Capitol Visitor Center: Update on Status of Project's Schedule	 
and Cost as of March 13, 2007 (13-MAR-07, GAO-07-601T). 	 
                                                                 
We appreciate the opportunity to assist the Subcommittee in	 
monitoring progress on the Capitol Visitor Center (CVC) project. 
GAO's remarks will focus on (1) the Architect of the Capitol's	 
(AOC) construction progress since the last CVC hearing on	 
February 16, 2007; and (2) the project's expected cost at	 
completion and funding status. 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. 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. At the last CVC hearing, we 
reported that our assessment of the project's schedule and	 
expected cost at completion was still somewhat constrained	 
because the CVC team was 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 still not 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 March 6, 2007, recognizing our
views could change as more information on the impact of these	 
changes becomes available.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-601T					        
    ACCNO:   A66765						        
  TITLE:     Capitol Visitor Center: Update on Status of Project's    
Schedule and Cost as of March 13, 2007				 
     DATE:   03/13/2007 
  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-07-601T

   

     * [1]In Summary
     * [2]Construction Is Progressing, but Substantial Delays Have Occ

          * [3]All Near-Critical Paths Have Been Delayed
          * [4]Indicators of Construction Progress Are Mixed
          * [5]Project Continues to Face Risks and Uncertainties

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

          * [10]Order by Mail or Phone

     * [11]To Report Fraud, Waste, and Abuse in Federal Programs
     * [12]Congressional Relations
     * [13]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 10:00 a.m. EDT
Tuesday, March 13, 2007

CAPITOL VISITOR CENTER

Update on Status of Project's Schedule and Cost as of March 13, 2007

Statement of Terrell G. Dorn, Director
Physical Infrastructure Issues

GAO-07-601T

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 February 16, 2007; and
(2) the project's expected cost at completion and funding status.^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. 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.

At the last CVC hearing, we reported that our assessment of the project's
schedule and expected cost at completion was still somewhat constrained
because the CVC team was 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 still not 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 March 6, 2007,
recognizing our views could change as more information on the impact of
these changes becomes available.

In Summary

Since the February 16, 2007, CVC hearing, the CVC team has continued to
move the project's construction forward, but work in a number of important
areas has been delayed. According to AOC's construction management
contractor, there were no delays in the critical path last month, but all
of the project's 17 near-critical paths lost time,^2 including 8 paths
that lost a month or more. 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. As noted at the last hearing, problems and uncertainty
associated with the project's most critical activity--the fire protection
system--are leading AOC to re-examine the project's schedule. AOC is
considering adding time for further pretesting of major building systems,
risks and uncertainties, and operations preparation. According to AOC, it
anticipates that this additional time would likely move the dates for
completing the CVC's construction to the spring of 2008 and for opening
the CVC to the public to the summer of 2008. AOC expects to have more
specific dates when it completes its schedule reassessment. In addition,
problems with other important activities, including work on the East Front
and the exhibit gallery, have not yet affected the project's completion
date, but could do so in the future. The project also 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 begin until July 2007, according to the project's most
recent schedule, dated January 2007.

^1GAO, Capitol Visitor Center: Update on Status of Project's Schedule and
Cost As of February 16, 2007,  GA0-07-507T (Washington, D.C.: Feb, 16,
2007).

^2The critical path is the single longest path of activities through a
project's schedule. Each day of delay in the critical path could delay the
completion of the entire project. Near-critical paths are the next longest
paths through the project's schedule.

As we reported at the February 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 $538.4 million has been approved for CVC
construction, including about $7.4 million in fiscal year 2007
appropriations. In fiscal year 2007, AOC has received an additional
appropriated amount of $36.4 million for the CVC project, which AOC has
not yet received approval to obligate. AOC has not indicated how much of
the additional money is needed for construction or operations. AOC has
also requested $20 million in fiscal year 2008 CVC construction
appropriations to cover remaining costs, and we estimate that AOC may need
further appropriations in future fiscal years for construction changes and
claims.

Construction Is Progressing, but Substantial Delays Have Occurred in
Near-Critical Paths

According to AOC's construction management contractor, contractor billings
indicated that the overall CVC project is now 91 percent complete,
compared with 90 percent reported complete at the February 16 CVC hearing.
Twelve of the CVC's 23 air-handling units were operating full time as of
March 1; about 84 percent of interior floor stone has reportedly been
installed; and work has progressed in the East Front. In addition, AOC's
Chief Fire Marshal has essentially approved all shop drawings^3 submitted
for the fire protection system except those for a special fire suppression
system for the exhibit gallery. In addition, the fire marshal expects to
complete his review of the contractor's final plan for the fire alarm
system's acceptance testing by mid-April.

All Near-Critical Paths Have Been Delayed

The construction management contractor maintains that there have been no
delays in the critical path shown in the January 2007 schedule. However,
delays have occurred in all 17 near-critical paths, and further delays in
some of these paths could affect the project's completion date. Work on 8
near-critical paths fell at least 4 weeks further behind in January. For
example, according to the construction management contractor, the
schedules for the East Front principal level and for the exhibit gallery's
fire protection system slipped by 9 weeks and 5 weeks, respectively,
between the December 2006 and the January 2007 schedules.

