Capitol Visitor Center: Update on Status of Project's Schedule	 
and Cost as of April 17, 2007 (24-APR-07, GAO-07-755T). 	 
                                                                 
The purpose of this testimony is to assist the Committees in	 
monitoring progress on the Capitol Visitor Center (CVC) project. 
This testimony will focus on (1) the Architect of the Capitol's  
(AOC) construction progress since the last CVC hearing on March  
13, 2007; and (2) the project's expected cost at completion and  
funding status. GAO'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; observations on the	 
progress of work at the CVC construction site; and discussions	 
with the CVC team (AOC and its major CVC contractors), AOC's	 
Chief Fire Marshal, and representatives from the U.S. Capitol	 
Police. 							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-755T					        
    ACCNO:   A68705						        
  TITLE:     Capitol Visitor Center: Update on Status of Project's    
Schedule and Cost as of April 17, 2007				 
     DATE:   04/24/2007 
  SUBJECT:   Construction contracts				 
	     Contract administration				 
	     Cost analysis					 
	     Cost overruns					 
	     Facility construction				 
	     Federal facilities 				 
	     Federal funds					 
	     Future budget projections				 
	     Public visitor-centers				 
	     Risk assessment					 
	     Schedule slippages 				 
	     Strategic planning 				 
	     Cost estimates					 
	     Capitol Visitor Center Project			 

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GAO-07-755T

   

     * [1]Summary
     * [2]Construction Is Progressing, but Issues Related to the Fire

          * [3]Schedule Slippage Has Continued, and AOC Faces Challenges in
          * [4]Project Continues to Face Risks and Uncertainties

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

          * [9]Order by Mail or Phone

     * [10]To Report Fraud, Waste, and Abuse in Federal Programs
     * [11]Congressional Relations
     * [12]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 1:30 p.m. EDT
Tuesday, April 24, 2007

GAO-07-755T

CAPITOL VISITOR CENTER

Update on Status of Project's Schedule and Cost as of April 17, 2007

Statement of Terrell G. Dorn,
Director, Physical Infrastructure Issues

The Web version of this testimony was reposted on April 30, 2007, to
reflect changes made to the text on the cover, and on pages 1 and 9.

See the list of changes on page 10 of this testimony.

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 March 13, 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 stonework. In addition, we reviewed
the contract modifications made as of April 11, 2007.

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. AOC completed its analysis of the
schedule on April 10 and extended its estimate of the project's completion
date by about 2 months, from March 2008 to June 2008. However, as of April
11, when we cut off our work to meet the congressional deadline for
submitting written testimony, AOC's construction management contractor had
not yet issued its analysis of the sequence 2 contractor's March 2007
schedule. With very little time to assess AOC's schedule analysis and
without the construction management contractor's analysis of the project's
March 2007 schedule, we could not thoroughly assess AOC's new scheduled
project completion date or the project's estimated cost at completion.
Thus, we are basing our remarks on the information available to us, and on
our analysis of that information, as of April 11, 2007, recognizing that
our views could change as more information becomes available.

1GAO, Capitol Visitor Center: Update on Status of Project's Schedule and
Cost As of March 13, 2007, [13]GAO-07-601T (Washington, D.C.: Mar. 13,
2007).

Summary

Since the March 13, 2007, CVC hearing, the CVC team has continued to move
the project's construction forward, but AOC has extended the project's
scheduled completion date by about 2 months, to June 2008,2 and further
delays are possible. This delay was attributable to problems with
activities on the project's critical path--the fire protection system.3
During the past month, the CVC team has made progress on the project's
heating, ventilation, and air-conditioning (HVAC) system, interior wall
stone and ceiling installation, and other interior and exterior
construction work. AOC will be able to meet or come close to meeting its
new scheduled project completion date only if the CVC team promptly makes
significant improvements in its execution of the project and the project's
schedule. To date, AOC's implementation of actions identified in its
November 2006 action plan has not been completely effective in curtailing
additional schedule slippages. Furthermore, ongoing communication and
coordination breakdowns between the contractors and AOC's Chief Fire
Marshal, as well as the large number of proposed change orders (over 450
as of February 2007), continue to present risks to the project's
completion time frames and costs. For example, because of inadequate
communication and coordination, some above-ceiling fire protection
equipment has to be inspected, even though the ceilings are already in
place, risking damage to ceilings and additional work if the inspections
reveal deficiencies. Most of the new construction change order proposals
that the project continues to generate each month are relatively small
compared with the project's total cost; however, a subcontractor has
expressed concerns about the cumulative effect of these proposals on
subcontractors' cash flows and on the ability of subcontractors to
complete their work on schedule.

