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2013, but Risks to Its Schedule and Cost Remain' which was released on 
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Correspondence to the Ranking Member, Committee on Foreign Relations, 
U.S. Senate: 

United States Government Accountability Office: 
GAO: 

July 2009: 

United Nations: 

Renovation Still Scheduled for Completion in 2013, but Risks to Its 
Schedule and Cost Remain: 

GAO-09-870R: 

GAO Highlights: 

Highlights of GAO-09-870R, a report to Ranking Member, Richard G. 
Lugar. 

Why GAO Did This Study: 

In 2008, the United Nations (UN) began construction associated with its 
Capital Master Plan (CMP) to renovate its headquarters complex in New 
York City. As the UN’s host country and largest contributor, the United 
States has a substantial interest in the success of the CMP. In this 
requested update, GAO reviewed the following key areas: schedule, cost, 
funding, risk management, procurement, and oversight. To perform this 
work, GAO reviewed UN documents and met with officials from the CMP 
office and other UN departments. GAO also reviewed select CMP schedules 
to assess the extent to which they met best practices for scheduling 
contained in GAO’s Cost Estimating and Assessment Guide.[A] To assess 
oversight and monitoring, GAO reviewed UN documents and oversight 
reports and interviewed officials from the UN’s Office of Internal 
Oversight Services and officials from the U.S. Department of State 
(State). 

[A] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for 
Developing and Managing Capital Program Costs, GAO-09-3SP (Washington, 
D.C.: March 2009). 

What GAO Found: 

Schedule: Despite delays in starting construction, UN officials still 
expect to complete the project in 2013. The likelihood of meeting this 
date will be clearer once detailed schedules for the renovation work 
are finalized as part of the contracting process. Contracts have been 
awarded for the Temporary North Lawn Building and one of the six 
buildings to be renovated and contracts for two more buildings are 
expected to be signed later this year. The CMP’s integrated master 
schedule and the subschedule GAO reviewed met, to some extent, most of 
nine scheduling best practices. The UN has not formally analyzed the 
risks to either schedule to quantify their potential impact on meeting 
the project's completion date. 

Cost: The CMP’s estimated cost is $97.5 million over its $1.88 billion 
budget, down from $190 million over budget in April 2008. CMP officials 
are optimistic about further reducing the cost, in part because of the 
recent downturn in the economy. However, member states are considering 
whether to add up to $206.6 million in related costs to the CMP. This 
would include $186 million in associated costs, such as furniture and 
equipment, and $20.6 million for a secondary data center. Some of these 
related costs are currently being paid from the CMP budget. 

Funding: Member state payments are on track and CMP officials expect 
the payments to cover renovation expenditures through 2011. However, 
CMP officials project funding shortfalls in 2012 and 2013 if the 
current budget overrun is not resolved and the General Assembly decides 
that the $206.6 million for related costs will be absorbed into the 
existing CMP budget. 

Risk management: The CMP office and its management consultant continue 
to assess risks to the project, resulting in an annual risk register, 
which identifies risks and mitigating strategies. The ability of the 
CMP office to complete the project within the original budget of $1.88 
billion and the timeliness of the contracting process remain high-risk 
areas. 

Procurement: The UN has awarded contracts for 8 of an expected 22 
contracts to the construction manager. It also reviews the construction 
manager’s subcontracting process. The CMP office expects U.S. workers 
to provide most of the on-site labor for the renovation. 

Oversight: OIOS continues to monitor the CMP, has issued reports, and 
plans annual reviews of security-related issues. According to OIOS, it 
has enough staff to perform the work. State also monitors the CMP. 

Figure: UN Headquarters Complex, New York City: 

[Refer to PDF for image: illustration] 

The illustration depicts the following: 

Secretariat; 
General Assembly; 
Library; 
South Annex; 
Conference Building; 
Temporary North Lawn Building; 
North Lawn extension (underground). 

Source: GAO and United Nations. 

[End of figure] 

What GAO Recommends: 

The Secretary of State and the U.S. Permanent Representative to the UN 
should work with other member states to direct the CMP office to 
implement the best practices for scheduling contained in GAO's Cost 
Estimating and Assessment Guide, to the extent practical for the CMP. 
State and the UN generally agreed with GAO’s findings and 
recommendation. 

View [hyperlink, http://www.gao.gov/products/GAO-09-870R] or key 
components. For more information, contact Terrell Dorn at (202) 512-
6923 or dornt@gao.gov or Thomas Melito at (202) 512-9601 or 
melitot@gao.gov. 

[End of section] 

United States Government Accountability Office: Washington, DC 20548: 

July 30, 2009: 

The Honorable Richard G. Lugar: 
Ranking Member: 
Committee on Foreign Relations: 
United States Senate: 

Dear Senator Lugar: 

In 2008, the United Nations (UN) began construction associated with its 
Capital Master Plan (CMP) to renovate its headquarters complex in New 
York City. Built in the early 1950s, the UN headquarters complex does 
not conform to current safety, fire, and building codes or meet UN 
technology or security requirements. In December 2006, the UN General 
Assembly adopted a resolution for the CMP, a comprehensive renovation 
of the entire complex, and approved a $1.88 billion budget and a 
schedule with a completion date of 2014 for the project.[Footnote 1] 
The scope of the project includes the renovation of the buildings 
within the UN complex, constructing a temporary building on the UN 
headquarters grounds to house General Assembly meetings and 
conferences, and the cost of off-site leased office space that staff 
will occupy during the renovation. As the UN's host country and largest 
contributor, the United States has a substantial interest in the 
success of the CMP. 

Since 2001, we have periodically reviewed UN efforts to develop and 
implement the CMP, prepare schedules and cost estimates, and provide 
oversight. In June 2001 and May 2003, we reported that the UN's 
renovation planning efforts had been reasonable and conformed to 
leading industry practices.[Footnote 2] In November 2006, we reported 
that UN officials continued to use leading industry practices to 
develop the UN headquarters renovation project, but that the renovation 
could become vulnerable to UN procurement weaknesses that we had 
previously identified. In addition, we reported that the UN Office of 
Internal Oversight Services (OIOS) relied on funds from the CMP budget 
and must negotiate for those funds with the UN budget office, a fact 
that may impair its independence.[Footnote 3] In February 2007, we 
provided information about the latest cost estimate[Footnote 4]. In 
April 2008, we reported that by planning to renovate buildings in 
single phases, rather than in multiple phases as previously planned, 
the UN had accelerated its schedule and planned to complete the project 
by mid-2013.[Footnote 5] We also reported that the project's total cost 
was $190 million over budget. 

You asked us to update our most recent report and provide information 
on the current status of the CMP. Accordingly, we reviewed the 
following key areas relating to the CMP: schedule, cost, funding, risk 
management, procurement, and oversight. The results of our work are 
contained in enclosure I. To perform our work, we reviewed relevant CMP 
documentation, including the schedule, cost estimates, information on 
payments made by member states, risk assessments, and contracts. We 
also interviewed UN officials in the CMP office and the procurement 
office. We also reviewed select CMP schedules to assess the extent to 
which they met best practices for scheduling contained in GAO's Cost 
Estimating and Assessment Guide.[Footnote 6] To assess oversight and 
monitoring activities, we reviewed reports on the CMP prepared by OIOS 
and interviewed OIOS officials. We also interviewed officials from the 
U.S. Department of State (State) on its CMP monitoring efforts. We 
conducted this work from February 2009 through July 2009 in accordance 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. Additional information about our scope 
and methodology is provided on the scope and methodology page of 
enclosure I. 

Agency Comments and Our Evaluation: 

We provided a draft of this correspondence to State, the UN Department 
of Management, and OIOS for their review and comment. State and the UN 
Department of Management provided written comments, which are 
reproduced in enclosures III and IV, and generally concurred with our 
findings and recommendation. They also provided us with technical 
suggestions and clarifications that we have addressed in this 
correspondence, as appropriate. OIOS stated that our correspondence was 
accurate and provided us with a technical suggestion, which we have 
incorporated. 

We are sending copies of this correspondence to interested Members of 
Congress, the Secretary of State, and the U.S. Permanent Representative 
to the United Nations. In addition, the correspondence will be 
available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. If you or your staff have any questions about this 
correspondence, please contact Thomas Melito at (202) 512-9601 or 
melitot@gao.gov or Terrell Dorn at (202) 512-6923 or dornt@gao.gov. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this correspondence. Key 
contributors are listed on the scope and methodology page of enclosure 
I. 

