Capitol Visitor Center: Update on Status of Project's Schedule	 
and Cost as of February 16, 2007 (16-FEB-07, GAO-07-507T).	 
                                                                 
At the last Capitol Visitor Center (CVC) hearing, GAO reported	 
that our assessment of the project's schedule and expected cost  
at completion was somewhat constrained because the CVC team was  
still analyzing the impact on the project's schedule and cost of 
recently identified changes required for certain components of	 
the fire protection and security systems. The impact of these	 
changes on the project is not yet fully known. Therefore, GAO	 
could not thoroughly assess the project's schedule or estimated  
cost at completion and are basing our views on the information	 
available as of February 5, 2007, including the Architect Of the 
Capitol's (AOC) December 2006 schedule. To assist the		 
Subcommittee on the Legislative Branch, House Committee on	 
Appropriations in monitoring progress on the CVC project, GAO's  
remarks will focus on (1) the AOC construction progress since the
last CVC hearing on November 15, 2006; and (2) the project's	 
expected cost at completion and status of funding.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-507T					        
    ACCNO:   A66045						        
  TITLE:     Capitol Visitor Center: Update on Status of Project's    
Schedule and Cost as of February 16, 2007			 
     DATE:   02/16/2007 
  SUBJECT:   Construction contracts				 
	     Contract administration				 
	     Cost analysis					 
	     Cost overruns					 
	     Facility construction				 
	     Federal facilities 				 
	     Federal funds					 
	     Future budget projections				 
	     Public visitor-centers				 
	     Risk assessment					 
	     Risk management					 
	     Schedule slippages 				 
	     Strategic planning 				 
	     Cost estimates					 
	     Capitol Visitor Center Project			 

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GAO-07-507T

   

     * [1]Construction Is Progressing, but Delays Have Occurred and a

          * [2]Critical and Near-critical Activities Have Been Delayed
          * [3]Indicators of Construction Progress Point to Further Delays
          * [4]Project Continues to Face Risks and Uncertainties
          * [5]AOC Has Begun to Implement Its Action Plan

     * [6]Recommendations
     * [7]Cost Estimate Remains Unchanged, but Additional Funds Have B
     * [8]Contacts and Acknowledgments
     * [9]GAO's Mission
     * [10]Obtaining Copies of GAO Reports and Testimony

          * [11]Order by Mail or Phone

     * [12]To Report Fraud, Waste, and Abuse in Federal Programs
     * [13]Congressional Relations
     * [14]Public Affairs

Testimony

Before the Subcommittee on the Legislative Branch, Committee on
Appropriations, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 2:30 p.m. EST

Friday, February 16, 2007

CAPITOL VISITOR CENTER

Update on Status of Project's Schedule and Cost as of February 16, 2007

Statement of Terrell G. Dorn, Director Physical Infrastructure Issues

GAO-07-507T

Madam Chair and Members of the Subcommittee:

I appreciate the opportunity to be here today to assist the Subcommittee
in monitoring progress on the Capitol Visitor Center (CVC) project. My
remarks will focus on (1) the Architect of the Capitol's (AOC)
construction progress since the last CVC hearing on November 15, 2006; and
(2) the project's expected cost at completion and status of funding.1

Today's remarks 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.2 We
also reviewed AOC's construction management contractor's periodic schedule
assessments, potential change order log, and weekly reports on the
progress of interior wall and floor stone installation. In addition, we
reviewed the contract modifications made to date and the estimates of cost
increases provided by AOC and its construction management contractor.

At the last CVC hearing, we reported that our assessment of the project's
schedule and expected cost at completion was somewhat constrained because
the CVC team was still analyzing the impact on the project's schedule and
cost of recently identified changes required for certain components of the
fire protection and security systems. The impact of these changes on the
project is not yet fully known. Therefore, we could not thoroughly assess
the project's schedule or estimated cost at completion and are basing our
views on the information available as of February 5, 2007, including AOC's
December 2006 schedule. Our views could change as more information on the
impact of these changes becomes available.

1GAO, Capitol Visitor Center: Update on Status of Project's Schedule and
Cost As of November 15, 2006, GA0-07-129T (Washington, D.C.: Nov. 15,
2006).

