In general, about 75 percent of these  projects were less than about $80,000; however, about 2 percent of the  projects were valued at $1.9 million or higher. Unforeseen Site Conditions Are Common, but Impacts on Reviewed Projects Were Limited

		Both Industry Stakeholders and GSA Officials Told Us Unforeseen Site Conditions Are Common in Repair and Alteration Projects

According to industry stakeholders we interviewed, unforeseen site  conditions are common in repair and alteration projects. On nine of the 11 projects we  selected that experienced unforeseen site conditions, the cost for  remediating those conditions accounted for 1 to 5 percent of the project’s  original construction contract award (see fig. 2). On one of the 11  projects—a prospectus project to, among other things, modernize the  heating, ventilation, and air-conditioning system at the New Executive  Office Building in Washington, D.C.—the cost for addressing unforeseen  site conditions was approximately 6 percent of the original construction  contract award. All of the reported costs for remediating unforeseen site  conditions on the projects we reviewed were below the typical 10 percent  construction contingency that GSA attaches to repair and alteration  projects. These ranged from 23 to 105  days due to the unforeseen site condition. For example, as the figure shows, for  projects we reviewed, incomplete building drawings and lack of building  information were among the possible causes for unforeseen site  conditions. GSA Has a Variety of Methods to Identify and Assess Risks of Unforeseen Conditions but Risk Identification Could Benefit from Analysis of Project Information

		Variety of Methods Are Available to Identify and Assess Potential Project Risks and GSA Generally Used These Methods on Projects We Reviewed

GSA policies and procedures describe a variety of methods available to  identify and assess potential risks on repair and alteration projects. Tools available during this  phase include facility condition assessments and site surveys. GSA officials told us that contract change  orders and modifications are used to document unforeseen site  conditions. We found that, in general, GSA prepared PMPs for our selected projects. For example, GSA prepared PMPs for 13 of the 18 RWA and prospectus  projects we reviewed. Five projects did not have PMPs—three were RWA  projects associated with larger projects and no separate PMP was  prepared for the RWA project, and for two projects, GSA officials were not  sure if a PMP was prepared and were unable to provide documentation of  a PMP. 4). On 11 of the projects we reviewed that experienced an unforeseen site  condition, GSA did not identify risks that later materialized. Standards for Internal Control in the Federal  Government states that an agency’s approach to assessing risks should  comprehensively identify agency risks using a variety of quantitative and  qualitative methods and estimate the significance of those risks to help  decide how to manage those risks and plan what actions should be taken. Analyzing contract modifications  and change orders to identify the causes of project cost growth and  schedule delays would not only allow GSA to better know what role  unforeseen site conditions play in project cost growth or schedule delays  but also the magnitude of this type of risk. In particular, GSA can better analyze the information it has available, like  contract change orders and modifications, an approach that would allow a  more comprehensive identification of types of project risks, the role these  risks play in repair and alteration projects, and the impacts these risks  have on project costs, schedules, or scope of work. Recommendation for Executive Action

To improve risk assessments for repair and alteration projects, we  recommend that the Administrator of GSA develop and implement a plan  to periodically analyze information GSA already collects, for example,  based on a representative sample of repair and alterations projects, in  order to:  identify the specific impacts unforeseen conditions have had on  project costs, schedules, and scope of work; analyze the causes of these conditions for those projects that experienced unforeseen site conditions; and identify actions that will be taken to address the potential causes of unforeseen site conditions. In its written  comments reproduced in appendix III, GSA agreed with the  recommendation and said it will develop a plan to address it. Appendix I: Objectives, Scope, and Methodology

The objectives of this report were to (1) identify information about the  extent, impact, and cause of unforeseen site conditions during selected  repair and alteration projects in federally owned buildings held by the  General Services Administration (GSA) and to (2) determine how GSA  identifies and assesses the risks of unforeseen site conditions. There were a total of six prospectus projects that received funding from  fiscal years 2010 through 2013. We interviewed GSA project managers and contracting officers for the  projects we selected and reviewed project documents to determine if the  projects encountered unforeseen site conditions. This  included a description of the unforeseen condition, the cost to remediate  the condition, and any schedule delays experienced.
Why GAO Did This Study

