Capitol Visitor Center: Update on Status of Project's Schedule	 
and Cost as of June 27, 2007 (27-JUN-07, GAO-07-897T).		 
                                                                 
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 April  
24, 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; 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 to date.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-897T					        
    ACCNO:   A71526						        
  TITLE:     Capitol Visitor Center: Update on Status of Project's    
Schedule and Cost as of June 27, 2007				 
     DATE:   06/27/2007 
  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-07-897T

   

     * [1]Summary
     * [2]Construction Is Progressing, but Delays in Work on Near-crit

          * [3]Project's Completion Date Remains Unchanged, but Delays in N
          * [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 9:00 a.m. EDT
Wednesday, June 27, 2007

CAPITOL VISITOR CENTER

Update on Status of Project's Schedule and Cost as of June 27, 2007

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

GAO-07-897T

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 April 24, 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 to date.

Summary

Since the April 24, 2007, CVC hearing, the project's construction has
progressed, and AOC is still projecting a June 27, 2008, completion date.2
Although the CVC team has avoided further delays in the project's critical
path (i.e., the work on the fire alarm system), activities on most of the
project's near-critical paths have fallen behind schedule, and further
delays are possible.3 During the past 2 months, 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. However, problems have occurred
in such near-critical activities as the ceiling close-ins in the upper
level security and orientation lobbies and elements of the House and
Senate expansion spaces, and a number of risks to the project's schedule
remain. These include potential problems in completing the installation,
integration, operation, and testing of complex, major building systems,
including the fire alarm, security, and HVAC systems. For example, the
subcontractor that is installing the fire alarm system told AOC in April
that the installation may not proceed as scheduled because of cash flow
issues and delays in other subcontractors' work. The subcontractor's cash
flow issues are, in turn, related to another risk to the project's
schedule--unsettled change order requests. Finally, a new risk emerged
this month, when problems with the HVAC automated control system delayed
the completion of efforts to test and balance of the HVAC units. Given
these and other risks to the project's schedule, we believe that AOC will
be able to meet or come close to meeting its scheduled construction
completion date only if the CVC team promptly makes significant
improvements in its execution of the project and the project's schedule.

1GAO, Capitol Visitor Center: Update on Status of Project's Schedule and
Cost As of April 17, 2007, [13]GAO-07-755T (Washington, D.C.: Apr. 24,
2007).

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.

At the November 15, 2006, CVC hearing, we reported 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. Because the project's expected completion date
remains uncertain, we have not updated these estimates. To date, about
$538.4 million has been approved 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 yet received approval to obligate. AOC has
indicated that of this amount, approximately $23.8 million will be used
for construction and $12.6 will be used for 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 claims.

Construction Is Progressing, but Delays in Work on Near-critical Paths and Other
Risks Could Affect the Scheduled Completion Date

According to AOC's construction management contractor, in dollar terms,
the overall CVC project is 95 percent complete, compared with 93 percent
reported complete at the April 24 CVC hearing. Twenty-one of the CVC's 23
air handling units were reportedly operating full time as of June 21, and
work has progressed in the East Front.

Project's Completion Date Remains Unchanged, but Delays in Near-critical Paths
Could Jeopardize Progress on Critical Path

According to AOC's construction management contractor, there have been no
delays in the critical path shown in the project's May 2007 schedule, but
there have been delays in 13 of 17 near-critical paths. As we noted at the
April 24 hearing, this schedule includes about 3 additional months for
slippages, risks, and uncertainties. Despite this additional time, further
substantial delays in some near-critical paths could affect the project's
completion date. For example, delays in ceiling installation, a
near-critical-path activity, could limit the installation of fire alarm
devices, a critical-path activity. Work on 5 near-critical paths fell at
least 3 weeks further behind in May. For example, according to the
construction management contractor, the schedule for the ceiling close-ins
in the upper level security and orientation lobbies slipped by 22 days, or
4.4 work weeks.

While the date for completing the CVC's construction remains unchanged,
the sequence 2 contractor extended the schedule for completing the
construction of the House and Senate expansion spaces because of delays in
the House hearing room and in several near-critical-path activities,
including testing and balancing the HVAC system, mounting fire alarm
devices, and framing ceilings. As a result, the schedule for completing
the expansion spaces slipped by about 1.5 weeks--to November 20,
2007--according to the project's May 2007 schedule.

