. For the site
improvements, the Kennedy Center is using construction- contracting
services available to federal entities through a Corps of Engineers
indefinite- delivery, indefinite- quantity contract. The Corps of
Engineers is also providing limited management assistance to the project.
Figure 1

shows the Kennedy Center building and adjacent area. 5 On December 15,
1999, the District of Columbia issued $34 million in District of Columbia
revenue bonds and loaned the proceeds to the Kennedy Center for the
purpose of constructing the garage expansion. The bonds are secured by
parking revenues from the garage expansion. Payments of principal and
interest on the bonds are insured by the

Ambac Assurance Corporation.

Figure 1: The John F. Kennedy Center for the Performing Arts* Building and
Site Source: The John F. Kennedy Center for the Performing Arts (GAO added
labels to identify key landmarks). Note: The garage expansion and site
improvement project provides additional parking beneath terraces A, C, and
D and improves the sidewalks, roads, and landscaping at the Kennedy Center
site. Terraces A, C, and D are new structures; terrace B was part of the
original structure.

Garage Expansion and As of July 2003, Kennedy Center officials estimated
the cost of the garage Site Improvement

expansion and site improvement project at $88 million. This estimate
includes $43 million for the site improvements and $45 million for the
Project Estimates

garage expansion, including revenue bond issuance costs and capitalized
interest payments. The garage expansion is to include 525 new parking
spaces. The site improvements are designed to improve vehicle and
pedestrian access to the Kennedy Center and include repairs and changes to
the sidewalks, roads, and landscaping surrounding the Kennedy Center site.
Regarding the garage expansion, 104 spaces are open and operating, and the
remainder will open in December 2003. Kennedy Center officials

estimated that the site improvements will be completed in the summer of
2004. These current estimates reflect changes made after the 2001 contract
award and include such things as an approximately 1- year increase in time
frames and a $3.3 million, or 15 percent, increase in the garage expansion
costs since the time of award. These increases were primarily due to (1)
changes to the project design required by the National Capital Planning
Commission and the Commission of Fine Arts; (2) large amounts of snow

and rain during the winter and spring of 2003 that caused project delays;
and (3) unforeseen site conditions, such as deteriorated concrete and
greater- than- expected amounts of soil contamination. Kennedy Center
officials told us that the site contains petroleum and coal- tar
contamination. Although the Kennedy Center performed a soil test before
construction began, the extent of the contamination was greater than
expected. The costs associated with removing this soil contamination
account for over half of the 15 percent increase over the awarded base
contract amounts.

The July 2003 estimates of the project*s costs, time frames, and scope
vary substantially from estimates that the Kennedy Center provided to
Congress in 1997 and 1998. At that time, Kennedy Center officials
estimated that the garage expansion would cost $25 million and would
include 900 to 1,000 parking spaces, and that the site improvements would
cost $3 million and include construction of a new front- entry driveway.
Kennedy Center officials estimated that the project would be completed by
August 2000. Table 1 summarizes the differences between the current and
the 1997 and 1998 estimates of the project cost, scope, and schedule.

Tabl e 1: Summary of the Kennedy Center*s Garage Expansion and Site
Improvement Project*s Estimated Cost, Scope, and Schedule

1997 and 1998 estimates Current estimate Garage expansion

Cost $25 million $45 million Scope 900 to 1, 000 spaces 525 spaces
Schedule August 2000 December 2003

Site improvements

Cost $3 million $43 million Scope Construction of new frontentry Multiple
improvements to the

driveway. surrounding sidewalks, roadways, and landscaping and to the
marble exterior wall coverings and walkways.

Schedule August 2000 Summer 2004 Source: The John F. Kennedy Center for
the Performing Arts.

