Capitol Visitor Center: Update on Status of Project's Schedule	 
and Cost As of August 2, 2006 (02-AUG-06, GAO-06-828T). 	 
                                                                 
Our remarks will focus on the Architect of the Capitol's (AOC)	 
progress in achieving selected project milestones and in managing
the project's schedule since Congress's June 28, 2006, hearing on
the project. As part of this discussion, we will address a number
of key challenges and risks that continue to face the project, as
well as actions AOC has taken or plans to take to address these  
risks. In addition, we will discuss the status of the project's  
costs and funding. Our remarks today are based on our review of  
schedules and financial reports for the Capitol Visitor Center	 
(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 the CVC team (AOC and its major	 
CVC contractors), AOC's Chief Fire Marshal, and representatives  
from the U.S. Capitol Police, the General Services		 
Administration, and the Office of Compliance. We also reviewed	 
AOC's construction management contractor's periodic schedule	 
assessments and daily reports on the progress of interior wall	 
and floor stonework.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-828T					        
    ACCNO:   A57941						        
  TITLE:     Capitol Visitor Center: Update on Status of Project's    
Schedule and Cost As of August 2, 2006				 
     DATE:   08/02/2006 
  SUBJECT:   Construction contracts				 
	     Contract administration				 
	     Contract oversight 				 
	     Contract performance				 
	     Contractors					 
	     Cost analysis					 
	     Cost overruns					 
	     Facility construction				 
	     Federal facilities 				 
	     Federal funds					 
	     Future budget projections				 
	     Public visitor-centers				 
	     Risk management					 
	     Schedule slippages 				 
	     Cost estimates					 
	     Capitol Visitor Center Project			 

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GAO-06-828T

     

     * Proposed Completion and Opening Dates Have Held Steady and C
          * AOC's Proposed Completion and Opening Dates Have Remained ab
          * Construction Work Is Progressing
          * Risks Associated with the Fire Protection System Pose the Gr
          * Other Risks Have Materialized, Delaying Activities Important
          * Indicators of Construction Progress Show Mixed Results
          * Project's Schedule Remains Vulnerable to Challenges, Risks,
     * Estimated Project Cost and Funding
     * Contacts and Acknowledgments
     * Appendix I: Capitol Visitor Center Critical Construction Mil
          * Order by Mail or Phone

Testimony

Before the Subcommittee on the Legislative Branch, Committee on
Appropriations, U.S. Senate

United States Government Accountability Office

GAO

For Release on Delivery Expected at 10:30 a.m. EDT

Wednesday, August 2, 2006

CAPITOL VISITOR CENTER

Update on Status of Project's Schedule and Cost As of August 2, 2006

Statement of Terrell Dorn, Director Bernard L. Ungar, Director

Physical Infrastructure Issues

GAO-06-828T

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to assist the Subcommittee in monitoring
progress on the Capitol Visitor Center (CVC) project. Our remarks will
focus 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 June 28, 2006, hearing on the project.1 As part of this
discussion, we will address a number of key challenges and risks that
continue to face the project, as well as actions AOC has taken or plans to
take to address these risks. In addition, we will discuss the status of
the project's costs and funding.

Our remarks 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 the CVC team (AOC and its major CVC contractors), AOC's
Chief Fire Marshal, and representatives from the U.S. Capitol Police, the
General Services Administration, and the Office of Compliance. We also
reviewed AOC's construction management contractor's periodic schedule
assessments and daily reports on the progress of interior wall and floor
stonework.

In summary:

Since the Subcommittee's June 28 CVC hearing, the CVC team has continued
to move the project's construction forward, and the project's overall
targeted completion dates have remained about the same as we reported at
that hearing. However, risks have materialized, especially in connection
with the CVC's fire protection system, and a number of important
activities have been delayed, lessening our confidence in the likelihood
of the CVC' team's meeting the targeted completion dates. We will reassess
the project's schedule and monitor the team's progress in achieving
effective management control over the CVC's fire protection system work
during the next several weeks and report our results to the Subcommittee
in September.

1GAO, Capitol Visitor Center: Update on Status of Project's Schedule and
Cost as of June 28, 2006, GA0-06-827T (Washington, D.C.: June 28, 2006).

           o  During the past month, work on the project has progressed in a
           number of areas. For example, chilled water began flowing from the
           Capitol Power Plant to the CVC this week, and the sequence 2
           contractor expects to have dehumidified air in the exhibit gallery
           by around mid-August. In addition, critical interior wall and
           floor stone installation has continued, together with other
           interior and exterior construction work. Almost all of the
           interior wall stone for the CVC itself (excluding the atrium
           areas, the East Front, and the tunnels) is now installed.
           o  A number of problems have developed in connection with the
           CVC's fire protection system, which we now consider to be the
           single greatest source of risk to meeting the project's scheduled
           completion dates. Although the overall schedule for completing
           this system has not slipped since the Subcommittee's last CVC
           hearing, some activities have been delayed, and the team continues
           to encounter new issues or "surprises" with the fire protection
           system. The CVC's fire protection system has not yet been fully
           approved, and a significant problem with the installation of one
           of the system's components was recently identified. Although this
           problem has been resolved, communication and management issues
           surfaced that could further affect work on the system if they are
           not effectively resolved quickly. In addition, critical building
           systems still have to be commissioned and tested, and certain
           design or work scope elements are still incomplete or are being
           clarified, refined, or changed, even though the project's overall
           design is essentially complete.
           o  Several activities important to the CVC's completion, such as
           East Front work, have been delayed since the Subcommittee's last
           CVC hearing. During the last 5 weeks, the sequence 2 contractor
           exceeded its target for interior floor stone installation but
           again fell short of its target for interior wall stone
           installation. In addition, the sequence 2 contractor met only 2 of
           the 8 milestones we have been tracking for this hearing. Although
           this contractor's monthly billings were higher in June than in
           May, the trend in billings continues to indicate that construction
           work is more likely to be completed closer to AOC's new target
           dates than its previous ones.
           o  AOC's schedule provides additional time to complete work after
           construction work is scheduled to be done. This additional time
           will give AOC some leeway, if necessary, to address risks and
           uncertainties such as those associated with complex building
           systems and trade stacking, should it occur. The CVC's complex
           heating, air conditioning, and ventilation (HVAC); fire
           protection; and security systems have to work together as well as
           separately, and uncertainties associated with each could affect
           the schedules for all. During the past month, the sequence 2
           contractor has continued work on its area-by-area plans to prevent
           trade stacking2 during finish work. In our reassessment of the
           project's schedule, we will determine whether the additional time
           AOC has scheduled is likely to be sufficient to address these and
           other risks and uncertainties. AOC's construction management
           contractor has not yet completed its reassessment of the schedule
           but expects to have it done shortly.

