oversight

United Nations Renovations: Best Practices Could Enhance Future Cost Estimates

Published by the Government Accountability Office on 2012-07-25.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States Government Accountability Office

GAO          Report to Congressional Requesters




July 2012
             UNITED NATIONS
             RENOVATIONS
             Best Practices Could
             Enhance Future Cost
             Estimates




GAO-12-795
                                               July 2012

                                               UNITED NATIONS RENOVATIONS
                                               Best Practices Could Enhance Future Cost
                                               Estimates
Highlights of GAO-12-795, a report to
congressional requesters




Why GAO Did This Study                         What GAO Found
In December 2006, the UN approved a            The Capital Master Plan (CMP) has made progress, but may not deliver the
$1.88 billion CMP to modernize its             project’s original scope, faces risks meeting its scheduled completion date, and is
headquarters in New York City by               projected to be about $430 million over budget as of February 2012. Regarding
2014, with a scope to include the              the project’s scope, the CMP office may not renovate the Library and South
renovation of five buildings. Separately       Annex—two of the five buildings in its original scope—due to the lack of a
from the CMP, the UN is also                   workable design solution to address security concerns. Related to schedule, the
considering the option of a new office         CMP office expects to complete the CMP in 2014, but reports that previous
building, known as the consolidation           schedule delays have reduced its ability to respond to unforeseen events without
building, to be located across the street
                                               affecting the project’s end date. According to the CMP office, the project’s
from UN headquarters. As the UN’s
                                               approximately $430 million in projected cost overruns are due to a number of
largest contributor, the United States
has a significant interest in these
                                               factors, including about $266 million in direct project costs and over $164 million
projects. GAO was asked to report on           from scope additions authorized without a corresponding increase in budget by
(1) the extent to which the CMP is             the United Nations (UN) General Assembly. The CMP office has proposed
meeting its planned renovation scope,          financing options that could address a portion of these cost overruns. However,
schedule, and budget; (2) the UN               even if approved, an additional member assessment may be needed. One option
General Assembly’s evaluation of CMP           for funding the U.S. portion of an additional member assessment is the use of
cost estimates; and (3) the status of          credits attributable to the United States in the UN Tax Equalization Fund (TEF)—
the consolidation building project.            a fund used to reimburse U.S. nationals working at the UN for taxes paid on their
                                               UN salaries. According to the UN, as of May 2012, the balance of TEF credits
To perform this work, GAO reviewed
                                               attributable to the United States stood at $120.9 million.
cost and schedule documents for the
CMP, as well as planning and legal             After evaluating the CMP’s cost estimates, the UN General Assembly issued a
documents for the consolidation                resolution in April 2012 stating that the estimates lacked transparency,
building; examined relevant UN                 timeliness, and clarity. For example, the UN General Assembly expressed
financial documents and UN General             concern about the lack of clarity regarding the renovation of the Library and
Assembly resolutions, as well as               South Annex buildings. Specifically, member states inquired about the schedule
GAO’s best practices for cost                  for the two buildings and why renovations to the buildings were delayed. To
estimation; and met with officials from        address these concerns, the UN General Assembly requested that the CMP
the Department of State (State), the
                                               office improve reporting on projected CMP cost increases. While the UN General
UN CMP office and other relevant UN
                                               Assembly resolution did not specifically identify how the CMP office should report
departments, and New York City.
                                               its future cost estimates, GAO has identified best practices for high-quality and
What GAO Recommends                            reliable cost estimates. For instance, a well-documented cost estimate should
                                               describe in detail how the estimate was developed and the methodology used.
The Secretary of State and the U.S.            Applying these best practices, as appropriate, could address the concerns raised
Permanent Representative to the                by the UN General Assembly regarding the CMP’s cost estimates.
United Nations should work with other
member states to direct the CMP office         To address its future office space needs, the UN is considering the option of a
and the UN to utilize best practices           new building that would be separate from the CMP, but it does not have an
identified by GAO when developing              estimate of the project’s costs. The UN estimates that by 2023 its office space
cost estimates for the CMP and the             needs will have exceeded the capacity of its current real estate portfolio, primarily
consolidation building. State and the          due to expiring leases. As a potential solution, the City and State of New York
UN concurred with GAO’s                        have proposed the construction of a new building known as the consolidation
recommendations.                               building. The UN has indicated its willingness to consider this proposal, but has
                                               not entered into any formal agreements. The current lack of a cost estimate for
View GAO-12-795. For more information,         the consolidation building makes its cost implications for the UN and its member
contact Thomas Melito at (202) 512-9601 or     states unclear. GAO has previously reported that cost estimates are critical to
melitot@gao.gov, or David Wise at (202) 512-
2834 or wised@gao.gov.                         program success, such as informed resource investments.
                                                                                        United States Government Accountability Office
Contents


Letter                                                                                          1
                       Background                                                               3
                       Progress Made on CMP, but Two Building Renovations May Not Be
                         Completed and Project Is Projected to Be Approximately $430
                         Million over Budget                                                    7
                       Use of Best Practices May Address UN General Assembly
                         Concerns Regarding CMP Cost Estimates                                19
                       UN Considering Consolidation Building to Address UN Office
                         Space Needs, but a Cost Estimate Has Not Been Completed              24
                       Conclusions                                                            28
                       Recommendations for Executive Action                                   29
                       Agency Comments and Our Evaluation                                     29

Appendix I             Objectives, Scope, and Methodology                                      31



Appendix II            UN Tax Equalization Fund                                                34



Appendix III           Comments from the Department of State                                   37



Appendix IV            Comments from the United Nations                                        40



Appendix V             GAO Contacts and Staff Acknowledgments                                  41



Related GAO Products                                                                           42



Tables
                       Table 1: Projected Completion Dates for Key CMP Activities             11
                       Table 2: Factors Contributing to CMP’s Projected Cost Overruns of
                                Approximately $430 Million, as of February 2012               13
                       Table 3: CMP Cost Estimates                                            15




                       Page i                                            GAO-12-795 UN Renovations
          Table 4: Estimated CMP Cost Overruns after Utilizing Financing
                   Options and Proposed Reductions in Project Scope, as of
                   February 2012                                                                    18
          Table 5: UN General Assembly Concerns, Specific Issues Raised,
                   and Additional Information Related to the CMP February
                   2012 Cost Updates                                                                21
          Table 6: UN General Assembly Concerns Regarding the CMP’s Cost
                   Estimates as Related to Best Practices                                           23
          Table 7: Best Practices for a High-Quality and Reliable Cost
                   Estimate                                                                         28
          Table 8: Credits in the UN Tax Equalization Fund Attributable to
                   the United States, 2001-2009, as Reported by the UN                              35


Figures
          Figure 1: UN Headquarters Complex in New York City                                         5
          Figure 2: Glass Curtain Wall of the Secretariat Building, as of May
                   2012                                                                              9
          Figure 3: Ceiling Conditions in the Basement of a UN Building
                   before and after Renovation                                                      16




          Abbreviations

          CMP               Capital Master Plan
          State             Department of State
          TEF               Tax Equalization Fund
          UN                United Nations
          UNDC              United Nations Development Corporation
          USUN              U.S. Mission to the United Nations



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          Page ii                                                       GAO-12-795 UN Renovations
United States Government Accountability Office
Washington, DC 20548




                                   July 25, 2012

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

                                   The Honorable Susan M. Collins
                                   Ranking Member
                                   Committee on Homeland Security and Governmental Affairs
                                   United States Senate

                                   The Honorable Ileana Ros-Lehtinen
                                   Chairman
                                   Committee on Foreign Affairs
                                   House of Representatives

                                   In December 2006, the United Nations (UN) approved a $1.88 billion
                                   Capital Master Plan (CMP) to renovate and modernize its headquarters
                                   complex by 2014. 1 To support the CMP, the United States has provided
                                   approximately $388 million in assessed contributions to the UN. In
                                   addition to the $388 million, $100 million in UN credits attributable to the
                                   United States were also used to support the project. Renovations to the
                                   UN headquarters complex began in 2008. We have periodically reviewed
                                   UN efforts to develop and implement the CMP and reported on the
                                   progress of the project. 2 In our most recent report in 2009, we reported
                                   that the CMP was on schedule, but $97.5 million over budget, and that
                                   the UN was considering adding $206.6 million in related costs to the CMP
                                   without a corresponding increase in budget. 3 Since 2009, the UN has
                                   reported continued cost overruns associated with the CMP.




                                   1                                st
                                    G.A. Res. 61/251, UN GAOR, 61 Sess., UN Doc. A/RES/61/251 (2006).
                                   2
                                    For a list of previous reports we have issued on the planning and progress of the CMP,
                                   see Related GAO Products at the end of this report.
                                   3
                                    GAO, United Nations: Renovation Still Scheduled for Completion in 2013, but Risks to Its
                                   Schedule and Cost Remain, GAO-09-870R (Washington, D.C.: July 30, 2009). When we
                                   reported in July 2009, the CMP was scheduled to be completed in 2013.




                                   Page 1                                                       GAO-12-795 UN Renovations
Separately from the CMP, the UN General Assembly 4 has stressed the
need for a long-term strategy to meet the office space needs of the UN. 5
The UN leases over 2 million square feet of office space in multiple
locations in New York City. In 2011, the City and State of New York
authorized the construction of a new office building for UN personnel to
be located across the street from the UN headquarters complex. This
building, known as the consolidation building, would allow the UN to
consolidate a portion of its personnel from leased space in various
locations in New York City into one office building. While the project is still
in its early stages, the United States, as the largest contributor to the UN,
has significant financial interest in whether this project proceeds.