In addition, at the time that the Kennedy Center officials were planning
the garage expansion and site improvement project, they were also planning
to construct a large format movie theater at an additional cost of $7
million to $10 million. This portion of the project was later dropped due
to cost

considerations. It was anticipated that repayment of the loan from the
District of Columbia would come, in part, from parking fees and movie
theater revenue. Kennedy Center officials recognize that the reduction in
planned parking spaces from approximately 1, 000 to 525, as well as
elimination of the movie theater revenue, will result in a reduced amount
of

revenue available for loan payments. However, they said they are confident
that given planned increases in parking prices over the next 30 years,
they will still be able to pay off the loan with revenue from the new
parking spaces. A table of the Kennedy Center*s projected parking revenue
is included in appendix I. Kennedy Center officials told us that they have
reevaluated some planned capital projects, and that making these changes
allowed them to expand the scope of the site improvements portion of the
project. These officials said that they decided to (1) eliminate two
projects involving the installation of a mezzanine in the Grand Foyer and
windows in the building facade; (2) delay the construction of a curtain
wall; and (3) construct planned repairs to elevators and an expansion of
the sprinkler and fire suppression systems in phases, rather than
simultaneously.

Furthermore, in commenting on a draft of this report, Kennedy Center
officials noted that the scope of the site improvements has increased
substantially since the 1997 estimate, and that the scope now includes
repairs and improvements to pedestrian walkways, the underground building
service tunnel, garage exhaust systems, and the marble walkways and
exterior wall coverings. Table 2 shows the scope of the components of the
current site improvements. Kennedy Center officials said that they

were initially planning on making these repairs at a later date. However,
by including them with the site improvements, they hoped to expedite the
work, achieve a more uniform architectural design, and reduce the number
of contractors involved, thereby simplify scheduling and coordination
efforts. Kennedy Center officials said these scope changes account for

$38.6 million of the difference between the $88 million actual cost and
the $28 million 1997 estimate.

Tabl e 2: Project Scope of the Kennedy Center Site Improvements Component
Description

Site improvements These improvements involve a reconfiguration of the
access roadway to reduce traffic congestion. The new design provides
additional security, new drop- off points in front of the main entrances,
additional garage entrances and exits, and direct access to the Potomac
Expressway from the Kennedy Center site. Pedestrian access will also be
improved by replacing the steep ramp with a monumental

stairway and a fully accessible walkway. The site is being relandscaped to
accommodate these changes.

Service tunnel, service drive, These repairs entail adding structural
reinforcement to portions of the service tunnel and loading dock roof to
accommodate the new roadway above the plaza. In addition, mechanical work
is required to reroute the supply and exhaust systems that currently
service the entire building. Finally, the design includes a secured exit
out of the service tunnel, thereby making the service tunnel suitable for
high- level dignitary visits.

Existing garage repairs and This component includes the repair and
replacement of exhaust fans and mechanical systems underground ducts and
the installation of carbon monoxide monitors tied into the

existing garage exhaust system. It also includes new signage and new
striping in the existing garage.

Plaza repairs These repairs include replacing the marble around the
exterior of the building with granite pavers, plumbing repairs, and
replacing all of the drains and waterproofing.

West fascia These repairs entail removing and replacing 63 marble panels,
repairing the front planter, and installing a new safety rail.

Source: The John F. Kennedy Center for the Performing Arts.

Kennedy Center officials were unable to provide a detailed explanation of
how they arrived at the preliminary 1997 and 1998 cost and schedule
estimates because they had experienced high staff turnover since the
estimates were developed, and records were either not available or not
retained. Despite this fact, these officials said that it appeared that
the estimates were based on some unrealistic assumptions. For example,
they said the initial estimates

 were incorrectly based on construction costs of garages outside the
District of Columbia, which was a poor comparison because they are less
expensive to construct;

 did not adequately consider the need to keep the Kennedy Center open 365
days per year, which had an effect on construction phasing and
coordination issues and subsequently on the estimated costs and time

frames; and  did not account for the unusually expensive, busy, and
competitive

construction market conditions during this period. Furthermore, the
project was delayed for approximately 2 years as Kennedy Center officials
worked through multiple efforts to design and bid the project and reduce
project costs. For example, as part of the National Capital Planning
Commission and the Commission of Fine Arts project

review process, the Kennedy Center was required to redesign some portions
of the project to comply with their decisions regarding design elements,
finishes, landscaping, and the elimination of planned valet parking on top
of the semi- elliptical terrace. 6 In addition, budget constraints led the
Kennedy Center to undertake various efforts in an attempt to lower the
project cost, such as (1) redesigning portions of the project, (2)
performing value engineering to identify and eliminate unnecessary costs,
and (3) rebidding the project after initial contractor bids far exceeded
the Kennedy Center*s expectations and it was unsuccessful in negotiating
with the lowest bidder. Kennedy Center officials acknowledged that they
should have better informed Congress of the preliminary nature of the 1997
and 1998 estimates and the subsequent