           We previously estimated that the total cost to complete the entire
           CVC project would be about $556 million without an allowance for
           risks and uncertainties and $584 million with such an allowance.
           To date, about $530 million3 has been provided for CVC
           construction. AOC and its construction management contractor have
           completed their reassessments of the cost to complete the project
           and believe that sufficient funding will be available except for
           potential delay-related costs, assuming that AOC receives about
           $26 million in fiscal year 2007 appropriations for CVC
           construction. This is the amount our previous cost-to-complete
           estimate showed would be necessary without provision for risks and
           uncertainties. We have not increased our $556 million estimate
           (which includes this $26 million) to reflect recent events. The
           results of our reassessment of the cost to complete the project,
           which we expect to have by mid-September, will include an
           assessment of the impact of these events. Although we anticipate
           that our $556 million estimate is likely to increase, we have no
           specific indication at this time that the cost to complete the
           entire project will exceed our $584 million estimate, which does
           include an allowance for risks and uncertainties, such as
           potential delay-related costs. In addition, as we have previously
           indicated, AOC preliminarily expects to need about $950,000 in
           fiscal year 2007 AOC general administration appropriations to pay
           for the contractual support needed to complete acceptance testing
           of the facility's fire protection system in time to meet the
           project's schedule. AOC plans to determine if it can reduce the
           amount needed for this contractual support; we will keep the
           Subcommittee apprised of this situation.

           Proposed Completion and Opening Dates Have Held Steady and Construction
			  Has Progressed, but Risks and Delays Threaten the Projectï¿½s Current Schedule
			  
			  The proposed completion and opening dates in the CVC project's
           schedule have remained about the same since the Subcommittee's
           last CVC hearing, and work on the project has continued to
           progress, but risks have materialized, delaying several important
           activities and threatening the project's current schedule. Most
           important, a problem with a component of the fire protection
           system was identified and has now been resolved. At this time, the
           problem seems to have greater implications for the project's cost
           than for its schedule, but the underlying management control
           issues that it reveals could adversely affect the schedule, even
           though AOC has agreed to take actions that we suggested to enhance
           its management control over the design and completion of the fire
           protection system. In addition, risks have led to problems in a
           number of areas, such as the HVAC systems, the gift shops, and the
           exhibit gallery, causing delays in these activities and increasing
           the risk of delay for the project as a whole. For example, the
           proposed opening of the exhibit gallery was deferred about 3
           months-to June 29, 2007-after the team learned that it must have a
           certificate of occupancy before the artifacts for display can be
           delivered and installed. The indicators of progress that we have
           been tracking for the Subcommittee showed mixed results during
           June, but the improvements in some are not sufficient to offset
           our concerns about the risks and uncertainties and delays.
           Overall, we have diminished confidence in the likelihood that the
           team will be able to meet its currently proposed opening dates. As
           noted, we plan to reassess the project's schedule and report our
           results to the Subcommittee in September.

           AOCï¿½s Proposed Completion and Opening Dates Have Remained about the Same
			  
			  According to the June 2006 project schedule, the base CVC project
           will be completed in May 2007 (except for the exhibit gallery) and
           the House and Senate expansion spaces will be completed in August
           2007. These dates are about the same as those indicated in the May
           2006 schedule. Moreover, according to both schedules, the base
           project will be opened in July 2007 and the expansion spaces will
           be opened in August 2007-time frames that AOC believes will
           accommodate possible additional delays and allow start-up time for
           operations.

           According to the June 2006 schedule, most of the physical
           construction work in the CVC, the East Front, and the expansion
           spaces will be completed by December 31, 2006; however, some work
           extends into 2007-as far as April 2007 for the exhibit gallery and
           March 2007 for the gift shops, certain East Front mechanical work,
           and the installation of wayfinding signage. Certain other
           construction work, such as the completion of space for the Capitol
           guide service, East Front finish work, and seating installation in
           the auditorium, also extends into 2007. Neither the CVC nor the
           expansion spaces can be opened until the Chief Fire Marshal has
           completed acceptance testing for the fire protection and life
           safety systems, now scheduled for May 2007 for the CVC and August
           2007 for the expansion spaces. The Chief Fire Marshal plans to
           issue a temporary certificate of occupancy for the CVC's base
           building when he completes his testing of it and a final
           certificate after he completes his testing of the expansion spaces
           and limited retesting of the CVC's base building. AOC believes
           that it may be able to shorten some of the time scheduled for
           testing the fire protection system and that it may be able to open
           segments of the expansion spaces earlier than August 2007. As we
           have discussed in previous CVC testimonies, AOC is continuing to
           explore this possibility.