Signed by: 

Thomas Melito: 
Director, International Affairs and Trade: 

Signed by: 

Terrell Dorn: 
Director, Physical Infrastructure Issues: 

Enclosures: 

[End of section] 

Enclosure I: 

Likelihood of Completing the CMP in 2013 Will Be Clearer once Detailed 
Schedules Are Finalized; Schedules, to Some Extent, Meet Most Best 
Practices: 

Renovation Approach: 

In December 2006, the United Nations (UN) General Assembly approved the 
renovation project’s scope and set its budget at $1.88 billion. As part 
of the Capital Master Plan (CMP), the UN will renovate the six 
buildings within its headquarters complex, including the underground 
extension that connects the buildings. In addition, the UN is 
constructing a temporary building on the North Lawn to house the 
Secretary-General and the functions normally housed in the Conference 
Building and the General Assembly during the renovation. To renovate 
the largest of its buildings, the Secretariat, the UN will move the 
approximately 2,600 staff who work in this building into leased swing 
space in three nearby buildings. Swing space refers to the space where 
UN staff and functions will be temporarily located during the 
renovation. The UN plans to dismantle the Temporary North Lawn Building 
as the last step of the CMP. 

The CMP schedule has two tracks for completion: (1) renovating the 
Secretariat building and (2) renovating the Conference and General 
Assembly and other buildings. These two tracks will proceed 
concurrently but independently of each other; both are scheduled to be 
completed in 2013. Timely completion of the Secretariat’s renovation is 
key to minimizing the amount the UN must pay to rent office space 
during the renovation. The lease for the swing space where most of the 
U.N. employees will be located during the renovation expires in January 
2014. 

UN Still Expects to Complete CMP in 2013, but Detailed Schedules Still 
to Be Completed for Much of the Work: 

Since our last report, in April 2008, the UN has begun constructing the 
Temporary North Lawn Building and made progress in preparing the office 
swing space. Although construction of the Temporary North Lawn Building 
started later than expected and the renovation of the Secretariat 
building is expected to start in late 2009—about 6 months later than 
originally scheduled—the UN still expects to complete the CMP in 2013. 

The delays mean that UN staff started moving into office swing space 
during the summer of 2009, instead of late 2008, as originally planned. 
UN officials said the delays occurred because it took longer than 
expected to procure construction services. In addition, the UN changed 
the design of the Temporary North Lawn Building when, for security and 
traffic purposes, it was decided that the Office of the Secretary-
General would be moved into this building during the renovation and to 
account for existing site conditions, such as the renovation of a 
sewage overflow pipe. The officials said they expected the renovation 
of the Secretariat to start in late 2009 and take less time than 
originally planned, thus making up for the delays. However, the 
construction contracts, which contain detailed schedules agreed upon by 
the UN and construction manager, have been awarded for two of the seven 
buildings shown in figure 1. The likelihood of completing the project 
in 2013 will be clearer once the schedules for the other five buildings 
have been finalized. Figure 1 shows the UN renovation schedule by 
building and year and compares it with the previous schedule. 

Figure 1: Schedule of UN Headquarters Renovation by Building and Year: 

[Refer to PDF for image: illustrated table] 

Building/project: Office swing space; 
Schedule: Construction/renovation: Mid-2008 to Late 2009 (changed from 
Early 2008 to Late 2009). 

Building/project: North lawn extension (underground); 
Schedule: Renovation period Mid-2008 to Late 2009. 

Building/project: Temporary North Lawn Building; 
Schedule: Construction: Mid-2008 to Late 2009 (changed from Mid-2008 to 
Mid-2009). 

Building/project: Secretariat; 
Schedule: Renovation period: Late 2009 to Mid-2012 (changed from Early 
2009 to Early 2012). 

Building/project: Conference building; 
Schedule: Renovation period: Late 2009 to Mid-2011 (changed from Mid-
2009 to Mid-2011). 

Building/project: Landscaping; 
Schedule: Site landscaping period: Mid-2011 to Late 2013 (changed from 
Mid-2011 to Mid-2013). 

Building/project: South Annex; 
Schedule: Renovation period: Late 2011 to Late-2012 (changed from Early 
2011 to Late-2012). 

Building/project: General Assembly; 
Schedule: Renovation period: Late 2011 to Mid-2013 (changed from Mid-
2011 to Mid-2013). 

Building/project: Library; 
Schedule: Renovation period: Late 2012 to Mid-2013 (changed from Early 
2012 to Mid-2013). 

Source: GAO and United Nations. 

[End of figure] 

Schedule Background: 

The CMP management consultant, Gardiner & Theobald, prepares and 
maintains the integrated master schedule. This schedule encompasses the 
entire project and shows the relationships between the various project 
components, such as the construction of the Temporary North Lawn 
Building and the renovation of the Secretariat. Gardiner & Theobald 
updates the master schedule using information from the more detailed 
subschedules for the project components. The construction manager, 
Skanska, prepares the project subschedules, which it develops as part 
of the contracting process for the project components. 

Guaranteed Maximum Price Contracts: 

To prepare the temporary space for staff and accomplish the renovation 
work, the UN is negotiating multiple construction contracts with 
Skanska. Each contract, referred to as a guaranteed maximum price 
contract (GMP), will encompass a specific body of work, generally 
associated with the renovation of different buildings, and includes a 
detailed schedule for the work. The CMP office expects to award a total 
of approximately 22 GMPs. A CMP official explained that once the UN and 
Skanska sign a GMP, Skanska subcontracts for the materials and services 
required to complete the work. Another CMP official stated that the GMP 
specifies a maximum price that the UN will pay for the work defined in 
the GMP. If the actual cost of this work is higher, Skanska absorbs the 
difference; if it is lower, the UN is charged the lower price. The UN 
is responsible for the cost of any work it requests that was not 
defined in the GMP. 

CMP Schedules Met, to Some Extent, Most Best Practices: 

In comparing the CMP integrated master schedule and a subschedule with 
the nine best practices for scheduling contained in our Cost Estimating 
and Assessment Guide, we determined that the two schedules met, to some 
extent, most of the best practices. (Enclosure II provides detailed 
information about our best practices and analysis of the extent to 
which the CMP integrated master schedule and the subschedule we 
reviewed met them.) A schedule establishes a time sequence for a 
project and helps identify both major milestones and the activities 
that drive the schedule. The schedule provides not only a road map for 
systematically executing a project but also the means by which to gauge 
progress, identify and address potential problems, and promote 
accountability. As changes occur on a project, the schedule is updated 
and used to analyze the impact of the changes. 

Both the integrated master schedule and the swing space schedule we 
selected for review appeared to capture the key activities that need to 
be completed. They also generally included information about the 
duration of the activities and identified the critical path, which 
represents the chain of dependent activities with the longest total 
duration. The critical path is particularly important to identify 
because any delay in activities on this path could delay the completion 
of the project. While the integrated master schedule identifies the key 
activities of the CMP, many of the time frames for the renovation work 
are not yet based on detailed construction information. As Skanska and 
the UN develop and approve additional GMPs, this detailed information 
will increase, providing more confidence that the project can achieve 
the scheduled time frames. The UN expects to award GMPs for the 
Secretariat and Conference buildings, two of the largest buildings 
being renovated, by the end of this year. 

Although the schedules we reviewed captured the key activities and 
their duration, neither the CMP integrated master schedule nor the 
subschedule we reviewed included resource requirements for key 
activities. Identifying the required resources in the schedule can help 
ensure that these resources will be available when needed. In addition, 
the UN has not performed a formal schedule risk analysis, which would 
quantify the potential impact of the identified risks and predict the 
level of confidence in meeting the project's completion date. A 
schedule risk assessment recognizes the risk that schedule durations 
for individual activities may vary because of, among other things, 
limited data, optimistic estimating, technical challenges, lack of 
qualified personnel, and external factors (such as weather and 
funding). The assessment helps management focus on important risk 
mitigation efforts. 