As we reported at the last CVC hearing, we previously estimated that the
total cost of the entire CVC project at completion would likely be about
$592 million without an allowance for risks and uncertainties, and over
$600 million with such an allowance. Because of the uncertainty over the
project's expected completion date, we have not updated these estimates.
To date, about $538.4 million has been approved for obligation for CVC
construction, including about $7.4 million in fiscal year 2007
appropriations. For fiscal year 2007, AOC has also received an additional
appropriation of $36.4 million for the CVC project, which AOC has not
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.

2This date does not allow time for installing artifacts in the exhibit
gallery or preparing for operations.

3The 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.

Construction Is Progressing, but Issues Related to the Fire Protection System
Have Delayed the Project's Scheduled Completion by About 2 Months

According to AOC's construction management contractor, in dollar terms,
the overall CVC project is 93 percent complete, compared with 91 percent
reported complete at the March 13 CVC hearing. Eighteen of the CVC's 23
air handling units were reportedly operating full time as of April 11, and
work has progressed in the East Front. As of April 11, AOC's Chief Fire
Marshal had essentially approved the shop drawings for all but one of the
CVC project's fire alarm system elements.

Schedule Slippage Has Continued, and AOC Faces Challenges in Meeting the New
Project Schedule

The schedule for the CVC project's critical path activity--fire alarm and
smoke control system--has slipped about 2 months since the Subcommittee's
last CVC hearing, reportedly because several fire alarm system activities
are taking longer than expected to complete. Additionally, the
subcontractor responsible for installing the fire alarm system has
indicated that because of contractual issues affecting its receipt of
payments and delays in work that must be done by other subcontractors
before it can complete its work, it may not be able to continue work at
the scheduled pace.

According to two indicators of construction progress we have been
tracking--the completion dates for certain work activities and the pace of
wall stone installation--the project is not likely to be completed by June
2008 unless the actions AOC is taking to improve its schedule performance
are more effective in stopping schedule slippages:

As shown in table 1, the sequence 2 contractor missed the completion dates
for the majority of the work activities being tracked, although these
dates have not been revised to be in line with AOC's latest schedule
analysis. Specifically, the contractor completed 6 of 17 activities on
time and completed 3 other activities late. AOC said that it did not
expect the contractor to meet many of the scheduled completion dates
because, in AOC's view, many of these dates were no longer realistic.
According to AOC, it has revised the completion dates for the activities
to be tracked for future CVC hearings to be in line with its schedule
analysis.

Table 1: Activities Being Tracked for the Capitol Visitor Center, March 13
through April 11, 2007

                                                         Scheduled     Actual 
Activity                          Location           completion completion 
Lobby paneling                    Visitor Auditorium  3/13/2007  2/28/2007 
Cabinets, buffet and servery      Food Service        3/15/2007  3/05/2007 
Ceiling installation              Senate Upper Level  3/16/2007  3/19/2007 
Riser cable installation          Life Safety         3/23/2007   4/4/2007 
Wall stone area #1                East Front          3/28/2007  3/23/2007 
                                     Principal                                
Floor stone                       West Lobby &        3/28/2007  3/23/2007 
                                     Assembly                                 
Riser cable termination           Life Safety         3/30/2007            
Insulation testing cables         Life Safety         3/30/2007   4/4/2007 
Install fabric ceiling panels     Exhibit Gallery     3/30/2007            
Plaster ceiling                   East Front Ground    4/4/2007            
Testing and balancing AHU #2&17   Orientation          4/5/2007  3/07/2007 
                                     Theaters                                 
Check out wiring termination @    Life Safety          4/6/2007            
equipment                                                                  
Testing and balancing AHU         Dining Room          4/6/2007            
#10/11/22                         /Kitchen                                 
Upholstered wall system           Visitor Auditorium  4/10/2007            
Testing and balancing AHU #13     Auditorium Visitor  4/10/2007            
                                     Lobby                                    
Frame VP bulkheads                LOC Tunnel          4/11/2007  3/19/2007 
Fabric ceiling panels             Orientation Lobby   4/11/2007            

Source: AOC and its construction management and sequence 2 contractors.

The project continues to experience delays in near-critical activities.
Because AOC's construction management contractor had not yet issued its
schedule analysis for March 2007, we did not have complete information on
the sequence 2 contractor's performance in meeting scheduled completion
dates for all of the project's near-critical activities during the month.
However, information provided at the CVC team's weekly schedule meetings
indicated that slippages continued to occur in a number of near-critical
activities, including the CVC's HVAC system and East Front work. Although
AOC's extension of the project's scheduled completion date generally
provides more time to complete the near-critical activities, significant
additional delays in certain areas, such as ceiling installation, could
delay the project's overall completion date if they slow work on the
critical path, such as fire alarm device installation.

The pace of wall stone installation in the East Front has varied, first
exceeding and then falling short of the expected average of 70 pieces of
wall stone per day. For several weeks, the masons were installing an
average of about 80 pieces of wall stone per day, but during the weeks of
March 26 and April 2, they installed an average of 47 and about 55 pieces
per day, respectively. The pace of installation slowed because the
sequence 2 contractor has been installing steel to support the remaining
wall stone. AOC expects the pace to pick up after the support steel is
installed. Failure to maintain the stone installation schedule could
further delay the installation of East Front fire alarm devices, since the
ceilings that the devices hang from cannot be completed until the walls
are installed.

