Capitol Visitor Center: Effective Schedule Management and Updated
Cost Information Are Needed (14-JUN-05, GAO-05-811T).
This testimony discusses the Architect of the Capitol's (AOC)
progress in achieving selected project milestones and in managing
the project's schedule since Congress's May 17 hearing on the
project. We will also discuss the project's costs and funding,
including the potential impact of schedule-related issues on the
project's costs. Our observations today are based on our review
of schedules and financial reports for the CVC project and
related records maintained by AOC and its construction management
contractor, Gilbane Building Company; our observations on the
progress of work at the CVC construction site; and our
discussions with CVC project staff, including AOC, its
construction management contractor, and representatives of an AOC
schedule consultant, McDonough Bolyard Peck (MBP). We did not
perform an audit; rather we performed our work to assist Congress
in conducting its oversight activities.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-811T
ACCNO: A26519
TITLE: Capitol Visitor Center: Effective Schedule Management and
Updated Cost Information Are Needed
DATE: 06/14/2005
SUBJECT: Construction contracts
Contract administration
Contract oversight
Contract performance
Contractors
Cost analysis
Facility construction
Public visitor-centers
Schedule slippages
Future budget projections
Federal funds
Federal facilities
Capitol Visitor Center Project
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GAO-05-811T
United States Government Accountability Office
GAO Testimony
Before the Subcommittee on the Legislative Branch, Committee on
Appropriations, U.S. Senate
For Release on Delivery
Expected at 10:30 a.m. EDT CAPITOL VISITOR
Tuesday, June 14, 2005
CENTER
Effective Schedule Management and Updated Cost Information Are Needed
Statement of Bernard L. Ungar, Director Terrell Dorn, Assistant Director
Physical Infrastructure Issues
GAO-05-811T
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here today to discuss GAO's ongoing work on the
progress of the Capitol Visitor Center (CVC) project. As requested, we
will focus our remarks today on the Architect of the Capitol's (AOC)
progress in achieving selected project milestones and in managing the
project's schedule since the Subcommittee's May 17 hearing on the
project.1 We will also discuss the project's costs and funding, including
the potential impact of schedule-related issues on the project's costs.
Our observations today are based on our review of schedules and financial
reports for the CVC project and related records maintained by AOC and its
construction management contractor, Gilbane Building Company; our
observations on the progress of work at the CVC construction site; and our
discussions with CVC project staff, including AOC, its construction
management contractor, and representatives of an AOC schedule consultant,
McDonough Bolyard Peck (MBP). We did not perform an audit; rather we
performed our work to assist Congress in conducting its oversight
activities.
In summary, AOC's sequence 2 contractor, Manhattan Construction Company,
has met 3 of 11 significant milestones scheduled for completion by today's
hearing. The sequence 2 contractor missed the other 8 milestones for
several reasons, such as unforeseen site conditions and a design problem.
AOC does not expect these delays to affect the CVC project's scheduled
September 2006 completion date because AOC believes that the contractor
can recover the lost time. Furthermore, certain utility tunnel work is
scheduled for completion about 5 months later than previously reported,
but AOC does not expect this delay to postpone the project's completion
date because AOC plans to use temporary equipment that will allow the
project to move forward but will also increase its costs. However, largely
because of past problems and risks and uncertainties that face the
project, we continue to believe that the project is more likely to be
completed in the December 2006 to March 2007 time frame than in September
2006, as shown in AOC's schedule. AOC and its construction management
contractor have continued their efforts to address two of the areas we
identified during the Subcommittee's May 17 CVC hearing as requiring
priority attention- having a realistic, acceptable schedule and
aggressively monitoring and
1GAO, Capitol Visitor Center, Priority Attention Needed to Manage
Schedules and Contracts, GAO-05-714T (Washington, D.C.: May 17, 2005).