This report provides information on the progress of the CMP and the
status of the UN consolidation building. Specifically, we examine (1) the
extent to which the CMP is meeting its planned renovation scope,
schedule, and budget; (2) the UN General Assembly’s evaluation of CMP
cost estimates; and (3) the status of the consolidation building project.

To evaluate the extent to which the CMP is meeting its planned
renovation scope, schedule, and budget, we analyzed CMP planning,
schedule, and budget documents to compare current planned scope,
completion dates, and cost estimates to initial scope, schedule, and
budget projections. Further, we examined other relevant CMP
documentation, including information on risk assessments, monthly
reports, and procurement information. We also reviewed financing
proposals reported by the CMP office, the Financial Rules and
Regulations of the UN, and UN Financial Reports and Audited Financial
Statements. To examine the UN General Assembly’s evaluation of CMP
cost estimates, we reviewed and analyzed CMP documents describing
the project’s financial condition as of February 2012 presented to the
UN’s Fifth Committee, which covers budget and administrative issues, as
well as UN General Assembly resolutions pertaining to the CMP. We also
analyzed how best practices for cost estimating from our Cost Estimating
and Assessment Guide could potentially address issues raised by the UN




4
 The General Assembly is the UN’s main policy-making body and comprises all 193
member states.
5                               th
G.A. Res. 60/282, UN GAOR, 60 Sess., UN Doc A/RES/60/282 (2006).




Page 2                                                    GAO-12-795 UN Renovations
                           General Assembly regarding CMP cost information. 6 For these objectives,
                           we also interviewed officials from the Department of State (State) and
                           relevant UN offices, including the CMP office, Program Planning and
                           Budget Division, Board of Auditors, and Office of Internal Oversight
                           Services, as well as toured the CMP project site. To assess the status of
                           the consolidation building project we reviewed planning and legal
                           documents. We also interviewed officials from State, relevant UN offices,
                           the UN Development Corporation, and the City of New York regarding
                           plans for and the estimated cost of the consolidation building. Additional
                           information about our scope and methodology is provided in appendix I.

                           We conducted our work from January 2012 to July 2012 in accordance
                           with generally accepted government auditing standards. Those standards
                           require that we plan and perform our work to obtain sufficient, appropriate
                           evidence to provide a reasonable basis for our findings and conclusions
                           based on our objectives. We believe that the evidence obtained provides
                           a reasonable basis for our findings and conclusions based on our
                           objectives.



Background
Original Budget,           In 2001, we reported that the UN headquarters complex in New York
Financing, Schedule, and   City—built largely between 1949 to 1952 7—no longer conformed to
Scope of the CMP           current safety, fire, and building codes or to UN technology and security
                           requirements. 8 The UN General Assembly noted that conditions in the UN
                           headquarters complex posed serious risks to the health and safety of
                           staff, visitors, and tourists. Thus, in December 2006, after several years of
                           design and planning, the UN General Assembly unanimously approved
                           the CMP to renovate the UN headquarters complex, at a budget not to
                           exceed $1.88 billion.



                           6
                            GAO, Cost Estimating and Assessment Guide, GAO-09-3SP (Washington, D.C.: Mar.
                           2009).
                           7
                            Additional buildings in the complex, such as the Library and South Annex, were built
                           between 1960 and 1982.
                           8
                            GAO, United Nations: Planning for Headquarters Renovation is Reasonable; United
                           States Needs to Decide Whether to Support Work, GAO-01-788 (Washington, D.C.: June
                           15, 2001).




                           Page 3                                                        GAO-12-795 UN Renovations
To finance the CMP, the UN General Assembly approved a strategy to
assess member states for the cost of the CMP, under which they could
choose to pay their assessment in either a lump sum or over a 5-year
period, from 2007 to 2011. CMP assessments, whether collected as
lump-sum or multi-year payments, were invested to earn interest income.
The UN General Assembly also approved a $45 million working capital
reserve to cover any temporary cash flow deficits. According to the CMP
office, member states would receive this reserve back in the form of a
credit at the end of the project’s construction phase. The United States
chose to pay its assessment for the CMP in five equal payments of $75.5
million per year starting in 2007, for a total of approximately $378 million.
The United States also paid a separate assessment to the project’s
working capital reserve of about $9.9 million in 2007. In the resolution
approving the CMP, the UN General Assembly decided that, in the event
of cost escalations over the approved budget of $1.88 billion, member
states would be subject to a further assessment to meet the revised
requirements of the CMP.

The UN General Assembly approved the completion of the CMP’s scope
during the scheduled period of 2006 to 2014. This scope included the
renovation of five buildings on the UN headquarters complex—the
General Assembly Building, the Conference Building, the Secretariat
Building, the Library, and the South Annex—as well as renovation of the
basements connecting several of those buildings and the construction of
a temporary conference building on the North Lawn of the complex.
Figure 1 shows the existing buildings of the UN headquarters complex,
along with the temporary conference building.




Page 4                                               GAO-12-795 UN Renovations
Figure 1: UN Headquarters Complex in New York City




                                       To house UN staff during the renovation, the CMP included plans to lease
                                       swing space in nearby buildings. Additionally, the CMP included
                                       landscaping, demolition of the temporary conference building, additional
                                       blast protection, measures to promote environmental sustainability, and
                                       improvements to the reliability and redundancy of headquarters systems
                                       such as emergency power.


Changes to the CMP                     In several resolutions, the UN General Assembly noted that it has the
Authorized by the UN                   sole prerogative to decide on any changes to the CMP’s scope, budget,
General Assembly: 2006-                and implementation strategy. Since December 2006, the UN General
                                       Assembly has exercised this prerogative to make changes to the CMP or
2009                                   authorize changes proposed by the Secretary-General. These changes
                                       include:

                                       •   Accelerated Strategy IV: In December 2007, the UN General
                                           Assembly approved an expedited strategy for the CMP known as
                                           accelerated strategy IV. This approach approved the renovation to
                                           proceed in two concurrent phases: one to renovate the Secretariat
                                           Building and one to renovate the Conference Building, General
                                           Assembly Building, and other buildings. Under the previous approach,
                                           the UN had planned on renovating buildings in multiple phases,
                                           including renovating the Secretariat Building while it was 75 percent
                                           occupied. The accelerated strategy called for the temporary relocation



                                       Page 5                                             GAO-12-795 UN Renovations
     of most of the staff of the Secretariat Building during the renovation—
     which required the CMP office to increase the amount of leased swing
     space—and expedited the schedule for the Secretariat Building’s
     renovation by reducing construction time from 6 to 3 years. The
     strategy also affected the schedules for the construction of the
     temporary conference building, as well as the renovation of the
     Conference Building and General Assembly Building. The CMP office
     reported that such an implementation strategy would reduce risks
     associated with the CMP. The CMP office also estimated that the
     strategy would produce an estimated cost overrun of $190 million,
     which it would seek to reduce through the process of value
     engineering. 9

•    Associated Costs: In April 2009, the UN General Assembly decided
     that certain costs related to the CMP—known as associated costs—
     would be financed from within the $1.88 billion CMP budget. 10
     Associated costs cover a wide range of requirements, such as
     broadcast equipment, new furniture, and additional staffing
     requirements to manage information technology and security. 11
     According to CMP officials, these costs were originally expected to be
     funded by UN program offices through the regular UN budget
     process. Therefore, the CMP office’s original cost estimates for the
     CMP did not include new furniture or equipment except where the
     equipment was part of the permanent infrastructure of the UN. For
     instance, according to the CMP office, the original CMP scope only
     provided for furniture for three new mid-sized conference rooms and
     supplemental office furniture associated with swing spaces. While
     associated costs are funded from within the CMP budget, UN
     departments other than the CMP office manage these costs. For
     example, the UN Department of Safety and Security manages costs


9
  Value engineering is the process of reviewing a project’s objectives and design, and
finding ways to achieve the same objectives at a lower cost. In February 2009, the CMP
office informed the UN Advisory Committee on Administrative and Budgetary Questions
that the decision to renovate the Conference Building in a single phase was the most
significant change to the scope of the project resulting from value engineering. The
Committee noted that some of the savings identified by the CMP office through value
engineering actually resulted from external, market-related factors.
10
  The resolution also noted that the CMP office entered into commitments for associated
costs absent the formal approval of the UN General Assembly.
11
  Other associated costs requirements include moving supplies and services, archive
space, and storage facilities.




Page 6                                                       GAO-12-795 UN Renovations
                               related to security. Prior to the UN General Assembly’s decision on
                               associated costs, the CMP office reported that the CMP budget could
                               not absorb associated costs without exceeding $1.88 billion. However,
                               the UN General Assembly argued that the CMP office could realize
                               further cost reductions that would enable the CMP to absorb
                               associated costs.

                          •    Secondary Data Center: In April 2009, the UN General Assembly
                               requested that the CMP partially absorb costs associated with a
                               secondary data center, including leasing a commercial facility and
                               establishing a service delivery agreement to provide equipment and
                               services. The secondary data center serves as a backup system to
                               enable the UN to respond to emergency situations that may impair
                               operations of critical elements of its information and communications
                               technology infrastructure and facilities. In resolutions in April 2009 and
                               December 2009, the UN General Assembly requested that the CMP
                               budget absorb $16.7 million to fund the secondary data center. 12

                          While the CMP nears completion of the renovation of two of the five
Progress Made on          buildings, the project has suspended the originally planned renovation of
CMP, but Two              two buildings, faces risks meeting its 2014 completion date, and is
                          projected to be approximately $430 million over budget. The CMP office
Building Renovations      may not renovate two buildings that were originally part of the scope of
May Not Be                the project, due to the lack of a workable design solution to address
Completed and             security requirements. In addition, the CMP office predicts that it will
                          complete the CMP by the end of 2014, but risks, such as a compressed
Project Is Projected to   schedule with work yet to be contracted, exist. Moreover, as of February
Be Approximately          2012, the CMP office estimates that the project will be about $430 million
                          over its approved budget of $1.88 billion—an increase of approximately
$430 Million over         53 percent (approximately $149 million) from its last reported estimate.
Budget                    According to the CMP office, a number of factors, such as unforeseen
                          conditions and complexities in the basements and Conference Building,
                          contributed to the increase in projected cost overruns. The CMP office
                          has proposed options to address a portion of these cost overruns;
                          however, even if approved, additional funding will be needed to address
                          the remainder. The United States could potentially use credits it has with
                          the UN to fund an assessment related to the CMP.


