1). When Congress  approves a flood control project for construction, it typically authorizes a  total cost for the project based on estimates prepared by the Corps. Maximum Project Cost

When Congress authorizes a specific amount of money for a project, this  authorized project cost provides the basis for the project’s maximum cost. A Majority of Projects Experienced Cost Increases Due to Various Factors

The majority of the Corps flood control projects budgeted for construction  from fiscal years 2004 to 2012 experienced cost increases, including  inflation. However, no projects had cost increases that exceeded their  maximum allowable cost, or 902 limit, as defined by law. Various factors  other than inflation contributed to cost increases among the eight projects  we selected for further review. The Corps has some efforts under way  intended to better manage costs. At Least Two-thirds of Flood Control Projects Experienced Cost Increases

At least two-thirds of the 87 flood control projects budgeted for  construction from fiscal years 2004 to 2012 experienced increases,  including inflation, from their original authorized cost to their current  estimated project cost or their total expenditures at closeout, according to  information provided by Corps officials. Design changes due primarily to unforeseen site  conditions and changes in design criteria following Hurricane Katrina  contributed to increased costs on six of the projects we reviewed. Less than optimal federal funding. Receiving  less than optimal federal funding increased the costs of three of the  eight projects we reviewed, according to Corps officials. Officials for  two projects—Napa River and Turkey Creek—said their projects  received less than optimal federal funding, so they had to break up  the work into smaller segments than initially planned. Underestimated costs. Specifically, Corps officials and nonfederal  sponsors told us that the Corps usually communicated changes in Corps  policy as soon as they occurred. The Corps’ communication with the  nonfederal sponsors on project scope and design changes was generally  effective among the projects, according to Corps officials and nonfederal  sponsors we spoke with. However, some sponsors told us the Corps was  less timely in providing updated cost information. Communications Plans Called for by Guidance Were Not Always Developed, and Corps Officials and Nonfederal Sponsors Suggested Ways to Improve Communication

Corps guidance directs project delivery teams to develop a  communications plan for their projects, but three of the eight projects we  selected for further review did not have a communications plan. Because the communications plan  provides a framework for the Corps and nonfederal sponsors to establish  a communications strategy and determine the needs of the project  delivery team, without such a plan, the Corps may be missing  opportunities to assess their communication needs. For example, a  communications plan may help Corps or sponsor staff understand the  team’s communications needs when they join the project delivery team;  for projects where there is significant turnover, understanding the team’s  needs is especially important. Recommendation for Executive Action

To improve communication between the Corps and nonfederal sponsors  of flood control projects, we recommend that the Secretary of Defense  direct the Chief of Engineers and Commanding General of the U.S. Army  Corps of Engineers take steps to ensure that flood control project delivery  teams comply with agency guidance to develop communications plans for  flood control projects. GAO staff who made key contributions to  this report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

This report examines (1) the extent to which cost increases occurred in  flood control projects and the primary factors that contributed to the  differences between estimated and actual costs; (2) the extent to which  the Corps communicated with and provided updated information to its  nonfederal sponsors on changes to Corps policies, project scope and  design, and estimated versus actual costs; and (3) Corps guidance on  communication with nonfederal sponsors and ways, if any, suggested by  Corps officials and sponsors to improve such communication. The Corps identified 87 new or ongoing flood  control projects that were budgeted for construction in any fiscal year  from 2004 to 2012. To determine the extent to which the Corps communicated with and  provided updated information to nonfederal sponsors, we interviewed  Corps district officials and representatives of the sponsors of the eight  projects selected for further review to obtain information on the Corps’  communication with, and provision of updated information to, the  sponsors regarding changes to Corps policies, project scope and design,  and estimated and actual costs, and analyzed the supporting documents  they provided.
Why GAO Did This Study

For fiscal year 2012, Congress appropriated almost $1.7 billion to the Corps for its Civil Works program to construct a wide range of projects, including flood control projects. Flood control projects require congressional authorization and appropriations. Nonfederal sponsors, such as a state or local government, also provide funds. When Congress approves a project for construction, it authorizes a total cost for the project based on estimates prepared by the Corps, and this authorized cost provides the basis for the project's maximum cost.
GAO was asked to review issues related to flood control projects. This report examines (1) the extent to which cost increases occurred and the primary factors that contributed to the differences between estimated and actual costs, (2) the extent to which the Corps communicated with and provided updated information to nonfederal sponsors, and (3) Corps guidance on communication with such sponsors and ways, if any, to improve such communication. GAO surveyed Corps officials on all 87 flood control projects identified by the Corps as budgeted for construction in any fiscal year from 2004 to 2012, selected 8 for further review covering each Corps division, reviewed project documents and Corps communication guidance, and interviewed Corps officials and nonfederal sponsors.

What GAO Found

The majority of the U.S. Army Corps of Engineers' (Corps) flood control projects budgeted for construction from fiscal years 2004 to 2012 experienced cost increases, including inflation. Specifically, 59 of 87 flood control projects during this period experienced increases from their original authorized cost to their current estimated project cost or their total expenditures at closeout, according to information provided by Corps officials. However, according to a Corps official, as of September 2013, no projects had cost increases that exceeded their maximum allowable cost as defined by law. Various factors other than inflation contributed to cost increases among the 8 projects GAO selected for further review. Factors included design changes, less than optimal federal funding, underestimated costs, and contract cost changes. For example, 6 of the 8 projects had design changes due to unforeseen site conditions and changes in design criteria following Hurricane Katrina. According to Corps officials, receiving less than optimal federal funding increased the costs of 3 of the 8 projects GAO reviewed. Corps officials also said that receiving less than optimal federal funding meant that 2 projects had to break up their work into smaller segments, and 1 project had to extend its completion schedule. The Corps has some efforts under way intended to better manage costs.
The extent to which the Corps communicated with and provided updated information to nonfederal sponsors varied among the 8 projects GAO selected for further review. Specifically, Corps officials and sponsors told GAO that the Corps usually communicated Corps policy changes affecting projects by telephone or email as soon as they occurred. In addition, the Corps' communication with the sponsors on project scope and design changes was generally effective among the projects, according to Corps officials and nonfederal sponsors with whom GAO spoke. However, some sponsors told GAO the Corps was less timely in providing updated cost information. For example, a representative of one sponsor told GAO that the sponsor had not received the required quarterly cost report on a regular basis.
The Corps has guidance regarding communication between the Corps and its nonfederal sponsors. Specifically, Corps guidance directs project delivery teams to develop a project management plan that includes a communications plan. However, GAO found that 3 of the 8 projects GAO reviewed did not have a communications plan as called for by guidance. Because the communications plan provides a framework for the Corps and nonfederal sponsors to establish a communications strategy and determine the needs of the project delivery team, without such a plan, the Corps may be missing opportunities to assess their communication needs. Developing such a plan may help Corps or sponsor staff understand the team's communications needs when they join the project delivery team; for projects where there is significant turnover, understanding the team's needs is especially important.

What GAO Recommends

GAO recommends that the Corps take steps to ensure compliance with its guidance calling for communications plans. The Department of Defense concurred with the recommendation.