The  strategy also affected the schedules for the construction of the  temporary conference building, as well as the renovation of the  Conference Building and General Assembly Building. Progress Made on CMP, but Two Building Renovations May Not Be Completed and Project Is Projected to Be Approximately $430 Million over Budget

While the CMP nears completion of the renovation of two of the five  buildings, the project has suspended the originally planned renovation of  two buildings, faces risks meeting its 2014 completion date, and is  projected to be approximately $430 million over budget. The CMP office  may not renovate two buildings that were originally part of the scope of  the project, due to the lack of a workable design solution to address  security requirements. According to the CMP office, the estimated cost overruns result from a  number of factors, including about $266 million in direct project costs and  about $164 million in scope additions authorized by the UN General  Assembly to be financed from within the project’s approved budget, as  shown in table 2. One potential option for funding all or part of an additional U.S. member  assessment for the CMP would be using credits in the UN Tax  Equalization Fund (TEF) account—a UN fund used to reimburse U.S.  nationals working at the UN for U.S. taxes paid on their UN salaries. After the  application of these credits, the balance of TEF credits attributable to the  United States stood at $120.9 million, as of May 2012. To address these concerns, the UN  General Assembly requested that the CMP office improve reporting on  the underlying causes of the projected CMP cost increases. In addition,  member states inquired about the main factors that led to the projected  increase in cost overruns. Use of Best Practices in Future CMP Cost Reporting May Address UN General Assembly Concerns

While the UN General Assembly resolution did not explicitly identify how  the CMP office should report future cost information, we have found that a  high-quality and reliable cost estimate should exhibit certain best  practices, including being comprehensive, well-documented, accurate,   These best practices include elements for documenting  and credible.and reporting cost estimates. UN Considering Consolidation Building to Address UN Office Space Needs, but a Cost Estimate Has Not Been Completed

To address its future office space needs, the UN is considering the option  of a new building that would be separate from the CMP, but it does not  have an estimate of the project’s costs. The UN estimates that its office  space needs will exceed the capacity of its current real estate portfolio by  2023, due primarily to expiring leases. As a potential solution, the City  and State of New York have proposed the construction of a new office  building, to be located across the street from UN headquarters, known as  the consolidation building. This proposal requires UN General Assembly  approval, but the UN has not entered into any formal agreements  regarding the building and the current lack of a cost estimate makes its  cost implications for the UN and its member states unclear. We have  previously reported that reliable cost estimates are critical to program  success, including informed resource investments. Financing options exist to address a portion of the projected cost  overrun; however, the United States and other UN member states may be  asked to provide an additional assessment to finance the remainder. Given the cost  overruns and challenges of the CMP, as well as the risks and unknown  costs associated with the UN’s potential consolidation building project,  these practices should be used to enhance the CMP’s future cost  estimates and to develop cost estimates of prospective projects to  address the UN’s long-term space needs. Permanent Representative to the United Nations work with other  member states to take the following two actions:  1. Direct the UN to ensure the development of a cost estimate for the  consolidation building utilizing GAO’s best practices for cost  estimation. Specifically, we examine (1) the extent to which the CMP is  meeting its planned renovation scope, schedule, and budget; (2) the UN  General Assembly’s evaluation of CMP cost estimates; and (3) the status  of the UN consolidation building project. Additionally, we discussed the progress, plans, risks, and costs of the  CMP and consolidation building project with officials from the Department  of State’s (State) Bureau of International Organizations, the U.S. Mission  to the UN, New York City, and UN offices, including the CMP office and  Central Support Services. To examine the UN General Assembly’s evaluation of CMP cost  estimates, we reviewed and analyzed documents provided by the CMP  office to the UN General Assembly’s Fifth Committee describing the  project’s financial condition as of February 2012, UN General Assembly  resolution 66/258 issued in April 2012, the 2011 CMP annual report  proposing financing options, and the Advisory Committee on  Administrative and Budgetary Questions report A/66/7/Add.11 on costs of  the CMP. For example,  State has previously requested that TEF credits be applied toward  assessed contributions for the UN. Update on the United Nations’ Capital Master Plan.
Why GAO Did This Study