           Construction Work Is Progressing
			  
			  According to information provided by AOC and its construction
           management contractor and our observations, work on the project
           has advanced, in terms of both the dollar value of the work in
           place and individual project elements. In dollar terms, AOC's
           construction management contractor reported that, as of June 30,
           the overall CVC project was about 84 percent complete and the
           sequence 2 work was about 74 percent complete-up from about 82
           percent and 71 percent, respectively, as of May 31. Progress on
           individual project elements includes the following:

           o  Interior CVC work has moved forward, according to AOC's
           construction management and sequence 2 contractors. For example,
           the chilled water systems were flushed, and chilled water began
           flowing from the Capitol Power Plant to the CVC this week. The
           sequence 2 contractor expects to have dehumidified air in the
           exhibit gallery by around mid-August. In addition, the sequence 2
           contractor has installed about 95 percent of the floor stone in
           the exhibit gallery and has installed about half of the floor
           stone in the great hall. Millwork in the south orientation theater
           has begun; bulkheads were being hung and finished; and the
           installation of kitchen wall and floor tile was substantially
           completed on the lower level. On the upper level and in the
           auditorium, mechanical, electrical, and plumbing rough-ins were
           substantially completed. Furthermore, the CVC team and AOC's Fire
           Marshal Division have continued resolving issues associated with
           the CVC's fire protection system.
           o  Surface work continued, including the installation of (1) stone
           pavers above the CVC, (2) stone steps on the concrete base slab
           between and around the trees planted alongside the auditorium, and
           (3) the skylight structure in the north opening above the great
           hall. Work on the House connector tunnel has also continued.
           o  Wall stone installation has now been fully completed in the
           food service area; all but four pieces have been installed in the
           great hall; and installation has progressed substantially in the
           East Front basement and plaza levels, atriums, and auditorium. As
           of last week, the sequence 2 contractor had installed 99 percent
           of the interior wall stone in the CVC itself, excluding the atrium
           areas, the East Front, and the tunnels.
           o  On the East Front exterior, AOC and its construction management
           contractor reported, the center steps have been reinstalled over
           new waterproofing material, and air-handling equipment has been
           placed on the East Front penthouse area.
           o  In the House and Senate expansion spaces, progress was made in
           installing and priming drywall; installing mechanical, electrical,
           and plumbing systems; and inspecting wall and ceiling close-ins.

           Risks Associated with the Fire Protection System Pose the Greatest
			  Challenge to the Projectï¿½s Schedule
			  
			  According to the project's June 2006 schedule, the completion date
           for the fire protection system has not changed, but for a variety
           of reasons, we are concerned that this system is at significant
           risk of delay. Moreover, delays in completing this system could
           directly affect the CVC's completion date. Specifically, the
           activities associated with the fire protection system now
           constitute the single longest path through the project's schedule,
           meaning that each day the system's completion is delayed, the
           CVC's completion could also be delayed.

           Our analysis indicates that progress on the fire protection system
           has been affected by communication and management issues, despite
           the team's various efforts to coordinate activities and prevent
           problems, as well as identify and resolve problems. A number of
           issues or "surprises" have occurred, requiring unanticipated
           changes to the fire protection system, the interrelated security
           system, the schedule, or a combination of these elements. The
           changes include adding control panels for the fire alarm system in
           the expansion spaces, changing the specifications for the
           programming of the fire alarm system, adding activities to the
           schedule for the fire alarm system, and changing the sequence of
           activities associated with the fire alarm system. AOC and its
           construction management contractor have attempted to avoid
           problems such as these by such means as holding biweekly or weekly
           meetings with the CVC team and AOC's Fire Marshal Division and by
           meeting with representatives of the U.S. Capitol Police when
           specific security issues arise. In our opinion, these biweekly or
           weekly meetings-which started in early 2005 and are chaired by a
           senior engineer with AOC's construction management contractor-have
           generally helped to identify and resolve the specific issues being
           addressed. AOC's weekly risk management meetings have also been
           helpful in identifying and addressing specific risks. However, the
           U.S. Capitol Police, which is responsible for managing the CVC's
           security system, has not always participated in the fire
           protection meetings and does not participate in the risk
           management meetings. As a result, representatives have not always
           been present to identify issues associated with the interface
           between the security and the fire protection systems. Furthermore,
           some issues have not been addressed because the issues have not
           been included in the meeting agendas or specifically raised. As we
           reported during the Subcommittee's June 28, 2006, CVC hearing, the
           CVC team has not had a comprehensive, prioritized list of system
           designs that have to be approved by AOC's Fire Marshal Division.
           In addition, although the team does address various parts of the
           fire protection system during its progress review, fire protection
           system, and risk management meetings the team is just now
           developing a comprehensive list of the system elements that can be
           used to (1) discuss their status or (2) systematically and
           effectively identify potential or actual problems with the design,
           installation, or testing of all of the system's components. The
           team is working to develop such lists and expects to complete them
           shortly. The lists should be particularly useful in identifying
           potential issues, including those involving the interface between
           the security and the fire protection systems.

           Notwithstanding the regular meetings between the CVC team and the
           Fire Marshal Division, a problem with a component of the CVC's
           fire protection system recently arose. This component is being
           installed as an alternative to an approach that was originally
           planned to provide a level of protection specified in the life
           safety code. Designed to provide an equivalent level of
           protection, the alternative approach is necessary because the
           original one could not be accommodated within the CVC's design.
           However, according to AOC's Fire Marshal Division, the
           component-which the sequence 2 contractor has almost completely
           installed-would not provide an equivalent level of protection
           because it does not meet a survivability standard applicable to
           the original system. The CVC team and the Fire Marshal Division
           resolved this issue last week, but additional work is required and
           additional costs will be incurred. The exact impact of the
           additional work on the project's schedule and cost is not yet
           clear, and AOC expects to have more information on both shortly.
           Moreover, although this issue has been resolved, other issues may
           arise and other changes may be required because the design of the
           fire protection system has not yet been fully approved; efforts to
           resolve open issues for some shop drawings have dragged on for
           several months; installation is still in progress; and pretesting
           and testing of the fire protection system have not yet begun.