2AOC decided to implement the CVC construction project in two phases, or
sequences. The sequence 1 contract, for excavation and structural work,
was awarded to Centex Construction Company, and the sequence 2 contract,
for mechanical, electrical, plumbing and interior finishing work, was
awarded to Manhattan Construction Company. In addition, AOC, which has
overall responsibility for managing the CVC project, has been receiving
construction management services from Gilbane Building Company. These
services include coordinating the activities of the major construction
contractors, monitoring worker safety, and providing AOC with status
information for reporting to Congress. See Capitol Visitor Center:
Priority Attention Needed to Manage Schedules and Contracts,
[15]GAO-05-714T (Washington, D.C.: May 17, 2005).

In Summary:

Since the November 15, 2006, CVC hearing, the CVC team has continued to
move the project's construction forward, but because of delays primarily
associated with the fire alarm system, AOC's December 2006 schedule shows
that the CVC will be available for occupancy in December 2007,3 almost 2
months later than previously estimated, and further delays are possible.
Over the past 3 months, the CVC team has made progress on the project's
heating, ventilation, and air-conditioning (HVAC) system; interior floor
stone and ceiling installation; and other interior and exterior
construction work. However, problems with the project's most critical
activity--the fire protection system--required AOC to extend the project's
schedule by 2 months. In addition, problems with many other important
activities, including work on the East Front and the House and Senate
expansion spaces, have not yet affected the project's completion date, but
could do so in the future. These problems, together with other indicators
of construction progress that we have been tracking, suggest to us that
the project is more likely to be available for occupancy in early 2008.
Furthermore, the project continues to face risks and uncertainties that
could affect its progress, especially risks associated with the final
testing of its major building systems, which is not scheduled to take
place until July 2007. Since the fall of 2006, AOC has been implementing
an action plan designed to improve the CVC team's execution of the project
and the project's schedule. It is too early to tell what impact this plan
will have on delays, but the CVC team's efforts to date--including weekly
schedule reviews and frequent site inspections--provide greater management
control of the sequence 2 work. However, to complete, or come close to
completing, the project in December 2007, AOC will need to take action to
mitigate any risks that it has not yet addressed and continue to implement
its CVC action plan aggressively, focusing particularly on those actions
that are critical to completing the work on schedule. Accordingly, we are
recommending that AOC (1) reassess the project's schedule risks, develop
risk mitigation strategies, and determine a realistic completion date, and
(2) continue to aggressively implement its November 2006 CVC action plan,
incorporating work on the expansion spaces and other building areas. AOC
generally agreed with our recommendations and said that accounting for
risks in the project's schedule will probably push the project's
completion date to early 2008.

3This date does not allow time for installing artifacts in the exhibit
gallery or for addressing risks and uncertainties, and it may not provide
enough time to prepare for operations. AOC's December 2006 schedule
allowed until January 2008 for installing the artifacts. According to AOC,
it is not yet clear how much time will be needed for operations
preparations.

As we reported at the November CVC hearing, we roughly estimate that the
total cost of the entire CVC project at completion is likely to be about
$592 million without an allowance for risks and uncertainties and over
$600 million with such an allowance. We have not updated our estimate of
the project's cost at completion with an allowance for risks and
uncertainties. To date, about $538 million has been provided for CVC
construction. For fiscal year 2007, AOC has requested about $26 million in
additional appropriations for CVC construction, a portion of which it has
already received, and for fiscal year 2008, it has requested another $20
million in CVC construction appropriations to cover remaining costs. Based
on the estimates we reported at the November hearing, we believe that, in
total, AOC may need about $15 million more than it has requested to date
to complete the project, without provision for risks and uncertainties.

Construction Is Progressing, but Delays Have Occurred and a Later Completion
Date Is Likely

According to AOC's construction management contractor, contractor billings
indicated that the overall CVC project is 90 percent complete, compared
with 88 percent reported complete at the November 15 CVC hearing. The
great hall and orientation theaters are nearing completion, although
certain items, such as custom light fixtures, will be late. Seven of the
CVC's 23 air-handling units were operating full time as of January 25;
about 12,100 square feet of interior floor stone and 370 pieces of wall
stone have reportedly been installed since November; and work has
progressed in the East Front. In addition, AOC's Chief Fire Marshal has
essentially reached agreement with the CVC team on nearly all elements of
the fire protection system.4