[End of section] 

Cost: 

Cost Estimate Is $97.5 Million over Budget, but $92.5 Million Less than 
Last Year; up to $206.6 Million in New Costs Could Be Added: 

Reported Cost Estimate Is Still over Budget, but Some GMPs Have Yielded 
Initial Cost Savings: 

In its 2008 annual report, the UN reported that the CMP was $97.5 
million over its $1.88 billion budget, down from the $190 million over 
budget that we reported in April 2008. CMP officials are optimistic 
about being able to further reduce costs, in part because of the recent 
downturn in the economy, which has resulted in lower prices for some of 
the labor and materials. The eight GMPs that have been signed as of 
June 2009 were about 3 percent ($13.6 million) under budget. Additional 
savings are possible, since the UN would receive the benefit if the 
actual costs of the subcontractors’ work are lower than expected in the 
GMP. However, minimizing changes and cost increases to the project will 
be critical to realizing these savings for the overall project. Table 1 
compares the 2007 and 2008 CMP cost estimates. 

Table 1: Comparison of 2007 and 2008 CMP Cost Estimates by Cost Category
(Dollars in millions): 

Cost category: Construction; 
2007 estimate: $964.6; 
Changes: $68.3; 2007 escalation: $72.3; Other ($4.1); 
2008 estimate: $1,032.9. 

Cost category: Professional fees and management; 
2007 estimate: $234.5; 
Changes: 45.8; Value engineering: $7.0; Redesign: $16.0; Design 
changes: $6.0; Project administration: $6.0; Construction manager’s 
fee: $5.0; Other $5.8. 
2008 estimate: $280.3 

Cost category: Contingency/escalation; 
2007 estimate: $477.8; 
Changes: ($242.60); 
2008 estimate: $235.2. 

Cost category: Temporary space; 
2007 estimate: $389.9; 
Changes: $35.8; Increase in size of the Temporary North Lawn Building 
and security upgrades; 
2008 estimate: $425.7. 

Cost category: Total; 
2007 estimate: $2,066.8; 
Changes: ($92.7); 
2008 estimate: $1,974.2. 

Source: United Nations. 

[End of table] 

The UN has changed its budget reporting by combining its cost estimates 
for contingency and escalation. Contingency is a reserve to account for 
unforeseen conditions and other changes that might arise during the 
renovation, and escalation is a reserve to account for the effect of 
inflation. While both categories are to account for uncertainties, 
combining them can reduce the transparency of how these funds—over 10 
percent of the estimated project costs—are being used. According to the 
CMP Executive Director, these accounts were combined because there is 
now less uncertainty about the timing of the project and because risks 
have been reduced by having awarded contracts totaling about $1 
billion, about half of the estimated cost of the renovation. 

Associated Costs Background: 

“Associated costs” refers to costs related to but not initially 
directly attributed to the CMP. Various UN program offices (Department 
for General Assembly and Conference Management, Department of 
Management, Department for Public Information, and Department of Safety 
and Security) developed the costs, which are for items such as 
furniture and equipment, information technology and communications 
services, archives storage, and temporary security staff. The largest 
portions of these costs are for furniture and equipment (about $99 
million) to be used in the renovated facilities, and security services 
at the swing space and the UN during construction (about $39 million). 
Many of these items, such as the furniture and equipment, needed to be 
replaced or refurbished, regardless of the CMP. The UN originally 
intended to have these costs borne by the program offices through the 
regular budget process. In our June 2001 and November 2006 reports we 
noted that these costs were not included in the UN’s estimate.[Footnote 
7] These costs were not included in the CMP budget approved by the 
General Assembly in December 2006. 

UN Has Not Conducted a Cost Risk Analysis: 

As mentioned in the schedule section, the UN has not conducted a formal 
schedule risk analysis, which would predict the level of confidence in 
meeting the project’s completion date. The UN also has not conducted a 
cost risk analysis to predict the level of confidence in meeting the 
project’s current budget. An integrated cost-schedule risk analysis, 
which recognizes the interrelationship between schedule and cost, would 
predict the likelihood of the project being completed on schedule and 
within budget. 

UN Has Not Resolved How to Fund up to an Additional $206.6 Million in 
Related CMP Costs: 

The UN is considering whether to add up to $206.6 million in costs—$186 
million in associated costs and $20.6 million for a secondary data 
center—to the CMP. In April 2009, the General Assembly decided that the 
associated costs would be financed from within the approved CMP budget 
unless the General Assembly specified otherwise. The General Assembly 
believes that further cost reductions in the CMP can be realized in the 
current economic environment, enabling the CMP budget to absorb the 
associated costs. The CMP Executive Director said the CMP is carrying 
the associated costs for now, but he has informed the General Assembly 
that he is unsure whether the CMP budget can absorb these costs. 

Questions have arisen about the appropriateness of including some of 
the associated costs in the CMP budget. The General Assembly’s Fifth 
Committee, which reviews administrative and budgetary issues, indicated 
in March 2009 that a number of the associated costs do not relate 
directly to the CMP, but rather are investment costs and long-term 
commitments. The UN’s Office of Internal Oversight Services (OIOS) has 
also raised concerns about the associated costs. In an August 2008 
report, OIOS said it is necessary to determine which associated costs 
should be attributed to the CMP and which should be funded from regular 
departmental budgets. OIOS also indicated that associated costs should 
be funded by departmental budgets because they will be managed by 
departments that are independent of the CMP. 

According to a CMP official, various UN program offices developed the 
estimated costs. In April 2009, the General Assembly requested that 
about $30 million in associated costs for the 2008-2009 biennium be 
absorbed by the approved $1.88 billion CMP budget. The CMP Executive 
Director said that some associated costs are currently being paid from 
the CMP budget. He also said that the 2009 CMP annual report will 
include a complete accounting of the commitment and expenditure of all 
associated costs. 

In addition to considering the associated costs, the UN is considering 
adding most of the cost of establishing a secondary data center to the 
CMP ($20.6 million of the $25.7 million total). According to UN 
officials, the secondary data center is needed while the primary data 
center is moved from the Secretariat to the Temporary North Lawn 
Building and will serve as a backup system after the CMP is completed. 
In April 2009, the General Assembly adopted a resolution requesting 
that an initial $5.1 million in funding for the secondary data center 
be absorbed by the approved CMP budget. 

[End of section] 

Funding: 

Member State Payments on Track; UN Expects the Payments Will Cover 
Costs through 2011: 

Funding Background: 

The General Assembly approved a strategy to assess member states for 
the cost of the CMP, which they could choose to pay in their assessment 
in a single lump sum or in equal payments over 5 years from 2007 
through 2011. The General Assembly also approved a $45 million working 
capital reserve to cover any temporary cash flow deficits. The 2006 CMP 
annual report stated that this reserve would be credited back to member 
states at the end of construction. Member states were assessed for the 
CMP in proportion to their regular UN budget assessment rate for 2007. 

The United States chose to pay its assessment for the CMP in 5 equal 
payments of $75.5 million per year starting in 2007. 

Member state payments are on track and CMP officials expect the 
payments to cover renovation expenditures through 2011, the last year 
contributions are scheduled to be paid. If the General Assembly decides 
that the CMP budget must absorb the related costs and CMP officials 
cannot reduce the currently projected cost overrun of $97.5 million, 
CMP officials project a funding shortfall of $101.5 million in 2012, 
growing to $304.1 million in 2013. (See cost section above for more 
information on these costs and cost overruns.) If the CMP office cannot 
reduce the costs in its budget and absorb the related costs, it will 
have to request additional funding. 

For 2002 through 2009, the UN assessed member states $1.2 billion for 
the CMP. As of June 30, 2009, the UN had received $1.1 billion, or 92 
percent, of these assessments. Member states had an $89.6 million 
outstanding balance through 2009, of which the U.S. share was $75.5 
million, owed for its 2009 assessment. The President’s fiscal year 2010 
budget request includes $75.5 million for the CMP, which would fully 
fund the 2009 assessment. 

[End of section] 

Risk Management: 

The CMP Office Continues to Identify Risks and Strategies to Mitigate 
Them: 

Annual Risk Assessment Identified Two High-Risk Items: 

The CMP office, working with its management consultant, continues to 
conduct yearly risk assessments of the project as a whole. The 
assessments culminate in an updated risk register, which identifies 
risks to the project’s schedule and costs, and strategies to mitigate 
the risks. This risk register does not specifically quantify the 
potential impact of the identified risks. As part of the risk 
assessment completed in January 2009, individual CMP staff were 
assigned responsibility for monitoring specific identified risks, 
updating information related to these risks throughout the year, and 
providing guidance to the appropriate parties. This assignment of 
individual responsibility provides more assurance that specific risks 
are being monitored and increases accountability for risk mitigation. 

