Update on the United Nations' Capital Master Plan

GAO-07-414R: Published: Feb 15, 2007. Publicly Released: Feb 15, 2007.

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Terrell G. Dorn
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Since 2000, the United Nations (UN) has been developing a Capital Master Plan (CMP) to renovate its headquarters complex in New York City to bring it into compliance with current life safety and building codes. The planned renovation will also enable the UN to address technology and security needs. Since 2001, we have reported on the UN's efforts to develop the CMP. As we finalized our most recent report in November 2006, the UN Secretary-General released the latest progress report on the CMP and recommended that the UN General Assembly approve a scope, schedule, budget, and funding mechanism for the CMP. The Secretary-General's report also included an updated cost estimate of $1.88 billion for the project. This estimate for the CMP is about $128 million higher than the previous estimate, which was released in 2005. As the host country and largest contributor to the UN, the United States continues to have a significant interest in the success of the renovation. In this report, we (1) analyze the changes in the latest cost estimate and (2) describe the latest decisions the UN General Assembly made in regard to the CMP and the resulting cost to the United States to fund the project.

A total of $214 million in cost increases and $86 million in cost decreases were identified in the latest cost estimate, for a net cost increase of $128 million. Most of the cost categories in the 2006 CMP cost estimate increased, but others decreased from the previous estimate. The increase in the cost categories largely resulted from higher rates of projected future inflation, further definition of the scope of work to be done, and a delay in the start of the project. Reductions were made to some cost categories because the design had progressed (reducing the uncertainty in the project), and areas were identified where the construction costs could be cut without affecting the quality or functionality of the project. In December 2006, the General Assembly approved a budget for the CMP of $1.88 billion, the final project scope, and a project schedule with a completion date of 2014. To fund the CMP, the General Assembly decided to allow member states the option of either making a onetime payment or equal payments over 5 years. Assessments are based upon each member state's regular budget rate of assessment. In addition, the General Assembly approved a $45 million working capital reserve to cover temporary project cash flow deficits that might occur. Payment for the single or first assessment and the working capital reserve is due around May 1, 2007. According to a State official, the United States is expected to pay its assessment of $377.7 million over 5 years, for a total of $75.5 million per year. Also, the United States has been assessed about $9.9 million for its share of the working capital reserve. The President's Fiscal Year 2008 Budget request includes about $85 million to pay the U.S. assessments.

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