4Discussions are continuing on outstanding points on the fire alarm
annunciator panels--panels that display the location of fire alarms--and
special fire suppression systems for the exhibit gallery and the expansion
space

Critical and Near-critical Activities Have Been Delayed

Despite the advances in construction since the November CVC hearing, the
project's scheduled completion date has slipped by almost 2 months--from
October 26 to December 21, 2007--primarily because of delays in the CVC
project's critical path activity5--the fire alarm and smoke control
system. According to AOC, these delays occurred because the fire alarm
system cabling took longer than expected to obtain and is taking longer
than expected to install. Additionally, it took longer than expected to
get approval of shop drawings6 for the fire alarm annunciator panels. The
sequence 2 contractor believes some of the lost time can be recovered.

Delays in many near-critical path activities have also occurred. Work on
11 such activities has fallen at least 4 weeks behind since the November
hearing, according to AOC's construction management contractor. For
example, according to the construction management contractor, the
schedules for the East Front upper levels and the upper level orientation
and security lobby slipped by about 7 weeks largely because of unforeseen
conditions in the East Front and the need to add a conduit for wiring in
the orientation lobby that was omitted through an oversight. According to
the project's December 2006 schedule, work on the HVAC system has slipped
about 3 weeks since the November hearing, reportedly because of delays in
finishing certain East Front work.

Because of the delays in the fire alarm system work and in several
near-critical path activities, AOC has extended the scheduled construction
completion date for the House and Senate expansion spaces as well as the
CVC. For the expansion spaces, the schedule has slipped by almost a
month--from July 2, to July 27, 2007--according to the December 2006
schedule. The near-critical activity paths include millwork, bronze doors,
and above-ceiling work. Of even greater concern, the dates shown in the
December 2006 schedule for completing several near-critical activities
were within 15 workdays of the critical path, meaning that additional
delays of 3 to16 workdays or more in these activities could delay the
overall completion of the expansion spaces. Furthermore, the expansion
space subcontractor has said that it has not determined yet whether scope
changes requested by the government will affect the scheduled construction
completion date.

5The critical path is the single longest path of activities through a
project's schedule. Each day of delay in a critical path activity could
delay the completion of the entire project. Near-critical paths are the
next longest paths through the project's schedule.

6Shop drawings are submittals required by the contract that provide
detailed information on work that is to be done.

Finally, according to the construction management contractor's report on
AOC's December 2006 schedule, the completion date for the Jefferson
Building modifications has slipped by 7 weeks, because of unforeseen
conditions on the basement floor and the contractor's inability to proceed
with this and certain other work before receiving direction from the
government. The contractor indicates that further delays are possible.

Barring further construction delays, the House and Senate expansion spaces
will be completed before the CVC's construction, but both the CVC and the
expansion spaces will be available for occupancy at the same time, because
AOC is planning to test the fire protection and other major building
systems in both facilities concurrently. In addition, the project's
schedule includes another 39 calendar days for installing artifacts and
documents in the CVC's exhibit gallery. More time may also be needed to
prepare for CVC operations, but this is not yet clear.

Indicators of Construction Progress Point to Further Delays

The indicators of construction progress that we have been tracking
continue to suggest that the project is not likely to be completed on
December 21, 2007, as shown in the project's December 2006 schedule,
unless the actions AOC is taking to improve the CVC team's schedule
performance are effective in stopping slippages. As shown in figures 1 and
2, the sequence 2 contractor fell behind in completing schedule
milestones, and the contractor's billings continue to indicate delays.
More specifically,

           o as of January 25, 2007, the sequence 2 contractor had met 2 of
           21 schedule milestones scheduled for completion by December 31,
           2006, and completed 2 other milestones late (see fig. 1) and
           o the sequence 2 contractor's monthly billings through December
           2006 continue to indicate that construction work is about 2 months
           behind the scheduled completion date (see fig. 2).