Schedule Milestones and Management
managing adherence to the schedule. But AOC has not yet developed risk
mitigation plans or, as the Subcommittee requested, prepared a master
schedule that integrates the major steps needed to complete construction
with the steps needed to prepare for operations. Until recently, AOC did
not have funding to continue contractual support it had been receiving to
help plan and prepare for CVC operations. We continue to believe that
these areas require AOC's priority attention and that the project's
estimated cost at completion will be between $522 million and $559
million, and that, as we indicated during the May 17 hearing, AOC will
likely need as much as $37 million more than it has requested to cover
risks and uncertainties to complete the project. We believe that most of
these additional funds will be needed in fiscal years 2006 and 2007,
although exactly how much will be needed at any one time is not clear. We
are recommending that this fall AOC update its estimate of the cost to
complete the project.
AOC and its major construction contractors have made progress since the
Subcommittee's May 17 hearing. As of May 31, the construction management
contractor reported that the CVC project's construction was about 65
percent complete. The sequence 1 contractor, Centex Construction Company,
which was responsible for the project's excavation and structural work,
has continued to address punch-list items, such as stopping water leaks
that continue to appear in perimeter walls. According to the construction
management contractor, as of May 31, the sequence 1 contractor had
completed almost all of the items on the punch list. AOC expects the
sequence 1 contractor to be completely done with this list and off site by
June 30, although the contractor may have to return later to address some
issues. Furthermore, the sequence 2 contractor, which is responsible for
the mechanical, electrical, plumbing, and finishing work, continued to
make progress in these areas, including erecting masonry block, placing
concrete, and installing finish stone, sheetrock and plaster, and granite
pavers. The sequence 2 contractor also continued work on the utility
tunnel.
As the Subcommittee requested, we worked with AOC on the selection of
several sequence 2 milestones that the Subcommittee can use to help track
the project's progress from the Subcommittee's May 17 hearing to July 31.
These milestones are shown in appendix 1 and include activities on the
project's critical path, as well as other activities that we and AOC
believe
are important for the project's timely completion.2 AOC's sequence 2
contractor completed 3 of the 11 activities listed in appendix 1 as
scheduled for completion by today. The 11 activities include certain stone
work in the Great Hall, a portion of the masonry wall in the auditorium,
and certain utility tunnel work. According to AOC, the delays in 8 of
these activities were caused by a number of factors, such as unforeseen
site conditions, a design problem, and delays in completing certain
masonry work that had to be completed before other work could be done. AOC
does not expect these delays to postpone the project's scheduled September
2006 completion date because it believes that the sequence 2 contractor
can recover the lost time.
Since the May 17 hearing, AOC learned that the utility tunnel, which was
expected to be operational in October 2005, is not now likely to be
operational until March 2006. According to AOC, this date slipped because
of unforeseen site conditions and the need to do certain work earlier than
originally anticipated. The sequence 2 contractor has indicated that the
impact of this delay on the project's scheduled September 2006 completion
date will be mitigated by the use of temporary dehumidification equipment.
However, this mitigation approach will result in additional costs, as
explained later in this statement. Also since the May 17 hearing, AOC's
contractors have updated the project's master schedule, and the new
schedule shows seven paths that are critical or are within 15 days of
being critical. For example, the updated schedule shows millwork and
finishing the auditorium to be within 10 days and 15 days, respectively,
of being critical. Having so many critical or near-critical paths
complicates schedule management and increases the risk of problems that
could lead AOC to miss its scheduled completion date.
In our May 17 statement, we provided several observations on AOC's
management of the project's schedules, including our view that problems in
this area contributed to slippage in the project's scheduled completion
date and additional project costs associated with delays. We also
2A critical path is a sequence of activities in a schedule that has the
longest duration. There is no scheduling flexibility or slack time
associated with the activities. This means that a delay in a critical path
activity will delay the entire project unless a way is found to reduce the
time required for other activities along the critical path. A schedule may
have multiple critical paths simultaneously, and the critical path through
a project can change as the project is updated and the time estimated to
complete the tasks changes. Currently, AOC's schedule shows CVC's critical
path running through wall stone and East Front stonework, and also shows
other work elements, such as utility tunnel and millwork, as near critical
(i.e. having little slack time).
discussed recommendations we had already made to AOC to enhance its
schedule management. AOC had agreed with these recommendations and had
generally begun to implement them, but, it still needed, in our view, to
give priority attention to them to keep the project on track and as close
to budget as possible. A brief discussion follows of the issues that need
AOC's priority attention and the current status of AOC's actions to
address these issues.