           We have not fully evaluated all of the circumstances surrounding
           the problem with this component of the CVC's fire protection
           system. However, according to the information we have gathered,
           issues in at least two areas-communication and
           management-contributed to the problem.

           o  Communication broke down because certain requirements were not
           stated explicitly in writing, assumptions varied, and information
           was conveyed largely through document exchanges rather than
           meetings, during which the unwritten requirements and differences
           in assumptions could have surfaced, leading to earlier resolution
           of the problem. According to both the CVC team and AOC's Chief
           Fire Marshal, much of the communication problem stemmed from the
           uniqueness of the CVC and the application of the component in
           question and the fact that the situation being addressed is not
           specifically covered in the life safety code and other
           project-related documents.
           o  Management issues also contributed to the problem with the
           component, despite all the efforts of the CVC team' and the Fire
           Marshal Division' to coordinate and successfully address the fire
           safety issues. The CVC team and the Fire Marshall Division have
           not been able to resolve all issues quickly. For example,
           resolution of the team's shop drawings and product specifications
           for the fire protection system component in question has dragged
           on for over 9 months and is still not complete. Resolution of the
           Fire Marshal Division's comments on some other fire protection
           system components is also taking several months, but a recent
           change in AOC's approach to resolving comments seems to have
           improved the situation. Notably, the Division's comments on the
           team's February 2006 submittal for another fire protection system
           component in the exhibit gallery had not yet been resolved as of
           last week. At the same time, though, the CVC team has been working
           aggressively to resolve the Division's comments on the drawings
           for the base project's fire alarm system, and recently, at the
           Architect of the Capitol's direction, the team and the Fire
           Marshal Division have been meeting (as well as exchanging
           documents) to discuss the Division's comments on the team's
           submittal for this system. This process appears to be working
           well.

           During the last 2 weeks, we met with AOC to discuss our concerns
           about the fire protection system and suggested that AOC take
           immediate steps to enhance management control over the completion
           of the fire protection system as well as its interface with the
           CVC's security system. In particular, we believe it is important
           for AOC to determine immediately and on an ongoing basis whether
           other problems with the design, installation, or testing of the
           fire protection system and its interface with the security system
           could have significant adverse effects on life safety,
           functionality, or the project's schedule or cost. To complement
           the team's ongoing efforts, which we believe have been quite
           helpful, we suggested, and AOC agreed, to have weekly meetings
           with key CVC team members and representatives from AOC's Fire
           Marshal Division and the U.S. Capitol Police to discuss all
           elements of the fire protection system and to identify and resolve
           any concerns, problems, or issues associated with all aspects of
           the system's design, installation, pretesting, or final testing,
           including any quality, scheduling, or coordination matters, and to
           focus on expeditiously attaining fully approved designs for all
           aspects of the system. In addition, we asked AOC's Chief Fire
           Marshal if he could develop his plans for acceptance testing of
           the fire protection system in the next few weeks so that the CVC
           team could factor these plans into its work, scheduling, and
           resource planning. The Chief Fire Marshal agreed and said that he
           has proposed that (1) his Division meet with the CVC team and the
           U.S. Capitol Police to identify potential submission items; (2)
           all submission items be tracked in weekly meetings; and (3) the
           submission items be prioritized for review and resolution. In
           addition, both AOC and a U.S. Capitol Police representative agreed
           that participation by the U.S. Capitol Police in more of the
           team's weekly meetings should prove helpful. Although it may be
           impossible to prevent all problems or surprises, we believe that
           these steps, if effectively implemented by all parties, can reduce
           the risks associated with the fire protection system's completion
           and the system's interface with the CVC's security system and
           identify problems early enough to minimize their consequences.

           Other Risks Have Materialized, Delaying Activities Important to
			  the Projectï¿½s Completion
			  
			  Although the scheduled completion date for the CVC has remained
           about the same as we reported at the Subcommittee's June 28
           hearing, problems in a number of areas have either delayed or
           could delay activities whose late completion could adversely
           affect the project's overall completion. For example, according to
           the construction management contractor, the date for the
           air-handling units to be mechanically ready slipped by 2 weeks
           because of further problems in completing tunnel pipe insulation
           work, and efforts to close in the ceiling in the upper-level
           orientation and security lobby slipped by 3 weeks because of
           problematic sequence 1 work that required remediation. According
           to the project's June schedule, additional delays in these
           activities of 15 and 25 workdays, respectively, could further
           delay the project's overall completion. In addition, a delay of as
           little as 2 workdays in completing the gift shops-whose design,
           AOC says, has now been agreed upon-could affect the project's
           overall completion date. As we will discuss later in our
           testimony, several other activities that are important to meeting
           the CVC's May 2007 scheduled completion date have also been
           delayed.

           Several activities important to completing the House and Senate
           expansion spaces have also been delayed since the Subcommittee's
           last CVC hearing. For example, AOC's construction management
           contractor reported design-related delays of about a month each in
           activities involving a custom light fixture, a concrete ramp, and
           a special fire suppression system. Furthermore, the sequence 2
           subcontractor doing the expansion work identified other concerns
           that could delay the completion of its work, some of which could
           affect the CVC's opening. For example, the subcontractor reported
           being instructed to stop certain work in the U.S.Capitol Police's
           command center pending the resolution of an issue involving the
           facility's fire protection system. The subcontractor also reported
           that a lack of humidity controls, caused by the delay in getting
           the air-handling units operational, could delay certain casework
           and ceiling tile installation.

           Finally, although not critical to the CVC's opening, work being
           done to connect the Library of Congress's Jefferson building to
           the tunnel linking it with the CVC may fall behind by as much as
           53 calendar days because of an asbestos problem. However, the
           contractor believes that it may be able to recover some of this
           time after the asbestos abatement work is completed.