Table 1: Sequence 2 Contractor's Progress in Meeting Selected Milestones
Scheduled for Completion by-December 31, 2006

                                                   Scheduled           Actual 
Activity             Location                  completion       completion 
Stone stairs         Great Hall                11/17/2006       11/17/2006 
Wood paneling and    Orientation               11/17/2006                  
doors                Theater                                               
Wood doors & frames  Food Service              11/20/2006                  
Install Hoods        Food Service              11/20/2006       11/27/2006 
Wall stone Area #2   East Front                11/27/2006                  
                        Principal                                             
Upholstered wall     Visitor Auditorium        11/28/2006                  
system                                                                     
Finish paint         West Lobby &              11/29/2006                  
                        Assembly                                              
Wood panels          West Lobby &              11/29/2006                  
                        Assembly                                              
Install Glass Wall   Exhibit Gallery           11/30/2006                  
North End                                                                  
AHU 10/11/22 Mech.   Service level             12/01/2006       11/28/2006 
Ready                                                                      
Procure fire alarm   Various locations         12/04/2006        1/22/2007 
panels                                                                     
Plaster ceiling      East Front                12/12/2006                  
                        Basement                                              
Stone stairs         East Front                12/18/2006                  
                        Principal                                             
Ceiling stone        East Front                12/18/2006                  
                        Principal                                             
Wall stone Area #1   East Front Gallery        12/18/2006                  
Wood doors and       West Lobby &              12/20/2006                  
frames               Assembly                                              
Hang drywall         East Front Attic          12/21/2006                  
Flooring             Orientation               12/26/2006                  
                        Theater                                               
Plaster ceilings     East Front Ground         12/27/2006                  
Flooring             Visitor Auditorium        12/27/2006                  
Fabric ceiling       Orientation Lobby         12/28/2006                  
panels                                                                     

Source: AOC's September 2006 CVC sequence 2 construction schedule for the
scheduled completion dates and AOC and its construction management
contractor for the actual completion dates as of January 25, 2007.

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:

The early and late lines on this figure reflect the cumulative billings
that would be required to complete the project through contract
modification number 154 ($240.1 million total contact value) by the early
and late finish dates shown in the sequence 2 contractor's schedule.

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

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 the late
lines in the figure. Even with the lag in billings, this figure indicates
that the amount of work being completed and billed each month is not
sufficient to keep the project on schedule.

Other indicators of construction progress that we have been tracking,
including the number of proposed change orders and the pace of floor and
wall stone installation, also point to further delays. The number of
proposed change orders has continued to grow during sequence 2 work, even
at this relatively late stage in the project. Proposed change orders that
result in contract modifications for new work or rework could adversely
affect the schedule, as well as the costs, of the project.

In addition, floor stone installation has slowed considerably because
materials, such as escalator parts, are being stored in areas where floor
stone needs to be laid. Moreover, no wall stone could be installed on the
upper two levels of the East Front for many weeks because site conditions
had to be corrected. Wall stone installation started on the main level the
week of January 22. AOC expects floor stone installation to pick up soon.

Project Continues to Face Risks and Uncertainties

Problems in completing the installation, integration, operation, and
testing of complex, major building systems, including the fire alarm,
security, and HVAC systems, remain the most significant risk facing the
project's schedule. Technical problems may not be evident until these
systems undergo testing and commissioning.7 For the HVAC system
commissioning is not scheduled to be completed until July 2007, and in the
interim, much work remains. As of January 25, 7 of the CVC's 23
air-handling units were providing conditioned air to their designated
spaces full time. The remaining 16 units were reportedly ready to operate
pending the installation of initial control programming, the preparation
and cleaning of spaces for the units, and in some cases, other work. All
23 units still require air flow testing and balancing, control-related
work, connection to the fire alarm system, punch-list work, and
commissioning. 8 While the CVC team expects the commissioning of the
entire HVAC system to be completed in July, the achievability of this date
is uncertain. Risks include an insufficient number of technicians with the
skills and training needed to install the system, technical problems that
could arise given the complexity of the system, problems coordinating the
work of subcontractors, damage to equipment from excessive dirt9 or from
moisture accumulating in nonoperational units, and delays in readying the
spaces for the air-handling units.

7Final acceptance testing is the last test of a system's operation,
conducted to ensure that the system meets all contract specifications and
relevant fire and life safety code requirements and operates as intended.

8Commissioning is a systematic process to ensure, by verification and
documentation, that all of a facility's systems perform interactively as
designed and intended to meet the owner's operational needs.