We reviewed the risk register to identify those risks that were rated 
as high in 2009 and certain other risks that CMP officials had 
highlighted during our discussions. The 2009 risk assessment process 
identified two high-risk items, compared with eight high-risk items in 
2007. One of the high-risk items identified in 2007 remained high, 
while the severity of the other seven was reduced. Project risks and 
their rankings can continually change. As work progresses and decisions 
are made, a risk may be eliminated or modified and other risks may be 
identified. The assessment report noted that the newly identified risks 
were generally related to construction activities. The two high-risk 
items were: 

* Budget constraints. The CMP budget is set at $1.88 billion. The 
current project cost estimate is about $97.5 million over this budget, 
and the costs of any delays must be funded from the approved budget. 
The UN plans to mitigate this risk by reviewing market conditions for 
possible cost savings, conducting an additional round of value 
engineering, and taking other actions.[Footnote 8] 

* GMP approval time frames. According to the UN, the schedule assumed 
that it would take 20 days to reach agreement on GMPs, but the first 
GMPs took up to 5 months to approve and some subsequent ones have taken 
as little as 30 to 60 days. In March 2009, the goal for signing GMPs 
was revised to 30 days. Given the number of GMPs yet to be signed, 
about 14, the overall project schedule is at risk if the contract 
approval process continues to take more than 30 days. 

Another key risk, which the risk register identified as having a low 
probability of occurring but a significant impact if it does occur, 
relates to security upgrades in the CMP. CMP and UN security officials 
have spoken with city officials about security features to be 
incorporated in the renovation. In July 2008, the CMP office contracted 
with a structural engineering firm to assess the vulnerability of the 
buildings in the UN headquarters compound. The firm submitted a draft 
of its assessment to the UN in May 2009. 

CMP Rates Risks of Extending Swing Space Leases as Medium: 

Other risks, which the UN mostly rated as medium, involve the UN’s 
rental of swing space and the cost that would be incurred to extend the 
swing space leases if construction is not completed on schedule. The 
estimated cost of renting swing space during the CMP is $263 million, 
and this estimate is included in the CMP budget. CMP officials said 
that if the renovation were to fall behind schedule, they would expect 
paying to accelerate the construction through the use of overtime would 
be more cost-effective for the CMP than extending the leases. 

CMP Reduced Risk Rating of Fraud and Ability to Meet Building Codes: 

The CMP recategorized the risk of fraud and corruption, changing it 
from high in the 2007 risk assessment to low in the 2009 risk 
assessment. UN officials said the CMP lowered this risk rating because 
it planned to contract with a firm for integrity monitoring services as 
a means of detecting possible corruption involving subcontractors. 
[Footnote 9] This may reduce the risk of fraud not being detected but 
may not reduce the risk of the fraud occurring. The CMP office has not 
identified any major problems involving Skanska related to this 
project, actual subcontractor fraud or failure, or problems with the 
subcontractor bidding process. One CMP official expressed confidence in 
Skanska’s ability to select reputable subcontractors. 

In its 2007 risk assessment, the UN rated its ability to meet New York 
City’s building codes in the renovation as a medium risk, but reduced 
it to a low risk in 2008. UN officials said that although the UN 
compound is sovereign territory and therefore not subject to 
requirements for complying with local building codes, the UN will 
voluntarily comply with these codes in the renovation project. The CMP 
office has been submitting renovation project design plans to the city 
for its review, and city officials said that they have designated staff 
to work with the UN and expedite reviews of the plans. Both CMP and 
city officials said this process has been working well. UN officials 
said they also have voluntarily agreed to invite city inspectors into 
the facility during the renovation and after it is complete, but city 
officials said they would like the agreement to be formalized. 

[End of section] 

Procurement: 

Procurement Proceeding with UN Review of Subcontracting Process; CMP 
Office Expects U.S. Workers to Provide Most of the Labor: 

Procurement Background: 

A fair and efficient procurement process is vital to any large 
construction project. A lack of fairness can lead to corruption and 
potentially substandard work, and inefficiency can cause potentially 
costly delays. The UN Department of Management, through the UN 
Procurement Division, is ultimately responsible for developing UN 
procurement policies. The UN Headquarters Committee on Contracts (HCC) 
reviews the procurement process and advises the Department of 
Management as to whether the procurement process used is in accordance 
with the UN procurement manual and UN financial rules and regulations. 

Procurement of GMPs Proceeding: 

As of June 2009, the UN and the construction manager had signed 8 of 
the expected 22 GMPs. Most of the signed GMPs relate to the spaces that 
UN staff will occupy during the renovation, such as construction of the 
Temporary North Lawn Building and preparing the leased office space. 
The UN has also signed the GMP for the façades of the Secretariat and 
other buildings, which will be replaced with new, more energy-efficient 
materials. 

Initially the UN took up to 5 months to approve a GMP after it had been 
submitted by Skanska to the UN. The current goal is for the UN to 
approve and sign GMPs within 30 days of Skanska submitting them. Some 
more recent GMP approvals have taken between 30 and 60 days. A UN 
procurement official said the UN’s Procurement Division, which now has 
more staff, facilitated this reduction in GMP approval times. He said 
the Procurement Division also briefed the HCC in November 2008 on the 
GMP development process and provided the HCC with templates for CMP-
related procurement processes. These processes include reviewing 
Skanska’s GMP submissions to make sure they are within budget and 
explaining if they vary from the budget. According to CMP and Skanska 
officials, the GMPs are duration contracts—that is, contracts for 
completing work within a specified time frame. If the signing of the 
GMP is delayed, the start of work is delayed, potentially delaying the 
overall project. 

Skanska officials said they can quickly move forward by starting to bid 
for subcontractors as they negotiate each GMP with the UN. The 
officials clarified that while Skanska cannot award any contracts until 
after the UN signs the GMP, this approach allows Skanska to sign the 
subcontracts soon after the GMP is signed. As discussed below, the 
subcontractor selection process takes about 8 weeks. 

As the CMP progresses, timely approval of any changes to the GMPs will 
be important in maintaining the schedule and controlling costs. To 
expedite these approvals while maintaining accountability and adhering 
to the principles outlined in the procurement manual, the UN increased 
the value of individual contract amendments that Procurement Division 
officials may approve without prior review by the HCC to $2.5 million. 
[Footnote 10] The UN has now raised this threshold to $5 million for 
the duration of the CMP. In addition, the UN in January 2009 delegated 
to the CMP’s Executive Director the authority to approve change orders 
of up to $5 million in value and not to exceed 10 percent of the value 
of each approved GMP. As a result, according to a UN procurement 
official, a request for a change order can be processed in 3 to 4 days, 
rather than the 3 weeks it would typically take. 

UN Reviews Construction Manager’s Subcontracting Process Procurement 
Background: 

The UN provides oversight and review of Skanska’s process for selecting 
subcontractors (see figure 2). The UN reviews Skanska’s actions during 
multiple stages in the process. Officials with Skanska, the 
construction manager, stated that this process takes about 8 weeks and 
is stricter than the process Skanska typically uses. While Skanska is 
responsible for hiring and managing the subcontractors, the UN has a 
vested interest in ensuring that the hiring process is fair, 
competitive, and transparent. 

To protect itself against possible defaults by subcontractors, Skanska 
not only prequalifies subcontractors as part of the bidding process but 
also has insurance to help cover the cost of any default. The 
Procurement Division also reviews Skanska’s process for comparing 
subcontractor bids. A procurement official said that Skanska ruled out 
a few very low bids because it did not think those bidders could stay 
in business to complete the job at those prices. This official said 
that he and his colleagues check subcontractors’ financial statements 
and “keep their ears to the ground” to stay abreast of any developments 
concerning subcontractors. Regarding our April 2008 recommendation that 
the CMP establish a process requiring the construction manager to 
inform the CMP of any subcontractor issues that could increase the 
project’s cost or delay its schedule,[Footnote 11] the CMP construction 
director said there are weekly meetings, which include Skanska 
officials, to discuss subcontractors, change orders, and project 
performance. 

