Courthouse Construction: Information on Project Cost and Size
Changes Would Help to Enhance Oversight (30-JUN-05, GAO-05-673).
The General Services Administration (GSA) and the federal
judiciary are in the midst of a multibillion-dollar courthouse
construction initiative aimed at addressing the housing needs of
federal district courts and related agencies. From fiscal year
1993 through fiscal year 2005, Congress appropriated
approximately $4.5 billion for 78 courthouse construction
projects. GAO (1) compared estimated and actual costs for
recently completed courthouse projects and determined what
information GSA provided to Congress on changes to proposed
courthouse projects, (2) identified factors that contributed to
differences between the estimated and actual costs of seven
projects selected for detailed review, and (3) identified
strategies that were used to help control the costs of the seven
selected projects.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-673
ACCNO: A28622
TITLE: Courthouse Construction: Information on Project Cost and
Size Changes Would Help to Enhance Oversight
DATE: 06/30/2005
SUBJECT: Construction costs
Cost analysis
Cost control
Cost overruns
Courts (law)
Federal courts
Government facility construction
Program evaluation
Program management
Cost estimates
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GAO-05-673
United States Government Accountability Office
GAO Report to Congressional Requesters
June 2005
COURTHOUSE CONSTRUCTION
Information on Project Cost and Size Changes Would Help to Enhance Oversight
a
GAO-05-673
[IMG]
June 2005
COURTHOUSE CONSTRUCTION
Information on Project Cost and Size Changes Would Help to Enhance Oversight
What GAO Found
The actual costs of courthouse construction projects exceeded the
estimated costs submitted to Congress at the design and construction
phases by an average of 17 percent and 5 percent, respectively, and the
reasons for the cost changes were not consistently explained. The actual
costs were closer to the estimates provided at the construction phase, but
as the figure shows, the actual cost still varied widely from the estimate
for some projects. Both the estimated cost and the proposed building size
often changed between the two funding requests. GSA did not always
indicate that changes had occurred or explain the reasons for the changes.
Including this information would be consistent with leading practices in
capital decision making.
For the seven projects GAO reviewed in detail, most cost changes resulted
from changes to the project's scope or from postponing the start of
construction. For example, scope changes called for by security
requirements and revisions to the U.S. Marshals Service's Design Guide
increased the costs of some projects. Postponing the start of construction
also increased costs because of inflation and changes in local market
conditions. Factors that led to postponing construction included
difficulties with site acquisition and GSA receiving funding later than
anticipated.
GSA used several strategies to help reduce or control costs for the seven
projects, including value engineering, modified contracting methods, and
involving tenant agencies. Value engineering was used during design on all
projects, and in some cases, resulted in the use of less expensive
materials to finish the courthouse interiors, but in other cases resulted
in changes that could increase the long-term cost of operating the
buildings. Some project managers used modified contracting methods to
control costs by reducing the time between the design and construction
phases. Project managers also used a variety of approaches for involving
tenant agencies in decisions about the building design and informing them
about the progress of the project.
Comparison of Actual and Estimated Courthouse Project Costs Number of
projects
12 11
10
8
6
4
2
0 -10% to -30% 0 to -10% 0 to +10% +10% to +30% +30% to +50% Over 50 %
Deviation of actual expenditures from estimate
Design estimate (27 projects)
Construction estimate (32 projects) Sources: GAO (analysis), GSA (data).
United States Government Accountability Office
Contents
Letter
Results in Brief
Background
Actual Costs of Courthouse Projects Can Vary Significantly from
Estimates Provided to Congress, and Changes Are Not Consistently Explained
Changes in Scope and Postponement of Planned Construction Start Dates
Resulted in Cost Changes for Selected Projects GSA Used Several Strategies
to Reduce and Control Costs of
Selected Projects Recent GSA Program Improvements Conclusions
Recommendations for Executive Action Agency Comments
1 2 4
9
14
22 28 29 29 30
Appendixes
Appendix I: Scope and Methodology 31
Appendix II: Timelines and Costs of Courthouse Projects Completed Since
1998 34
Appendix III: Comments from the General Services Administration 37
Appendix IV: GAO Contact and Staff Acknowledgments 39
Tables Table 1: Changes between Estimated and Actual Costs for Seven
Projects 15
Table 2: Factors That Caused Scope Changes for Seven Selected
Projects 16
Table 3: Summary of Estimated and Actual Costs 35
Figures Figure 1:
Figure 2:
Figure 3: Figure 4:
Figure 5:
Figure 6:
Development and ApprovalProcess for Funding a Typical
Courthouse 6
Breakdown of Estimates Provided to Congress by GSA
for 38 Projects 10
Comparison of Actual and Estimated Costs 11
Changes between Design and Construction Funding
Requests 12
Historic Preservation for the Gulfport Courthouse
Project 17
Timelines of Courthouse Construction Projects 34
Contents
Abbreviations
AOUSC Administrative Office of the U.S. Courts
CCP Center for Courthouse Programs
ESPC Energy Savings and Performance Contracts
GSA General Services Administration
OMB Office of Management and Budget
USMS U.S. Marshals Service
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separately.
A
United States Government Accountability Office Washington, D.C. 20548
June 30, 2005
The Honorable James M. Inhofe Chairman, Committee on Environment and
Public Works United States Senate
The Honorable Christopher S. Bond
Chairman, Subcommittee on Transportation and Infrastructure Committee on
Environment and Public Works United States Senate
The General Services Administration (GSA) and the federal judiciary are in
the midst of a multibillion-dollar courthouse construction program aimed
at addressing the housing needs of federal district courts and related
agencies. From fiscal year 1993 through fiscal year 2005, Congress
appropriated approximately $4.5 billion for 78 courthouse construction
projects.1 The judiciary's current 5-year plan (covering fiscal years 2005
through 2009) identifies 57 new projects that are expected to cost $3.8
billion.
In response to concerns that GSA's Inspector General and we have raised
over the years, GSA and the judiciary have taken actions to manage and
control courthouse construction costs. However, courthouse projects
continue to be costly, and increasing rents and budgetary constraints have
given the judiciary further incentive to control their costs. The
judiciary pays rent to GSA for the use of the courthouses, which GSA owns,
and the proportion of the judiciary's budget that goes to rent has
increased as the judiciary's space requirements have grown. Additionally,
in fiscal year 2004, the judiciary faced a budgetary shortfall that
required it to cut its administrative costs and reduce staff by 6 percent.
In September 2004, the judiciary announced a 2-year moratorium on new
courthouse construction projects as part of an effort to address its
increasing operating costs and budgetary constraints. During this time,
among other things, the judiciary plans to review its space needs and
standards in an effort to reduce the costs of its space. While some of the
57 projects in the current 5-year plan
1The $4.5 billion does not include all rescissions that affected the total
funding available for the 78 projects.
and their costs may change as a result of the moratorium, the judiciary
believes that it will continue to need additional space to accomplish its
mission.
To assist the committees with their oversight of the courthouse
construction program, you asked us to review courthouse construction
project costs. As a result, we (1) compared estimated and actual costs for
recently completed courthouse projects and determined what information GSA
provided to Congress on changes to the proposed courthouse projects, (2)
identified factors that contributed to differences between the estimated
and actual costs of selected projects, and (3) identified strategies that
were used to help control the costs of the selected projects. To do this
work, we reviewed project documents submitted to Congress and obligations
data from GSA's budget office for 38 projects completed since 1998. For
each project, we compared the actual cost, including claims, with the
estimated total project cost that GSA provided to Congress, typically when
it requested funding for the project's design and construction. GSA
generally requests funding in two phases-initially for the design of the
project and then later for the project's construction-and provides
Congress with an estimate of the project's total cost with each request.
We then selected seven completed courthouses for a detailed review to
identify factors that affected costs and the strategies used to help
control them. The seven courthouses we reviewed were located in Albany,
Georgia; Cleveland, Ohio; Denver, Colorado; Erie, Pennsylvania; Gulfport,
Mississippi; Las Vegas, Nevada; and Seattle, Washington. We selected these
courthouses to include a range of cost changes, sizes, and geographic
locations. We visited the courthouses, reviewed relevant project files,
and interviewed GSA project managers and others involved in the projects.