Because of the delays in the fire alarm system work and in several
near-critical paths, AOC has extended the scheduled construction
completion date for the House and Senate expansion spaces. For the
expansion spaces, the schedule slipped by 8 days--from July 27 to August
9, 2007--according to the January 2007 schedule. The near-critical paths
include millwork, bronze doors, and above-ceiling work. Of even greater
concern, the dates shown in the January 2007 schedule for completing six
near-critical paths were within 20 workdays of the critical path, meaning
that additional delays of 12 to 20 workdays or more in these paths could
delay the overall completion of the expansion spaces. Furthermore, the
expansion space subcontractor has said that it has not yet determined
whether scope changes requested by the government will affect the
scheduled construction completion date.

^3Shop drawings are submittals required by the contract that provide
detailed information on work that is to be done.

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.

Indicators of Construction Progress Are Mixed

The indicators of construction progress that we have been tracking
continue to suggest that, despite some progress, the project's
construction is not likely to be completed on December 21, 2007, as shown
in the project's January 2007 schedule, unless the actions AOC is taking
to improve the CVC team's schedule performance are effective in stopping
slippages. First, as shown in table 1, the sequence 2 contractor^4
completed 8 of 9 milestones^5 scheduled for completion by March 7, 2007,
the date of our analysis. Six of these milestones were completed on time.
While the number of completed milestones is greater this month than
last,^6 our analysis for this month is based on a new baseline established
for the February schedule. Had we used the same baseline we used for the
previous hearing, all but 1 of the milestones would have been completed
late. AOC changed the baseline because it recognized that the older
schedule was unrealistic, and we agree that a change in the baseline was
necessary.

^4AOC 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,
[14]GAO-05-714T (Washington, D.C.: May 17, 2005).

^5The table also includes a tenth milestone, scheduled for completion by
March 9, 2007, but as of March 7, AOC did not expect this work to be
completed by that date.

^6As we reported at the February hearing, the contractor completed 4 of 21
milestones scheduled for completion by December 30, 2006--2 milestones on
time and 2 late.

Table 1: Sequence 2 Contractor's Progress in Meeting Selected Milestones
Scheduled for Completion by March 13, 2007

                                                        Scheduled  Actual     
Activity                           Location          completion completion 
Set escalator 35 truss             West Lobby and    02/12/2007 02/20/2007 
                                      Assembly                                
Set escalator 34 truss             West Lobby and    02/16/2007 02/16/2007 
                                      Assembly                                
Install glass floor, north end 1/3 Exhibit Gallery   02/28/2007 02/19/2007 
Servery area stone tile            Food Service      02/28/2007 02/28/2007 
Carpet                             Food Service      02/28/2007 03/01/2007 
Finish drywall bulkheads           Orientation Lobby 02/28/2007 02/15/2007 
Foot grilles                       Great Hall        03/05/2007 02/26/2007 
Ceiling installation               House Service     03/07/2007 ^a         
                                      Level                                   
Install glass wall north end 2/3   Exhibit Gallery   03/09/2007 02/27/2007 
Complete testing and balancing     Great Hall        03/09/2007 ^a         

Source: AOC for the scheduled completion dates and AOC and its
construction management contractor for the actual completion dates as of
March 7, 2007.

^aAs of March 7, 2007, AOC did not expect this work to be completed on
time.

Second, as figure 1 shows, the sequence 2 contractor's monthly billings
through January 2007 continue to indicate that construction work is about
2 months behind the scheduled completion date. Because the line for actual
billings falls below the line for billings based on the late finish dates
in the schedule, the work is likely to be completed later than scheduled.

Figure 1: 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 160 ($242.4 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, such
as the number of proposed change orders, 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.

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 According to the January 2007
schedule, the HVAC system's commissioning is not planned to be completed
until July 2007, and in the interim, much work remains. As of March 1, 12
of the CVC's 23 air-handling units were providing conditioned air to their
designated spaces full time. The remaining 11 units were reportedly ready
to operate as soon as the initial control programming could be installed,
spaces for the units could be prepared and cleaned, and in some cases,
other work could be completed. 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. We continue to believe that AOC
needs to ensure that all of the remaining work and testing related to the
CVC's major building systems is well coordinated, as we discussed at the
Subcommittee's February CVC hearing.

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 is currently
reassessing the schedule and considering adding more time for such items
as further pretesting of major building systems, risks and uncertainties,
and operations preparation. According to AOC, it anticipates that this
additional time would likely move the CVC's completion date to the spring
of 2008 and the CVC's date for opening to the public to the summer of
2008. AOC expects to have more specific dates when it completes its
schedule reassessment.

^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.

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
have reported since 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 million estimate to
reflect our assessment of the cost impact of risks and uncertainties.

To date, about $538.4 million has been approved for CVC construction,
including about $7.4 million in fiscal year 2007 appropriations. In fiscal
year 2007, AOC has received an additional appropriated amount of $36.4
million for the CVC project, which AOC has not yet received approval to
obligate. AOC has not indicated how much of the additional money is needed
for construction or operations. AOC has also requested $20 million in
fiscal year 2008 CVC construction appropriations to cover remaining costs.
In addition to this requested fiscal year 2008 funding, we estimate that
AOC may need further appropriations in future fiscal years for
construction changes and claims.

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, Maria Edelstein, Elizabeth Eisenstadt, Jeanette Franzel,
Jackie Hamilton, Bradley James, Kelly Slade, and Bernard Ungar.

(545056)

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References

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