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. Delays continue, and technical problems remain a risk
until these systems have been installed, integrated, and successfully
tested. Moreover, problems with these systems may not be evident until
their final acceptance testing. In addition, significant delays have
occurred because of breakdowns in communication and coordination between
AOC's Chief Fire Marshal and the CVC team. This past month, for example,
it was discovered that the sprinkler system was not inspected as required
before some ceilings were closed in, even though the Chief Fire Marshal
and the CVC team were meeting at least once a week. Although this
breakdown may not affect the project's new June 2008 completion date,
given the additional time AOC has included in the schedule for risks and
uncertainties, some closed ceilings must be opened so that the sprinkler
system can be inspected, and additional above-ceiling work may be needed
if problems are found. Given the project's history, the risk of additional
communication and coordination breakdowns between AOC's Chief Fire Marshal
and the CVC team remains, and such breakdowns could affect the project's
overall completion date.

As of April 11, 18 of the CVC's 23 air handling units were reportedly
providing conditioned air to their designated spaces full time. The
remaining 5 units were reportedly ready to operate as soon as the initial
control programming could be installed, spaces for the units could be
prepared or cleaned, and in some cases, other work could be completed. All
23 units still require some work, such as initial or final air flow
testing and balancing, connection to the fire alarm system, punch-list
work, and commissioning.4 The CVC team expects the HVAC system's
commissioning to be completed by the fall of 2007, but some activities are
taking longer than planned, and the achievability of this time frame is
not certain. Risks include insufficient manpower, technical problems that
could arise given the sophistication of the system (e.g., stair
pressurization), coordination problems among subcontractors, equipment
damage due to excessive dirt or moisture from a lack of air flow in some
nonoperational units, and slippages in space readiness. Although 18 units
were operating full time, the spaces being served by only 9 units were
reported to be completely ready and clean as of April 11.

Another important risk, which we have consistently cited, is the number of
proposed change orders during sequence 2, which has continued to grow even
at this relatively late stage in the project. Proposed change orders that
result in contract modifications for new work or rework could delay the
project's scheduled completion, as well as increase the project's costs.
Even though the dollar value of recent change proposals has been
relatively small compared with the project's total cost, the unabated
increase in the number of change proposals is cause for concern. As of
February 2007, there were over 450 such proposals. Over the past 6 months
AOC has settled an average of about 20 proposed change orders per month.
At this rate, it would take almost 2 years, long after the project's
construction is supposed to be complete, to settle all of the change
proposals, even if no new change proposals were issued. Furthermore,
completing the project before reaching agreement on all the change
proposals could require contractors to complete some work before agreeing
on a final price for the work or on all contractual terms. As a result,
some subcontractors might experience cash flow problems that could affect
their financial stability. In addition, a subcontractor's cash flow
problems might delay progress on the project if the subcontractor was
unable to provide the manpower needed to maintain the expected pace of
construction. A major subcontractor responsible for installing the fire
alarm system recently expressed concerns to AOC about cash flow issues due
to the large number of proposed change orders. Figure 1 illustrates the
steady increase in proposed change orders, together with AOC's progress in
settling them.

4Commissioning 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.

Figure 1: Proposed Change Orders Submitted for Sequence 2, March 2006
through February 2007

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 last CVC hearing--$592 million without provision for risks
and uncertainties and over $600 million with such provision. As we
previously reported, 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 obligation 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, Lindsay Bach, Maria Edelstein, Elizabeth Eisenstadt,
Jeanette Franzel, Jackie Hamilton, Bradley James, David Merrill, Joshua
Ormond, and Bernard Ungar.

(545057)

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The incorrect version of this testimony was posted to the Web and the
following changes were made to the text:

           1. On the Cover in the Addressee's Block, "Before Congressional
           Committees was revised to read "Before the Subcommittee on the
           Legislative Branch, Committee on Appropriations, House of
           Representatives".
           2. On page 1:

                        o First line, "Madam Chair, Chairwoman, and Members
                        of the Committees:" was revised to read "Madam Chair
                        and Members of the Subcommittee:".
                        o First paragraph on line 1, "Committees" was revised
                        to read "Subcommittee". 
                        o Second paragraph, on line 10, "to date." was
                        revised to read "as of April 11, 2007."
                        o Third paragraph, on line 6 "last week and extended
                        its estimate of the" was revised to read "on April 10
                        and extended its estimate of the".
                        o Third paragraph, on line 9 "Committees'" was
                        revised to read "congressional".

           3. On page 9 in the second paragraph, "Madam Chair and Chairwoman"
           was revised to read "Madam Chair and Members of the Subcommittee".

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References

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