We also discussed our work with judiciary officials, including
Administrative Office of the U.S. Courts (AOUSC) officials and judges. We
determined that the project cost data were reliable for the purposes of
our review. We conducted our work from July 2004 through April 2005 in
accordance with generally accepted government auditing standards (see app.
I for more information on our scope and methodology).
Results in Brief The actual costs of courthouse construction projects
exceeded the estimated costs submitted to Congress at the design and
construction phases by an average of 17 percent and 5 percent,
respectively, and the reasons for the cost changes were not consistently
explained in GSA's documents. Specifically, the actual costs for
courthouse construction projects completed since fiscal year 1998 ranged
from 23 percent below to
115 percent above the first cost estimates provided to Congress.2 The
actual costs were closer to the estimates provided at the second key
point, when funds were requested for construction, than they were to the
design phase estimates, but the actual costs still ranged from 25 percent
below to 52 percent above the construction phase estimates.3 Both the
estimated project cost and the proposed building size, described in the
prospectus or fact sheet submitted to Congress with the request for
construction funding, often differed from the information contained in
earlier design phase documents. However, GSA did not always indicate that
changes had occurred or explain the reasons for the changes. As a result,
changes to the courthouse projects that could have increased costs might
not have been apparent to congressional decision makers.
For the seven projects we reviewed in detail, most cost changes resulted
from changes in the scope of the project or from postponing the start of
construction. We found that changes to the scope of these projects often
resulted in cost changes. For example, changes called for by security
requirements and revisions to the U.S. Marshals Service's Design Guide
increased the costs of some projects. We also found that postponing the
start of construction increased the likelihood of cost increases due to
inflation and changes in local market conditions. Factors that led to
postponing construction included difficulties with site acquisition and
GSA receiving funding later than anticipated. We did not find that
departures from the U.S. Courts Design Guide (Design Guide), which sets
standards for courthouse construction, were a major factor in project cost
increases.
For the seven projects we reviewed in detail, GSA used several strategies
to help reduce or control costs, such as value engineering (a process to
identify potential cost-saving changes), modified contracting methods, and
a variety of approaches for involving and communicating with tenant
agencies. GSA used value engineering during the design of all seven
projects to help control costs. Many of the value engineering changes
resulted in the use of less expensive materials to finish the interior of
the courthouses. Some other changes, such as the removal of a window
washing platform, could increase the future operating costs of the
buildings. Some project managers used modified contracting methods in an
2This range is for the 27 projects that GSA provided a total project cost
estimate to Congress at the project design phase.
3This range is for the 32 projects that GSA provided a total project cost
estimate to Congress with the construction funding request.
effort to control costs by reducing the time between the design and
construction phases. This strategy reduced the risk that changes in
tenants' requirements and inflation could increase costs. In keeping with
capital project leading practices, GSA project managers also used a
variety of communication tools to involve project stakeholders in
decisions about the building design and keep them informed about the
progress of the project. For example, each project manager had a full-size
model of a district courtroom built before construction began to solicit
judges' and other stakeholders' comments and input. Changes to the design
and layout of the courtrooms were made at this point, thereby helping to
control costs by minimizing changes during construction.
We are recommending that GSA clearly identify and explain changes in
estimated project costs and building size to improve the usefulness of
project information that GSA provides to Congress. GSA commented on a
draft of this report and concurred with our findings and recommendation.
GSA and AOUSC also provided technical clarifications, which we have
incorporated in this report as appropriate.
Background The judiciary and GSA are responsible for managing the
multibillion-dollar federal courthouse construction program, which is
designed to address the judiciary's long-term facility needs. AOUSC, the
judiciary's administrative agency, works with the nation's 94 judicial
districts to identify and prioritize needs for new and expanded
courthouses. Since fiscal year 1996, AOUSC has used a 5-year plan to
prioritize new courthouse construction projects, taking into account a
court's need for space, security concerns, growth in judicial
appointments, and operational inefficiencies that may exist. The Design
Guide specifies the judiciary's criteria for designing new court
facilities and sets the space and design standards for courthouse
construction. First published in 1991, the Design Guide has been revised
several times to address budgetary considerations, technological
advancements, and other issues.
GSA has been using AOUSC's 5-year plan since fiscal year 1996 to develop
requests for both new courthouses and expanded court facilities. GSA also
prepares feasibility studies to assess various courthouse construction
alternatives and serves as the central point of contact with the judiciary
and other stakeholders throughout the construction process. For
courthouses that are selected for construction, GSA prepares detailed
project descriptions called prospectuses.4 The prospectus includes the
justification, location, size, and estimated cost of the new or annexed
facility. GSA typically submits two prospectuses to Congress to request
authorization and funding.5 The first prospectus, often called the site
and design prospectus, outlines the scope and estimated costs of the
project at the outset and typically requests authorization and funding to
purchase the site for and design of the building. The second prospectus,
often called the construction prospectus, outlines the scope and estimated
costs of the project as it enters the construction phase and typically
requests authorization and funding for construction, as well as additional
funding if needed for site and design. At the request of Congress or when
additional authority and funding are required, GSA may also provide
additional prospectuses or fact sheets that contain the project's
estimated total cost.
GSA requests funding for courthouses as part of the President's annual
budget request to Congress. Once Congress authorizes and appropriates
funds for the project, GSA refines the project budget and selects
private-sector firms for the design and construction work through a
competitive procurement process. GSA also manages the construction
contract and oversees the work of the construction contractor. If disputes
arise between GSA and the contractor that cannot be resolved, the
contractor has the option of filing a claim against the federal
government. Figure 1 illustrates the process for planning, approving, and
constructing a courthouse project.
4Under the Public Buildings Act of 1959, as amended, prospectuses are
submitted to the Senate Committee on Environment and Public Works and the
House committee on Transportation and Infrastructure for the proposed
construction, alteration, or acquisition of a public building that exceeds
a certain annually adjusted cost threshold. The prospectus threshold for
projects in fiscal year 2005 was $2,360,000.
5Some courthouse projects are procured using the design-build method,
which typically requires only one prospectus to be submitted to Congress
because funding for the site, design, and construction are requested at
the same time.
Figure 1: Development and Approval Process for Funding a Typical
Courthouse Planning
External Stakeholders
General Services Administration and Prospectus Development
Site and Design Funding Request
2-3 years
Construction Funding Request
2 years
Construction Begin Construction
3-5 years
Construction Completed
Source: GSA.
Note: This figure shows the typical process for a project procured through
the design-bid-build method.
aCourthouse projects are financed through the Federal Buildings Fund
(FBF), a revolving fund that is used to fund GSA real property activities
with rent from tenant agencies. The President's annual budget request to
Congress proposes spending from the FBF. GSA submits detailed project
descriptions called prospectuses to Congress as part of its Capital
Investment Program. Prospectuses request authorization and funding for new
construction and repair and alteration projects.
GSA and the judiciary have implemented a number of initiatives since
fiscal year 1995 to improve the management of the courthouse construction
program. These initiatives are consistent with leading practices that we
have recognized in prior reports, including the use of project management
tools and communication with stakeholders.6 To improve comprehensive
planning, the judiciary implemented an annually updated 5-year plan to
prioritize its courthouse projects and revised its Design Guide to include
new criteria intended to encourage cost consciousness.
In 1995, GSA established the Courthouse Management Group, which was
reorganized in 2003 as the Center for Courthouse Programs (CCP), to serve
as a central point of contact for the judiciary, GSA's field offices, the
Office of Management and Budget (OMB), and Congress. CCP's
responsibilities include reviewing and finalizing prospectuses before they
are submitted to OMB, developing cost benchmarks and comparing new
projects' cost estimates with these benchmarks, and determining whether
proposed courthouse designs conform to the Design Guide's standards. GSA
also established three programs-the Project Management Center of Expertise
and the Design and Construction Excellence programs-to share project
management innovations and provide opportunities for peer review during
the design and construction phases.
To provide for accountability and oversight throughout a project, GSA uses
a benchmarking system at the start of the design process to develop the
first estimate of the project's construction cost. This system computes
the estimated cost of the building by comparing it to similarly sized
courthouses and adjusts for differences in local market conditions and the
number of years expected to complete the project. The benchmark is used to
estimate the construction costs that will be submitted in the prospectus.