                          12
                            The UN General Assembly also requested that the support account for peacekeeping
                          operations absorb approximately $4.2 million in costs associated with the secondary data
                          center.




                          Page 7                                                       GAO-12-795 UN Renovations
Progress Made on CMP   The CMP office has nearly completed the first two building renovations of
Renovations            the CMP—the Secretariat and Conference Buildings—which began in
                       2010. By February 2013, both buildings are scheduled to be completely
                       renovated and back in use. Specifically, the CMP office plans for the
                       Secretariat Building to be primarily reoccupied and in use by November
                       2012. The CMP office predicts completion of the renovation of the
                       Conference Building by the end of 2012, with the building reoccupied and
                       in use in February 2013. The CMP office has reported a number of other
                       achievements of the CMP, such as:

                       •    Modernizing 1 million square feet in the basements, including
                            installation of chilled water piping, electrical conduit and wire,
                            telecommunication conduit and copper cable.

                       •    Redesigning the Conference Building to take into account enhanced
                            security upgrades. 13 According to the CMP office, the enhanced
                            security upgrades include two major activities: structurally enhancing
                            the Conference Building and associated basements to withstand blast
                            threats and installing protective structures, including bollards and
                            gates, along the perimeter of the UN complex. The CMP office
                            anticipates that the enhanced security upgrades will be completed by
                            2014.

                       •    Substantially completing the removal and replacement of the glass
                            curtain wall in the Secretariat Building, shown in figure 2.




                       13
                         The United States and the UN reached an agreement in January 2011 on the design
                       requirements for more stringent security measures than those originally planned for the
                       CMP. In 2010, the CMP office, in consultation with the UN Department of Safety and
                       Security, undertook additional studies to examine the effect on UN facilities of potential
                       vehicle-borne explosive devices. As a result of these studies, the UN decided to
                       implement enhanced security upgrades for the CMP. The United States did not object to
                       the UN’s use of up to $100 million in credits attributable to the United States from the UN
                       Tax Equalization Fund to fund the upgrades. Noting this funding, the UN General
                       Assembly decided that the costs related to the enhanced security upgrades would not be
                       recovered through an assessment imposed on member states.




                       Page 8                                                         GAO-12-795 UN Renovations
                       Figure 2: Glass Curtain Wall of the Secretariat Building, as of May 2012




                       The UN General Assembly has requested that the CMP office provide
                       information on contracts awarded for the CMP. The CMP office posts
                       information on contract awards on the UN Procurement Division and CMP
                       websites. According to the CMP office, 85 percent of the value of CMP
                       contracts has gone to U.S. firms.


Renovations for Two    Security requirements and concerns have led the CMP office to suspend
Buildings May Not Be   originally planned renovations for two buildings—the Library and the
Completed              South Annex. In 2010, UN security studies found these buildings to be
                       vulnerable to vehicle blast threats. As of April 2012, CMP officials stated
                       that they lacked a workable design solution to address these security
                       concerns. Specifically, according to CMP officials, the only solution to the
                       risk of blast threats would be to close a nearby highway exit ramp. 14
                       However, based on discussions between the UN and the United States,



                       14
                         In October 2011, the CMP office reported that the options regarding the future of the
                       Library and South Annex were (1) moving the off-ramp, (2) closing the off-ramp, (3)
                       closing the Library and South Annex upon completion of the CMP, or (4) assuming that no
                       solution would be found and demolishing the buildings.




                       Page 9                                                      GAO-12-795 UN Renovations
                           the CMP office does not view this outcome as likely. To renovate the
                           Library and South Annex to the required security standards, CMP officials
                           told us that they would have to demolish the buildings and begin new
                           construction. CMP officials also told us that since they do not have a
                           viable renovation option for these buildings, they have not updated their
                           initial design and cost estimates. Absent a solution to the security
                           vulnerabilities of the Library and South Annex, CMP officials told us that
                           only limited use of the buildings would be possible. In May 2012, the CMP
                           office reported that it plans to consult with UN departments affected by
                           the suspension to determine where to relocate functions impacted by
                           potentially not renovating the buildings.


CMP Office Projects 2014   The CMP office expects to complete the CMP by 2014, but its schedule
Completion, but Risks to   faces risks, such as a compressed schedule with some work yet to be
Schedule Exist             contracted. As of February 2012, the CMP office estimates completing
                           renovations by mid-2014, about 1 year behind the schedule it reported in
                           October 2008. As shown in table 1, while the completion date for the
                           project is still estimated to be mid-2014, the projected completion dates
                           for key CMP activities have experienced delays for various reasons.




                           Page 10                                            GAO-12-795 UN Renovations
Table 1: Projected Completion Dates for Key CMP Activities

                        Date as of October
                        2008 (Accelerated          Date as of               Approximate
Activity                Strategy IV)               February 2012            delay of                   Reasons for delays
                                   a
Basements               Early 2011                 Mid-2014                 39 months                  Delayed due to unexpected
                                                                                                       complexities in basement
                                                                                                       conditions.
Conference Building     Mid-2011                   Late 2012                15 months                  Delayed due to enhanced
                                                                                                       security upgrades.
Secretariat Building    Early 2012                 Mid-2012                 3 months                   Delayed due to the delay in the
                                                                                                       construction of the temporary
                                                                                                       conference building.
Library                 Early 2013                 ——————-                  ——————-                    Suspended pending resolution of
                                                                                                       the security issue.
General Assembly        Mid-2013                   Mid-2014                 12 months                  Delayed due to enhanced
Building                                                                                               security upgrades to the
                                                                                                                            b
                                                                                                       Conference Building.
South Annex             Early 2012                 ——————-                  ——————-                    Suspended pending resolution of
                                                                                                       the security issue.
Completion of CMP       Mid-2013                   Mid-2014                 12 months
Activities
                                        Source: GAO analysis of CMP data.
                                        a
                                         The CMP office did not report a completion date for the basements as of October 2008. We have
                                        included the completion date reported in the original schedule as of October 2006.
                                        b
                                         According to the CMP office, it cannot begin renovations to the General Assembly Building until it
                                        completes renovations to the Conference Building.


                                        CMP officials attribute schedule delays mostly to enhanced security
                                        upgrades added to the CMP in 2011. We reported in 2009 that security
                                        upgrades to the CMP represented a key risk to the project’s progress. 15
                                        According to the CMP office, implementing enhanced security upgrades
                                        to address security issues resulted in a delay of about 1 year in the
                                        schedule of the Conference Building. Although it reported a mid-2011
                                        completion date as of October 2008, the CMP office now estimates that
                                        the Conference Building renovation will be completed in late 2012.

                                        According to the CMP office, despite delayed start dates for a number of
                                        activities, the CMP office has maintained a 2014 project completion date.
                                        However, the CMP office faces two key risks related to meeting this date:


                                        15
                                          GAO-09-870R. The CMP office’s risk register identified the risk of security upgrades to
                                        the CMP as having a low probability of occurring, but a significant impact if it did occur.




                                        Page 11                                                               GAO-12-795 UN Renovations
•   Compressed schedule. CMP officials noted that maintaining the 2014
    project completion date while experiencing delays to the start dates
    for several projects has created a compressed schedule, which
    reduces the ability to develop workaround solutions if problems arise.
    For example, CMP officials identified the completion of the
    Conference Building renovation as a “critical path” of the project’s
    schedule, because renovations to the General Assembly Building
    cannot begin until those to the Conference Building are completed.
    Once the CMP office moves conference functions back into the
    Conference Building, it will reconfigure the temporary conference
    building to house the functions of the General Assembly Building
    while the General Assembly Building undergoes renovation.
    Previously, as a result of delays in the Conference Building’s
    schedule, the CMP office delayed the completion date of the General
    Assembly Building from mid-2013 to mid-2014. CMP officials said that
    the amount of time that the Conference Building renovation can be
    delayed without impacting the overall project’s completion date is
    minimal.

•   Work yet to be contracted. The CMP office has yet to contract work
    for various remaining parts of the project and thus does not have
    agreed upon completion dates with the contractors that will be doing
    the work. For instance, as of March 2012, the CMP office reported
    that it had not committed any funds for the renovation of the General
    Assembly Building. CMP officials told us that conditions in the General
    Assembly Building—such as the potential for asbestos and
    weaknesses in the building’s concrete slab—also constitute potential
    risks. Additionally, the CMP has not fully contracted for renovation
    work in the basements. CMP officials have noted that renovation in
    the basements is linked to the overall renovations, as the basements
    house the infrastructure for the UN complex. CMP officials have
    described the work in this area as highly complex and have noted that
    to date it has taken longer than expected.




Page 12                                            GAO-12-795 UN Renovations
Projected Total CMP Cost                    As of February 2012, the CMP office projected total cost overruns of
Overruns Approximately                      about $430 million over the CMP’s approved budget of $1.88 billion. 16
$430 Million                                According to the CMP office, the estimated cost overruns result from a
                                            number of factors, including about $266 million in direct project costs and
                                            about $164 million in scope additions authorized by the UN General
                                            Assembly to be financed from within the project’s approved budget, as
                                            shown in table 2.