           Indicators of Construction Progress Show Mixed Results
			  
			  The four indicators of construction progress that we have been
           tracking for the Subcommittee show mixed results since the
           Subcommittee's June 28 CVC hearing. An update on these indicators
           follows:

           Sequence 2 contractor has continued to miss most milestones.
           Starting with the Subcommittee's June 2005 CVC hearing, at the
           Subcommittee's request, we and AOC have been selecting and
           tracking sequence 2 milestones to help the Subcommittee monitor
           construction progress. These milestones include activities that
           were either on the project's critical path or that we and AOC
           believe are critical to the project's timely completion. As figure
           1 shows, the sequence 2 contractor has generally missed these
           milestones. For today's hearing, the contractor met 2 of the 8
           milestones that were due to be completed, according to the
           project's June 2006 schedule, and for both, the work was completed
           ahead of schedule. However, the contractor was late in meeting 2
           other milestones and had not met the remaining 4 milestones as of
           July 31. (See app. I.) The sequence 2 contractor attributed the
           slippages to a number of factors, including the need to do
           remedial or other work first, the work itself or necessary
           preceding work taking longer than expected, and a resequencing of
           work by the contractor.

           Figure 1: Sequence 2 Contractor's Progress in Meeting Selected
           Milestones as of CVC Hearing Dates

           In total, AOC's construction management contractor reported delays
           in 17 of 24 critical and near-critical paths that AOC's
           construction management contractor identified as important to
           meeting the base project's overall completion date.4 According to
           AOC's construction management contractor, delays occurred in, but
           were not limited to, the utility tunnel, East Front, orientation
           theaters, exhibit gallery, certain elevator installations, the
           upper level assembly room, the atrium, and the Library of Congress
           tunnels. According to the CVC team, these other delays were
           attributable to such factors as water leaks, deficient sequence 1
           work, changes in the sequence of work activities by the sequence 2
           contractor, the need to do lead abatement work, and inaccessible
           work areas. Even more important than the individual delays
           themselves, however, is their likely impact on the CVC team's
           ability to complete construction work on schedule. So many
           activities have fallen behind schedule that relatively short
           additional delays could push the CVC's overall completion date
           further back. The number of critical and near-critical paths
           increased from 23 in the project's May schedule to 24 in the June
           schedule, and a number of the activities that slipped in June had
           also slipped in the May schedule.

           Value of completed work increased in June, but trend continues to
           indicate completion in late spring or summer of 2007. Another
           indicator of construction progress that we and AOC's construction
           management contractor have been tracking is the value of the
           completed construction work billed to the government each month.
           Although the sequence 2 contractor's billings for June were about
           $2.2 million higher than for May, both we and the construction
           management contractor believe that, overall, the sequence 2
           contractor's monthly billings, including the bills for March
           through June 2006, indicate that AOC is more likely to finish
           closer to its currently scheduled completion dates than its
           previously scheduled completion dates. While this indicator has
           some limitations (for example, billings lag behind construction),
           it is generally regarded in the construction industry as a useful
           measure of how likely a project is to be completed on time. Figure
           2 compares the sequence 2 contractor's billings since May 2003
           with the billings needed to complete construction work on schedule
           and indicates that the sequence 2 contractor is unlikely to finish
           the project until at least late spring or summer 2007 unless the
           value of completed work increases significantly and is sustained
           at the increased level. We believe that such a significant
           increase will be difficult, given the limited number of areas that
           will be ready for finish work at any given time.

2Trade stacking can occur when workers from different trades, such as
stone masons, electricians, plumbers, or plasterers, have to work in the
same area at the same time to meet a schedule, sometimes making it
difficult to ensure sufficient space and resources for concurrent work.

3Since our last CVC testimony, the House and Senate Committees on
Appropriations approved an AOC request to reprogram about $1 million from
CVC operations funding to CVC construction. We have not reflected this
reprogramming in our cost-to-complete estimates or funding figures above,
but will include this change, as well any other changes we believe are
appropriate, in our next CVC testimony.

  Proposed Completion and Opening Dates Have Held Steady and Construction Has
    Progressed, but Risks and Delays Threaten the Project's Current Schedule

AOC's Proposed Completion and Opening Dates Have Remained about the Same

Construction Work Is Progressing

Risks Associated with the Fire Protection System Pose the Greatest Challenge to
the Project's Schedule

Other Risks Have Materialized, Delaying Activities Important to the Project's
Completion

Indicators of Construction Progress Show Mixed Results

4Construction projects typically have one critical path, which is the
sequence of activities having the longest duration through the schedule.
There is no slack time associated with these activities, meaning 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. Some projects have multiple critical paths simultaneously;
in practice, the CVC had what essentially amounted to two concurrent
critical paths in May-(1) acceptance testing of the fire protection system
and (2) fit-out of the gift shops. In June, there was one critical
path-acceptance testing of the fire protection system. Generally, the more
critical and near-critical activities a project has, the greater is the
risk of late completion because there are more opportunities for slight
delays that can adversely affect the project's completion.

Figure 2: Total Billings by the Sequence 2 Contractor for the Entire CVC
Project Compared with the Billings Needed to Finish Construction Work on
Schedule

Notes:

1. The early and late lines on this figure reflect the cumulative billings
that would be required to complete the project through contract
modification number 110 ($226.8 million total contact value) by the early
and late finish dates shown in the sequence 2 contractor's schedule, which
is based on the September 2006 contractual completion date.

2. The actual line reflects the sequence 2 contractor's actual monthly
billings.

3. Although bills are typically submitted for payment after work is
completed, it is often likely that construction work will be completed on
schedule when the actual billing line falls between the early and late
lines in the figure. With respect to the CVC, the actual billing line has
been trending below, and in March 2006 went below, the late finish line,
where it remained through June 2006. Even with the lag in billings, this
trend indicates that the amount of work being completed each month is not
sufficient to finish the project by the previously scheduled completion
date.