To help ensure that courthouse projects can be built within authorized
budgets, GSA develops independent cost estimates for each new courthouse
at three milestone dates-during the preliminary planning, design
development, and construction document phases. GSA also facilitates
stakeholders' involvement, another recognized leading practice, by
encouraging regular partnership meetings between the judiciary and
6GAO, Executive Guide: Leading Practices in Capital Decision-Making,
GAO/AIMD-99-32 (Washington, D.C.: Dec. 1998) and GAO, Intercity Passenger
Rail: Amtrak's Management of Northeast Corridor Improvements Demonstrates
Need for Applying Best Practices,
GAO-04-94 (Washington, D.C.: Feb. 27, 2004).
GSA and by using courtroom mock-ups to encourage greater judicial feedback
on the design of the courthouse facilities.
Since the courthouse construction program began in the early 1990s,
budgetary constraints faced by GSA and the courts have affected the
program's progress, putting some planned courthouse construction projects
on hold for extended periods. In response to recommendations by the 1993
National Performance Review, GSA initiated a "time-out and review" of all
prospectus-level new construction projects, including courthouse projects,
in 1993 and 1994. During this time-out and review, GSA reevaluated the
costs of new construction projects to ensure that proposed projects were
justified and cost effective and that alternatives had been adequately
considered. Funding requests for courthouse projects were not included in
the President's budget in 4 of the last 10 fiscal years (1998, 1999, 2000,
and 2004). Congress did not provide funding for courthouse projects in
fiscal years 1998 and 2000. Most recently, in September 2004, the Judicial
Conference adopted a 2-year courthouse construction moratorium on
planning, authorizing, and budgeting courthouse construction projects.
This moratorium affects 42 out of the 57 projects listed on the
judiciary's 5-year plan. According to judiciary officials, the moratorium
was necessary to seek remedies for its own budgetary shortfalls, resulting
in part from the increase in the total rent it pays to GSA for the space
it occupies. According to the judiciary, rent currently accounts for just
over 20 percent of its operating budget and is expected to increase to
over 25 percent of its operating budget in fiscal year 2009 when the costs
of new court buildings already under way are included. During this
moratorium, AOUSC officials said that they plan to reevaluate the
courthouse construction program, including reassessing the size and scope
of projects in the current 5-year plan, reviewing the Design Guide's
standards, and reviewing the criteria and methodology used to prioritize
projects. Judiciary officials also said that they plan to reevaluate their
space standards in light of technological advancements and opportunities
to share space and administrative services.
Actual Costs of Courthouse Projects Can Vary Significantly from Estimates
Provided to Congress, and Changes Are Not Consistently Explained
The actual costs for courthouse construction projects completed since
fiscal year 1998 varied from the estimates provided to Congress at the
design and construction phases. As expected, the variation was greater, on
average, for the design phase estimates than for the later, more refined
construction phase estimates. For many projects, the estimated cost and
proposed building size changed between the design and construction phases,
but GSA often did not indicate that these changes had occurred or explain
the reasons for them in the prospectuses and fact sheets it supplied to
Congress.
As shown in figure 2, GSA provided Congress with at least two separate
total cost estimates for 24 of the 38 projects. Of the remaining 14
projects, GSA provided Congress with a single, total-cost estimate for 11
of the projects and provided no formal estimate prior to the appropriation
of funds for 3 of the projects. The single estimates were for design-build
projects, for which all funding was requested at one time, or for projects
for which GSA did not provide a total project cost estimate when
requesting funds for design. In all, for the 38 projects we reviewed, GSA
provided Congress with a total project cost estimate at the design phase
for 27 projects and at the construction phase for 32 projects. The project
cost estimates that GSA provides to Congress typically include all costs
associated with acquiring the site and designing and constructing the
courthouse.7 These estimates do not include estimates for items that the
tenant agencies fund for the new courthouse, such as space alterations
above the standard normally provided by GSA.
7GSA accounts for inflation in estimates by escalating the project's cost
to reflect the anticipated construction start date.
Figure 2: Breakdown of Estimates Provided to Congress by GSA for 38
Projects
Construction estimate only: 8 projects
No estimate: 3 projects
Design and construction estimates: 24 projects
Design estimate only: 3 projects
Source: GAO analysis of GSA documents submitted to Congress.
Notes: Estimate provided at design for 27 projects.
Estimate provided at construction for 32 projects.
For the 27 projects that had a total cost estimate provided to Congress at
the design phase, the actual cost, including claims, exceeded the estimate
by an average of 17 percent and ranged from 23 percent below to 115
percent above the estimate.8 The actual cost compared more favorably with
the estimate at the construction phase, which is provided to Congress an
average of 2 years after the initial design phase estimate. This improved
accuracy is expected because more information is available to estimate the
cost of the project as its design moves forward and becomes more fully
defined. For the 32 projects that had a total cost estimate provided to
Congress at the construction phase, the actual cost exceeded the estimate
by an average of 5 percent and ranged from 25 percent below to 52 percent
above the estimated cost. The actual cost exceeded this estimate by more
than 10 percent for 9 of these 32 projects. The construction industry
commonly uses 10 percent as a benchmark for the expected variance
8Claims are paid out of available project funds until the funds are
exhausted. If additional funds are needed, they are paid out of the U.S.
Treasury Department's Judgment Fund.
between the actual cost and the construction estimate. Figure 3
illustrates the numbers of projects whose actual costs fell short of or
exceeded estimates at both the design and construction phases. See
appendix II for additional details on the estimated project costs provided
to Congress and the actual costs for all projects we examined.
Figure 3: Comparison of Actual and Estimated Costs Number of projects 12
10
8
6
4
2
0
Deviation of actual expenditures from estimate
Design estimate (27 projects)
Construction estimate (32 projects)
Sources: GAO (analysis), GSA (data).
The Public Buildings Act of 1959, as amended, requires GSA to seek
approval from Congress if the estimated maximum expenditures for a project
exceed the amount appropriated for the project by more than 10 percent. We
found that GSA obtained approval from Congress for those projects where
the estimated cost exceeded appropriated amounts by more than 10 percent.
-20% to -30%
0 to -10%-10% to -20%
0 to +10%+10% to +20%+20% to+30%+30% to+40% %+40% to +50%+50% to+60%+60% to
+70%+70% to +80%
+80% to +90%+90% to +100%
Project cost estimates and proposed building sizes often changed between
GSA's submissions to Congress of the design and construction phase
documents. According to prospectuses and fact sheets provided to Congress,
29 of the 38 projects experienced changes in cost, building size, or both
after the initial estimated project cost at design was submitted. As shown
in figure 4, for 16 projects, both the proposed building size and the
estimated project cost changed between the design phase and the
construction phase. For another 7 projects, only the cost estimate
changed, and for the other 6 projects, the building size changed; but only
one estimate was provided to Congress, so we could not determine if the
estimated cost changed. The building size changes ranged from small
additions or subtractions of tenant space to substantial changes in
overall square footage. For example, the proposed size of the Hammond,
Indiana, courthouse increased by nearly two-thirds because the need for
additional space was identified during a long-range planning process
initiated after the initial funding request was submitted to Congress. By
contrast, the proposed size of the Omaha, Nebraska, courthouse was reduced
by approximately 11 percent after funds were requested for design because
of a re-evaluation of construction projects completed as part of GSA's
time-out and review process.
Figure 4: Changes between Design and Construction Funding Requests
Only cost changed: 7 projects Insufficient information: 3 projects
No changes: 6 projects
Size and cost changed: 16 projects
Size changed: 6 projectsa
Source: GAO analysis of GSA documents submitted to Congress.
aFor these six projects, we were unable to determine if the estimated
costs had changed because only one estimated total project cost was
provided.