The UN has no independent system to capture bid protests, although we 
have recommended several times that it set up such a system because of 
procurement scandals unrelated to the CMP.[Footnote 12] A UN 
Procurement Division official and a Skanska official said bidders have 
opportunities to express concerns they might have over the contracting 
process. The Skanska official said bidders could always protest to the 
UN if they believed they were not treated fairly. In addition, he said 
that OIOS would identify improprieties through its audits if Skanska 
did not award contracts in accordance with UN procedures. Also, the UN 
procurement official said that a bidder could e-mail the Procurement 
Director if wrongdoing is suspected. However, this would not constitute 
an independent system because the Procurement Director is not 
independent of the procurement process. According to the official, with 
whom we met in March 2009, no major complaints had been received to 
date. the Skanska official said that most complaints come from bidders 
who do not respond within the specified time frame and want more time 
to prepare their bids. However, without an independent bid protest 
system, the extent of concern that may exist about the bidding process 
is unknown. 

Figure 2: Skanska’s Bidding Process for Subcontractors: 

[Refer to PDF for image: illustration] 

Skanska	action: 
UN action: 
Comment: 

Skanska	action: Skanska requests UN's consent for standard trade 
subcontract (key step); 

Skanska	action: 				
Skanska and UN define each subproject with a schedule of 
subcontractors. 

Skanska	action: 
Skanska establishes prequalification criteria for bidders. 

UN action: 
The UN reviews any criteria over and above standard Skanska guidelines; 
Comment: This is done to ensure that the bidders are financially sound. 

Skanska	action: 
Skanska requests UN approval to procure with solicitation method for 
each tender. 

UN action: 
The UN gives its consent and publicly advertises the bid locally, 
nationally, and internationally (key step); 
Comment: If the estimate of the trade contractor purchase order is less 
than $50,000. Skanska requests permission from the UN to proceed 
without competitive bidding, and proceeds if the UN does not object 
within 10 days. 

Skanska	action: 
Skanska provides list of recommended bidders to the UN. 

UN action: 
UN approves list of bidders (key step). 

Skanska	action: 
Skanska sends bid packages to bidders on the list (key step). 

Skanska	action: 
Skanska organizes pre-bid meeting and site visit, to which UN officials 
and architects and engineers are invited. 

Skanska	action: 
Skanska receives requests for proposals in writing and sends addenda to 
all bidders. 
		
Skanska	action: 
Skanska receives bids and organizes bid opening	with UN participants. 
architects, and engineers
Comment: The bids arrive sealed and are not opened unless UN 
procurement staff are present. 

Skanska	action: 	
Skanska starts evaluating bids. 

Skanska	action: 		
Skanska and the UN verify the scope of each bid; 
Comment: This is done to ensure that each bid includes all the work 
specified in the request for proposals and is for the same scope of 
work. 

Skanska	action: 
Skanska and the UN negotiate to reduce price with at least 3 low 
bidders whose proposals were within budget and compliant in scope. 

Skanska	action: 
Skanska recommends a bidder to the UN (key step). 

UN action: 
The UN has 5 business days to object. 

Skanska	action: 
Skanska contracts with the winning bidder to perform the work requested 
(key step). 

Source. GAO analysis of Skanska information. 

[End of figure] 

CMP Office Expects U.S. Workers to Provide Most of the On-site Labor 
for the Renovation: 

In a March 2009 briefing for U.S. government officials, the CMP 
Executive Director stated that almost all contracts so far have gone to 
U.S. firms. He said that the renovation project is marketed worldwide 
and the UN is trying to procure materials from all over the world, 
including developing countries and economies in transition. However, 
U.S. companies are better positioned to submit low-cost bids for 
contracts that include work performed on-site. Another factor, 
according to the UN’s project manager, is that the construction market 
in New York City is unionized and few, if any, nonlocal firms would 
have union members. According to the CMP Executive Director and a UN 
Procurement Department official, the CMP office is developing a system 
to track the origin of materials used in the renovation. These 
officials said that while the UN encourages firms from developing 
economies to participate in the bidding process, no work is reserved 
for firms from these countries, the United States, or any other 
country, and no preference is to be shown in awarding contracts. 

[End of section] 

Oversight: 

OIOS and State Department Continue to Monitor CMP: 

UN Oversight Bodies: 

The UN’s Office of Internal Oversight Services (OIOS) oversees UN 
activities that are under the authority of the Secretary General 
through monitoring, inspection, and evaluation. In a 2003 resolution, 
the General Assembly stressed the importance of oversight in 
implementing the CMP and requested that all relevant oversight bodies, 
including OIOS, initiate immediate oversight activities.[Footnote 13] 

The UN Board of Auditors (BOA) is appointed by the General Assembly to 
audit accounts of UN organizations and programs and to report findings 
and recommendations to the General Assembly through the Advisory 
Committee on Administrative and Budgetary Questions. According to a 
senior OIOS official, OIOS coordinates closely with BOA and there is no 
overlap between the two entities’ audits of the CMP. 

OIOS Continues to Monitor CMP and Says It Has Sufficient Staff to 
Accomplish This: 

OIOS continues to monitor the CMP and issued several reports in 2008 
and the first half of 2009, covering such topics as value engineering; 
provision of swing space, storage, and other facilities; and budgetary 
and financial control. OIOS concluded that the CMP is applying 
effective financial controls, which for example is evidenced by 
withholding payment of invoices when work has not been completed. OIOS 
officials said other reports were under way as of June 2009, including 
forthcoming reports on subcontractors and the roles of the CMP office 
and Skanska, and Skanska’s procurement process. In April 2008, we 
reported that OIOS was unable to quickly fill staff vacancies and, 
because of insufficient staff, provided minimal oversight of the CMP 
during 2007. In March 2009, a senior OIOS official told us that OIOS 
currently has two full-time staff auditing the CMP and that he does not 
anticipate needing additional staff to audit the CMP. If it becomes 
evident that more staff will be needed, they can be brought on board 
within a month through a temporary vacancy announcement. 

In December 2008, OIOS also completed an audit of security provisions 
applied to staff, site, and assets during the execution of the CMP. 
Given the security sensitivity of this report, it has not been made 
public. According to an OIOS official, the CMP office has been 
responsive to the recommendations made in the report. He said that OIOS 
is planning annual audits of security provisions applied to staff, 
site, and assets during the execution of the CMP, and that the next 
such audit will begin in the fall of 2009. He also said that he met 
with CMP staff to discuss a study by a structural engineering firm that 
assessed the vulnerability of the buildings in the UN headquarters 
compound. He said he does not expect any changes to the renovation 
design as a result of this study. 

State Department Monitoring Efforts: 

As the UN’s host country and largest contributor, the United States has 
a substantial interest in the success of the CMP. The State Department’
s Bureau of International Organization Affairs, which develops and 
implements U.S. policy on the UN, the UN’s specialized agencies, and 
other international organizations, continues to monitor the CMP through 
quarterly visits to the UN and meetings with CMP officials. Officials 
from State’s Office of Overseas Building Operations have also 
participated in these visits and meetings. In addition, State’s Bureau 
of Diplomatic Security has discussed security issues with a private 
security consultant hired by the CMP Office, and this discussion 
confirmed that the UN’s plan approximates what would be incorporated 
into a comparable U.S. federal facility. 

[End of section] 

Conclusion and Recommendation: 

Conclusion: 

As the CMP moves further into the construction phase, the schedule will 
serve as a key tool for managing the progress of the project. Since 
costs generally increase the longer a project takes, maintaining the 
schedule is important to controlling costs. Having schedules that align 
with best practices can help ensure that they are as useful and 
informative as possible. The CMP is multifaceted, with many 
construction contracts yet to be signed, multiple buildings expected to 
be under renovation concurrently, and numerous stakeholders. Making 
more information available earlier to CMP officials about potential 
risks to the project could make it easier to mitigate these risks. If, 
for example, the CMP office were to conduct a formal schedule risk 
assessment, the potential impact of schedule delays—due to contract 
approval issues and possible scope changes, such as the addition of the 
backup data center—would be clearer. Such an assessment would build on 
the CMP office’s current annual risk assessment and quantify the 
potential impact of the identified risks. In addition, a cost risk 
analysis would predict the level of confidence in meeting the project’s 
current budget and alert CMP officials to the need for potential action 
to ensure that the project is completed within the limits of the funds 
available. 