Table 2: Factors Contributing to CMP’s Projected Cost Overruns of Approximately $430 Million, as of February 2012

Dollars in millions
                                                                                                                                           Percent
Category                  Description                                                                                      Estimate        of total
Direct costs of the CMP   •   Includes renovation costs, swing space estimates, contingency, and                             $265.7            62.0
                              price escalation. Renovation costs include construction, professional
                              fees, and management costs.
Associated costs          •   In April 2009, the UN General Assembly decided that associated costs                            146.8            34.0
                              would be financed from within the $1.88 billion CMP budget.
                          •   The estimate for associated costs covers the period of 2008 to 2013. The
                              majority of the associated costs relate to the renovation of the Secretariat
                              Building and the Conference Building, with the main cost drivers
                              pertaining to the purchase of furniture and the permanent broadcast
                              facility and media asset management system.
                                                                                                                                  a
Secondary data center     •   In April 2009, the UN General Assembly requested that the CMP partially                         17.4              4.0
                              absorb costs associated with a secondary data center.
                          •   The costs of the secondary data center are shared between the regular
                              budget and the peacekeeping support account—80 percent to 20
                              percent, respectively—on the basis of the proportion of capacity used.
                              The CMP office finances the 80 percent share.
                                            Source: GAO analysis of CMP office data and UN General Assembly resolutions.
                                            a
                                             The total estimated cost for the secondary data center is $20.7 million, with costs shared between
                                            the CMP budget and peacekeeping support account. The total cost funded by the CMP budget, as of
                                            February 2012, is $17.4 million. The UN General Assembly requested that the support account for
                                            peacekeeping operations absorb approximately $4.2 million in costs associated with the secondary
                                            data center. The CMP office has received about $3.3 million and expects to receive another $0.9
                                            million from the peacekeeping support account to fund the secondary data center.




                                            16
                                              The total cost overrun estimate includes a combination of accrued costs for work already
                                            completed and projected costs for work not yet contracted. For example, the CMP has
                                            awarded large contracts for ongoing work in the Conference Building, Secretariat Building,
                                            and basements. As a result, some portions of the total projected cost overruns for the
                                            CMP, such as swing space and asbestos costs, are actual costs. However, the estimated
                                            cost overruns also include a number of projected costs, such as those for the General
                                            Assembly Building, where the CMP office has yet to award contracts.




                                            Page 13                                                                        GAO-12-795 UN Renovations
Projected CMP cost overruns increased significantly between May 2011
and February 2012. 17 The UN General Assembly described the increase
as “sudden and unexplained.” In October 2011, the CMP office reported
that it had committed 84.5 percent of the CMP funding against the original
$1.88 billion budget, which significantly reduced the risk of unexpected,
adverse events during the remainder of the project. 18 As shown in table 3,
estimated cost overruns increased by approximately 53 percent (roughly
$149 million) between May 2011 and February 2012, driven primarily by
direct costs to the CMP.




17
  The CMP reported cost estimates as of May 2011 in its ninth annual progress report on
the CMP, which was published in October 2011.
18
  The CMP office reported similar information in 2009 when changing its budget reporting
by combining the cost estimates for contingency and escalation. The CMP office reported
that it combined the accounts because it had less uncertainty about the timing and risks of
the project. Similarly, in September 2007, in remarking on accelerated strategy IV, the
CMP office reported that it would know almost all of the contract values within the first 3
years of the project, greatly reducing the financial risks to the UN.




Page 14                                                       GAO-12-795 UN Renovations
Table 3: CMP Cost Estimates

Dollars in millions
                                                                                         As of                   As of
Category                                                                              May 2011           February 2012               Change
                        a
Direct costs to the CMP                                                                $2,004.5                 $2,153.5              $149.1
Associated costs                                                                           146.8                    146.8                       -
                            b
Enhanced security upgrades                                                                  99.6                     99.6                       -
Secondary data center                                                                       20.7                     20.7                       -
Total costs                                                                              2,271.5                  2,420.6               149.1
Less
                                                           c
UN General Assembly approved budget and other funding                                    1,990.5                  1,990.7                     0.2
Total projected cost overruns                                                              281.0                    429.9               148.9
                                        Source: GAO analysis of CMP office data.
                                        a
                                            Direct costs to the CMP include costs for CMP swing space rent after October 2012.
                                        b
                                         The CMP received “up to” $100 million to fund the enhanced security upgrades. While the CMP
                                        reports $99.6 million in costs for these updates, it applies the entire $100 million as part of its
                                        available funding. As a result, the total projected cost overruns are understated by $0.4 million.
                                        c
                                         Other funding includes voluntary contributions, $100 million to fund enhanced security upgrades, and
                                        $3.3 million in funding from the peacekeeping support account to support the secondary data center.
                                        A $0.2 million increase in voluntary contributions accounts for the difference between the amount of
                                        funds in May 2011 and February 2012.


                                        Although the increase in estimated cost overruns reported in February
                                        2012 are attributable to the direct costs of the CMP, a portion consists of
                                        costs added to the CMP over time by the UN General Assembly without a
                                        corresponding increase in the CMP budget—such as associated costs
                                        and the secondary data center. CMP officials told us that they assume
                                        responsibility for direct costs of the CMP—which include renovation,
                                        swing space, contingency, and escalation—but have no control over
                                        additional related costs added to the CMP. In explaining the reasons for
                                        the estimated cost overruns directly attributable to the project, the CMP
                                        office cited several factors, including the following:

                                        •       Asbestos abatement. According to the CMP office, when the
                                                renovations began, the volume of asbestos found far exceeded its
                                                expectations. Moreover, new regulations enacted by New York City in
                                                2010 made the abatement of that asbestos even more complicated
                                                and expensive.

                                        •       Unforeseen conditions in the Conference Building. The CMP office
                                                reported that the actual construction of the concrete floor slabs in the
                                                Conference Building differed from the original design drawings. The



                                        Page 15                                                                 GAO-12-795 UN Renovations
                                             construction of the concrete floor slabs required the CMP office to
                                             amend the design of the Conference Building. As of March 2012, the
                                             CMP office reported that it expected to find similar conditions in the
                                             General Assembly Building.

                                         •   Complexities in the basements. The CMP office noted that work in the
                                             basements was more complex than expected due, in part, to limited
                                             documentation of the basement infrastructure and relocation of
                                             essential mechanical systems. For instance, the CMP office reported
                                             that UN documentation did not account for the large quantity of
                                             existing telephone, electrical, and security cables in the ceilings of the
                                             basements. According to the CMP office, each of these cables had to
                                             be individually tested to ensure that the CMP office did not remove
                                             active infrastructure, which was a labor-intensive process. Figure 3
                                             shows examples of ceiling conditions in the basements before and
                                             after CMP renovations.


Figure 3: Ceiling Conditions in the Basement of a UN Building before and after Renovation




Proposals to Address Cost                To address cost overruns of the CMP, the CMP office recommended that
Overruns Exist, but New                  the UN General Assembly endorse two financing proposals. Specifically,
Member Assessment May                    the CMP office proposed utilizing the working capital reserve fund and the
                                         interest income on CMP funds. As of February 2012, $45 million was
Be Needed                                available in the working capital reserve fund and the interest income
                                         amounted to $107.2 million. As of May 2012, the UN General Assembly




                                         Page 16                                               GAO-12-795 UN Renovations
had not made a decision to approve the use of these funds, but the
Advisory Committee on Administrative and Budgetary Questions had
reviewed and supported the proposals. 19 If the UN General Assembly
approves the utilization of the working capital reserve fund and the
interest income, these funds will cover about a third of the projected cost
overruns, but cost overruns in the amount of approximately $277.7 million
will still not be addressed.

The CMP office is also exploring options to further address estimated cost
overruns by not fully renovating two buildings included in the original CMP
renovation scope. With no solution to the security issues related to the
Library and South Annex, CMP officials told us that they would propose
limiting the scope of the renovations to these buildings. Rather than
renovating as originally planned, the renovations to the Library and South
Annex would only include connecting them to new building systems, such
as heating and air conditioning. Based on the original cost estimate for
these buildings, the CMP office estimates that not fully renovating the two
buildings would eliminate $65 million in planned work, which could be
applied to address projected cost overruns of the CMP. CMP officials also
told us that they plan to explore additional opportunities to reduce work
and achieve savings related to site landscaping and the General
Assembly Building, but have not estimated the potential savings of these
options. As shown in table 4, combining the proposed financing options
with reductions in the project’s planned scope would still leave the project
with a shortfall of $212.7 million.




19
  Although the UN General Assembly did not make a decision on whether the CMP office
could utilize the working capital reserve or interest income in the March 2012 resumed
session, the General Assembly did authorize the Secretary-General to enter into
commitments of up to an additional $135 million for resources required for the CMP
project through 2012. The UN General Assembly did not identify a source of funding for
the $135 million in new commitment authority for the CMP. According to UN officials, the
eventual funding could be sourced through the use of the working capital reserve and
interest income on the CMP, or it could be sourced from an assessment on member
states.




Page 17                                                      GAO-12-795 UN Renovations
Table 4: Estimated CMP Cost Overruns after Utilizing Financing Options and
Proposed Reductions in Project Scope, as of February 2012

 Dollars in millions
 Category                                                                   Estimate
 Projected cost overruns of the CMP                                           $429.9
 Working capital reserve                                                       (45.0)
 Interest income from CMP funds                                               (107.2)
 Reduction in renovation scope of Library and South Annex                      (65.0)
 Total estimated CMP cost overruns                                             212.7
Source: GAO analysis of CMP office data.