6 In general, the National Capital Planning Commission and the Commission
of Fine Arts review every federal development project in the National
Capital Region and approve or deny the location and design of new
construction; exterior additions and renovations; grading and landscaping;
street and road extensions; and parking modifications at all federal
buildings, museums, memorials, and monuments.

events in the planning and bidding phases of the project that affected the
project*s costs, time frames, and scope. As a result, these officials said
that they now have monthly meetings with congressional stakeholders to
discuss the status of ongoing construction projects. Kennedy Center Faces

In addition to problems associated with the planning and bidding phases of
Challenges in

the project, we found that the Kennedy Center faces a number of challenges
in managing large construction projects. The Kennedy Center Managing Its

lacks (1) adequate policies and procedures to guide the planning and
Construction Program

management of the construction process, (2) some timely construction data
on schedules and costs for effectively overseeing construction projects
and measuring results, and (3) key human capital resources and expertise
that would be highly beneficial in managing the construction process. More
specifically:

 Policies and procedures. Although the Kennedy Center had some limited
construction- related guidance, such as safety plans developed by the
construction management contractor, it does not have formal, written
project management policies and procedures to help guide and administer
construction projects. A typical project management guide

would include policies and procedures on the organization of the project,
quality control and assurance standards, project execution procedures, and
requirements for day- to- day administration of contracts, all of which
would help to ensure overall project oversight. Other federal agencies
that manage construction projects, such as the General Services
Administration, the Department of State, and the Architect of the Capitol,
use such guidance.

 Timely construction data. The Kennedy Center does not always receive
timely construction data on schedules and costs. These data are necessary
for monitoring construction costs and measuring results, such as estimated
total project costs. For example, the Kennedy Center*s construction
manager told us that he provided cash flow reports only when requested,
and that, at times, he provided the reports at a rate of once every 3
months, instead of on a monthly basis as required by the contract. In
addition, the Kennedy Center decided to waive the submission of key timely
written project management reports from the construction manager and to
rely instead on weekly meetings. In commenting on a draft of this report,
Kennedy Center officials said that they had received timely scheduling
data on the garage project, on a weekly and monthly basis, at various
meetings. However, these

meetings were no substitute for timely written reports, which are
typically used in construction project management and would have provided
additional detailed information on schedules and costs that could have
been helpful in project oversight. Kennedy Center officials agree that
they should have obtained monthly project management reports and are now
doing so.

 Human capital resources and expertise. Kennedy Center officials lack key
human capital resources and expertise that would be highly beneficial in
managing the construction process. For example, the Kennedy Center
experienced significant turnover in both in- house staff and contractor
personnel during the design stages of the project, which has contributed
to reduced institutional knowledge of the project and has increased the
time necessary to finalize design decisions. In addition, two key
management positions were left vacant for an extended period. The project
executive position became vacant in September 2001. The person in this
position is responsible for directing and managing all capital repair and
construction projects. Kennedy Center officials had decided not to fill
the project executive position, but instead to have the executive vice
president assume those duties. However, Kennedy Center officials said that
given the complexities and scale of the upcoming plaza and buildings
project, they now plan to fill this position and have the person report to
the executive vice president. Also, the contracting officer position
became vacant in the summer of

2002, and Kennedy Center officials told us that because of difficulties in
finding a qualified candidate, they did not fill this position until March
2003. The President of the Kennedy Center told us he recognized that the
Kennedy Center continues to lack adequate staff or expertise to manage its
upcoming plaza and buildings project, and he detailed plans

to address these shortcomings. In commenting on a draft of this report,
Kennedy Center officials noted that they are in the process of filling the
positions of director of capital projects and project manager, have
engaged an architect and developer firm, and now feel that they do have
sufficient staff and expertise.