Recommendation for Executive Action: 

We recommend that the Secretary of State and the U.S. Permanent 
Representative to the United Nations work with other member states to 
direct the CMP office to implement the best practices for scheduling 
contained in our Cost Estimating and Assessment Guide, to the extent 
practical for the CMP. 

[End of section] 

Scope and Methodology: 

To describe changes in the CMP schedule since our last report, we 
reviewed the schedules contained in the 2007 and 2008 CMP annual 
reports and in a March 2009 CMP briefing. We also interviewed CMP 
officials about schedule changes, the reasons for the changes, and the 
changes’ effect on project completion. With the assistance of a project 
management consultant, we reviewed the CMP integrated master schedule 
and a swing space subschedule provided by the CMP office. We reviewed 
these schedules to determine the extent to which they reflect best 
practices for scheduling contained in our Cost Estimating and 
Assessment Guide. As part of the assessment, CMP officials provided a 
walk-through of the scheduling process to explain how the schedules 
were constructed and maintained. 

We described CMP cost changes by reviewing cost information contained 
in the 2007 and 2008 CMP annual reports and in relevant UN resolutions 
and reports, including information on costs that the UN is considering 
adding to the CMP budget, and by interviewing CMP officials. 

To report on the status of the project’s funding, including the 
collection and use of member states’ CMP assessment payments, we 
reviewed projected assessments and UN data on payments received and 
outstanding from member states. 

To describe the CMP’s risk management efforts, we reviewed CMP risk 
assessment reports from 2007 and 2009 to identify changes in the risk 
ratings and interviewed CMP officials about their risk management 
efforts. In addition, we interviewed New York City officials to obtain 
their perspective on CMP risks involving the city. 

We described the CMP procurement status by reviewing the GMPs that had 
been awarded, and by interviewing UN procurement and CMP officials. 

To describe the UN’s oversight efforts regarding the CMP, we reviewed 
OIOS reports on the CMP and interviewed OIOS officials. We also 
interviewed officials from State’s Bureau of International 
Organizations and other State bureaus to describe State’s monitoring of 
the project. 

Furthermore, we toured the UN headquarters buildings to observe their 
condition and one of the swing space office buildings to view the 
progress that was being made to prepare the space for use by UN 
employees. 

We conducted this work from February 2009 through July 2009 in 
accordance with generally accepted government auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

GAO Contacts: 

Thomas Melito, (202) 512-9601, or melitot@gao.gov. 

Terrell Dorn, (202) 512-6923, or dornt@gao.gov. 

Staff Acknowledgments: 

In addition to the contacts named above, individuals making key 
contributions to this report include Maria Edelstein, Assistant 
Director; Debbie J. Chung; Bess Eisenstadt; Kay Halpern; Bob Homan; 
Josh Ormond; and Karen Richey. Mark Dowling and Brandon Haller provided 
technical assistance. 

[End of Enclosure I] 

Enclosure II: 

Table 2: Extent to Which the CMP Integrated Master Schedule Met Best 
Practices: 

Best practice: Capturing key activities; 
Explanation: The schedule should reflect all key activities as defined 
in the project’s work breakdown structure, which defines in detail the 
work necessary to accomplish a project’s objectives, including 
activities to be performed by both the owner and contractors; 
Met? Yes; 
GAO analysis: The CMP integrated master schedule reflected both owner 
and contractor activities, such as construction at UN buildings like 
the General Assembly and the Secretariat, UN activities for testing 
temporary swing space and moving staff to and from it, and key 
milestones for measuring progress in vacating and moving back into 
various floors. The schedule was sufficiently detailed (identifying 307 
work activities) to suggest that all key activities were properly 
identified and included key milestones. According to project officials, 
the schedule was checked against structural and design drawings and was 
reviewed by representatives of all of the building trades (e.g., 
mechanical, electrical, plumbing, and carpentry) to ensure its 
completeness. 

Best practice: Sequencing key activities; 
Explanation: The schedule should be planned so that critical project 
dates can be met. To meet this objective, key activities need to be 
logically sequenced—that is, listed in the order in which they are to 
be carried out. In particular, activities that must be completed before 
other activities can begin (predecessor activities), as well as 
activities that cannot begin until other activities are completed 
(successor activities), should be identified. This helps ensure that 
interdependencies among activities that collectively lead to the 
accomplishment of events or milestones can be established and used as a 
basis for guiding work and measuring progress; 
Met? Partially; 
GAO analysis: Of the 221 activities and milestones not yet completed, 
79 (36 percent) had missing logic—that is, lacked a successor or a 
predecessor activity. This missing logic caused us to question the 
validity of the critical path, which represents the chain of dependent 
activities with the longest total duration, and the reasonableness of 
the project completion date. The majority of these 79 tasks lacked 
successors, making it unclear how any delay in these tasks would affect 
the progress of other tasks that depend on them. This logic error must 
be remedied for the schedule to be properly sequenced. Project 
officials said that many of the activities were missing successors 
because detailed schedules for future construction efforts had not yet 
been developed. 

Best practice: Assigning resources to key activities; 
Explanation: The schedule should reflect what resources (e.g., labor, 
materials, and overhead) are needed to do the work, whether all 
required resources will be available when needed, and whether any 
funding or time constraints exist; 
Met? No; 
GAO analysis: The schedule did not allocate resources, such as labor 
hours and materials, to key activities. Project officials said that 
resources were not a problem, since they could hire more workers on a 
short-term basis and were confident that they could get whatever 
equipment and materials they needed. 

Best practice: Establishing the duration of key activities: 
Explanation: The schedule should realistically reflect how long each 
activity will take to execute. In determining the duration of each 
activity, the same rationale, historical data, and assumptions used for 
cost estimating should be used. Durations should be as short as 
possible and have specific start and end dates. The schedule should be 
continually monitored to determine when forecasted completion dates 
differ from planned dates; this information can be used to determine 
whether schedule variances will affect subsequent work;
Met? Partially; 
GAO analysis: The schedule benchmarked the durations against other 
completed projects using the number of square feet and the 
site/complexity of each floor to scale the effort. However, the 
schedule contained many activities with unusually long durations. For 
example, several construction activities had durations ranging from 500 
to 785 days long. According to project officials, these activities 
represent high-level planning packages that will be fleshed out once 
more detailed schedules are available. 

Best practice: Integrating key activities horizontally and vertically; 
Explanation: The schedule should be horizontally integrated, meaning 
that it should link products and outcomes associated with other 
sequenced activities. These links are commonly referred to as “
handoffs” and serve to verify that activities are arranged in the right 
order to achieve aggregated products or outcomes. The schedule should 
also be vertically integrated, meaning that the dates for starting and 
completing activities in the integrated master schedule should be 
aligned with the dates for supporting tasks and subtasks. Such mapping 
or alignment among levels enables different groups to work to the same 
master schedule; 
Met? Partially; 
GAO analysis: Until the schedule is properly sequenced by identifying 
the appropriate predecessors and successors, it cannot be horizontally 
integrated. However, we verified that the schedule was vertically 
integrated. To do this we tested two critical path milestones (each of 
which includes several activities) in a subschedule to see if their 
start and finish dates could be traced to the integrated master 
schedule. The dates for one milestone matched exactly, while those for 
the other milestone were off by a couple of days. 

Best practice: Establishing the critical path for key activities; 
Explanation: Scheduling software should be used to identify the 
critical path, which represents the chain of dependent activities with 
the longest total duration. Establishing a project’s critical path is 
necessary to examine the effects of any activity slipping along this 
path. Potential problems along or near the critical path should also be 
identified and reflected in scheduling the duration of high-risk 
activities; 
Met? Mostly; 
GAO analysis: The project’s critical path was defined using scheduling 
software and included activities involved in construction, moving UN 
personnel, and demolishing the Temporary North Lawn Building. However, 
specifying a date for the UN staff to return to the remodeled building 
yielded a second critical path that included more activities related to 
design drawings, furniture installation, testing, and other 
construction. While both critical paths appeared reasonable, until the 
missing logic is fixed, we could not tell whether the new logic would 
affect the critical path. 

