By Steve Rizer
Has the U.S. Government Accountability Office (GAO) exposed the tip of a federal iceberg that is made up of flawed construction management practices and that is wreaking havoc via massive cost increases and schedule delays?
Earlier this month, an official from GAO, the investigative arm of Congress, told a House panel that her office has found significant shortcomings in the way the U.S. Department of Veterans Affairs (VA) is managing the construction of major medical facilities. ConstructionPro Week (CPW) then asked the same GAO representative whether she believes similar problems are common throughout the federal government.
“I would venture to guess that there might be similar problems [among other federal entities], but, quite frankly, I couldn’t really tell you if there were similar problems because” of the limited degree to which GAO has investigated federal construction management processes, Lorelei St. James, GAO’s director of physical infrastructure, told CPW. “What we have [investigated] is a lot of individual projects” involving the Architect of the Capitol, the Kennedy Center for Performing Arts, the Smithsonian Institution, and certain other federal entities -- investigations that had “different slants” in their assigned missions. However, she added, “I would venture to guess that more likely than not [such problems occur elsewhere in the federal government] because they all pretty much have to go through the same government regulations.”
St. James said she is unaware of any evaluation that GAO has conducted of construction management practices across the federal government and that her office only could conduct such an investigation upon congressional request.
And what exactly are these problems?
Among other things, changes in project scope, unanticipated events involving asbestos and faulty electrical systems from pre-existing buildings, and changes in site location have led to increased costs and delayed schedules in VA projects, St. James told the House Veterans’ Affairs Committee’s Subcommittee on Oversight and Investigations. Her testimony was based on a report that GAO released in April, entitled “VA Construction: Additional Actions Needed to Decrease Delays and Lower Costs of Major Medical-Facility Projects.” The report, GAO-13-302, can be accessed at http://www.gao.gov/assets/660/653585.pdf.
The report focuses on VA’s current 50 major medical-facility projects as well as the original cost estimates, completion dates, and the projects’ “current status” according to November 2012 data. In an effort to understand issues involving cost estimates and completion dates, the office took a more detailed review of four VA medical-facility projects in Las Vegas, Orlando, New Orleans, and Denver. GAO also reviewed and analyzed construction documents, VA’s “Strategic Plan Fiscal Years 2011 to 2015,” and other documents that the office considered relevant. GAO additionally interviewed officials from VA, veterans support organizations, architectural and engineering firms, general contractor construction firms, and construction management firms.
Based on its investigation, GAO determined that costs increased and schedules were delayed “considerably” for VA’s four largest medical-facility construction projects, when taking into account November 2012 construction project data with the cost and schedule estimates that initially were submitted to Congress. Cost increases ranged from 59 percent to 144 percent, representing a total cost increase of nearly $1.5 billion and an average increase of approximately $366 million per project. Schedule delays ranged from 14 to 74 months with an average delay of 35 months per project.
Of the remaining 46 major medical-facility projects, 26 are under construction or were recently completed. Of these 26, half have experienced cost increases, but the other half experienced either no change in costs or a decrease in costs. Nineteen of 24 construction projects currently under construction or recently completed have experienced schedule delays.
At each of the four locations GAO reviewed, the following factors were deemed to have contributed to cost increases and schedule delays, according to St. James:
- “Changing healthcare needs of the local veteran population changed the scope of the Las Vegas project. VA officials told us that the Las Vegas Medical Center was initially planned as an expanded clinic co-located with Nellis Air Force Base. However, VA later determined that a much larger medical center was needed in Las Vegas after it became clear that an inpatient medical center shared with the Air Force would be inadequate to serve the medical needs of local veterans.”
- “Decisions to change plans from a shared university/VA medical center to a stand-alone VA medical center affected plans in Denver and New Orleans. For Denver and New Orleans, VA revised its original plans for shared facilities with local universities to stand-alone facilities after proposals for a shared facility could not be finalized.”
- “Changes to the site location by VA delayed efforts in Orlando. In Orlando, VA’s site location changed three times from 2004 to 2010. It first changed because VA, in renovating the existing VA hospital in Orlando, realized the facility site was too small to include needed services. However, before VA could finalize the purchase of a new larger site, the land owner sold half of the land to another buyer, and the remaining site was again too small.”
- “Unanticipated events in Las Vegas, New Orleans, and Denver also led to delays. For example, VA officials at the Denver project site discovered they needed to eradicate asbestos and replace faulty electrical systems from pre-existing buildings. They also discovered and removed a buried swimming pool and found a mineral-laden underground spring that forced them to continually treat and pump the water from the site.”
In summarizing GAO’s investigation, St. James told the panel, “We recognize that some cost increases and schedule delays result from factors beyond VA’s control; however, our review of VA’s largest projects indicated [that] weaknesses in VA’s construction management processes also contributed to cost increases and schedule delays. Given that VA is currently involved in 50 major medical-facility construction projects, including four large medical centers, VA should take further action to improve its management of costs, schedule, and scope of these projects.”
In the ConstructionPro Network (CPN) member version of this article, VA representatives provide CPW their reaction to the report and offer some advice about what other public agencies can do to avoid having to face similar allegations. To sign up for a CPN membership, click here.