Interior wall stone installation is taking longer than expected, but floor
stone installation exceeded target. Overall, about 84 percent of the CVC's
interior wall stone has been installed (in the CVC, East Front, atrium
areas, and tunnels), according to AOC's construction management
contractor, and the sequence 2 contractor installed 2,890 pieces of
interior wall stone during the last 5 weeks, about 61 percent of its 4,736
piece production target. During the same period, the sequence 2 contractor
installed about 7,130 square feet of floor stone, or about 5 percent more
than the 6,770 square feet specified in the floor stone installation plan
that the contractor recently provided to AOC. In addition, 2 of the 8
schedule milestones that we and AOC have been tracking for the
Subcommittee for today's hearing are related to interior wall stone
installation, and the sequence 2 contractor completed work for one ahead
of schedule, but has not yet completed the other one, according to AOC's
construction management contractor. Although the sequence 2 contractor
made good progress in installing interior wall stone in the base project,
it encountered delays in installing wall stone in the East Front and
atrium areas. According to the construction management contractor, the
East Front delays were attributable to a need for remedial, preparatory,
and lead abatement work, and the atrium delays were attributable to the
need to do remedial work and a decision by the sequence 2 contractor to
resequence work affecting those areas.

Figures 3 and 4 show the sequence 2 contractor's progress in installing
interior wall and floor stone since January 23 and February 13, 2006,
respectively.

Figure 3: Progress of CVC Interior Wall Stone Installation Compared with
Targets Set by the Sequence 2 Contractor

Figure 4: Progress of CVC Interior Floor Stone Installation Compared with
Preliminary Targets Set by the Sequence 2 Contractor

Project's Schedule Remains Vulnerable to Challenges, Risks, and Uncertainties

As we have indicated during the Subcommittee's previous CVC hearings, we
believe that the CVC team continues to face challenges, risks, and
uncertainties in completing the project. In our view, the remaining work
associated with the fire protection system poses the greatest single risk
to meeting AOC's July and August 2007 proposed opening dates. At this
time, we are uncertain whether the 2 to 3 months that AOC has added to the
schedule for addressing the challenges, risks, and uncertainties that
continue to face the project-including the fire protection system-will be
sufficient, particularly given the project's history of delays, the
difficulties the CVC team has encountered in getting effective control
over the fire protection system, and the large number of near-critical
activities that can affect the project's overall completion if they incur
relatively short additional delays. Accordingly, we plan to monitor the
actions taken by the CVC team to enhance its control over the completion
of the fire protection system, reassess the project's schedule this
summer, and report our results to the Subcommittee by mid-September 2006.
A brief update follows on the challenges, risks, and uncertainties the CVC
team continues to face and the team's plans for addressing them:

           o  Complex building systems remain a significant risk. The CVC
           will house complex building systems, including HVAC, fire
           protection, and security systems. These systems not only have to
           perform well individually, but their operation also has to be
           integrated. If the CVC team encounters any significant problems
           with them, either separately or together, during the resolution of
           design issues, installation, commissioning, or testing, the
           project could be seriously delayed. The risks and uncertainties
           associated with the fire protection system are apparent: the shop
           drawings for some elements of the system have not yet been
           approved; installation has begun, and issues other than the
           problem we discussed earlier may require resolution. In addition,
           the process for testing the system is not yet clear; the time
           needed to complete these activities is uncertain, and the fire
           protection system must work in tandem with the security system.
           The unanticipated problems that emerged in reviewing the design of
           the fire alarm system and in programming it illustrate the impact
           such problems can have on the project's schedule. Additional
           delays could occur if the team takes longer than expected to get
           approved shop drawings, if the proposed system does not meet the
           project's design specifications or the life safety code, or if the
           fire protection system does not work effectively with the security
           system.5 Additionally, the Chief Fire Marshal noted that delays
           could occur if the CVC team does not adequately pretest the system
           and correct any problems found during the pretesting. On March 23,
           AOC's commissioning contractor submitted its plan for testing the
           performance of the CVC's smoke control system, which is a critical
           component of the CVC's fire protection system and must work
           properly before the CVC can be opened to the public. As of July
           27, this plan had not yet been submitted to or approved by the
           Fire Marshal Division. Moreover, as we have previously noted, the
           Chief Fire Marshal's timely completion of the fire protection
           system's acceptance testing depends on his ability to obtain
           sufficient funding for a contractor to help perform the tests.
           o  Trade stacking could delay completion. As we discussed during
           the Subcommittee's previous CVC hearings, trade stacking could
           hold up finish work, such as drywall or ceiling installation,
           electrical and plumbing work, plastering, or floor stone
           installation. This work could be stacked because of delays in wall
           stone installation. Trade stacking could also increase the risk of
           accidents and injuries. Hence, it remains important, as we said at
           previous CVC hearings, for the CVC team to closely monitor
           construction to identify potential trade stacking and promptly
           take steps to address it. The CVC team has also identified trade
           stacking as a high risk. The sequence 2 contractor has developed
           plans that show when various subcontractors will be working in
           each area of the CVC except the East Front, which the sequence 2
           contractor does not expect to be ready for finish work for several
           weeks. According to the sequence 2 contractor, it intends to
           continue meeting regularly with its subcontractors to review and
           update the area plans and to have the area plan for the East Front
           done before finish work begins there. According to the sequence 2
           contractor, its area-by-area plans have prevented trade stacking
           to date.
           o  Building design and work scope continue to evolve. The CVC has
           undergone a number of design and work scope changes. Since the
           Subcommittee's June 28 CVC hearing, AOC's architectural contractor
           has issued nine design changes or clarifications. As of July 27,
           2006, this contractor reported, another eight were in process. In
           addition, since the project began, AOC has executed about 100
           sequence 2 contract modifications for work that was not
           anticipated.6 Some of these changes, such as changes in the
           exhibit gallery and in the East Front, have resulted in delays.
           Furthermore, although shop drawings have been approved for almost
           all project elements except the fire protection system, according
           to AOC, further design or scope changes in various project
           elements are likely, given the project's experience to date. In
           fact, in reporting on the June schedule, AOC's construction
           management contractor noted that anticipated changes to the House
           expansion space could affect ceiling close-ins. Project design and
           scope changes are typically reflected in the development of
           potential change orders (PCO), many of which result in contract
           modifications. Figure 5 shows the PCOs submitted for consideration
           for sequences 1 and 2 since September 2003. Although PCOs are not
           always approved, they are often regarded as a reasonably good
           indicator of likely future design or scope changes that can affect
           a project's cost and schedule. Even more important, the adverse
           impact of scope and design changes on a project's schedule is
           likely to increase as the project moves toward completion. For
           example, changes in the design of the gift shops are likely to
           affect the project's schedule more adversely now than if the
           changes had been made several months ago.