Best practice: Identifying the float between key activities; 
Explanation: The schedule should identify the float—the amount of time 
by which a predecessor activity can slip before the delay affects 
successor activities—so that a schedule’s flexibility can be 
determined. As a general rule, activities along the critical path have 
the least float. Total float is the total amount of time by which an 
activity can be delayed without delaying the project’s completion (if 
everything else goes according to plan); 
Met? Partially; 
GAO analysis: We found that the total float for remaining activities 
ranged from 7 to 1,310 days. This unusually long float was not 
accurate, since it was being driven by the many activities identified 
above that were missing predecessors and successors. As a result, the 
schedule’s true flexibility could not be determined until the missing 
logic was fixed. 

Best practice: Conducting a schedule risk analysis; 
Explanation: A schedule risk analysis should be performed using 
statistical techniques to predict the level of confidence in meeting a 
project’s completion date. This analysis focuses not only on critical 
path activities but also on activities near the critical path, since 
they can affect the project’s status; 
Met? No; 
GAO analysis: The CMP did not perform a schedule risk analysis to 
determine the level of confidence in meeting the project’s completion 
date. Project officials did conduct a qualitative risk analysis that 
included definitions of risk probability and considered but did not 
quantify the impact of risks on time and cost. Using these data, the 
project developed a risk probability and impact matrix with different 
combinations of low, moderate, high, and very high risks to objectives. 
However, the CMP did not identify a schedule reserve, which is an 
activity at the end of the schedule that has no specific scope 
assigned, since it is not known which risks may materialize. Without a 
schedule reserve, any delays in any activities on the critical path 
will lead to further delays in the scheduled completion date. 

Best practice: Updating the schedule using logic and durations to 
determine dates; 
Explanation: The schedule should be continuously updated using logic 
and durations to determine dates, and the schedule should be analyzed 
continuously for variances and changes to the critical path and 
completion date; 
Met? Mostly; 
GAO analysis: The CMP provided evidence that it monitored the actual 
start and completion dates of work activities, and we found no evidence 
of broken logic. Moreover, because the schedule was up to date and 
reflected the project’s current status, we had confidence that project 
officials were using the schedule to actively manage the project. Thus, 
the schedule was an effective tool for determining the actual duration 
of work completed, analyzing variances to determine the root causes of 
schedule slips, and using the results of such analyses when planning 
future work. However, because of the missing logic for over one-third 
of the activities, we cannot have confidence in the projected end date. 

[End of table] 

Table 3: Extent to Which the CMP Swing Space Subschedule Met Best 
Practices: 

Best practice: Capturing key activities; 
Explanation: The schedule should reflect all key activities as defined 
in the project’s work breakdown structure, which defines in detail the 
work necessary to accomplish a project’s objectives, including 
activities to be performed by both the owner and contractors; 
Met? Yes; 
GAO analysis: The swing space schedule was based on the guaranteed 
maximum price (GMP) agreement and the preliminary drawings 
specifications. To ensure that the schedule contained all activities, 
the CMP relied on structural, architectural, and design engineering 
teams who reviewed the schedule for completeness. Moreover, we traced 
15 bid packages from the GMP cost estimate to the schedule to verify 
that it included all of the effort. 

Best practice: Sequencing key activities; 
Explanation: The schedule should be planned so that it can meet 
critical project dates. To meet this objective, key activities need to 
be logically sequenced—that is, listed in the order in which they are 
to be carried out. In particular, activities that must be completed 
before other activities can begin (predecessor activities), as well as 
activities that cannot begin until other activities are completed 
(successor activities), should be identified. This helps ensure that 
interdependencies among activities that collectively lead to the 
accomplishment of events or milestones can be established and used as a 
basis for guiding work and measuring progress; 
Met? Partially; 
GAO analysis: Of the 352 activities not yet completed, 71 (20 percent) 
had missing logic, causing us to question the validity of the critical 
path, which represents the chain of dependent activities with the 
longest total duration, and the reasonableness of the project 
completion date. More than half the tasks with missing logic did not 
have successors, which was a concern since the schedule would not 
identify the impact of any delay on other tasks that depend on them. 
This logic error must be remedied for the schedule to be properly 
sequenced. Skanska agreed to tie these activities to the appropriate 
floor completion milestone successors so that the schedule would model 
the current plan. 

Best practice: Assigning resources to key activities; 
Explanation: The schedule should reflect what resources (e.g., labor, 
materials, and overhead) are needed to do the work, whether all 
required resources will be available when needed, and whether any 
funding or time constraints exist; 
Met? No; 
GAO analysis: The schedule did not include any resources for labor, 
materials, or equipment because Skanska stated that plenty of resources 
were available. Although the schedule does not include resources, CMP 
officials said that they actively managed furniture purchases and 
installations using Excel spreadsheets that included more details about 
each floor move than the schedule. 

Best practice: Establishing the duration of key activities; 
Explanation: The schedule should realistically reflect how long each 
activity will take to execute. In determining the duration of each 
activity, the same rationale, historical data, and assumptions used for 
cost estimating should be used. Durations should be as short as 
possible and have specific start and end dates. The schedule should be 
continually monitored to determine when forecasted completion dates 
differ from the planned dates; this information can be used to 
determine whether schedule variances will affect downstream work; 
Met? Yes; 
GAO analysis: The maximum duration for remaining normal tasks was 50 
days – an adequate level of detail for the project to objectively 
measure progress. Skanska estimated activity durations by applying 
metrics such as square footage and productivity rates by trade. Skanska 
also relied on its experience when determining the activity durations 
for various New York City inspections. 

Best practice: Integrating key activities horizontally and vertically; 
Explanation: The schedule should be horizontally integrated, meaning 
that it should link products and outcomes associated with other 
sequenced activities. These links are commonly referred to as “
handoffs” and serve to verify that activities are arranged in the right 
order to achieve aggregated products or outcomes. The schedule should 
also be vertically integrated, meaning that the dates for starting and 
completing activities in the integrated master schedule should be 
aligned with the dates for supporting tasks and subtasks. Such mapping 
or alignment among levels enables different groups to work to the same 
master schedule; 
Met? Mostly; 
GAO analysis: Until activities are linked to the correct successors, 
the schedule will not be horizontally integrated. In addition, we 
tested the vertical integration of this schedule and of the CMP 
integrated master schedule and found that milestones for the most part 
had matching dates. There was a small discrepancy in the dates produced 
by the two schedules for one milestone, but the difference was within a 
few days, including a weekend, of the correct date. 

Best practice: Establishing the critical path for key activities; 
Explanation: Scheduling software should be used to identify the 
critical path, which represents the chain of dependent activities with 
the longest total duration. The establishment of a project’s critical 
path is necessary for examining the effects of any activity slipping 
along this path. Potential problems along or near the critical path 
should also be identified and reflected in scheduling time for high-
risk activities; 
Met? Mostly; 
GAO analysis: There were 23 activities on the critical path, including 
commissioning heating and air-conditioning units, testing the security 
system, and conducting final fire department inspections, all of which 
drive the final move-in date for the staff. Because some activities 
still needed to be connected to other tasks, we could not determine 
whether additional activities would show up on the critical path. As a 
result, the critical path does not fully meet this best practice. 

Best practice: Identifying the float between key activities; 
Explanation: The schedule should identify the float—the amount of time 
by which a predecessor activity can slip before the delay affects 
successor activities—so that a schedule’s flexibility can be 
determined. As a general rule, activities along the critical path have 
the least float. Total float is the total amount of time by which an 
activity can be delayed without delaying the project’s completion (if 
everything else goes according to plan); 
Met? Mostly; 
GAO analysis: The maximum total float for activities was 94 days; 
however, this float was expected to decrease once the activities with 
missing logic were linked to their successors. In addition, we 
questioned why the total float was so high for a project that was 
scheduled to be completed in a few months. 

Best practice: Conducting a schedule risk analysis; 
Explanation: A schedule risk analysis should be performed using 
statistical techniques to predict the level of confidence in meeting a 
project’s completion date. This analysis focuses not only on critical 
path activities but also on activities near the critical path, since 
they can affect the project’s status; 
Met? No; 
GAO analysis: Skanska did not perform a schedule risk analysis because 
the contract’s scope of work did not require one. The project team is 
relying on its ability to identify and respond to risks by adding 
resources to mitigate any delays. Without performing this analysis, 
Skanska cannot provide the UN with a level of confidence in when this 
work will be completed. 