Another potential financing option is an additional member assessment.
In the resolution approving the CMP, the UN General Assembly decided
that, in the event of cost escalations over the approved budget of $1.88
billion, member states would be subject to a further assessment to meet
the revised requirements of the CMP. The actual amount of such an
assessment would depend on the decisions of the UN General Assembly
regarding proposed financing and reduced scope options. The U.S. share
of any future assessment would be 22 percent.

One potential option for funding all or part of an additional U.S. member
assessment for the CMP would be using credits in the UN Tax
Equalization Fund (TEF) account—a UN fund used to reimburse U.S.
nationals working at the UN for U.S. taxes paid on their UN salaries. (For
more information on the UN TEF, see appendix II.) According to the UN,
as of December 31, 2011, there was a balance of $134 million in TEF
credits attributable to the United States. This balance remained after the
UN applied $100 million in TEF credits attributable to the United States to
fund the enhanced security upgrades to the CMP in 2011. Congress has
since passed legislation related to the use of TEF credits. The
Consolidated Appropriations Act of 2012, passed in December 2011,
required that TEF credits shall only be available for the United States’
assessed contributions to the UN and shall be subject to the regular
notification procedures of the Committees on Appropriations. 20 State told




20
  Pub. Law No. 112-74, 125 Stat. 1168.




Page 18                                                     GAO-12-795 UN Renovations
                          us that it is complying with these provisions. 21 For instance, in January
                          2012, the U.S. Mission to the UN requested that the UN apply $13.1
                          million of TEF credits attributable to the United States toward the United
                          States’ regular UN budget assessment for calendar year 2011. After the
                          application of these credits, the balance of TEF credits attributable to the
                          United States stood at $120.9 million, as of May 2012. However, under
                          this policy, TEF credits could be used to fund cost overruns of the CMP if
                          the cost overruns are funded through a member assessment as called for
                          by the resolution approving the CMP.


                          In April 2012, the UN General Assembly issued a resolution expressing
Use of Best Practices     concerns regarding the transparency, timeliness, and clarity of the CMP’s
May Address UN            February 2012 cost estimates. To address these concerns, the UN
                          General Assembly requested that the CMP office improve reporting on
General Assembly          the underlying causes of the projected CMP cost increases. While the UN
Concerns Regarding        General Assembly resolution did not specifically identify how the CMP
CMP Cost Estimates        office should report its future cost estimates, we have identified best
                          practices associated with high-quality and reliable cost estimates.
                          Applying these best practices, as appropriate, may address the UN
                          General Assembly’s concerns regarding CMP cost estimates.


UN General Assembly Has   After evaluating the CMP office’s February 2012 cost information, the UN
Expressed Concerns        General Assembly reported a number of concerns with these estimates,
Regarding CMP Cost        such as a lack of transparency, timeliness, and clarity. For example, with
                          regard to transparency, member states inquired why the CMP office did
Estimates                 not include $38 million in increased swing space leasing costs in earlier
                          CMP cost estimates. The CMP office noted that it negotiated swing space
                          leases for a period longer than necessary to mitigate the risk of CMP
                          schedule delays. The CMP office did not include these costs in its earlier
                          estimates because it assumed these leases could be terminated early or


                          21
                            It is unclear whether these provisions are relevant to the use of existing TEF credits
                          attributable to the United States. According to State, once the United States provides
                          assessed contributions to the UN, the organization legally controls them. While State
                          officials said that the UN generally weighs U.S. preferences regarding the use of TEF
                          credits it has contributed to the organization, ultimately the use of these credits is at the
                          sole discretion of the UN. However, State officials told us that they will not endorse the
                          use by the UN of TEF credits attributable to the United States for any purpose other than
                          assessed contributions and that it is unlikely that the UN would act unilaterally to use TEF
                          credits for a purpose to which State objected. UN officials confirmed this statement.




                          Page 19                                                         GAO-12-795 UN Renovations
used by other UN departments in the event the CMP project no longer
needed the swing space. According to the CMP office, in a healthy rental
market, early termination or subleasing is common; however, the
economic downturn prevented it from taking such actions. In addition,
member states inquired about the main factors that led to the projected
increase in cost overruns. According to the CMP office, a key factor of the
projected cost overruns was increased asbestos abatement costs related
to asbestos found in the basements and Conference Building in late
2011. However, the CMP office had previously reported that all asbestos
was abated from Conference Rooms 1-3 of the Conference Building in
February 2011. Further, the 2011 CMP annual report considered the
abatement of asbestos and the removal of obsolete materials from the
Secretariat and Conference Buildings a significant achievement. For
additional information regarding the concerns of the UN General
Assembly and issues raised by member states, see table 5.




Page 20                                            GAO-12-795 UN Renovations
Table 5: UN General Assembly Concerns, Specific Issues Raised, and Additional Information Related to the CMP February
2012 Cost Updates

Concern expressed by the UN
General Assembly                      Specific issues raised                       Additional information
Lack of transparency and timely       •   The factors that led to the              •     The CMP office provided qualitative explanations of the
information on budget, forecasts,         increase in cost overruns of                   differences between planned and actual costs for major
and projected cost overruns               the CMP.                                       renovation activities, such as buildings and swing space.
                                                                                         However, it did not quantify individual cost drivers for
                                                                                         major renovation activities, nor did it clearly identify what
                                                                                         parts of its estimates were based on actual versus
                                                                                         projected costs.
                                      •   The original budget for swing            •     The CMP office reported a budgeted swing space
                                          space rent.                                    estimate of $464 million, as of February 2012. However,
                                                                                         this estimate is $74 million higher than what the CMP
                                                                                         office reported when it proposed accelerated strategy IV
                                                                                         in 2007.
Lack of transparency and timely       •   The volume, value, and                   •     The CMP office presented information on the reasons for
information on risks                      reasons for change orders                      change orders, such as field conditions. Member states
                                          within the CMP.                                expressed interest in more details, such as which UN
                                                                                         departments requested changes. Moreover, the UN
                                                                                         Board of Auditors reported that the CMP office cost
                                                                                         estimate did not include a robustly calculated estimate for
                                                                                         the cost of all change orders.
                                      •   The potential for costs of the           •     The CMP office reported that it does not expect any cost
                                          enhanced security upgrades                     overruns for the enhanced security upgrades. However,
                                          to exceed the budgeted                         the CMP office reports that it is developing a total cost
                                          projection.                                    estimate and awaiting approval for portions of the
                                                                                         upgrades. The UN Board of Auditors reported that the
                                                                                         cost of enhanced security upgrades is high-risk, given
                                                                                         third party approvals.
Lack of clarity regarding the         •   The cost estimates, delayed              •     The CMP office reported that reducing the scope of the
renovation of the Library and South       schedules, and prospective                     renovations to the Library and South Annex would result
Annex                                     plans for the Library and                      in an estimated $65 million savings. However, the UN
                                          South Annex.                                   Board of Auditors has reported that the original budgets
                                                                                         for the CMP do not clearly identify the costs for these
                                                                                         buildings.
                                             Source: GAO analysis based on information provided by the CMP office and UN General Assembly resolution A/RES/66/258.



                                             Officials from the U.S. Mission to the UN (USUN) also raised concerns
                                             with the explanation of the projected CMP cost overruns, both during and
                                             at the conclusion of the March 2012 session. For example, a U.S.
                                             representative at the March 2012 session asked about the amount and
                                             utilization of the remaining contingency fund for the CMP. While the CMP
                                             office reported that $89.1 million remained in funds for contingency and
                                             price escalation, this amount was as of May 2011, before the increase in




                                             Page 21                                                                                GAO-12-795 UN Renovations
                           estimated cost overruns reported in March 2012. 22 Moreover, USUN
                           officials told us that despite the briefings and information provided by the
                           CMP office, there was still insufficient information as to why and when the
                           projected cost overruns occurred. 23

                           While CMP officials told us that they could not currently quantify the
                           individual cost drivers of the $149 million increase in projected cost
                           overruns that occurred between May 2011 and February 2012, they
                           stated that the February 2012 estimates were the best available. Further,
                           they noted that it is difficult to attribute the causes for cost overruns to
                           specific buildings. For example, asbestos abatement is a campus-wide
                           activity that affects the cost of all building renovations.

                           After evaluating CMP cost estimates, the UN General Assembly issued a
                           resolution in April 2012 requesting that the CMP office produce additional
                           reporting related to CMP costs. Specifically, the UN General Assembly
                           requested more information on the underlying causes of the projected
                           cost increases and practical options to address them.


Use of Best Practices in   While the UN General Assembly resolution did not explicitly identify how
Future CMP Cost            the CMP office should report future cost information, we have found that a
Reporting May Address UN   high-quality and reliable cost estimate should exhibit certain best
                           practices, including being comprehensive, well-documented, accurate,
General Assembly           and credible. 24 These best practices include elements for documenting
Concerns                   and reporting cost estimates. For example, a cost estimate that is well-
                           documented and accurate should allow for the cost estimate to be traced
                           back to and verified against its sources and explain the variances
                           between planned and actual costs.



                           22
                              We previously reported that the CMP office changed its budget reporting by combining
                           its cost estimates for contingency and escalation. While both categories account for
                           uncertainties, combining them can reduce the transparency of how these funds are being
                           used.
                           23
                             Over the years, we have reported that many programs overrun their budgets due, in
                           part, to difficulties estimating program costs. While not an exact comparison, we reported
                           that cost estimates for the Capital Visitor Center rose from $303.5 million in 2003 to $621
                           million in 2007 due to uncertainties related to the preliminary nature of the design work,
                           the unknown scope of pre-construction requirements, and security adjustments to the
                           design after the events of September 11, 2001.
                           24
                                GAO-09-3SP.