o Having realistic time frames for completing work and obtaining fully
acceptable schedules from contractors. Over the course of the project,
AOC's schedules have shown dates for completing tasks that project
personnel themselves considered unlikely to be met. In addition, the
master project schedule ( prepared by AOC's construction management
contractor) that AOC was using in May 2005 did not tie all interrelated
activities together and did not identify the resources to be applied for
all the activities, as AOC's contract requires. On June 10, the
construction management contractor told us that it had reassessed the
reasonableness of the activity durations and found that they reasonably
reflected the time required to perform the activities. Last week, AOC
provided us with a revised master schedule that the construction
management contractor said (1) reflected significant improvement in the
linkage of interrelated tasks and (2) provided sufficient information to
manage the project's resources. AOC said that it planned to approve and
accept this schedule subject to several conditions. Although our initial
review of this revised schedule indicates that a number of improvements
have been made, we have not yet had time to fully evaluate it. We will
have a more complete assessment for the Subcommittee by its next CVC
oversight hearing. Furthermore, as we said during the May 17 hearing, we
continue to believe that AOC's scheduled September 2006 completion date is
optimistic and that the project is more likely to be done in the December
2006 to March 2007 time frame, largely because of past problems, the risks
to the schedule identified during our assessment of it in early 2004, and
future risks and uncertainties facing the project. We plan to update our
risk assessment for AOC's revised schedule and have our update completed
in September 2005. Our update will include a review of activity durations.
o Aggressive monitoring and managing contractors' adherence to the
schedule, including documenting and addressing the causes of delays, and
reporting accurately to Congress on the status of the project's schedule.
We noted in our May 17 testimony that neither AOC nor its construction
management contractor had previously (1) adhered to contract provisions
calling for monthly progress review meetings and schedule updates and
revisions, (2) systematically tracked and
documented delays and their causes as they occurred or apportioned their
time and costs to the appropriate parties on an ongoing basis, and (3)
always accurately reported on the status of the project's schedule. AOC
and the construction management contractor have been working with the
schedule consultant to develop a new, systematic process for tracking,
analyzing, and documenting schedule progress and delays, addressing
schedule issues, approving proposed schedule changes, and reporting on
the schedule's status. On June 7, AOC, the construction management
contractor, the sequence 2 contractor, and the schedule consultant
conducted the first monthly schedule status review session using the
newly developed approach. If effectively implemented and sustained, we
believe that this new approach should generally resolve the schedule
management concerns we previously raised, although it is not yet clear
how delays will be handled on an ongoing basis. We believe that the
successful implementation of this new approach, including the effective
handling of delays, depends heavily on the CVC project team's continuous
commitment of sufficient skilled resources to schedule management. On
June 9, the construction management contractor told us that a project
control engineer who had been assigned temporarily to help manage the
project's schedule would be working full time on the project starting June
13. We plan to closely monitor the implementation of this new approach,
including the resources devoted to it, the handling of delays, and the
accuracy of the information provided to Congress.
o Developing and implementing risk mitigation plans. In the course of
monitoring the CVC project, we have identified a number of risks and
uncertainties that could have significant adverse effects on the project's
schedule and costs. Some of these risks, such as underground obstructions
and unforeseen conditions, have already materialized and have had the
anticipated adverse effects. We believe the project continues to face
risks and uncertainties, such as unforeseen conditions associated with the
project's remaining tunnels and other work, scope gaps or other problems
associated with the segmentation of the project between two major
contractors, and shortages in the supply of stone and skilled stone
workers. Although we have recommended that AOC develop and implement risk
mitigation plans for these types of risks and uncertainties, AOC has not
yet done so. AOC has agreed, however, to begin to do this shortly, and,
according to AOC's CVC project executive, is exploring possible
approaches.