As we have explained in a previous report on funding capital projects, an
important factor reinforcing the decision-making process is the
availability of good information.9 Although changes in the proposed
building size and estimated cost of a project during its design phase are
not unexpected, GSA did not consistently identify or explain project
changes in the prospectuses and fact sheets it submitted to Congress. For
17 of the 29 projects that changed after the design phase, no description
or explanation of the change was provided in later construction phase
documents submitted to Congress. In some cases, significant changes in
building size, estimated cost, or both were not explained. For example, a
comparison of documents submitted at the design and construction phases
for the Jacksonville, Florida, courthouse shows a total estimated cost
increase of over $11 million (13 percent) and an increase in total
building size of approximately 9,000 square feet (2 percent), yet these
changes are not described or explained. Similarly, an increase in the
estimated unit construction cost of $55 per square foot-which increased
the estimated total costs by over $3 million (11 percent) for the
Greeneville, Tennessee courthouse-was not explained in the fact sheet
provided to Congress. By contrast, GSA fully explained the reasons for a
nearly 40-percent decrease in the proposed size of the Youngstown, Ohio,
courthouse, along with a 27-percent decrease in the project's estimated
cost. For the Tucson, Arizona, courthouse, GSA submitted a fact sheet
describing numerous changes made in building size and estimated costs
since the initial funding request, but it did so in response to a
congressional staff request.
9GAO/AIMD-99-32.
Changes in Scope and Postponement of Planned Construction Start Dates
Resulted in Cost Changes for Selected Projects
For the seven projects we reviewed in detail, changes in scope and the
postponement of planned construction start dates resulted in differences
between estimated and actual project costs.10 Several factors contributed
to changes in scope, including issues associated with site selection,
historic preservation requirements, changes in tenants' requirements, and
the need for additional security after the Oklahoma City bombing.
Depending on circumstances unique to each project, some changes increased,
while other changes decreased, the project's total costs. Postponing the
start of construction for five of the seven projects increased their cost
because of inflation, since GSA's project cost estimates are based on an
expected construction start date.
The actual costs for the seven projects we reviewed in detail varied from
5 to 56 percent above the cost estimates provided to Congress at the
design phase and from 2 percent below to 25 percent above the cost
estimates provided at the construction phase. Table 1 compares the
estimated costs with the actual costs for these seven projects.
10These seven projects represent a nonprobability sample. Results from
nonprobability samples cannot be used to make inferences about a
population, because in a nonprobability sample, some elements of the
population being studied have no chance or an unknown chance of being
selected as part of the sample. For details on how these projects were
selected, see appendix I.
Table 1: Changes between Estimated and Actual Costs for Seven Projects
Dollars in millions
Project
Estimate at design
Estimate at construction
Actual cost
Change between estimate at design and actual cost Change between estimate
at construction and actual cost
Albany, GAa N/A $12.2 $13.1 N/A 7.9%
Cleveland, OH $199.2 $170.5 $213.3 7.1% 25.1%
Denver, CO $76.2 $93.5 $99.1 30.0% 5.9%
Erie, PAb $21.5 $34.0 $33.4 55.8% -1.8%
Gulfport, MS $52.1 $52.4 $59.3 13.8% 13.2%
Las Vegas, NVc $99.0 N/A $103.7 4.7% N/A
Seattle, WAb $164.4 $216.1 $214.7 30.6% -0.6%
Source: GAO analysis of GSA data.
Note: N/A = Not applicable.
aGSA submitted only one prospectus to Congress on February 23, 1995. The
prospectus noted that Congress had included design funding in GSA's fiscal
year 1992 budget and construction funding in GSA's fiscal year 1993 and
fiscal year 1995 budgets.
bAdditional costs are likely for the Seattle and Erie projects because of
outstanding claims.
cThe Las Vegas courthouse project was procured using the design-build
method, thus requiring only one prospectus.
Multiple Factors Led to Changes in Project Scope
For each of the seven projects we reviewed, the scope changed and
contributed to differences between the estimated cost provided to Congress
and the actual cost. The term "scope" refers both to building size and to
the amount of work or number of tasks required to complete the project.
Factors that caused changes in scope included site selection issues, the
need to address historic preservation requirements, changes in tenants'
requirements, and the need for additional security provisions. Although
some scope changes changed both the building size and the amount of work
to be done, other scope changes, such as those necessary to comply with
historic preservation requirements and certain improvements requested by
tenants, increased only the amount of work to be done. Table 2 identifies
the factors that contributed to changes in scope for each of the projects
we reviewed.
Table 2: Factors That Caused Scope Changes for Seven Selected Projects Project
Site acquisition issues
Historic preservation requirements Changes in tenants' requirements
Additional security needs
Albany, GA
Cleveland, OH X
Denver, CO X
Erie, PA X
Gulfport, MS X X
Las Vegas, NV
Seattle, WA X X
Source: GAO analysis.
Site Selection Issues Difficulties with finding and acquiring a site for a
new courthouse increased the scope of two projects, adding to their costs.
The scope of the Gulfport project increased when GSA faced community
resistance to the preferred site and had to purchase a larger site and
close a street to accommodate the new courthouse. According to GSA
officials and the project files we reviewed, procuring the only site that
was suitable and acceptable to the community required GSA to purchase more
land than it had planned in order to accommodate the preservation of a
historic high school building that was on part of the property. The site
cost $3.63 million, or 94 percent, more than GSA had planned when it
submitted its design funding request.
In Seattle, GSA had to redesign the courthouse to include three more
courtrooms when it could not locate the new courthouse adjacent to the
existing courthouse as planned. Under the new plan, the circuit courtrooms
remained in the existing courthouse building and the bankruptcy courts
were included in the new building. This change was required after GSA was
unable to reach an agreement with the city of Seattle on relocating the
city library, which was located on the preferred site.
Historic Preservation The scope of two courthouse projects increased to
provide for historic preservation work that GSA had not anticipated when
it requested design funding for the projects. The original design concept
for the Erie courthouse project called for the preservation and
incorporation of a historic public library building into the courthouse
design. According to
GSA officials and the project files we reviewed, additional preservation
work was required when an old clothing store on the site became eligible
for historic status. Rather than demolish the store as originally planned,
GSA incorporated it into the project design. This decision increased the
project's total cost by about $1.3 million.
Procuring the Gulfport project site, as discussed above, was contingent on
preserving a historic high school. This requirement increased the scope of
work for both the design and construction phases because, as shown in
figure 5, three of the old school's four exterior walls had to be
preserved. According to our analysis of GSA data, preserving the exterior
walls and retrofitting a new structure within the walls of the old school
increased the project's design costs by 14 percent.
Figure 5: Historic Preservation for the Gulfport Courthouse Project
Source: GSA.
Tenants' Space Requirements Changes in tenants' space requirements
increased the scope of work for three of the projects we reviewed. The
U.S. Marshals Service (USMS) provides security for the federal judiciary,
including physical protection of courthouses and prisoner transport, and
was a tenant in each of the courthouses we reviewed. The U.S. Attorneys
Offices are also often located in courthouse facilities. In Cleveland and
Seattle, the U.S. Attorneys Offices initially resisted relocation to the
new courthouses because they preferred their current leased spaces. In
addition, for the Seattle U. S. Attorneys,
there were questions of whether they would have to move again at a later
date as the courts' space needs grew. In Denver, the USMS revised its
plans for the amount of office space it would occupy in the new
courthouse. For these three projects, GSA had to redesign space to meet
the tenant agencies' needs.
According to GSA's project manager, to preserve the Cleveland project's
schedule, the project moved forward after an agreement could not be
reached with the U.S. Attorneys Office on the design of its space. The
U.S. Attorneys determined that the original space was not large enough and
received authorization from the Department of Justice for additional space
in the courthouse. This change required five floors of the courthouse to
be redesigned to meet the U.S. Attorneys Office's requirements.
In Seattle, according to the GSA project manager, the redesign effort was
minimized because GSA anticipated the inclusion of the U.S. Attorneys in
the courthouse and included an option in the construction contract to
build out the required space. In Denver, the USMS revised its occupancy
plan for the Denver courthouse during the design phase, prompting a
redesign effort. The USMS decided to occupy office space in the new
courthouse rather than remain in the existing, adjacent courthouse as
planned. According to the GSA project manager, this change in the tenant's
requirements led to redesigning and allocating most of the third floor to
the USMS.
GSA now has a policy to obtain signed agreements from the tenant agencies
specifying how much space they will occupy in a new building before
construction begins. These agreements, called occupancy agreements, also
specify the rent that the agencies will pay for their space. According to
the project managers we spoke with, the occupancy agreements have helped
tenant agencies understand the rent commitments they are entering into and
have helped GSA resolve occupancy issues before starting construction.