5According to the sequence 2 subcontractor that is fitting out the House
and Senate expansion spaces, the delays in getting approved shop drawings
for the fire protection system have already postponed ceiling close-ins in
the expansion spaces, and AOC believes that further such delays, along
with possible requests for design changes, pose the greatest risks to the
completion schedule for the expansion spaces.

6These data exclude sequence 2 contract modifications for work that was
planned but not included in the sequence 2 base contract. Examples include
the fit-out of the House and Senate expansion spaces, the construction of
the utility tunnel, and the purchase and installation of food service
equipment.

Figure 5: Cumulative Number of Potential Change Orders Submitted for CVC
Sequences 1 and 2 between September 2003 and June 2006

As the figure indicates, new PCOs for sequence 1 were submitted until
shortly before, and even for several months after, November 2004, when AOC
determined that the sequence 1 contract work was substantially complete.
Similarly, PCOs for sequence 2 are still being submitted, and we have seen
no indication that their submission is likely to stop soon. It therefore
appears likely to us that some of the design or scope changes indicated in
PCOs could lead to contract modifications that will affect the project's
schedule. AOC agrees that it is important to minimize the impact of
proposed design and scope changes.

Additional delays associated with the CVC's new utility tunnel have
resulted, or are likely to result, in additional work or slippages. As we
have previously testified, the delay in starting up the utility tunnel's
operations has necessitated the use of temporary humidity control
equipment for the orientation theaters to avoid damage to finish work and
ceiling tile. Moreover, utility tunnel delays could require additional
equipment in other areas, subject certain work to risk of damage, or delay
finish or ceiling work in areas not suitable for the use of temporary
humidity and temperature control equipment. For example, the CVC team
installed ceiling tile in portions of the great hall to take advantage of
the scaffolding in place, even though neither the temperature nor the
humidity were controlled in that area. According to the CVC team, the
installed tile could be damaged if the temperature or humidity is not
within the specified levels. The CVC team has completed the preparatory
work necessary to begin running chilled water through the CVC utility
tunnel and expects to have steam running through the tunnel by mid-August.
The team expects to have the first air-handling unit-which serves the
exhibit gallery-providing dehumidified air to the exhibit gallery by
mid-August. To keep the CVC and expansion space finish work on schedule,
the team will have to either get the other air-handling units operational
within the necessary time frames or obtain temporary equipment to provide
conditioned air, where feasible.

           o  Opening the CVC and expansion spaces at different times is
           likely to result in a temporary cap on CVC occupancy and could
           increase costs. AOC's current plan to open the CVC in July 2007
           before the expansion spaces are scheduled for completion is likely
           to result in a temporary cap on CVC visitor occupancy and may
           necessitate the construction of temporary emergency exits for fire
           and life safety protection.7 AOC is proposing this sequential
           approach because it believes that conducting acceptance testing
           for the fire protection system for the CVC and the expansion
           spaces concurrently would delay opening the CVC to the public.
           AOC's proposed July 2007 opening date for the CVC depends on the
           timely completion of work not only on the base project but also on
           the expansion spaces, since certain expansion space work must be
           completed before the CVC's opening. Because certain work on both
           the base project and the expansion spaces has been delayed during
           the last several months, we believe that it will be especially
           important to monitor the progress of construction to determine
           what additional work (and funding) may be needed to meet AOC's
           planned date for opening the CVC, including what temporary work
           may be required in the expansion spaces for the opening to occur
           before the expansion space work is completed. AOC's Chief Fire
           Marshal has not yet worked out the details of how he will conduct
           his acceptance testing for the CVC and the expansion spaces; so
           the order in which various CVC and expansion space areas will be
           available for opening is not yet clear. More information on this
           sequencing issue should be available by the Subcommittee's next
           CVC hearing because the Chief Fire Marshal expects to have his
           testing plan done soon.

           o  Risks from insufficient stone deliveries appear to be
           diminishing. Although wall stone shortages have caused delays in
           the past, they have not recently been a problem. All of the wall
           stone for the base project and atrium areas has been delivered,
           and AOC does not anticipate a problem with the remaining wall
           stone deliveries. According to the construction management
           contractor, about 3,700 pieces of wall stone for the East Front
           and all of the wall stone for the tunnels still have to be
           delivered. For a time, the sequence 2 contractor did have a
           problem with the delivery of floor stone for the exhibit gallery,
           but that problem has been resolved, and the contractor does not
           anticipate problems with floor stone deliveries for other areas.
           The sequence 2 subcontractor doing the House and Senate expansion
           space work said that some wall stone for the expansion spaces has
           been delivered, and at this time he does not anticipate a delivery
           problem with the remaining wall stone.

           Finally, as we have said in previous discussions with AOC, its
           construction management contractor, and the Subcommittee, it will
           be important for AOC to have adequate analysis and documentation
           of the reasons and responsibilities for delays.8 On April 11,
           2006, AOC executed a contract modification authorizing its
           construction management contractor to have one of its managers who
           has not been involved in the CVC project assess the adequacy of
           this type of information. The manager submitted his report to AOC
           in early June. He reported generally positive findings but also
           identified desired improvements. He made several recommendations
           to AOC, which AOC has generally agreed with and plans to implement
           consistent with the availability of resources. As we have
           previously stated, we believe it is important for AOC to complete
           its analysis of delays expeditiously given the current September
           15, 2006, sequence 2 contract completion date and the impact this
           analysis is likely to have on delay-related costs.