Best practice: Updating the schedule using logic and durations to 
determine dates; 
Explanation: The schedule should be continuously updated using logic 
and durations to determine dates, and the schedule should be analyzed 
continuously for variances and changes to the critical path and 
completion date; 
Met? Yes; 
GAO analysis: Skanska updated the schedule weekly using data collected 
from the construction managers on activity status. On a monthly basis, 
Skanska submitted its schedule to the CMP, which analyzed it to 
identify potential activities that could be performed concurrently to 
accelerate the work. The CMP office then met with the UN to identify 
any changes that needed to be incorporated into the schedule. While 
some minor adjustments to the schedule’s logic still needed to be made, 
Skanska demonstrated during our schedule walk-through that it 
understood scheduling best practices and said it would incorporate the 
adjustments we identified. As a result, we were confident that the 
schedule could be used to determine the project’s current status. 

[End of table] 

[End of Enclosure II] 

Enclosure III: Comments from the Department of State: 

United States Department of State: 
Assistant Secretary for Resource Management and Chief Financial 
Officer: 
Washington, D.C. 20520: 

July 22, 2009: 

Ms. Jacquelyn Williams-Bridgers: 	
Managing Director: 
International Affairs and Trade: 	
Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548-0001: 

Dear Ms. Williams-Bridgers: 

We appreciate the opportunity to review your draft report, "United 
Nations: Renovation Still Scheduled for Completion in 2013, But Risks 
to Its Schedule and Cost Remain," GAO Job Code 545087. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact Lisa 
Spratt, Program Analyst, Bureau of International Organization Affairs 
at (202) 647-6395. 

Sincerely, 

Signed by: 

James L. Millette: 

cc: 
GAO - Kay Halpern: 
IO - Esther Brimmer: 
State/OIG - Mark Duda: 

[End of letter] 

Department of State Comments on GAO Draft Report: 
United Nations: Renovation Still Scheduled for Completion in 2013, But 
Risks to Its Schedule and Cost Remain (GAO-09-870R, Job Code 545087): 

Thank you for the opportunity to comment on your draft report entitled 
United Nations: Renovation Still Scheduled for Completion in 2013, But 
Risks to Its Schedule and Cost Remain. The Department of State welcomes 
the GAO report and concurs with its recommendation that the Capital 
Master Plan (CMP) Office should implement the best practices for 
scheduling contained in GAO's Cost Estimating and Assessment Guide, to 
the extent practical for the CMP. 

The Department agrees that the CMP Office should strive to implement 
scheduling practices that will help them improve their management of 
the project by providing better information on the impact and risk of 
delays. We note that by not fully implementing some of these best 
practices, the CMP Office may not be taking all the steps it could to 
proactively manage the project, as many of these practices are intended 
to alert managers sooner to impediments to timely execution of key 
activities. We believe that making improvements consistent with those 
recommended by the GAO will provide greater confidence that the project 
will be able to be completed within the established schedule. 

The Department remains concerned with the current projected cost 
overruns and will closely review the refined cost estimate when it 
becomes available. We acknowledge that agreement on how the associated 
costs are to be handled is a key decision in relation to the project 
budget. However, we also believe that there is potential for additional 
cost savings to be identified given the current bidding environment and 
we expect the UN to do everything possible to stay within the budget 
approved by member states. 

[End of Enclosure III] 

Enclosure IV: Comments from the United Nations: 

United Nations: 
Headquarters: New York, NY 10017
TEL: 1(212)-063-1234: 
FAX: 1 (212)-963-4879: 

24 July 2009: 

Reference: 

Mr. Terrell Dorn, Director, Physical Infrastructure Issues: 
Thomas Melito, Director, International Affairs and Trade: 
Government Accountability Office: 
Washington DC: 

Dear Messrs Dorn and Melito: 

Thank you for your letter dated 10 July 2009 in which you requested my 
comments on behalf of the United Nations regarding your draft report on 
the Capital Master Plan. 

In summary, I find the draft GAO report to be a valuable and accurate 
assessment of the current state of planning for the United Nations 
renovation project, and in general concur with your findings and 
recommendations. 

Upon receipt of your draft report, staff members from the concerned 
offices within the Department of Management were in contact with 
members of your-team and provided several suggestions regarding the 
report. I understand your team will be taking these suggestions into 
account as you finalize your report. 

I wish to extend my appreciation to your team for their continued 
courtesy and professionalism. 

Sincerely, 

Signed by: Illegible, for: 

Angela Kane: 
Under-Secretary-General for Management: 

[End of Enclosure IV] 

Footnotes: 

[1] United Nations General Assembly, Resolution Adopted by the General 
Assembly, A/RES/61/251 (New York, N.Y.: Dec. 22, 2006). 

[2] GAO, United Nations: Planning for Headquarters Renovation Is 
Reasonable; United States Needs to Decide whether to Support Work, 
[hyperlink, http://www.gao.gov/products/GAO-01-788] (Washington, D.C.: 
June 15, 2001), and United Nations: Early Renovation Planning 
Reasonable, but Additional Management Controls and Oversight Will Be 
Needed, [hyperlink, http://www.gao.gov/products/GAO-03-566] 
(Washington, D.C.: May 30, 2003). 

[3] GAO, United Nations: Weaknesses in Internal Oversight and 
Procurement Could Affect the Effective Implementation of the Planned 
Renovation, [hyperlink, http://www.gao.gov/products/GAO-06-877T] 
(Washington, D.C.: June 20, 2006), and United Nations: Renovation 
Planning Follows Industry Practices, but Procurement and Oversight 
Could Present Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-07-31] (Washington, D.C.: Nov. 16, 
2006). 

[4] GAO, Update on the United Nations' Capital Master Plan, [hyperlink, 
http://www.gao.gov/products/GAO-07-414R] (Washington, D.C.: Feb. 15, 
2007). 

[5] GAO, United Nations: Renovation Schedule Accelerated after Delays, 
but Risks Remain in Key Areas, [hyperlink, 
http://www.gao.gov/products/GAO-08-513R] (Washington, D.C.: April 9, 
2008). 

[6] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for 
Developing and Managing Capital Program Costs, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009). 

[7] GAO, United Nations: Planning for Headquarters Renovation Is 
Reasonable; United States Needs to Decide Whether to Support Work, 
[hyperlink, http://www.gao.gov/products/GAO-01-788] (Washington, D.C.: 
June 15, 2001), and United Nations: Renovation Planning Follows 
Industry Practices, but Procurement and Oversight Could Present 
Challenges, [hyperlink, http://www.gao.gov/products/GAO-07-31] 
(Washington, D.C.: Nov. 16, 2006). 

[8] Value engineering is the process of reviewing a project’s 
objectives and design, and finding ways of achieving the same 
objectives at a lower cost. 

[9] The UN in July 2008 issued a request for proposal for an “integrity 
monitor” to detect possible corruption involving subcontractors and 
help prevent fraud, waste, and abuse in the bidding process and other 
construction-related activities. The UN awarded this contract in April 
2009. 

[10] See GAO, United Nations: Renovation Schedule Accelerated after 
Delays, but Risks Remain in Key Areas, [hyperlink, 
http://www.gao.gov/products/GAO-08-513R] (Washington, D.C.: Apr. 9, 
2008), 16. 

[11] See [hyperlink, http://www.gao.gov/products/GAO-08-513R], 20. 

[12] See GAO, United Nations: Procurement Internal Controls Are Weak, 
[hyperlink, http://www.gao.gov/products/GAO-06-577] (Washington, D.C.: 
Apr. 25, 2006), 22-23 and 35. See also GAO, United Nations: Weaknesses 
in Internal Oversight and Procurement Could Affect the Effective 
Implementation of the Planned Renovation, [hyperlink, 
http://www.gao.gov/products/GAO-06-877T] (Washington, D.C.: June 20, 
2006), 13 and 16, and United Nations: Internal Oversight and 
Procurement Controls and Processes Need Strengthening, [hyperlink, 
http://www.gao.gov/products/GAO-06-701T] (Washington, D.C.: Apr. 27, 
2006), 15 and 18. 

[13] United Nations Resolution Adopted by the General Assembly, 
A/RES/57/292 (New York, N.Y.: Feb. 13, 2003). 

[End of section] 

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