Security Enhancements Enhancements made to building security required
scope changes for four of the seven projects we reviewed. According to the
GSA project managers for the Denver and Albany projects, these
enhancements were made in response to the 1995 Oklahoma City bombing and
reflected updates to the U.S. Marshals' Design Guide. Thus, additional
security features were added to those projects that were in design or
under construction between 1995 and 1999.
Changes to the design criteria for federal buildings increased the scope
of work for the Las Vegas courthouse project and resulted in a claim
against the project. This was the first federal courthouse designed after
the Oklahoma City bombing. For security purposes, the building was
reinforced with additional steel, increasing the project's costs. In
addition, because this was a new security design, the contractor had not
correctly anticipated the amount of steel that would be needed and filed a
claim to recoup the cost of the additional steel. According to the GSA
project manager, the project's budget was increased by $4.7 million to
meet the enhanced security requirements; and after the construction was
complete, the contractor was paid $3.2 million to settle his claim for the
additional work and materials associated with blast proofing the exterior
walls.
Changes made to the U.S. Marshals' Design Guide increased the costs of
projects in Cleveland, Albany, and Denver. Among other things, these
changes modified the type of materials used in the prisoners' holding
cells.
Postponing Construction and Changes in Local Market Conditions Contributed
to Changes in Project Costs
Postponing the start of construction and changes in local market
conditions contributed to changes in costs for five of the seven projects
we reviewed. GSA had to postpone its schedule for starting construction on
five projects. Of these five projects, two were built in highly
competitive local construction markets whose volatility also contributed
to increases in the projects' costs. Local market conditions are driven by
the supply of skilled construction labor, materials, and the relative
number of construction projects within a locality.
Courthouse construction takes place in a dynamic and constantly changing
economic environment. Postponing construction schedules exposes a project
to cost changes caused by annual inflation or deflation rates and
increases the risk that the assumptions used to establish the project's
budget may not keep pace with changing local market conditions. Yet, even
if construction is not postponed, the 2 years that typically elapse
between the development of a prospectus and the actual funding of a
project provide ample time for local market conditions to drift from the
conditions assumed in developing the estimates in the first place. Thus,
postponing construction schedules for reasons as diverse as the timing of
appropriations or the judiciary's current moratorium increase the
probability that estimated and actual costs will diverge.
The Erie project illustrates the effect that not receiving funding when
anticipated and postponing construction can have on a project's costs. The
Other Factors Caused Project Costs to Change
design prospectus for the Erie project was submitted in March 1994. When a
fact sheet was submitted in March 1999-5 years after the prospectus-the
design concept had changed, as discussed earlier, increasing the scope of
historic preservation work and adding to the design costs. Furthermore,
appropriations for construction funding were not provided until fiscal
year 2002. Primarily because of inflation and the scope increase, the
project's estimated total cost increased 59 percent in nominal dollars
over the estimate provided in the 1994 prospectus.
Construction on two projects, Gulfport and Seattle, were postponed as a
result of site acquisition issues, as discussed earlier. In addition,
according to the GSA project manager, the booming local construction
market in Seattle contributed to increased project costs. The Seattle
project also illustrates the uncertainty involved in anticipating local
market conditions. GSA's benchmark used an escalation factor of 3 percent
to estimate construction costs, but the project manager said that the
escalation in Seattle was closer to 3.9 percent.
According to GSA's project manager, the Denver courthouse also was
constructed in a highly competitive economic environment that increased
the project's cost. During the project's development, the project manager
said that Denver experienced a construction boom that caused construction
prices to rise sharply and contributed to construction bids for the
project that came in approximately $10 million over budget. Although one
floor was removed from the design and other cost-saving measures were
implemented, the persistent, ongoing competition in the local construction
market contributed to actual costs that were 6 percent higher than the
estimated costs submitted with the construction funding request.
Other factors that were unique to specific projects we reviewed also
caused costs to change. For example, costs increased for the Denver
project when GSA headquarters decided that the Denver courthouse project
would serve as a demonstration project to showcase a number of sustainable
design features, such as solar panels, light shelves, and automated
heating and air-conditioning controls. These project changes increased the
estimated cost of construction by $5 million.11
11GSA did a life-cycle cost analysis that showed the sustainable design
features may lower the energy related life cycle costs.
According to the Cleveland project manager, problems with contractors and
a design error increased the actual costs of the project. Although the
project was originally intended to use design-bid-build procurement,
because of design delays, the construction schedule was divided into three
phases, and construction started before the design was completed. When the
contractor fell behind in the second phase, GSA followed the advice of its
construction manager and became the general contractor for the final
construction phase in an effort to avert potential claims arising from the
second phase delays. GSA managed over 10 contracts in the final
construction phase. According to the GSA claims attorney involved in the
project, GSA's taking on the role of general contractor accounted for the
large number of claims paid on the project. GSA settled the claims for
approximately $20.8 million, or 12 percent of the estimated total cost
that was submitted with the construction prospectus. In addition,
construction costs increased when a design error that underestimated the
size of certain steel beams was corrected, and special beams had to be
manufactured and imported from an overseas supplier.
Finally, a general contractor's inability to maintain the construction
schedule and meet its obligations to building material suppliers caused
the construction phase of the Albany project to be extended 3 years beyond
its anticipated completion. Eventually, the general contractor's surety
company, which guaranteed the contractor's ability to perform the work,
took over the management of the project and brought it to completion. GSA
still had to settle claims brought against the project by the contractor's
surety. Although GSA was able to limit the actual cost increase to 7.9
percent over the estimate submitted to Congress, the relatively small
building took 5 years to construct.
Several project managers also noted the effect that GSA's time-out and
review initiative had on the early planning for the projects. The
principal motivation of GSA's time-out and review initiative was to cut
costs, reevaluate priorities, and improve the management of the federal
buildings program. For the courthouse construction program, GSA
reevaluated priorities and trimmed the costs of existing projects,
identifying savings of $324 million from 43 courthouse projects. For
example, as a result of time-out and review, the estimated cost of the
Cleveland project was reduced by $63 million or about 26 percent. However,
in this project, much of the savings were not realized and had to be added
back into the project during construction.
Departures from the Design Guide Had Little Impact on Project Costs
In 1991, the judiciary issued the U.S. Courts Design Guide, which
specified the judiciary's criteria for designing new court facilities. The
Design Guide provides specific guidelines for the size, design
requirements, security, and other features of courtrooms, judges'
chambers, and other court-related space. Significant departures from the
Design Guide criteria must be justified by the district courts and
approved by the Circuit Judicial Council for the judicial circuit where
the project is located. The Design Guide has been revised several times in
response to economic constraints and is being reevaluated during the
judiciary's current moratorium to determine if additional revisions are
appropriate.
Departures from the Design Guide are often thought to increase courthouse
project costs. However, we found few departures from the Design Guide in
the projects we reviewed, and most of them were made to increase the
building's functionality. The project managers said none of the departures
resulted in an increase in the building size. We were not able to quantify
the costs associated with the departures, but according to the project
managers, their impact on cost was minimal.
o In the Albany courthouse, ceilings were lowered by 1 to 2 feet, which
reduced costs and allowed the magistrate judge courtrooms on the floor
above to be built to the size of district courtrooms to meet future
expansion needs.
o In Gulfport, the judiciary obtained approval to include a special
proceedings courtroom in the new courthouse. These courtrooms are 600
square feet larger than a traditional district courtroom and are used for
multidefendant trials or special events, such as naturalization
ceremonies.
o In Cleveland, increases in the size of the grand jury suite and
magistrate judges' courtrooms were accommodated within the planned size of
the building by reducing the size of other court spaces.
GSA Used Several For the seven projects we reviewed in detail, GSA project
managers used
several strategies to reduce costs and keep them within budget.
TheseStrategies to Reduce strategies included value engineering, modified
contracting methods, and a and Control Costs of variety of approaches for
involving and communicating with tenant Selected Projects agencies. On the
basis of estimates provided by GSA, Congress authorizes
and appropriates funds for individual courthouse construction projects.
GSA sets each project budget according to the appropriated funds and seeks
to manage each project to the specified budget.