One indicator of construction progress we have been tracking--the
completion date for certain work activities--shows that the project is not
progressing as well as planned. For example, as shown in table 1, the
sequence 2 contractor completed 6 of 16 scheduled completion dates on time
and completed 3 others late.

Table 1: Activities Being Tracked for the Capitol Visitor Center, April 11
through June 22, 2007

                                                         Scheduled     Actual 
Activity                       Location              completion completion 
Fabric ceiling panels          West lobby & assembly  4/23/2007  3/23/2007 
Security furniture installed   Security                6/7/2007  3/27/2007 
Stone stairs #29               East Front ground      5/23/2007  4/05/2007 
Front stage millwork           Visitor auditorium     6/18/2007   5/8/2007 
Wall stone Area #2             East Front principal     5/29/07  5/25/2007 
Testing & balancing AHU #7     Securitylobbies        6/11/2007   6/5/2007 
Receive pretest plan           Life safety            5/01/2007  5/08/2007 
Plaster walls                  Library of Congress     6/1/2007   6/5/2007 
                                  tunnel                                      
Testing & balancing AHU #1     Exhibit gallery        5/28/2007  6/11/2007 
Complete glass floor           Exhibit gallery        5/22/2007            
installation                                                               
Ceiling stone                  East Front principal   5/29/2007            
Stone stairs                   East Front principal   5/29/2007            
Carpet                         Visitor auditorium     5/30/2007            
Floor stone                    East Front basement     6/9/2007            
Wall stone Area #2             East Front gallery      6/9/2007            
Testing & balancing AHU #20    South circulation      6/21/2007            

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

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 April the subcontractor responsible for installing the fire alarm
system told AOC that the system's installation may not proceed as
scheduled because of contractual issues affecting the subcontractor's
receipt of payments and delays in other subcontractors' work that must be
completed before the fire alarm system can be installed. They attribute
these payment issues to unsettled change order requests. AOC and its
construction management contractor have worked to settle these change
order requests, which were intended to increase the funds available to the
subcontractor. This month, the same subcontractor told AOC that there are
additional issues to be addressed. AOC officials told us they are
investigating the issues.

Problems in commissioning the project's HVAC system remain a risk even
though, as of June 21, 2007, 21 of the CVC's 23 air handling units were
reportedly providing conditioned air to their designated spaces full time.
According to AOC, the 2 remaining units were ready to operate as soon as
additional ductwork could be completed. However, all 23 units still
require some work, such as final air flow testing and balancing,
connection to the fire alarm system, punch-list work, and commissioning.4
The CVC team still expects the HVAC system's commissioning to be completed
by October 2007, but some activities are taking longer than planned, and
the achievability of this time frame is not certain. Risks to completing
this work on schedule include insufficient manpower, technical problems
that could arise given the sophistication of the system (e.g., stair
pressurization), coordination problems among subcontractors, and delays in
preparing spaces for the remaining units. Recent problems with the
automated controls for these units demonstrate some of these risks.

The number of outstanding proposed change orders for sequence 2 work also
poses a risk to the project's schedule. Although this number fell in March
for the first time in several months, it continued to grow in April and
May, increasing from 376 in March to 451 in May. The increases occurred
even though AOC settled almost twice as many proposed change orders during
the past month--49 for May--as it averaged over the last year (about 25
per month). 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 values of
recent proposed change orders have been relatively small compared with the
project's total cost, unsettled change order requests are a cause for
concern. They can, for example, contribute to payment delays such as those
affecting the subcontractor that is installing the fire alarm system.
Figure 1 compares the number of outstanding proposed change orders with
the number settled each month.

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: Outstanding and Settled Proposed Change Orders by Month, March
2006 through May 2007

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

Because the project's expected completion date remains uncertain, we have
not updated our cost-to-complete estimate since the November 15, 2006, CVC
hearing--$592 million without provision for risks and uncertainties and
over $600 million with such provision. To date, about $538.4 million has
been approved for CVC construction, including about $7.4 million in fiscal
year 2007 appropriations. AOC also received an additional $36.4 million in
fiscal year 2007 appropriations for the CVC project, which AOC has not yet
received approval to obligate. AOC has indicated that of this amount,
approximately $23.8 million will be used for construction and $12.6 will
be used for 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 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, and
Joshua Ormond.

(545058)

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