These construction management challenges are not new to the Kennedy
Center. In September 1995, a Kennedy Center consultant reported that there
were no clear lines of responsibility within the existing facility
management structure, and that job descriptions were not clearly defined.
7 In addition, the consultant*s report also noted the following: *An
organized

system should be developed for managing information concerning the
facility operations to be used to monitor performance against established
standards.* Regarding human capital, we reported in 1993 that the Kennedy
Center lacked a federal contracting officer, architects, engineers, or
other professional occupations associated with capital projects. 8 We
concluded that the Kennedy Center did not have sufficient capability to

effectively manage large- capital construction projects. In commenting on
a draft of this report, Kennedy Center officials told us that since 1993,
they have added a contracting department of five full- time positions and
an entire project management department consisting of nine employees* six
full- time Kennedy Center employees, including four project managers and
two support personnel, plus three contract employees. In addition, these
officials said that full job descriptions have been developed for all
positions.

Although it is difficult to determine the extent to which these challenges
have hindered the Kennedy Center*s efforts on the garage expansion and
site improvement project to date, having adequate policies and procedures,
timely construction data, and additional qualified human capital* even
though the Kennedy Center has enhanced its facility management staff since
our earlier reports* would help to strengthen the construction program and
reduce risk. Addressing these challenges will become

increasingly important as the Kennedy Center undertakes the larger, more
costly, and more complex plaza and buildings project. The critical
importance of having quality guidance, data, and human capital was
highlighted by the National Research Council*s 2000 report on federal
organizations, such as the Kennedy Center, that contract out for
construction management services to acquire and build facilities. The
council found that, among other things, these organizations should have
(1) plans, policies, and procedures to define project goals and develop

7 Wiss, Janney, Elstner Associates, Inc., Trammell Crow Company, and
Environmental Systems Design, Inc., Facility Management Assessment, Phase
I (Washington, D. C.: September 1995).

8 U. S. General Accounting Office, Kennedy Center: Information on the
Capital Improvement Program, GAO/ GGD- 93- 46 (Washington, D. C.: Feb. 9,
1993).

strategies and methods for achieving those goals; (2) detailed data to
monitor progress and assess risks; and (3) in- house staff with sufficient
management, financial, and technical skills necessary for effective
oversight of all phases of the project. Effective policies and procedures
would provide a road map for project managers on how best to estimate
project costs, administer the contract, and define the roles and

responsibilities of project staff. Timely data would allow project
managers to effectively oversee project status and measure results to
gauge effectiveness. Qualified human capital and expertise would improve
efforts to control project costs, time frames, and scope. Kennedy Center
officials acknowledged the importance of focusing on these areas. In
commenting on a draft of this report, these officials said that they have
initiated efforts to improve these areas of concern, including (1)
contacting the Federal Facilities Council for assistance with updating and
improving construction management policies and procedures, (2) requesting
monthly written

project management reports, and (3) hiring additional in- house and
contractor staff to assist in the upcoming plaza and buildings project.

Conclusions Changes in costs, time frames, and scope are not unusual in
large construction projects. However, in the case of the Kennedy Center
garage expansion and site improvement project, early estimates proved to
be

especially problematic and were based on unrealistic assumptions.
Furthermore, if the Kennedy Center continues to operate without adequate
construction polices and procedures, timely schedule and cost data, and
qualified human capital, the success of its future plaza and buildings

project will be at risk. Although making improvements in these areas is no
guarantee of project success, such improvements would strengthen the
construction program and reduce risk by providing greater effectiveness in
managing and overseeing future projects and measuring results.

Recommendations To help improve the Kennedy Center*s ability to manage and
oversee its construction program, we recommend that the President of the
Kennedy

Center, in conjunction with the Chairman of the Board of Trustees, 
develop comprehensive project management policies and procedures to guide
the planning and execution of the construction process,

 ensure development and use of timely data to oversee construction
projects and measure results, and

 ensure that the needs for human capital expertise are met. Kennedy
Center

We provided a draft copy of this report to the Chairman of the Kennedy
Comments

Center Board of Trustees and the President of the Kennedy Center. On June
20, 2003, the Kennedy Center President provided us with written comments
on behalf of the trustees and staff (see app. II). Kennedy Center
officials generally agreed with our findings and recommendations. They
said that they found the recommendations helpful, and that they have
initiated efforts to address them. Further, these officials provided
additional comments to clarify information regarding the project
estimates, project management data, and human capital resources, which we
have incorporated throughout the report as appropriate.