Value Engineering Used to Bring Costs within Budget
For the seven projects we reviewed, GSA project managers used value
engineering during the design phase to identify cost-saving changes and to
reduce costs. Project managers also used value engineering as the primary
method to reduce costs to meet the budget when the initial construction
bids exceeded the project's budget. Value engineering is an organized
effort to analyze the functions of systems, equipment, and facilities for
the purpose of achieving the essential functions at the lowest cost
possible while maintaining performance, reliability, quality, and safety.
Changes resulting from value engineering ranged from using less expensive
materials than originally planned to making changes in scope that affected
the features built into the courthouse. Some changes made as a result of
value engineering permanently reduced building costs while other changes
deferred costs to later years.
In a commitment to continue cost reduction after the time-out and review
process of the mid-1990s, GSA emphasized the use of value engineering as a
method to reduce costs below the approved budgets. The Office of
Management and Budget requires executive branch agencies to use value
engineering as appropriate to reduce program and acquisition costs while
maintaining necessary quality levels. For the projects we reviewed, GSA
project managers generally hired outside consultants to perform value
engineering studies during the design phase to identify potential areas
for cost savings. Project managers used value engineering again for four
of the seven projects, when the construction bids exceeded the project's
budgets. The estimated cost at construction or the construction bids
exceeded the budget by $2 million to $16 million, or 6 to 18 percent, for
these four projects. The project managers tasked the contractors that were
bidding on the construction phase of the project to submit ideas for
cutting costs. This approach allowed GSA to reduce the bids to within the
budget without redesigning the building. Having to redesign the building,
then going through another bidding process is time consuming; and as
discussed earlier, starting construction later than planned can lead to
cost increases.
Many relatively small changes were often made as a result of value
engineering to reduce projects' costs. The most common change for all
seven projects was substituting less expensive materials for more
expensive materials that were originally called for in the design. For
example, using commercially available products rather than custom-made
materials lowered costs. These material substitutions often had no or
minimal impact on the appearance and functionality of the building. For
example, in two courthouse projects, wainscoting was used in place of
full-height wood paneling. For the Seattle project, GSA removed the copper
cladding from the roof after determining that its removal would not
negatively affect the appearance or durability of the building.
The court officials involved in the seven projects told us that they
participated in the value engineering sessions and agreed with the changes
to reduce the construction costs. These officials understood that there
was a limited budget and made trade-offs to get the features they wanted
the most. For example, in Las Vegas the judges agreed to reduce the amount
of limestone used on the outside of the building so that they could keep
wood paneling in the courtrooms.
Other value engineering changes resulted in the elimination or reduction
of spending on some features, such as building systems, to reduce
projects' costs. While these changes lowered the construction costs, some
could increase future operating and maintenance costs. In Las Vegas, a
window-washing platform was eliminated to save $250,000. According to the
GSA building manager, it now costs about $30,000 to wash the courthouse's
windows, because special equipment is needed. As a result, the windows are
seldom washed. For two projects, GSA eliminated the funds for heating and
air-conditioning systems from the construction contracts and entered into
energy savings and performance contracts (ESPC) to procure these systems.
Under an ESPC, the contractor purchases and installs the heating and
air-conditioning systems and GSA pays for the systems over the life of the
contract, for as long as 25 years, from its operating budget. It is
expected that the contractor will install a more energy-efficient system
than would have been installed without the ESPC and that the cost of the
system will be paid for from the savings attributed to a more efficient
system. In new construction, energy savings are estimated using many
assumptions about energy usage and costs, since there are no actual
systems and costs on which to base estimates of expected savings.
In December 2004, we reported that using ESPCs to install heating and
air-conditioning systems is more expensive than funding the installation
of
such systems up front as part of the construction costs.12 In that review,
we estimated that the use of an ESPC for the Gulfport Federal Courthouse
might cost about $2.5 million, compared with about $1.6 million if the
system had been installed as part of the construction. This is an increase
of about 56 percent in the cost of the heating and air conditioning
system. We found that GSA focused on reducing the construction costs, so
that it could award the construction contract, rather than on the
long-term cost implications of using an ESPC.
Modified Contracting Methods Used to Control Costs
On three projects, project managers identified the contracting method as a
strategy they used to help control costs and keep the project on schedule.
One project involved the construction contractor in the design phase of
the project while another included incentive award clauses in the
construction contract. The third project used versions of both of these
approaches.
GSA traditionally approaches a new construction project by designing the
building and then soliciting bids to construct the building based on the
design. This is referred to as the design-bid-build method of contracting.
In this traditional method, the construction contractor is not involved in
the design process and often has questions about the design, which can
lead to changes during construction. To reduce the risk of changes during
construction and accelerate the project's schedule, the Las Vegas project
manager used a design-build bridging contract method. Under this
contracting method, the project began with a traditional design phase to
develop the concept for the building. The concept design identified the
basic structure of the building, including the layout of courtrooms and
chambers on each floor. GSA then advertised for a contractor to complete
the detailed building design and construct the building. The winning
contractor was a joint venture between an architectural firm and a general
contractor. This approach allowed construction to begin as soon as the
design was completed, thus saving time and reducing the chances of the
tenants' requirements changing between the time of design completion and
the start of construction. In addition, the architect and builder were
with the same firm, so when issues came up during construction, each had
an interest in arriving at solutions rather than finger-pointing and
blaming each other. According to the project manager, as a result of this
contracting
12GAO, Capital Financing: Partnerships and Energy Savings Performance
Contracts Raise Budgeting and Monitoring Concerns, GAO-05-55 (Washington,
D.C.: Dec. 16, 2004).
Tenant Agency Involvement and Communication Identified as Keys to
Projects' Success and to Controlling Costs
method, relatively few changes were made on the project during
construction.
For the Gulfport courthouse project, GSA hired the general contractor
during the design stage when the building's design was only 35 percent
complete. The project manager believed that involving the general
contractor in the development of the design and construction documents
would minimize the number of questions the contractor would have about the
design and thus minimize the number of change orders. Change orders on a
project may increase the time needed to construct the building and
increase the cost of construction. The project manager believed that this
was a successful approach because there were few questions about the
design during construction and relatively few change orders due to design
issues.
GSA used construction contracts with incentive award clauses for the
Gulfport and Seattle courthouses. The incentive awards required periodic
reviews of the contractors' performance throughout the projects, which
ensured a certain level of communication. The project manager for the
Seattle courthouse said that this method forced the stakeholders to
communicate and address issues that, without the incentive award, might
not have been addressed until the end of the project. The use of incentive
awards is intended to increase communication and help control the
projects' overall costs. The contractor on the Gulfport project earned 85
percent of the incentive award, and the contractor on the Seattle project
earned about 92 percent of the incentive award.
GSA project managers and judiciary officials said the involvement of
tenant agencies and open and continual communication with them on the
projects we reviewed were important to the successful completion of the
projects and to controlling their costs.13 Judges at each of the
courthouses said the new buildings met their requirements, and they were
all very happy with the new courthouses. GSA project managers used a
variety of strategies, such as regular meetings and courtroom mock-ups, to
identify changes prior to construction, to involve tenant agencies in
planning the courthouse
13The courthouse projects that we reviewed often included space for the
district, magistrate, and bankruptcy courts; U.S. Attorneys Office; USMS;
Probation and Pretrial Services; and congressional offices.
projects, and to keep them informed about the progress of the projects.
The judiciary also generally hired its own project manager to oversee each
of the projects and to facilitate communication between GSA and the
judiciary. In addition, many of the project managers used a Web-based
project management tool to facilitate communication among the construction
contractors.
Involving tenant agencies and incorporating their interests into a
project, particularly during the planning stages, is one of the five
components of a leading practices framework. Project managers agreed that
working with tenant agencies to define their requirements and keeping
tenants informed about the project were important to getting the agencies'
"buy-in" on the project and to minimizing changes during construction.
Making changes during a project's design to ensure that tenants'
requirements are met is generally less costly than making changes during
construction. Leading practices in capital project management suggest
frequent communication and involvement through such means as meetings and
correspondence. GSA project managers and judiciary officials who
represented the various courts' interests said that judiciary officials
were actively involved from the conception of the projects. Project
documents show that other tenant agencies were also involved throughout
the projects.
