Case Studies 4 and 15: From VA Construction, GAO-10-189, December 14, 2009

The Department of Veterans Affairs (VA) operates one of the largest health care systems in the nation. As of August 2009, VA’s Veterans Health Administration (VHA) had 32 major ongoing construction projects, with an estimated total cost of about $6.1 billion and average cost per project of about $191 million. Some of these projects were initiated as part of VA’s Capital Asset Realignment for Enhanced Services (CARES), which was a comprehensive assessment of VHA’s capital asset requirements. In response to a congressional request, we (1) described how costs and schedules of current VHA major construction projects had changed, (2) determined the reasons for changes in costs and schedules, and (3) described the actions VA had taken to address cost increases and schedule delays.

We reviewed construction documents, visited three construction sites, and interviewed VA and general contractor officials. We found that while about half of the 32 major ongoing construction projects were within their budgets, since submitted to the Congress, 11 had schedule delays, 18 had been subjected to cost increases, and 5 showed a cost increase of over 100 percent. For example, the cost of a new medical center in Las Vegas rose from an initial estimate of $286 million to over $600 million, an increase of about 110 percent. In addition, 13 projects had been subjected to cost increases of between 1 and 100 percent and 11 to schedule delays, 4 of which were longer than 24 months. Several reasons for project cost increases and schedule delays included VA’s preparing initial cost estimates that were not thorough, its making significant changes to project scope after initial estimates were submitted, and unforeseen events such as an increase in the cost of construction materials.