                           Page 22                                                        GAO-12-795 UN Renovations
                                           These best practices may also help address some of the concerns raised
                                           by the UN General Assembly regarding the CMP’s cost estimates. For
                                           example, using the best practices associated with a well-documented
                                           cost estimate can improve an estimate’s transparency, by capturing in
                                           writing such things as the source of the data used, the calculations
                                           performed, and the rationale for choosing particular estimating methods.
                                           Table 6 shows how the concerns of the UN General Assembly regarding
                                           the CMP’s cost estimates could be addressed by using our best
                                           practices, as well as the potential benefits of this approach.

Table 6: UN General Assembly Concerns Regarding the CMP’s Cost Estimates as Related to Best Practices

                         Related best
Concern                  practice               Specific element of best practice                           Potential benefit
Lack of transparency     Comprehensive          Document all cost-influencing ground                        Clearly documenting the ground rules
and timely information                          rules and assumptions in the estimate.                      and assumptions of a cost estimate
on the budget,                                                                                              provides a basis for areas of potential
forecasts, and                                                                                              risk to be resolved.
projected cost
overruns
                         Accurate               Document, explain, and review the                           Properly explaining the variance between
                                                variances between planned and actual                        planned and actual costs allows
                                                costs.                                                      estimators to determine the quality of
                                                                                                            their estimates and how the project has
                                                                                                            changed over time.
                                                Regularly update the cost estimate to                       Updating an estimate allows estimators
                                                reflect significant changes in the program                  to analyze changes in program costs and
                                                so that it always reflects current status.                  provide decision makers with accurate
                                                                                                            information for assessing alternative
                                                                                                            decisions.
Lack of transparency     Credible               Conduct a risk and uncertainty analysis                      A risk and uncertainty analysis can help
and timely information                          that quantifies the imperfectly understood                  managers determine a level of funding to
on risks                                        risk and identify these effects of changing                 hold in reserve to cover costs resulting
                                                key cost driver assumptions and factors.                    from uncertainties.
Lack of clarity          Well-documented        Describe in sufficient detail the         Documentation can help validate and
regarding the                                   calculations performed and the estimating defend a cost estimate.
renovation of the                               methodology used to derive each
Library and South                               element’s cost in the documentation.
Annex
                                           Source: GAO analysis of UN General Assembly resolution A/RES/66/258 and GAO Cost Estimating and Assessment Guide,
                                           GAO-09-3SP.



                                           CMP officials told us that they plan to present the additional information
                                           requested by the UN General Assembly in fall 2012. Applying these best
                                           practices, as appropriate, may help the CMP office as it prepares updated
                                           cost materials.




                                           Page 23                                                                             GAO-12-795 UN Renovations
                            To address its future office space needs, the UN is considering the option
UN Considering              of a new building that would be separate from the CMP, but it does not
Consolidation               have an estimate of the project’s costs. The UN estimates that its office
                            space needs will exceed the capacity of its current real estate portfolio by
Building to Address         2023, due primarily to expiring leases. As a potential solution, the City
UN Office Space             and State of New York have proposed the construction of a new office
Needs, but a Cost           building, to be located across the street from UN headquarters, known as
                            the consolidation building. This proposal requires UN General Assembly
Estimate Has Not            approval, but the UN has not entered into any formal agreements
Been Completed              regarding the building and the current lack of a cost estimate makes its
                            cost implications for the UN and its member states unclear. We have
                            previously reported that reliable cost estimates are critical to program
                            success, including informed resource investments.


The UN Anticipates Office   In September 2011, the Office of the Secretary-General completed a
Space Needs at Its          report on future office space accommodation needs for UN headquarters.
Headquarters Will Exceed    The study estimates that, as of 2014, its real estate portfolio in New York
                            will consist of approximately 3.4 million square feet of space—about 39
Capacity by 2023            percent owned and 61 percent leased. 25 The UN headquarters campus
                            comprises the majority of the UN’s owned space, with office space in the
                            Secretariat Building, Conference Building, Library, basements, and
                            General Assembly Building. The UN also leases space in various
                            locations around its headquarters campus to accommodate staff that
                            cannot be housed in its owned space. 26

                            However, due to the combination of expiring leases and estimated staff
                            growth, the Secretary-General’s report estimates that by 2023 the UN’s
                            office space needs will exceed the capacity of the owned and leased
                            buildings currently in its real estate portfolio. Leases for the UN’s two
                            largest leased office spaces expire at the end of March 2018, with options
                            to extend to the end of March 2023, but no renewal options beyond that
                            date. The UN Development Corporation (UNDC)—a public benefit


                            25
                              The UN chose the year 2014 as the starting point for its long-term space needs
                            assessment. According to the UN, the organization plans to vacate temporary swing
                            spaces leased for the CMP prior to 2014. Therefore, it did not include these leased spaces
                            in its assessment.
                            26
                              The CMP plans to renovate office space owned by the UN on its headquarters campus.
                            However, even after the UN completes the renovation of these buildings, it will still require
                            additional office space to accommodate its headquarters staff.




                            Page 24                                                         GAO-12-795 UN Renovations
                           corporation of the State of New York whose mission is to provide office
                           space and other facilities to help meet the current and future space needs
                           of the UN—constructed these buildings in 1976 for use by the UN. The
                           buildings provide approximately 670,000 square feet of office space,
                           housing about 2,500 staff. The UN currently leases these buildings at
                           below-market rates. According to the Secretary-General’s report,
                           renegotiating the leases beyond 2023 would likely result in lease rates set
                           at market rates, rather than the favorable below-market rates currently
                           enjoyed by the UN. 27 Additionally, the Secretary-General’s report projects
                           that headquarters staff levels will increase from 10,711 in 2014 to 11,911
                           in 2023. Using the report’s estimate that each additional staff person
                           requires an additional 250 square feet of space per person, this increase
                           will require an additional 300,000 square feet of office space. We have
                           not independently verified the report’s per person space estimate.
                           However, in October 2011, the UN’s Advisory Committee on
                           Administrative and Budgetary Questions found that a more in-depth and
                           comprehensive analysis of the factors affecting the UN’s space
                           requirements was needed.


Consolidation Building     The City and State of New York have initiated a proposal to construct a
Proposed as an Option to   new office building—known as the consolidation building—that could help
Address UN Long-Term       the UN address some of its long-term office space needs, but the UN has
                           not entered into any agreements on the proposal. In July 2011, the
Office Space Needs         Governor of the State of New York signed legislation authorizing the City
                           of New York to transfer parkland to UNDC to construct a new office
                           building for the UN as large as 900,000 square feet and located across
                           the street from UN headquarters. In October 2011, key officials of the City
                           and State of New York entered into a memorandum of understanding
                           (MOU) regarding the consolidation building. The MOU, to which UNDC
                           consented, obligates UNDC to specific actions, including initial funding for
                           and issuance of bonds to finance the project. Per the MOU, the property
                           will not convey to the UN until UNDC and UN reach agreement on the
                           terms, with a deadline of December 31, 2015. According to UNDC
                           officials, they would like to receive agreement from the UN by early 2014.




                           27
                             The UN has estimated that the market rates for the space effective in 2023 would be
                           $77 per square foot.




                           Page 25                                                      GAO-12-795 UN Renovations
UN officials told us that they were informed of the MOU by UNDC officials
shortly before it was finalized and signed, but have not entered into a
formal agreement regarding the consolidation building. UN officials stated
that they did not see the MOU prior to the City and State of New York
signing it in October 2011 and therefore had no input to the document.
Moreover, while the UN is not a party to the MOU, the document contains
requirements to which the UN must agree for the consolidation building to
move forward. For example, the UN would have to agree to lease the new
office building from UNDC, potentially in a lease-to-own or similar
arrangement. UN officials expressed concern that some of the terms of
the MOU could increase costs and risks to the UN. For instance,
according to UN officials, leasing the building would likely require the UN
to pay an amount roughly equivalent to the bonds issued by UNDC to
design and construct the consolidation building. 28 UN officials told us that
since they will not know the potential lease costs until the bonds are
issued, they would like the option to opt out of the project upon review of
the potential costs. Additionally, according to the MOU, as a condition of
agreeing to lease the consolidation building, the UN would have to extend
the leases at two of its largest leased spaces at increased rental rates
and with additional costs. For instance, according to the terms of the UN’s
current lease, its rates will increase from $27.50 per square foot (about
$18.2 million per year) to $30 per square foot (about $19.8 million per
year) if the organization exercises the option to extend its lease from
2018 to 2023. However, according to UN officials, under the MOU, the
UN would have to extend the leases from 2018 to 2023 and its rates
could rise to market rates, estimated by the UN to be approximately $77
per square foot. Additional costs include an amount equal to real estate
taxes attributable to the space, which UN officials said was not originally
included in the lease renewal terms. Finally, UN officials cited concerns
related to “risk sharing” in the proposal. Specifically, officials expressed
concern that the proposal places the entire risk for the cost of the project
on the UN, rather than sharing the risk between the UN and UNDC. UN
officials told us that they continue to discuss the consolidation building
and its potential costs with UNDC officials. However, as of June 2012, the
UN had not entered into a formal agreement regarding the consolidation
building.




28
  UN officials told us the MOU may also require them to cover $73 million in funds used to
acquire the land on which to construct the consolidation building.




Page 26                                                       GAO-12-795 UN Renovations
                             UN officials told us that the UN General Assembly’s Fifth Committee,
                             which reviews administrative and budgetary issues, plans to discuss
                             options related to the consolidation building at its fall 2012 session.