In December 2006, the UN approved a $1.88 billion CMP to modernize its headquarters in New York City by 2014, with a scope to include the renovation of five buildings. Separately from the CMP, the UN is also considering the option of a new office building, known as the consolidation building, to be located across the street from UN headquarters. As the UNs largest contributor, the United States has a significant interest in these projects. GAO was asked to report on (1) the extent to which the CMP is meeting its planned renovation scope, schedule, and budget; (2) the UN General Assemblys evaluation of CMP cost estimates; and (3) the status of the consolidation building project.
To perform this work, GAO reviewed cost and schedule documents for the CMP, as well as planning and legal documents for the consolidation building; examined relevant UN financial documents and UN General Assembly resolutions, as well as GAOs best practices for cost estimation; and met with officials from the Department of State (State), the UN CMP office and other relevant UN departments, and New York City.

What GAO Found

The Capital Master Plan (CMP) has made progress, but may not deliver the projects original scope, faces risks meeting its scheduled completion date, and is projected to be about $430 million over budget as of February 2012. Regarding the projects scope, the CMP office may not renovate the Library and South Annextwo of the five buildings in its original scopedue to the lack of a workable design solution to address security concerns. Related to schedule, the CMP office expects to complete the CMP in 2014, but reports that previous schedule delays have reduced its ability to respond to unforeseen events without affecting the projects end date. According to the CMP office, the projects approximately $430 million in projected cost overruns are due to a number of factors, including about $266 million in direct project costs and over $164 million from scope additions authorized without a corresponding increase in budget by the United Nations (UN) General Assembly. The CMP office has proposed financing options that could address a portion of these cost overruns. However, even if approved, an additional member assessment may be needed. One option for funding the U.S. portion of an additional member assessment is the use of credits attributable to the United States in the UN Tax Equalization Fund (TEF)a fund used to reimburse U.S. nationals working at the UN for taxes paid on their UN salaries. According to the UN, as of May 2012, the balance of TEF credits attributable to the United States stood at $120.9 million.
After evaluating the CMPs cost estimates, the UN General Assembly issued a resolution in April 2012 stating that the estimates lacked transparency, timeliness, and clarity. For example, the UN General Assembly expressed concern about the lack of clarity regarding the renovation of the Library and South Annex buildings. Specifically, member states inquired about the schedule for the two buildings and why renovations to the buildings were delayed. To address these concerns, the UN General Assembly requested that the CMP office improve reporting on projected CMP cost increases. While the UN General Assembly resolution did not specifically identify how the CMP office should report its future cost estimates, GAO has identified best practices for high-quality and reliable cost estimates. For instance, a well-documented cost estimate should describe in detail how the estimate was developed and the methodology used. Applying these best practices, as appropriate, could address the concerns raised by the UN General Assembly regarding the CMPs cost estimates.
To address its future office space needs, the UN is considering the option of a new building that would be separate from the CMP, but it does not have an estimate of the projects costs. The UN estimates that by 2023 its office space needs will have exceeded the capacity of its current real estate portfolio, primarily due to expiring leases. As a potential solution, the City and State of New York have proposed the construction of a new building known as the consolidation building. The UN has indicated its willingness to consider this proposal, but has not entered into any formal agreements. The current lack of a cost estimate for the consolidation building makes its cost implications for the UN and its member states unclear. GAO has previously reported that cost estimates are critical to program success, such as informed resource investments.

What GAO Recommends

The Secretary of State and the U.S. Permanent Representative to the United Nations should work with other member states to direct the CMP office and the UN to utilize best practices identified by GAO when developing cost estimates for the CMP and the consolidation building. State and the UN concurred with GAOs recommendations.