Objectives, Scope, and To meet our first objective of comparing the garage
expansion and site

Methodology improvement project*s most recent estimates on costs, time
frames for

completion, and scope with estimates previously provided to Congress in
1997 and 1998, we analyzed Kennedy Center construction project documents,
such as contracts, estimates, and plans. To gain a better understanding of
the construction project, we accompanied a Kennedy Center official on a
tour of the construction site during which the official pointed out the
major components and features of the project. In addition, we interviewed
officials with the Kennedy Center, the construction management contractor,
the architectural firm involved with the project, and the U. S. Army Corps
of Engineers. To meet our second objective of determining what challenges,
if any, the Kennedy Center faces in managing

large construction projects, we examined the Kennedy Center construction
process, including existing policies and procedures, organization
structure, and construction data systems. For background information, we
reviewed applicable statutes relating to the Kennedy Center and considered
previous GAO work and industry construction management practices. We did
our work between January and July 2003 in accordance with generally
accepted government auditing standards.

As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after its issue date. At that time, we will send copies of this report to
the appropriate congressional committees, the Chairman of the Kennedy

Center Board of Trustees, and the President of the Kennedy Center. We will
make copies available to others on request. In addition, this report will
be available at no charge on the GAO Web site at http:// www. gao. gov.

If you or your staff have any questions, please contact me on (202) 512-
2834 or at goldsteinm@ gao. gov. Major contributors to this report were
Casey L. Brown, Terrell Dorn, and Thomas G. Keightley.

Mark L. Goldstein Acting Director, Physical Infrastructure Issues

Appendi xes Kennedy Center*s Projected Revenue from Parking Spaces
Constructed in the Garage

Appendi x I

Expansion Debt service Fiscal

Parking rate Number of

Projected Annual

(principal plus year per space parking spaces capacity factor revenue

interest) Excess (deficit)

2004 $15 525 0. 8 $2, 299, 500 $3, 830,124 ($ 1,530, 624) 2005 15 525 1. 1
3, 161, 813 2,345,932 815, 881 2006 16 525 1. 1 3, 372, 600 2,347,134 1,
025, 466 2007 16 525 1. 1 3, 372, 600 810,765 2, 561, 835 2008 17 525 1. 1
3, 583, 388 2,327,825 1, 255, 563 2009 17 525 1. 1 3, 583, 388 3,906,706
(323, 319) 2010 18 525 1. 1 3, 794, 175 2,353,108 1, 441, 067 2011 18 525
1. 1 3, 794, 175 2,354,248 1, 439, 927 2012 19 525 1. 1 4, 004, 963
706,533 3, 298, 430 2013 19 525 1. 1 4, 004, 963 2,333,685 1, 671, 278
2014 20 525 1. 3 4, 982, 250 2,333,633 2, 648, 617 2015 20 525 1. 3 4,
982, 250 4,060,521 921, 729 2016 21 525 1. 3 5, 231, 363 2,362,280 2, 869,
083 2017 22 525 1. 3 5, 480, 475 2,367,424 3, 113, 051 2018 22 525 1. 3 5,
480, 475 539,607 4, 940, 868 2019 23 525 1. 3 5, 729, 588 2,335,932 3,
393, 656 2020 24 525 1. 3 5, 978, 700 2,332,691 3, 646, 009 2021 24 525 1.
3 5, 978, 700 4,275,310 1, 703, 390 2022 25 525 1. 3 6, 227, 813 2,376,286
3, 851, 527 2023 26 525 1. 3 6, 476, 925 2,379,500 4, 097, 425 2024 27 525
1. 3 6, 726, 038 311,664 6, 414, 374 2025 28 525 1. 3 6, 975, 150
2,337,920 4, 637, 230 2026 29 525 1. 3 7, 224, 263 4,513,050 2, 711, 213
2027 30 525 1. 3 7, 473, 375 2,395,916 5, 077, 459 2028 30 525 1. 3 7,
473, 375 2,394,620 5, 078, 755 2029 31 525 1. 3 7, 722, 488 58,953 7, 663,
535 2030 32 525 1. 3 7, 971, 600 2,343,953 5, 627, 647