Cost Estimate for the        While the UN has held discussions with UNDC, neither organization has
Consolidation Building Not   completed a cost estimate for the consolidation building. In October 2011,
Completed                    the UN’s Advisory Committee on Administrative and Budgetary Questions
                             reviewed the Secretary General’s office space study. The committee
                             noted that future UN space requirements could vary significantly
                             depending on the underlying assumptions for estimating staff growth and
                             space allowance per person, as well as alternative workplace policies.
                             The committee also concluded that it was not fully convinced of the
                             assumptions used to establish the baseline estimates of the UN’s future
                             office space requirements. Moreover, the committee stated its desire to
                             compare all potential options for future office space accommodation, and
                             recommended that the Secretary-General complete a detailed cost
                             analysis of the consolidation building comparing the potential cost of the
                             building to other options.

                             We have previously reported that a reliable cost estimate is critical to the
                             success of any program. Such an estimate provides the basis for
                             informed investment decision making, realistic budget formulation and
                             program resourcing, meaningful progress measurement, proactive course
                             correction when warranted, and accountability for results. While the UN’s
                             recommendations did not clarify what to include in the cost estimate for
                             the consolidation building, our research has identified a number of best
                             practices that form the basis of effective program cost estimating and
                             should result in reliable and valid cost estimates that management can
                             use for making informed decisions. As noted earlier, a high-quality and
                             reliable cost estimate is comprehensive, well-documented, accurate, and
                             credible. For example, a comprehensive cost estimate should include all
                             life-cycle costs of a project, document all cost-influencing ground rules
                             and assumptions affecting the estimate, and completely define the
                             program and its schedule, among other best practices. See table 7 for the
                             best practices associated with a high-quality and reliable cost estimate.




                             Page 27                                             GAO-12-795 UN Renovations
Table 7: Best Practices for a High-Quality and Reliable Cost Estimate

Best Practice          Best practice description
Comprehensive          A comprehensive cost estimate should include costs of the program over its full life cycle, provide a level of
                       detail appropriate to ensure that cost elements are neither omitted nor double-counted, and document all
                       cost-influencing ground rules and assumptions.
Well-documented        A well-documented cost estimate should capture in writing such things as the source and significance of the
                       data used, the calculations performed and their results, and the rationale for choosing a particular estimating
                       method. A well-documented estimate can be traced back to and verified against sources and should be
                       reviewed and accepted by management.
Accurate               An accurate cost estimate should be, among other things, unbiased, not overly conservative or optimistic,
                       based on historical data reflecting most likely costs, and adjusted properly for inflation. An accurate estimate
                       should be updated regularly to reflect the current status, such as material changes in and actual cost
                       experiences of the program, and steps should be taken to minimize mathematical mistakes. Further,
                       variances between planned and actual costs should be documented, explained, and reviewed.
Credible               The cost estimates should discuss any limitations of the analysis because of uncertainty, or biases
                       surrounding data or assumptions. Risk and uncertainty analysis should be performed to determine the level of
                       risk associated with the estimate. Further, the estimate’s results should be cross-checked against an
                       independent estimate.
                                           Source: GAO analysis based on the GAO Cost Estimating and Assessment Guide, GAO-09-3SP.



                                           UN officials told us that they plan to conduct a cost analysis of the
                                           consolidation building. However, as of June 2012, the UN had not
                                           completed such an estimate. A cost estimate using our best practices
                                           could assist the UN in predicting the level of confidence in meeting the
                                           project’s budget by quantifying risks and uncertainties associated with the
                                           project. Such an estimate gives decision makers perspective on the
                                           potential variability of the estimate, should facts, circumstances, and
                                           assumptions change. We have found that, without the ability to generate
                                           reliable cost estimates, projects risk experiencing cost overruns, missed
                                           deadlines, and performance shortfalls. As a result, absent a completed
                                           cost estimate for the consolidation building, the potential cost implications
                                           for the UN and its member states are not clear.


                                           As the CMP nears completion of the renovations of the Secretariat and
Conclusions                                Conference Buildings, the project is estimated to be approximately $430
                                           million over budget and risks remain as some renovations have yet to
                                           begin. Financing options exist to address a portion of the projected cost
                                           overrun; however, the United States and other UN member states may be
                                           asked to provide an additional assessment to finance the remainder.
                                           Aware of this risk, the UN General Assembly has requested that the CMP
                                           produce additional reporting on its costs. We have found that the best
                                           practices of developing high-quality and reliable cost estimates help
                                           inform decisions to manage capital projects effectively. Given the cost



                                           Page 28                                                                            GAO-12-795 UN Renovations
                      overruns and challenges of the CMP, as well as the risks and unknown
                      costs associated with the UN’s potential consolidation building project,
                      these practices should be used to enhance the CMP’s future cost
                      estimates and to develop cost estimates of prospective projects to
                      address the UN’s long-term space needs. Such an approach would likely
                      improve the quality and reliability of cost information provided to the UN
                      and its member states, as well as help decision makers evaluate costs
                      and risks associated with these projects.


                      To improve the quality and reliability of information provided to the UN
Recommendations for   and its member states, we recommend that the Secretary of State and
Executive Action      U.S. Permanent Representative to the United Nations work with other
                      member states to take the following two actions:

                      1. Direct the CMP office to implement, as appropriate, GAO’s best
                         practices for cost estimation when it updates information on CMP
                         costs.

                      2. Direct the UN to ensure the development of a cost estimate for the
                         consolidation building utilizing GAO’s best practices for cost
                         estimation.

                      We provided a copy of this report to State and the UN for review and
Agency Comments       comment. State and the UN provided written comments, which are
and Our Evaluation    reproduced in appendixes III and IV, and technical comments, which we
                      have incorporated as appropriate.

                      State concurred with our recommendations and expressed its concern
                      that projected cost overruns of the CMP had grown to approximately $430
                      million. State also noted that it is not actively considering the use of TEF
                      credits to address a U.S. share of a potential additional assessment for
                      the CMP since member states have yet to decide on proposed funding
                      options to address cost overruns. However, given that the estimated cost
                      overruns of the CMP would still be approximately $212.7 million even if
                      the UN approves the use of proposed funding sources, we maintain that
                      an additional member assessment may be needed and that TEF credits
                      attributable to the United States are a possible source of funding such an
                      assessment.




                      Page 29                                             GAO-12-795 UN Renovations
The UN noted that our report was an accurate assessment of the status
of the CMP and that it provided constructive recommendations.


We are sending copies of this report to interested congressional
committees, the Secretary of State, the U.S. Mission to the United
Nations, and the UN. In addition, the report is available at no charge on
the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact
Thomas Melito at (202) 512-9601 or melitot@gao.gov, or David Wise at
David Wise, (202) 512-2834 or wised@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to this
report are listed in appendix V.




Thomas Melito
Director, International Affairs and Trade




David Wise
Director, Physical Infrastructure Issues




Page 30                                             GAO-12-795 UN Renovations
Appendix I: Objectives, Scope, and
              Appendix I: Objectives, Scope, and
              Methodology



Methodology

              This report provides information on the progress of the United Nations
              (UN) Capital Master Plan (CMP) and the status of the UN consolidation
              building. Specifically, we examine (1) the extent to which the CMP is
              meeting its planned renovation scope, schedule, and budget; (2) the UN
              General Assembly’s evaluation of CMP cost estimates; and (3) the status
              of the UN consolidation building project.

              To address our objectives, we reviewed and analyzed relevant planning,
              schedule, and budget documents related to the CMP, as well as relevant
              planning and legal documents related to the consolidation building.
              Additionally, we discussed the progress, plans, risks, and costs of the
              CMP and consolidation building project with officials from the Department
              of State’s (State) Bureau of International Organizations, the U.S. Mission
              to the UN, New York City, and UN offices, including the CMP office and
              Central Support Services. We also discussed efforts related to the
              consolidation building project with the UN Development Corporation, a
              public benefit corporation created to develop and operate office space for
              the benefit of the UN. We focused on these agencies because they are
              involved in the efforts of the CMP and the UN consolidation building
              project.

              To examine the extent to which the CMP is meeting its planned
              renovation scope, schedule, and budget, we analyzed documents such
              as CMP annual reports, UN Board of Auditors reports on the CMP, and
              UN General Assembly resolutions. We compared current planned
              renovation scope, projected completion dates, and cost estimates with
              previously reported scope, schedule, and budget projections. For our
              baseline comparison, we referred to UN General Assembly resolutions
              that approved the planned renovation scope and schedule from
              accelerated strategy IV in 2007 and the $1.88 billion budget for the CMP
              in 2006. Further, we examined other relevant CMP documentation,
              including information on risk assessments, monthly reports, and
              procurement information. To understand the project’s cost estimates, we
              examined materials provided by the CMP office to the UN General
              Assembly’s Fifth Committee documenting the project’s financial condition
              as of February 2012, and analyzed reports on CMP progress and
              associated costs produced by the Advisory Committee on Administrative
              and Budgetary Questions and the Program Planning and Budget Division.
              We also discussed these costs and the CMP’s integrated master
              schedule with CMP officials. To understand options for funding projected
              CMP cost overruns, we reviewed UN Financial Rules and Regulations,
              UN Financial Report and Audited Financial Statements, and relevant
              congressional requirements in Appropriations Law, such as the


              Page 31                                            GAO-12-795 UN Renovations
Appendix I: Objectives, Scope, and
Methodology




Consolidated Appropriations Act of 2012. Further, we held discussions
with officials from the CMP office, the UN Program Planning and Budget
Division, UN Board of Auditors, and State’s Bureau of International
Organizations to understand the various options that the United States
could utilize to finance its portion of projected CMP cost overruns. We
also traveled to New York City, New York, to tour the renovation sites and
observe the progress of the CMP. During these visits, we met with
officials from the CMP office, various UN departments—Program
Planning and Budget Division, Board of Auditors, Office of Internal
Oversight Services—and the U.S. Mission to the UN to discuss the ways
in which the CMP is meeting its planned renovation scope, schedule, and
budget.