o Preparing a master schedule that integrates the major steps needed to
complete CVC construction and the steps necessary to prepare for
operations. A number of activities, such as hiring and training staff,
procuring supplies and services, and developing policies and
Project Costs and Funding
procedures, need to be planned and carried out on a timely basis for CVC
to open to the public when construction is complete. Although AOC has
started to plan and prepare for CVC operations, as we indicated in our May
17 testimony, it has not yet developed a schedule that integrates the
construction activities with those activities necessary to prepare for
operations. The Subcommittee requested such a schedule during its April
13, 2005, hearing on AOC's fiscal year 2006 budget request. Because of a
lack of funds, AOC had not been able to extend the work of a contractor
that had been helping it plan and prepare for operations. Last week, AOC
received the funding needed to re-engage this contractor, and AOC said
that it would be working with the contractor to continue planning and
preparing for CVC operations.
As we said during the Subcommittee's May 17 hearing, we estimate that the
cost to complete the construction of the CVC project, including proposed
revisions to its scope, will range from about $522 million without
provision for risks and uncertainties to about $559 million with provision
for risks and uncertainties. As of June 10, 2005, about $483.7 million had
been provided for CVC construction. In its fiscal year 2006 budget
request, AOC asked Congress for an additional $36.9 million for CVC
construction. AOC believes this amount will be sufficient to complete
construction and, if approved, will bring the total funding provided for
the project's construction to $520.6 million. Adding $1.7 million to this
amount for additional work related to the air filtration system that we
believe will likely be necessary brings the total funding needed to
slightly more than the previously cited $522 million. AOC believes that it
could obtain this $1.7 million, if needed, from the Department of Defense.
AOC's $36.9 million budget request includes $4.2 million for potential
additions to the project's scope (e.g. congressional seals, an orientation
film, and storage space for backpacks) that Congress will have to consider
when deciding on AOC's fiscal year 2006 CVC budget request.
AOC has not asked Congress for the additional $37 million ($559 million
minus $522 million) that we believe will likely be needed to address the
risks and uncertainties that continue to face the project. These include,
but are not limited to, shortages in the supply of stone and skilled stone
workers, unforeseen conditions, scope gaps, further delays, possible
additional requirements or time for life safety or security changes and
commissioning, unknown operator requirements, and contractor coordination
issues. These types of problems have been occurring, and as of June 1,
2005, AOC had received proposed sequence 2 change orders with costs
estimated to exceed the funding available in fiscal year 2005 for
sequence 2 changes by about $400,000.3 AOC plans to help cover this
potential shortfall by requesting approval from the House and Senate
Committees on Appropriations to reprogram funds from other project
elements that it does not believe will be needed for those elements. AOC
can also request approval from these Committees to use part of $10.6
million that Congress approved for transfer to the CVC project from funds
appropriated for Capitol Buildings operations and maintenance.4
For several reasons, we believe that AOC may need additional funds for CVC
construction in the next several months. These reasons include the pace at
which AOC is receiving proposed change orders for sequence 2, the problems
it is encountering and likely to encounter in finishing the project, and
the uncertainties associated with how much AOC may have to pay for
sequence 2 delays as well as when AOC will have fiscal year 2006 funds
available to it. For example, AOC is likely to incur additional costs for
dehumidification if the expected delay in the utility tunnel cannot be
mitigated or AOC has to obtain temporary equipment to provide steam and
chilled water to CVC. AOC may be able to meet this need as well as the
other already identified needs by additional reprogramming of funds and by
obtaining approval to use some of the previously discussed $10.6 million.5
However, these funds may not be sufficient to address the risks and
uncertainties that may materialize from later this fiscal year through
fiscal year 2007. Thus, while AOC may not need all of the remaining $37
million we have suggested be allowed for risks and uncertainties, we
believe AOC is likely to need more funds in fiscal years 2006 and 2007
than it has already received and has requested to complete the
construction of CVC's currently approved scope, although the exact amount
and timing are not clear at this time. Effective implementation of our
3In our May 17 testimony, we reported that AOC had about $700,000
remaining in its fiscal year 2005 funding for sequence 2 changes after
deducting estimated costs for proposed changes it had received.