Tot al $143,086, 388 $63,035,320 $80,051, 068

Source: The John F. Kennedy Center for the Performing Arts. Note: The
information in this appendix was provided by the John F. Kennedy Center
for the Performing Arts and does not contain any GAO analysis.

Agency Comments from the John F. Kennedy

Appendi x II Center for the Performing Arts

(543062)

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As of July 2003, Kennedy Center officials estimated that the garage
expansion and site improvement project would cost $88 million, the garage
expansion will be completed in December 2003, the site improvements will
be completed in summer 2004, and the project will include 525 parking

spaces and various traffic flow improvements. These estimates vary
substantially from estimates that Kennedy Center officials provided to
congressional stakeholders in 1997 and 1998. At that time, Kennedy Center
officials estimated that the project would cost $28 million, would be
completed by August 2000, and would include between 900 and 1, 000 parking
spaces. According to Kennedy Center officials, the initial estimates were
preliminary in nature and were based on some unrealistic assumptions. They
acknowledged that they should have done a better job of informing Congress
of the preliminary nature of the estimates and the subsequent events in
the project*s planning and bidding phases that affected the costs, time
frames, and scope. Kennedy Center officials said that they now hold
monthly meetings with Congress about the status of ongoing projects.

The Kennedy Center faces certain challenges in managing large construction
projects. Specifically, the Kennedy Center lacks (1) adequate policies and
procedures to guide the planning and management of the construction
process, (2) some timely construction data on schedules and costs for
effectively overseeing construction projects and measuring results, and
(3) key human capital resources and expertise that would be highly
beneficial in managing the construction process. Kennedy Center officials
are now

working to address these challenges. Although making improvements in these
areas is no guarantee of project success, these types of improvements
would strengthen the construction program and reduce risk by providing
greater effectiveness in managing and overseeing projects and measuring
results. The John F. Kennedy Center for the Performing Arts

In the mid- 1990s, John F. Kennedy Center for the Performing Arts (Kennedy
Center) officials recognized a need for additional parking and better site
access. As a precursor to a planned project to

construct an 8- acre plaza and two additional buildings at the site, the
Kennedy Center is currently in the process of constructing a garage
expansion and site improvement project. GAO did this study because of
congressional concerns over project delays and costs as well as challenges
that the Kennedy Center faces as it pursues this major construction
effort. GAO*s objectives were to (1) compare the

garage expansion and site improvement project*s current costs, time
frames, and scope with the estimates provided to congressional
stakeholders in 1997 and 1998 and (2) identify what challenges the Kennedy
Center

faces in managing large construction projects.

GAO recommends that the Kennedy Center  develop comprehensive project
management policies

and procedures to guide the construction process,  ensure development and
use of timely data to oversee

construction projects, and  ensure that needs for human capital expertise
are met. In commenting on a draft of this report, Kennedy Center officials
generally agreed with GAO*s findings and recommendations. Highlights of
GAO- 03- 823, a report to the Chairman and Ranking Minority Member,

Subcommittee on Economic Development, Public Buildings, and Emergency
Management, Committee on Transportation and Infrastructure, House of
Representatives

www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 823. To view the full product,
including the scope and methodology, click on the link above. For more
information, contact Mark L. Goldstein, (202) 512- 2834, or goldsteinm@
gao. gov.

September 2003

KENNEDY CENTER

Improvements Needed to Strengthen the Management and Oversight of the
Construction Process

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Appendix II

Appendix II Agency Comments from the John F. Kennedy Center for the
Performing Arts Page 19 GAO- 03- 823 Management and Oversight of the
Construction Process

Appendix II Agency Comments from the John F. Kennedy Center for the
Performing Arts

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