To examine the UN General Assembly’s evaluation of CMP cost
estimates, we reviewed and analyzed documents provided by the CMP
office to the UN General Assembly’s Fifth Committee describing the
project’s financial condition as of February 2012, UN General Assembly
resolution 66/258 issued in April 2012, the 2011 CMP annual report
proposing financing options, and the Advisory Committee on
Administrative and Budgetary Questions report A/66/7/Add.11 on costs of
the CMP. Further, we analyzed the extent to which best practices for cost
estimating from our Cost Estimating and Assessment Guide could
potentially address concerns raised by the UN General Assembly with
regard to the cost information provided by the CMP office. We did not
conduct a full assessment of the CMP’s February 2012 cost estimates, as
(a) the estimates were updated projections provided in response to
questions from the UN General Assembly’s Fifth Committee during
briefings, rather than comprehensive cost estimates; and (b) the CMP
office intends to provide a full report on the project’s costs, including new
cost estimates, in fall 2012. Although we did not audit the CMP cost data
and are not expressing an opinion on them, based on our examination of
the documents received and our discussions with cognizant officials, we
concluded that the data were sufficiently reliable for the purposes of this
engagement. We also held discussions with officials from the CMP office,
UN Program Planning and Budget Division, UN Board of Auditors, and
the U.S. Mission to the UN on a number of factors affecting CMP cost
estimates.

To examine the status of the UN consolidation project, we analyzed the
memorandum of understanding (MOU) signed between the City and State
of New York to identify actions required by the MOU. Additionally, we
reviewed UN documents such as the Secretary-General’s Feasibility
Study on the United Nations Headquarters Accommodation Needs 2014-


Page 32                                              GAO-12-795 UN Renovations
Appendix I: Objectives, Scope, and
Methodology




2034 and a related report by the Advisory Committee on Administrative
and Budgetary Questions to understand the UN’s long-term office space
needs. We conducted interviews with officials from New York City, the UN
Development Corporation, and the UN regarding negotiations related to
the consolidation building and lease costs for buildings potentially
affected. Further, we reviewed how our best practices for cost estimating
could provide insight on potential project costs to inform UN decision
making.

We conducted our work from January 2012 to July 2012 in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform our work to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions
based on our objectives. We believe that the evidence obtained provides
a reasonable basis for our findings and conclusions based on our
objectives.




Page 33                                            GAO-12-795 UN Renovations
Appendix II: UN Tax Equalization Fund
              Appendix II: UN Tax Equalization Fund




              The United States annually pays assessed contributions to the UN
              General Fund to support the UN’s programs and activities. One of these
              activities is a staff assessment, which is an amount deducted from the
              gross pay of all UN employees and used to fund the UN Tax Equalization
              Fund (TEF). The UN established the TEF to equalize the net pay of all
              UN staff members whatever their national tax obligations. While most UN
              employees are exempt from paying income tax on their UN earnings in
              their home country, some UN employees, including U.S. nationals, are
              not. For member states that levy income taxes on the earnings of UN
              employees, such as the United States, contributions to the TEF are first
              used to reimburse UN employees for the taxes they paid on their UN
              income. 1 Unused TEF credits remain as a balance in a member state’s
              TEF account.

              The UN reports TEF credits on a biennial basis. According to U.S. and
              UN officials, various factors, such as modifications in U.S. tax laws or
              changes in the number of U.S. employees at the UN, can result in TEF
              credits or debits in a member state’s account. As shown in table 8, credits
              in the TEF attributable to the United States and reported by the UN rose
              by over $160 million between 2001 and 2009—from $17.6 million to $179
              million.




              1
               Member states that do not levy income taxes on the earnings of UN employees receive
              TEF credits as an offset against their mandatory UN assessments.




              Page 34                                                    GAO-12-795 UN Renovations
Appendix II: UN Tax Equalization Fund




Table 8: Credits in the UN Tax Equalization Fund Attributable to the United States,
2001-2009, as Reported by the UN

    Dollars in millions
                                                                                              Change from previous
                                                                                                                 a
    Biennium ending                                 Amount of credits                                    biennium
    December 31, 2001                                                  $17.6
    December 31, 2003                                                  $50.8                                 $33.2
    December 31, 2005                                                  $97.3                                 $46.5
    December 31, 2007                                                 $126.0                                 $28.7
    December 31, 2009                                                 $179.0                                 $53.0
Source: GAO analysis of UN Board of Auditors, Financial Report and Audited Financial Statements.
a
 This table shows changes from previous biennium beginning with 2003.


If a member state’s TEF account has a balance, the Financial Rules and
Regulations of the UN state that such a balance shall be credited against
the mandatory assessed contributions due from that member state the
following year. 2 However, notwithstanding UN financial regulations that
TEF credits should be applied toward a member state’s assessed
contributions, TEF credits attributable to the United States were applied to
fund enhanced security upgrades to the CMP. In October 2010, the UN
requested State’s endorsement of the use of up to $100 million of TEF
credits accrued in prior years. In a January 2011 letter to the UN, State
acknowledged the UN’s use of up to $100 million in U.S. TEF credits
described as “attributable to annual U.S. regular budget contributions” to
fund the enhanced security upgrades. 3

This transaction differs from previous uses of TEF credits. For example,
State has previously requested that TEF credits be applied toward
assessed contributions for the UN. Specifically, we reported that in 1997
the U.S. payment for its regular budget assessment included a $27.3



2
 UN Regulation 4.12. United Nations, Financial Regulations and Rules of the United
Nations, ST/SGB/2003/7. Mandatory assessed contributions include those in the UN
regular budget, peacekeeping operation accounts, and international criminal tribunal
accounts.
3
 State also informed Congress of this pending transaction in letters sent in December
2010.




Page 35                                                                                   GAO-12-795 UN Renovations
Appendix II: UN Tax Equalization Fund




million credit from surplus funds in the TEF. 4 UN officials confirmed that
TEF credits attributable to the United States were previously applied
toward U.S. assessed contributions; however, they noted that in the case
of the enhanced security upgrades the credits were used for a different
purpose.




4
 GAO, United Nations: Financial Issues and U.S. Arrears, GAO/NSIAD-98-201BR,
(Washington, D.C.: June 18, 1998).




Page 36                                                  GAO-12-795 UN Renovations
Appendix III: Comments from the
                           Appendix III: Comments from the Department
                           of State



Department of State

Note: GAO comments
supplementing those in
the report appear at the
end of this appendix.




                           Page 37                                      GAO-12-795 UN Renovations
                 Appendix III: Comments from the Department
                 of State




See comment 1.




See comment 2.




                 Page 38                                      GAO-12-795 UN Renovations
               Appendix III: Comments from the Department
               of State




               The following are GAO’s comments on State’s letter dated July 9, 2012.


               1. We maintain that an additional member assessment may be needed
GAO Comments   and that Tax Equalization Fund credits attributable to the United States
               remain a possible source of funding for such an assessment. Given the
               Capital Master Plan’s (CMP) projected cost overruns of approximately
               $430 million, even if the United Nations (UN) General Assembly approves
               the use of proposed funding sources and reductions in planned
               renovations, the estimated cost overruns of the project would still be
               $212.7 million. In the event of cost escalations over the approved budget
               of the CMP, the UN General Assembly decided that member states would
               be subject to a further assessment. The U.S. share of any future
               assessment would be 22 percent.

               2. Our report makes clear that the CMP project is separate from the
               consolidation building proposal. However, we maintain that regardless of
               whether the UN directly manages the construction of the consolidation
               building, a sound cost estimate should be developed as the UN will be
               responsible for financing the building should it agree to its construction.




               Page 39                                             GAO-12-795 UN Renovations
Appendix IV: Comments from the United
             Appendix IV: Comments from the United
             Nations



Nations




             Page 40                                 GAO-12-795 UN Renovations
Appendix V: GAO Contacts and Staff
                  Appendix V: GAO Contacts and Staff
                  Acknowledgments



Acknowledgments

                  Thomas Melito, Director, International Affairs and Trade, (202) 512-9601
GAO Contacts      or melitot@gao.gov

                  David Wise, Director, Physical Infrastructure Issues, (202) 512-2834 or
                  wised@gao.gov


                  In addition to the contacts named above, Maria Edelstein, Assistant
Staff             Director; Biza Repko; Adam Yu; Mark Dowling; Debbie J. Chung; Jason
Acknowledgments   Lee; and Karen Richey made key contributions to this report. Joshua
                  Ormond provided technical assistance.




                  Page 41                                            GAO-12-795 UN Renovations
Related GAO Products
             Related GAO Products




             United Nations: Renovation Still Scheduled for Completion in 2013, but
             Risks to Its Schedule and Cost Remain. GAO-09-870R. (Washington,
             D.C.: July 30, 2009).

             United Nations: Renovation Schedule Accelerated after Delays, but Risks
             Remain in Key Areas. GAO-08-513R. (Washington, D.C.: April 9, 2008).

             Update on the United Nations’ Capital Master Plan. GAO-07-414R.
             (Washington, D.C.: February 15, 2007).

             United Nations: Renovation Planning Follows Industry Practices, but
             Procurement and Oversight Could Present Challenges. GAO-07-31.
             (Washington, D.C.: November 16, 2006).

             United Nations: Early Renovation Planning Reasonable, but Additional
             Management Controls and Oversight Will Be Needed. GAO-03-566.
             (Washington, D.C.: May 30, 2003).

             United Nations: Planning for Headquarters Renovation is Reasonable;
             United States Needs to Decide Whether to Support Work. GAO-01-788.
             (Washington, D.C.: June 15, 2001).




(320892)
             Page 42                                           GAO-12-795 UN Renovations
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