4Public Law 108-447, enacted in December 2004, provided that up to $10.6
million could be so transferred upon the approval of the House and Senate
Committees on Appropriations. In March 2005, AOC requested that about $4
million of these funds be transferred to CVC, including some funds for
construction-related work, such as design of the gift shop space. As of
June 10, AOC had received approval to use about $2.8 million of this $10.6
million. None of the $10.6 million was included in the $483.7 million
above.
5AOC plans to fund anticipated additional costs for the House connector
tunnel, the Jefferson Building connection to the Library of Congress
tunnel, and certain securityrelated work by requesting approval to
reprogram about $1.6 million from sequence 1 construction and the East
Front Interface to these project elements.
recommendations, including risk mitigation, could reduce AOC's funding
needs.
Recommendation for Executive Action
Given the development of a new project schedule, the pace at which
sequence 2 change orders are being proposed, and the risks and
uncertainties that continue to face the project, we recommend that, in the
September to November 2005 time frame, the Architect of the Capitol update
the estimated cost to complete the project. We believe that such
information will be useful to Congress as it considers AOC's budget
request for fiscal year 2007 as well as any other requests AOC may make
for CVC funding. We expect to have our risk assessment of AOC's new
project schedule done in September and believe that the information
developed during this assessment will be important in estimating future
costs. In addition, we believe that AOC will have more information on the
possible costs of sequence 2 delays by that time. AOC has agreed to do
this update.
Mr. Chairman, this completes our prepared statement. We would be happy to
answer questions that you or other Subcommittee Members may have.
Contacts and For further information about this testimony, please contact
Bernard Ungar at (202) 512-4232 or Terrell Dorn at (202) 512-6923. Other
key
Acknowledgments contributors to this testimony include Shirley Abel,
Maria Edelstein, Elizabeth Eisenstadt, Brett Fallavolitta, Jeanette
Franzel, Jackie Hamilton, Bradley James, Scott Riback, and Kris Trueblood.
Appendix I: Capitol Visitor Center Critical Construction Milestones May
2005-July 2005
Scheduled Actual
Activity Location completion completion
Wall Stone Area 1 Great Halla,b 5/11/05 6/06/05
Scheduled for completion between
5/17/05 and 6/14/05
Wall Stone Area 3 Base Support Great Halla 5/20/05 5/20/05
Wall Stone Layout Area 4 Great Hall 5/20/05 6/06/05
Saw Cut Road at 2nd Street Utility Tunnela 5/24/05
Wall Stone Area 4 Base Support Great Halla 5/27/05
Wall Stone Layout Area 5 Great Hall 5/27/05 5/27/05
Masonry Wall Lower Level East Cong. Auditorium 6/03/05 5/25/05
Wall Stone Area 5 Base Support Great Halla 6/06/05 6/09/05
Wall Stone Layout Area 6 Great Hall 6/06/05
Drill/Set Soldier Piles at 2nd
Street Utility Tunnela 6/08/05
Wall Stone Area 6 Base Support Great Halla 6/13/05
Scheduled for completion between 6/15/05 and 7/31/05
Wall Stone Layout Area 8 Great Hall 6/20/05
Masonry Wall Orientation Theater 6/24/05
Wall Stone Layout Area 9 Great Hall 6/24/05
Wall Stone Area 9 Base Support Great Halla 7/05/05
Wall Stone Installation Area 2 Great Hall 7/06/05 Wall Stone Installation
Area 3 Great Hall 7/06/05 Wall Stone Installation Area 4 Great Hall
7/15/05 Wall Stone Area 9 Base Great Halla 7/15/05 Excavate/shore Station
0-1 Utility Tunnela 7/21/05 Concrete Working Slab 2nd Street Utility
Tunnela 7/26/05 Waterproof Working Slab Station 0-1 Utility Tunnela
7/29/05
Source: AOC's April 2005 CVC sequence 2 construction schedule for the
scheduled completion dates and AOC and its construction management
contractor for the actual completion dates.
Note: Actual completion information was obtained on June 9, and AOC did
not expect that the wall stone area 6 base-support work in the Great Hall
would be done by June 13; it is now expected to be done after June 14.
aThese activities are critical.
bThis activity was scheduled for completion by the Subcommittee's May 17
hearing but was not done as of that date.
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