While work on the fire alarm system has advanced, it still requires
substantial acceptance testing, as well as testing to ensure that it and
the other major building systems operate together as intended. In
addition, the project's schedule remains vulnerable to other risks and
uncertainties, including design or scope changes, late identification or
slow resolution of problems, and insufficient manpower.

AOC Has Begun to Implement Its Action Plan

Since the fall of 2006, AOC has been implementing elements of its November
2006 action plan to enhance the CVC team's performance in meeting schedule
dates. For example, AOC has been selectively accelerating critical work;
focusing greater team attention on identifying and quickly resolving
problems, including conducting frequent site inspections; and changing the
criteria for the contractor's award fee to reward adherence to the
project's schedule. In addition, AOC has been holding weekly CVC team
meetings that focus on achieving the sequence 2 schedule; however, until
recently, these meetings have not generally addressed the schedules for
the House and Senate expansion spaces and for major building systems.
While the pace of sequence 2 work may not currently depend on progress in
these other areas, the completion of the CVC project will ultimately
require the completion and integrated operation of all areas, and delays
in completing the expansion space and major systems work could delay the
CVC's completion and opening to the public.

It is too soon to tell whether the actions identified in AOC's November
2006 action plan will be effective in curtailing additional schedule
slippages. Furthermore, continuing concerns associated with the CVC's HVAC
system, if not quickly addressed, could adversely affect the project's
schedule. However, the greater management attention resulting from AOC's
implementation of the plan has the potential to keep scheduled work on
track, and aggressively carrying out the planned actions is essential to
prevent further delays.

9Although 7 units were operating full time, the spaces being served by
only 2 units were reported to be completely ready and clean as of January
25.

Recommendations

The Architect of the Capitol should

           1. Promptly reassess the risks associated with, and the likelihood
           of, meeting, the project's schedule, especially with respect to
           the installation, successful operation and integration, and
           testing of major building systems; coordinate all work associated
           with the HVAC system; take appropriate action to mitigate any
           risks that have not been sufficiently addressed; and provide
           Congress with a realistic completion date; and
           2. Continue to aggressively implement the November 2006 CVC action
           plan, including focus on the near-critical activities that can
           further delay the completion of the expansion spaces and the steps
           that can be taken to ensure that the pace of work is sufficient to
           meet the schedule. Also include work on the House and Senate
           expansion spaces, major building systems, and the Jefferson
           Building in weekly schedule review sessions.

AOC generally agreed with our recommendations and commented that
accounting for risks in the schedule, especially those risks associated
with improving system integration, will probably push the project's
completion date to early 2008 and its opening date to spring 2008.

Cost Estimate Remains Unchanged, but Additional Funds Have Been Provided and
More Are Likely to Be Needed

Our estimate of the project's cost at completion remains the same as we
reported at the November 15 CVC hearing--$592 million without provision
for risks and uncertainties and over $600 million with such provision. As
we reported at the November hearing, the $592 million estimate is rough,
and we have not updated the $600 estimate to reflect our assessment of the
cost impact of risks and uncertainties.

To date about $538.4 million has been provided for CVC construction,
including about $7.4 million in fiscal year 2007 funds provided under a
continuing resolution.10 AOC received approval to obligate this $7.4
million in December 2006. AOC's total request for fiscal year 2007
(including the $7.4 million) is $25.6 million.11 AOC has also requested
$20 million in fiscal year 2008 CVC construction appropriations to cover
remaining costs. We estimate that AOC may need about $15 million more than
AOC has estimated to complete the project, without provision for risks and
uncertainties.

10AOC has been operating under a continuing resolution (CR) funded until
February 15, 2007, See Public Laws 109-289, 109-369, and 109-383. The CR
allows AOC's projects to continue at a rate for operations not exceeding
the current rate or the rate permitted by the action of the House of
Representatives, whichever is lower. Accordingly, the $7.4 million
requested was available under the CR.

Madam Chair, this completes my prepared statement. I 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 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, Kelly Slade and Bernard Ungar.

(545055)

11In addition, AOC's fiscal year 2007 budget request included $950,000 in
AOC general administration appropriations for contractual support to
complete acceptance testing of the CVC's fire protection system on
schedule.

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References

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  15. http://www.gao.gov/cgi-bin/getrpt?GAO-05-714T
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