While all of the project meetings included tenant agency representatives,
GSA and judiciary officials said that using courtroom mock-ups and having
a judicial project manager were important strategies used to facilitate
communication. All project managers used courtroom mock-ups in which a
full-size model of a courtroom was constructed and the judges and other
courtroom participants evaluated the model for such things as sight lines
and the placement of furniture. The courtroom mock-ups resulted in changes
to courtroom designs, and, according to GSA, no major changes were
required during or after the construction of the courtrooms to correct
deficiencies. Thus, the courtrooms met the judges' requirements, and costs
were avoided by making necessary changes prior to construction.
According to judiciary officials, there was open communication between the
judiciary and GSA on six of the seven projects. These officials said that
the collegial relationships they developed with GSA facilitated
communication and allowed them to work together to control and, when
necessary, to reduce costs in a constructive way. For these six projects,
the judiciary had its own project manager, who interacted with GSA on a
regular basis. The judges said that it was critical for them to have this
project manager, who was knowledgeable about construction, and could
advise the judges on suggested changes and facilitate communication with
GSA.
The USMS and the U.S. Attorneys Office were also major tenants in most of
the courthouses we reviewed. According to GSA project managers, these
agencies were involved in the projects to a lesser extent than the
judiciary. USMS officials said that their level of involvement varied,
depending on the project and the project manager involved. As discussed,
some of the cost increases during construction resulted from the USMS's
and the U.S. Attorneys Office's requirement changes. USMS changes
primarily resulted from increases in security standards, which could not
have been anticipated prior to construction. Changes involving the U.S.
Attorneys Office more often resulted because of its decisions about moving
to the new building. As noted, GSA's policies and procedures have changed
over the last several years, and GSA now requires tenant agencies to sign
occupancy agreements prior to construction. Such agreements define the
amount of space the tenant will occupy and the rental cost for the space.
This policy should eliminate last minute questions about which tenants
will occupy the building and the amount of space they will occupy.
Finally, GSA used commercially available Web-based project management
tools for several of the projects to facilitate communication among the
contractors. These tools facilitate communication by reducing paperwork;
electronically assigning responsibility for tasks; tracking changes,
questions, and answers; and providing all contractors with access to the
same information as appropriate. For example, if a contractor has a
question about the design of a particular building element, it can submit
a question to the architect; and GSA can track the question and response
to ensure that the question is resolved as quickly as possible. The
Seattle project manager highlighted the importance of having clearly
defined design and construction requirements. The manager said that in
Seattle, he was able to reduce the construction bid by meeting with the
subcontractors to answer their questions about the building requirements.
If subcontractors do not fully understand an aspect of the design, they
will build in additional costs to cover their risk. By clarifying the
building requirements, GSA was able to reduce the subcontractors' risk and
thus reduce their bids on the project.
Recent GSA Program During the last decade, GSA has implemented a number
of initiatives to enhance and improve the performance of the courthouse
construction
Improvements program. Among these initiatives are enhancements to the
benchmarking
system, the use of courtroom mock-ups, and the ongoing development of
project management practice through the Project Management Center of
Expertise. GSA's Center for Courthouse Programs is also conducting
independent cost estimates and quality control reviews at three points
during the design phase of projects to help ensure that courthouse
projects can be built within budget and the quality of the buildings is
not being sacrificed to stay within budget. While the results of some of
these initiatives were apparent in the seven projects we reviewed, such as
with the courtroom mock-ups, the effects of the more recent efforts to
enhance the program are not captured in our data collection. This
situation occurred because many of the projects in our universe were
already fairly advanced by time the more recent initiatives were
introduced.
Conclusions Courthouse construction is a process that evolves over many
years and includes multiple stakeholders. Many factors can affect the cost
of a courthouse project as it moves from planning and design to
construction. Our work showed that the most significant cost changes
occurred between the time of GSA's request for design and its request for
construction funding. Some reasons for cost increases, such as the need
for additional security or changing market conditions, affected several
projects and could not have been easily anticipated. Other reasons for
cost changes were unique to individual projects. It is important to
provide decision makers with information about the costs, risks, and scope
of projects before resources are committed. Such a practice would be
consistent with our past work on leading practices in capital decision
making. In the case of courthouse projects, GSA does not consistently
explain project changes in documents provided to congressional decision
makers. These changes may only be apparent if congressional decision
makers compare the information submitted with the construction funding
request to the information submitted, sometimes years earlier, with the
design funding request.
Recommendations for To improve the usefulness of the information on
courthouse construction projects that GSA provides to Congress, we
recommend that the
Executive Action Administrator of GSA, when requesting funding for those
projects, identify and explain changes in estimated costs and building
size from the information provided to Congress in prior project
prospectuses or fact sheets.
Agency Comments We provided a draft copy of this report to the
Administrator of the General Services Administration and the Director of
the Administrative Office of the U. S. Courts for their review and
comment. On June 24, 2005, GSA provided us with written comments and
concurred with our recommendation (see app. III). GSA noted that in 2004
it began notifying Congress when significant changes in scope and budget
occurred in courthouse projects. While GSA started notifying the
authorizing committees of significant changes to projects in 2004, it has
not been notifying the appropriation committees of these changes. We
believe that all the stakeholders should have the same information, and
changes to the project should be included in the prospectuses as part of
the funding process. GSA also noted changes it has made over the years to
how it plans, budgets, and manages courthouse projects and provided
technical clarifications, which we have incorporated in this report as
appropriate. AOUSC provided technical clarifications, which we have
incorporated as appropriate.
As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from
the report date. At that time, we will send copies of this report to the
appropriate congressional committee, the Administrator of GSA, and the
Director of the Administrative Office of the U.S. Courts. Copies will also
be made available to other interested parties on request. In addition, the
report will be available at no charge on GAO's Web site at
http://www.gao.gov.
If you or your staff have any questions about this report, please contact
me at (202) 512-6670 or [email protected]. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this report
are listed in appendix IV.
Mark L. Goldstein Director, Physical Infrastructure Issues
Appendix I
Scope and Methodology
The objectives of our report were to (1) compare estimated and actual
costs for recently completed courthouse projects, (2) identify factors
that contributed to differences between the estimated and actual costs of
selected projects, and (3) identify strategies that were used to help
control the costs of selected projects. To address these objectives, we
reviewed project prospectuses and courthouse expenditure data; interviewed
General Services Administration (GSA) and judiciary officials; and
conducted a detailed review of seven completed courthouses around the
country.
We identified a total of 38 new courthouse construction projects completed
since 1998 from information supplied by GSA's Center for Courthouse
Programs (CCP). We chose 1998 as a starting date to exclude the projects
we had considered in our previous report on the courthouse construction
program and to include only those projects that were designed and built
during the period when a number of changes were made to the program, such
as the implementation of 5-year plans by the Administrative Office of the
U.S. Courts (AOUSC) and the establishment of the CCP.
To determine estimated costs, we examined prospectuses and fact sheets
submitted to Congress during the appropriations process.1 For 35 of the 38
projects completed since 1998, at least one estimate of total project cost
was provided to Congress. Three projects did not go through the typical
approval and funding process. GSA typically submits two requests for
funding, one in the prospectus for design funding and another in the
prospectus for construction funding, but this is not always the case. For
some projects, the initial estimate was submitted in the form of a "Report
of Building Project Survey," sometimes called an 11(b) report after the
section of the Public Buildings Act of 1959, which provides for such a
report. In other cases, the estimate was submitted in the form of a
one-page fact sheet either as a supplement to or in lieu of a prospectus.
Prospectuses and fact sheets typically contain an estimated total project
cost as the sum of separate estimates for site acquisition, design,
management and inspection, and construction. For some projects, we added
the construction cost estimate to the amounts previously appropriated for
design and site acquisition to arrive at a total project cost estimate. To
1Under the Public Buildings Act of 1959, as amended, prospectuses are
submitted to the Senate Committee on Environment and Public Works and the
House Committee on Transportation and Infrastructure for the proposed
construction, alteration, or acquisition of a public building that exceeds
a certain annually adjusted cost threshold. The prospectus threshold for
construction projects in fiscal year 2005 was $2.36 million.
Appendix I Scope and Methodology
determine changes in proposed building size and parking, we compared
documents submitted for the construction phase funding with those
submitted for the design phase funding.
