Most Major Projects Have Exceeded Original Costs and Are Years Late, Principally Because of Ineffective DOE Project Oversight and Contractor Management

The estimated costs of many of the DOE major construction projects we  reviewed have significantly exceeded original estimates and schedules  have slipped. In addition, as shown in table 2, 9 of the 12 projects experienced schedule  delays ranging from 9 months to more than 11 years. The DOE project oversight issues mentioned in table 3 include the  following:  inadequate systems for measuring contractor performance;   approval of construction activities before final designs were sufficiently  insufficient DOE staffing and experience; inadequate use of project management controls;  lack of headquarters assistance and oversight support of field project  directors;  failure to detect contractor performance problems, including inadequate  federal inspection activities; and   poor government cost estimates, including inadequate funding for  contingencies. Cost increases  and schedule delays for 6 of the 9 projects were due in part to contractors’  poor management of the development and integration of technologies  used in project designs by, among other things, not accurately anticipating  the cost and time that would be required to carry out the highly complex  tasks involved. DOE Does Not Consistently Measure Technology Readiness to Ensure That Critical Technologies Will Work as Intended before Construction Begins

Although DOE requires its final designs to be sufficiently complete before  beginning construction, it has not systematically ensured that the critical  technologies reflected in project designs are technologically ready. DOE Does Not Consistently Assess Technology Readiness

Only 1 of the 5 projects we reviewed to determine how DOE ensures that  project designs are sufficiently complete before construction—projects  that were approaching or had recently begun construction—had a  systematic assessment of technology readiness to determine whether the  project components would work individually or collectively as expected in  the intended design. DOE’s experience with the Waste Treatment and Immobilization Plant is a  case in point. The DOE  project directors of the 5 DOE projects that are nearing, or have recently  begun construction, told us they have completed, or expect to complete  prior to construction, 85 to 100 percent of their projects’ final design. Both NASA and DOD use a nine-point scale to measure technology  readiness, from a low of TRL 1 (basic principles observed) to a high of  TRL 9 (total system used successfully in project operations). According to several DOE project directors we spoke with, a consistent,  systematic method for assessing technology readiness would help achieve  a number of objectives: that is, standardize terminology, make technology  assessments more transparent, and improve communication among  project stakeholders before they make critical project decisions. Other federal agencies have recognized the need to consistently measure  and communicate technology readiness to help avoid cost increases and  delays that result from relying on immature technologies. Appendix I: Scope and Methodology

To determine the extent to which the Department of Energy’s (DOE)  major construction projects have experienced cost increases and schedule  delays and the factors that have contributed to these problems, we  identified (1) active DOE major line-item construction projects that have  current total project cost estimates above the $750 million threshold— DOE’s criteria for “major construction projects,” and (2) the projects with  estimates above $400 million—the DOE threshold for major projects until  July 2006. Nuclear Weapons: Design Reviews of DOE’s Tritium Extraction  Facility.
Why GAO Did This Study

The Department of Energy (DOE) spends billions of dollars on major construction projects that help maintain the nuclear weapons stockpile, conduct research and development, and process nuclear waste so that it can be disposed of. Because of DOE's long-standing project management problems, GAO determined the extent to which (1) DOE's major construction projects are having cost increases and schedule delays and the major factors contributing to these problems and (2) DOE ensures that project designs are sufficiently complete before construction begins to help avoid cost increases and delays. We examined 12 DOE major projects with total costs of about $27 billion, spoke with federal and contractor officials, and reviewed project management documents.

What GAO Found

Of the 12 DOE major projects GAO reviewed, 9 exceeded their original cost or schedule estimates, principally because of ineffective DOE project oversight and poor contractor management. Specifically, 8 of the 12 projects experienced cost increases ranging from $79.0 million to $7.9 billion, and 9 of the 12 projects were behind schedule by 9 months to more than 11 years. Project oversight problems included, among other things, inadequate systems for measuring contractor performance, approval of construction activities before final designs were sufficiently complete, ineffective project reviews, and insufficient DOE staffing. Furthermore, contractors poorly managed the development and integration of the technology used in the projects by, among other things, not accurately anticipating the cost and time that would be required to carry out the highly complex tasks involved. Even though DOE requires final project designs to be sufficiently complete before beginning construction, it has not systematically ensured that the critical technologies reflected in these designs have been demonstrated to work as intended (technology readiness) before committing to construction expenses. Specifically, only one of the five DOE project directors with projects that have recently begun or are nearing construction had systematically assessed technology readiness. The other four directors also told us that they have or will have completed prior to construction, 85 to 100 percent of their projects' final design, but they had not systematically assessed technology readiness. Proceeding into construction without also demonstrating a technology's readiness can lead to cost increases and delays. For example, one technology to be used in DOE's Waste Treatment and Immobilization Plant was not sufficiently demonstrated--that is, shown to be technologically ready for its intended application--before construction began. Consequently, the technology did not perform as expected, which resulted in about $225 million in redesign costs and schedule delays of more than 1 year. To help avoid these problems, the National Aeronautics and Space Administration (NASA) pioneered and the Department of Defense (DOD) has adopted for its projects a method for measuring and communicating technology readiness levels (TRL). Using a scale from one (basic principles observed) through nine (total system used successfully in project operations), TRLs show the extent to which technologies have been demonstrated to work as intended in the project. DOE project directors agreed that such an approach would help make technology assessments more transparent and improve stakeholder communication prior to making critical project decisions, such as authorizing construction.