VA Construction: VA Is Working to Improve Initial Project Cost Estimates, but Should Analyze Cost and Schedule Risks
GAO-10-189
Published: Dec 14, 2009. Publicly Released: Dec 14, 2009.
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Highlights
The Department of Veterans Affairs (VA) operates one of the largest health care systems in the country. As of August 2009, VA's Veterans Health Administration (VHA) had 32 major ongoing construction projects with an estimated total cost of about $6.1 billion and average cost per project of about $191 million. Some of these projects were initiated as part of VA's Capital Asset Realignment for Enhanced Services (CARES) process, which was a comprehensive assessment of VHA's capital asset requirements. In response to a congressional request, GAO (1) described how costs and schedules of current VHA major construction projects have changed, (2) determined the reasons for changes in costs and schedules, and (3) described the actions VA has taken to address cost increases and schedule delays. To do its work, GAO reviewed construction documents, visited three construction sites, and interviewed VA officials.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Veterans Affairs | To provide a realistic estimate of when a construction project may be completed as well as the risks to the project that could be mitigated, we recommend that the Secretary of Veterans Affairs direct CFM to require the use of an integrated master schedule for all major construction projects. This schedule should integrate all phases of project design and construction. | In 2010, GAO reported that Department of Veterans Affairs (VA) generally follows best practices for construction schedules at the three major medical facility construction sites it visited. However, GAO found that VA lacked an integrated master schedule for these projects--which would integrate both VA and contractor effort for all phases of a project, including all design and construction work--hampered VA's ability to provide accurate information on the schedule for a project. As a result, GAO recommended that the Secretary of Veterans direct the VA Office of Construction and Facilities Management (CFM) to require the use of an integrated master schedule for all major construction... projects which would integrate all phases of project design and construction. In March 2012, CFM issued a memorandum requiring the development of a complete integrated master schedule for all projects that obtained initial funding in fiscal years 2011 or 2012. The schedule was to include planning activities for procurement, design, construction, medical equipment procurement and activation. The use of an integrated master schedule could assist VA in monitoring the progress of a major construction project before construction begins and allow VA to increase the accuracy of its schedule estimates
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| Department of Veterans Affairs | To provide a realistic estimate of when a construction project may be completed as well as the risks to the project that could be mitigated, the Secretary of VA should direct CFM to conduct a schedule risk analysis, when appropriate, based on the project's cost, schedule, complexity, or other factors. Such a risk analysis should include a determination of the largest risks to the project, a plan for mitigating those risks, and an estimate of when the project will be finished if the risks are not mitigated. | In 2010, GAO reported that Department of Veterans Affairs (VA) generally follows best practices for construction schedules at the three major medical facility construction sites it visited. However, GAO found that VA did not perform schedule risk analysis and therefore cannot predict a project's completion date with confidence. A schedule risk analysis uses statistical techniques to determine the likelihood of a major construction project being completed on time and to predict risks to that can lead to schedule delays. GAO recommended that the Secretary of Veterans direct the VA Office of Construction and Facilities Management to conduct a schedule risk analysis of construction projects,...
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| Department of Veterans Affairs | To improve estimates of the cost of a major construction project as well as the risks that may influence the cost and how these risks can be mitigated, the Secretary of VA should direct the Office of Construction and Facilities Management (CFM) to conduct a cost risk analysis of major construction projects. | In 2010, GAO reported that Department of Veterans Affairs (VA) has taken steps to improve initial construction project cost estimates. GAO visited three major construction sites and found that the cost estimates were generally comprehensive and well documented. However, GAO found that the estimates for two of the projects did not include a cost risk analysis to examine the effect of changing assumptions on the cost estimate. Conducting a cost risk analysis is particularly important because only by quantifying cost risk can management make informed decisions about risk mitigation strategies. Quantifying cost risk also provides a benchmark for measuring future progress. GAO identified best...
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Best practicesBudgetingConstruction contractsConstruction costsCost analysisCost overrunsFacility constructionFederal fundsHealth care facilitiesHealth centersRisk assessmentSchedule slippagesStrategic planningVeterans' medical careCost estimates