           Estimated Project Cost and Funding
			  
			  Our most recent estimate of the cost to complete the CVC project
           was made several months ago. At that time, we estimated that the
           total cost to complete the entire CVC project would be about $556
           million without an allowance for risks and uncertainties and could
           be as much as about $584 million with such an allowance. To date,
           about $530 million9 has been provided for CVC construction. This
           amount includes about $3.6 million that was made available for
           either CVC construction or operations and has been approved for
           CVC construction by the House and Senate Committees on
           Appropriations.10 AOC and its construction management contractor
           have completed their reassessments of the cost to complete the
           project and have concluded that the amount of funds provided to
           date plus the $26 million that AOC hopes to receive in fiscal year
           2007 CVC construction funds will be sufficient to complete the
           project except for possible delay-related costs. (This $26 million
           in additional funds is the amount our previous cost-to-complete
           estimate showed would be necessary without provision for risks and
           uncertainties.) AOC and its construction management contractor
           acknowledged, however, that in drawing their conclusions, they
           assumed that some funds that have been slated for use for possible
           delay-related costs may have to be used for other purposes, thus
           possibly requiring additional funding for potential delay-related
           costs. As we testified during the Subcommittee's June 28 CVC
           hearing, recent events have raised questions about the sufficiency
           of the $556 million cost-to-complete estimate, given that it does
           not provide an allowance for risks and uncertainties. Although
           recent events suggest to us that our previous $556 million
           estimate may increase, we have not changed it yet pending the
           results of our reassessment of the cost to complete the project,
           which we expect to have by mid-September. Notwithstanding our
           pending reassessment, we have no specific indication that the
           total cost to complete the project will exceed our $584 million
           estimate, which does include an allowance for risks and
           uncertainties.

           In addition, AOC has indicated that it plans to use about $950,000
           of the fiscal year 2007 general administration appropriations it
           has requested to provide contractual support for its Fire Marshal
           Division. As we stated in our last several CVC testimonies, AOC
           believes that it may be able to reduce the amount of funds it will
           need in fiscal year 2007 to provide contractual support for
           testing the CVC's fire protection system and is exploring ways to
           do so. We plan to monitor this situation and report to the
           Subcommittee as soon as AOC has a firmer estimate.

           AOC currently has sufficient contingency funding available to
           cover anticipated possible delay-related costs associated with the
           asbestos problem identified in connection with the work being done
           to connect the tunnel running from the CVC to the Jefferson
           Building. Even after considering use of the contingency to address
           anticipated possible costs for the asbestos problem, AOC would
           have contingency funding available for some additional problems or
           changes related to the Jefferson Building work. We will continue
           to monitor this work and the use of the contingency funds for it.

           Mr. Chairman, this completes our prepared statement. We would be
           pleased to answer any questions that you or Members of the
           Subcommittee may have.

           Contacts and Acknowledgments
			  
			  For further information about this testimony, please contact
           Bernard Ungar at (202) 512-4232 or Terrell Dorn at (202) 512-6923.
           Other key contributors to this testimony include Shirley Abel,
           John Craig, Maria Edelstein, Elizabeth Eisenstadt, Jeanette
           Franzel, Jackie Hamilton, Bradley James, Joshua Ormond, and Scott
           Riback.

           Appendix I: Capitol Visitor Center Critical Construction Milestones, June
29, 2006-August 2, 2006

                                                        Scheduled  Actual     
Activity          Location                           completion completion 
Wall Stone Area 3 East Front Ground                  7/17/06    7/15/06a   
Plaster Walls     Orientation Lobby                  7/18/06    7/25/06a   
Plaster Ceilings  West Lobby Assembly                7/19/06    7/25/06a   
Hang VP Drywall   Congressional Auditorium, Lower    7/20/06    b          
Ceiling           Level                                         
Wall Stone Area 6 Congressional Auditorium           7/20/06    c          
Flush and Treat   CVC                                7/24/06    6/24/06    
HVAC Piping                                                     
Fire Alarm Record CVC                                7/31/06    d          
Submittal                                                       
Install AHU-EF-1  Mechanical System                  8/01/06    e          

Source: AOC's June 2006 CVC sequence 2 construction schedule for
           the scheduled completion dates and AOC and its construction
           management contractor for the actual completion dates and reasons
           for missing milestones.

           aWork noted as substantially complete by contractor.

           bPreceding work took longer than expected.

           cWork delayed by concrete tolerance issues related to sequence 1.

           dContractor needed to incorporate a revised sequence of operations
           specification recently received from AOC, and other issues took
           longer than expected to resolve.

           eWork was resequenced after schedule was updated in June and is
           now expected to be done in late August.

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7According to AOC, the CVC's occupancy at any one time would be
temporarily limited to 3,500, compared with about 4,200, the normal
anticipated occupancy level, until acceptance testing of the fire
protection system for the expansion spaces has been completed. Although
AOC anticipates the need for some temporary work, it does not believe that
the associated costs will be substantial.

8See for example: GAO, Capitol Visitor Center: Effective Schedule
Management and Updated Cost Information Are Important, GAO-05-811T
(Washington, D.C.: June 14, 2005).

9See footnote 3.

10Public Law 108-447, enacted on December 8, 2004, provided that up to
$10.6 million (reduced to $10.5 million by a subsequent budget recission
of $84,800) could be transferred from AOC's Capitol Building appropriation
account for the use of the CVC project. The use of the amount transferred
is subject to the approval of the House and Senate Committees on
Appropriations. AOC has now received approval to obligate the entire $10.5
million, which we will discuss further in our next CVC testimony.

(545045)

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