GSA annually spends hundreds of millions of dollars making major and minor repairs and alterations to the more than 1,500 federally owned buildings that it holds. GAO's past work has indicated that GSA sometimes encounters “unforeseen site conditions”—conditions that are different from what was expected—in performing this work. Unforeseen conditions can add both time and cost to repair and alteration projects. GAO was asked to review issues related to tenant repair and alteration projects. This report addresses (1) information about the extent, impact, and cause of unforeseen site conditions on selected projects, and (2) how GSA identifies and assesses the risks of unforeseen conditions.
GAO reviewed 18 non-generalizable repair and alteration projects funded from fiscal year 2010 to 2013, valued at $2 million or more; interviewed GSA project managers and contracting officers about these projects; reviewed project documents; and interviewed a non-generalizable sample of organizations and individuals knowledgeable about the construction industry (industry stakeholders).

What GAO Found

Both industry stakeholders and General Services Administration (GSA) officials told GAO that unforeseen conditions in repair and alteration projects are common. Such conditions, for example, included an unknown wood subflooring discovered during demolition work. Among the impacts identified by the stakeholders were increased project costs and schedule delays. In general, data are limited on unforeseen conditions since GSA does not analyze this type of information. Most of the repair and alteration projects GAO reviewed—11 of 18 projects--experienced an unforeseen condition. The overall impact of the unforeseen conditions on the 18 projects GAO reviewed was largely limited. On 9 of the 11 projects that experienced such conditions, the cost to remediate them accounted for 1 to 5 percent of the project's original construction contract award amount, and on one project the cost was approximately 6 percent. These amounts were below the typical 10 percent construction contingency GSA adds to project costs. Schedule impacts were also limited: 4 of the 11 projects experienced delays ranging from 23 to 105 days. GAO also found that three projects reviewed that did not experience unforeseen conditions were attached to larger projects that did experience these conditions. In two of these larger projects the cost increases from unforeseen conditions were about $2 million each. Incomplete building drawings and lack of building information were among the possible causes of the unforeseen conditions experienced in the projects GAO reviewed.
GSA has a variety of methods to identify and assess risks of unforeseen conditions. GSA's Project Planning Guide states that, among other things, facility condition assessments and site surveys should be conducted initially. GSA guidance also calls for preparation of a project management plan (PMP), which includes a risk assessment matrix. GAO found that, in general, GSA used at least one of its risk identification methods on the projects reviewed. For example, GAO found that GSA prepared PMPs for 13 of the 18 projects reviewed. Three of the remaining five projects were attached to larger projects that had PMPs and GSA was unable to provide a PMP for the other two projects. However, GSA's risk identification was sometimes inconsistent with unforeseen conditions that were actually experienced. For example, on 11 of the projects, GSA did not identify risks that later materialized during the project. The Standards for Internal Control in the Federal Government state that agencies should comprehensively identify risks using a variety of quantitative and qualitative methods. GSA officials told GAO that contract change orders are used to document unforeseen conditions that result in a change to the contract, but that these change orders are not analyzed to identify what role these conditions represent on projects or their causes or impacts. As shown in the projects GAO reviewed, unforeseen conditions can delay schedules and increase project costs—in some cases in the millions of dollars. Analyzing project information such as change orders would allow GSA to better know what role unforeseen conditions play in repair and alteration projects and the magnitude of this risk.

What GAO Recommends

GAO recommends that GSA develop and implement a plan for analyzing information it collects to identify the role of unforeseen conditions in repair and alteration projects and the specific causes and impacts of these conditions. GSA agreed with the recommendation and the agency stated it will develop a plan to address it.