To determine actual costs, we used data provided by GSA's Public Building
Service (PBS) Budget Office for all courthouse projects completed since
1998. We defined actual costs as all obligations recorded against each
project through the end of fiscal year 2004 plus any claims paid from the
U.S. Treasury Department's Judgment Fund. According to information
supplied by the PBS Budget Office, 13 of the 38 projects that we examined
had at least one claim paid from the Judgment Fund, ranging from $65,000
on the St. Louis courthouse to over $20 million on the Cleveland
courthouse. Claims are paid from the Judgment Fund when there are no funds
left available in the project budget to pay the claims. The reported
actual costs of the courthouse projects include only funds budgeted by GSA
and specifically authorized by Congress for new construction and exclude
items funded by the tenant agencies. We also reviewed appropriation acts
for fiscal years 1993 through 2005 to identify funding appropriated for
new courthouse construction projects and other relevant legislation
relating to GSA's construction authority.
To compare actual with estimated costs, we calculated the percentage by
which actual costs differed from estimates of the costs. When more than
one estimate was provided for a project, we compared the actual costs with
the initial and latest estimates. For example, when an 11(b) report was
prepared for a project, we used this document as a source for the original
estimate. Similarly, when a fact sheet was submitted after a construction
prospectus for a project, we used the estimate provided in the fact sheet.
To identify factors that contributed to differences between estimated and
actual costs and to identify the types of strategies used to controls
costs, we selected seven courthouses whose construction was completed
between 2000 and 2004: Albany, Georgia; Cleveland, Ohio; Denver, Colorado;
Erie, Pennsylvania; Gulfport, Mississippi; Las Vegas, Nevada; and Seattle,
Washington. To select these courthouses, we considered a number of
factors, including the range and scope of the cost changes, the size of
the project, and the geographic location. For each of these seven
courthouses, we obtained estimated and actual cost information by
reviewing prospectuses, 11(b) reports, and fact sheets submitted to
Congress and budgetary expenditure data provided by GSA.
Appendix I Scope and Methodology
During our visits to the seven courthouses, we reviewed the relevant
project files from GSA. We looked specifically for documentation of
factors that contributed to or helped control cost changes, such as scope
modifications, contractor and bid documents, change orders, and claims. We
also interviewed GSA and judiciary officials responsible for each
courthouse project, including judges, project managers, contracting
officers, and other individuals involved during the design and
construction phases of the courthouse. We also interviewed judiciary
officials associated with the projects including Administrative Office of
the U.S. Courts (AOUSC) officials and judges. From the interviews and
project file reviews, we obtained information on the extent of and reasons
for the cost changes. We also reviewed GSA and AOUSC documents related to
management controls, policies, procedures, and guidance for courthouse
construction projects.
For the estimated costs of the 38 courthouse projects, we relied on the
original source documents, including the prospectuses that GSA provided to
Congress. We assessed the reliability of actual cost data provided by
GSA's PBS Budget Office by (1) reviewing documents describing policies and
procedures for the administrative control of funds, (2) interviewing
knowledgeable agency officials about the data, and (3) reviewing an
independent auditor's report. We determined that the data were
sufficiently reliable for the purposes of this report. We also
corroborated much of the testimonial information provided by GSA and
judiciary officials during our seven courthouse reviews by obtaining
documentation of project management and cost changes during our file
reviews. Because we selected a nonprobability sample of courthouses to
review in detail, our findings are not generalizable to the 38 projects.
Appendix II
Timelines and Costs of Courthouse Projects Completed Since 1998
Figure 6: Timelines of Courthouse Construction Projects
Source: GAO analysis of GSA documents submitted to Congress.
Note: Project initiation refers to the fiscal year for which funds were
first requested from Congress, an 11(b) report was submitted, or funds
were first appropriated.
Appendix II Timelines and Costs of Courthouse Projects Completed Since
1998
Table 3: Summary of Estimated and Actual Costs
Construction
Project Design ETPCa ETPCb Total Claims Actual cost
location obligationsc
Albany, GA N/A $12,163,000 $13,127,344 $13,127,344
Albuquerque, N/A $56,794,000 $50,146,643 $50,146,643
NM
Beckley, WV N/A N/A $35,677,860 $35,677,860
Boston, MA $163,005,000 $202,005,000 $230,671,501 $4,250,000 $234,921,501
Brownsville, $35,027,000 $33,813,000 $32,708,650 $32,708,650
TX
Central N/A $227,009,000 $215,629,990 $700,000 $216,329,990
Islip, NY
Charleston, $80,406,500 N/A $80,754,535 $80,754,535
WV
Cleveland, OH $199,203,000 $170,537,000 $192,497,198 $20,790,000 $213,287,198
Columbia, SC $55,960,000 $55,961,000 $63,721,116 $63,721,116
Corpus $33,740,000 $33,056,000 $34,244,915 $34,244,915
Christi, TX
Covington, KY $20,858,000 $21,791,000 $22,155,221 $22,155,221
Denver, CO $76,211,000 $93,504,000 $99,052,566 $99,052,566
Erie, PA $21,450,000 $34,039,000 $33,412,332 $33,412,332
Fargo, ND N/A N/A $19,328,942 $19,328,942
Ft. Myers, FL N/A $29,796,000 $25,897,340 $25,897,340
Greeneville, $28,043,000 $31,165,000 $31,056,543 $31,056,543
TN
Gulfport, MS $52,093,000 $52,391,000 $59,287,053 $59,287,053
Hammond, IN $28,028,000 $59,061,000 $60,316,073 $60,316,073
Jacksonville, $85,305,000 $96,680,000 $96,591,397 $96,591,397
FL
Kansas City, $114,476,000 $112,181,000 $113,860,442 $232,665 $114,093,107
MO
Knoxville, TN N/A N/A $39,709,609 $39,709,609
Lafayette, LA $34,409,000 $34,607,000 $34,314,536 $34,314,536
Laredo, TX $23,194,000 $36,531,000 $42,579,078 $42,579,078
Las Vegas, $99,041,000 N/A $100,491,555 $3,200,000 $103,691,555
NVd
London, KY $15,808,000 $16,642,000 $19,018,809 $19,018,809
Montgomery, $53,638,000 $48,335,000 $60,115,326 $13,178,171 $73,293,497
AL
Omaha, NE N/A $67,194,000 $65,579,829 $5,300,000 $70,879,829
Phoenix, AZ N/A $111,063,000 $114,030,705 $11,152,007 $125,182,712
Sacramento, N/A $173,249,000 $130,509,658 $130,509,658
CA
Santa Ana, CA N/A $134,902,000 $125,861,026 $18,080,137 $143,941,163
Scranton, PA $41,679,000 $36,188,000 $35,553,938 $35,553,938
Seattle, WA $164,407,000 $216,082,000 $214,730,651 $214,730,651
St. Louis, MO $251,772,000 $230,863,000 $250,234,082 $65,000 $250,299,082
Tallahassee,
FL $23,472,000 $29,129,000 $30,556,900 $721,684 $31,278,584
Appendix II Timelines and Costs of Courthouse Projects Completed Since
1998
(Continued From Previous Page)
Construction
Project Design ETPCa ETPCb Total Claims Actual cost
location obligationsc
Tampa, FL $84,561,000 $81,161,000 $69,487,426 $1,253,605 $70,741,031
Tucson, AZ $98,625,000 $81,708,000 $83,765,867 $9,050,776 $92,816,643
Wheeling, $29,303,000 N/A $28,324,368 $28,324,368
WVd
Youngstown,
OH $21,534,000 $15,799,000 $16,517,999 $16,517,999
Source: GAO Analysis of funding requests submitted to Congress.
Note: N/A = not applicable.
aETPC = estimated total project cost.
bFor some projects, additional funds were requested after the construction
ETPC was submitted.
cTotal obligations are through the end of fiscal year 2004.
dThese projects were procured using the design-build process, so only one
ETPC was provided to Congress.
Appendix III
Comments from the General Services Administration
Appendix III
Comments from the General Services
Administration
Appendix IV
GAO Contact and Staff Acknowledgments
GAO Contact Mark L. Goldstein, (202) 512-2834
Staff In addition to those named above, Lindsay Bach, Maria Edelstein,
Bess Eisenstadt, Daniel Hoy, David E. Sausville, Dave Stikkers, and
Acknowledgments Dorothy Yee made key contributions to this report.
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