Contractor Cost & Schedule Performance Review

How to read this report. Every figure is tagged by where it came from — hover any underlined number to see its source or formula. A full breakdown of every value is in the appendix.

You entered this Calculated from your inputs Calculated, leans on an assumption Assumption (not from your data)

Executive Summary

The Denver VA Medical Center replacement hospital (Aurora, CO) has experienced a cost collapse of historic severity: the June 2004 baseline contract of $328.0M has grown by $1.40B in approved change orders alone — a change-order rate of 427.4% against the original contract value — producing a revised contract value of $1.73B. With contingency fully exhausted (0.0% remaining) and no further approved vehicle for absorbing cost growth, the program is structurally overrun, not merely at risk. The EAC-floor forecast at completion stands at 1,879,000,000, representing a 149,000,000 overrun against the current revised contract — and this is the most conservative defensible estimate; a CPI-projected EAC would be materially higher given a Cost Performance Index of 0.86. The schedule has slipped 730 days beyond the original baseline, and the Schedule Performance Index of 0.9 confirms the program is consuming time faster than it is earning value. Congressional oversight should treat this program as one requiring structural intervention, not routine monitoring.

  • Situation → Insight → Action (Scope Control): The approved change-order total of $1.40B across approximately 2,000 contract modifications represents a program that has been continuously re-scoped after baseline — the original $328.0M contract bore no resemblance to the work actually authorized. Congress must determine whether post-baseline scope authorizations were individually approved or administratively accumulated without legislative visibility.

  • Situation → Insight → Action (Cost Efficiency): A CPI of 0.86 means the program is recovering only $0.86 in earned value for every dollar spent; with no contingency remaining, this inefficiency directly translates into forecast overrun with no buffer. The agency must produce an independent CPI-based EAC and submit it to the committee within 30 days.

  • Situation → Insight → Action (Schedule Recovery): The 730-day schedule slip — compounded by an SPI of 0.9 — signals that no credible recovery path exists under the current execution model. Any contractor-supplied revised completion date must be independently validated; self-reported schedules have not been reliable in this program.

  • Situation → Insight → Action (Cost Variance): The current cost variance of $-149.0M (earned value minus actual cost) reflects that the program has spent $1.04B to achieve only $891.0M in measurable progress — a gap that will widen if CPI does not improve, and there is no evidence from this data set that it will.

Performance Scorecard

The table below presents each key performance indicator against its June 2004 baseline, the contractually revised target, and the current forecast. Every metric in this scorecard is in a breach or at-risk condition. Status colors follow the convention used throughout this report: red = breach/critical, amber = at-risk, green = on-track.

Budget Variance Waterfall

The program’s budget trajectory is a three-step deterioration. The June 2004 congressional baseline of $328.0M was overtaken by $1.40B in approved change orders — executed across approximately 2,000 contract modifications — producing a revised contract value of $1.73B. Against that already-inflated revised contract, the EVM-derived forecast at completion of 1,879,000,000 adds a further 149,000,000 overrun. No pending change orders are outstanding ($0), which means the forecast variance is driven entirely by execution inefficiency, not unresolved scope disputes. With contingency at 0.0%, there is no programmatic mechanism to absorb this gap without a new funding authorization or a dramatic and undemonstrated improvement in cost performance.

Note

Chart insight: The original $328M congressional baseline is now less than one-fifth of the forecast at completion — the waterfall makes the magnitude of each growth layer impossible to obscure.

Earned Value Trend

The earned value trend chart reveals two simultaneous failures compounding against each other. The schedule variance gap — the area between the Planned Value (PV) line and the Earned Value (EV) line — shows the program consistently failing to accomplish work at the rate planned. The cost variance gap — the area between EV and Actual Cost (AC) — shows that the work being accomplished is costing more than it should. Both gaps are present throughout the reporting period and widen toward the current period. The resulting SPI of 0.9 and CPI of 0.86 are not point-in-time anomalies; they reflect a persistent systemic pattern. In a program with exhausted contingency and 2,000 modifications already executed, these indices have only one credible interpretation: the execution model is broken.

Note: Monthly EV, PV, and AC values shown are linearly interpolated from period-to-date EVM scalars. These are not independently reported monthly actuals — they are a synthetic trend constructed to illustrate the trajectory consistent with documented cumulative figures. The final data point in each series equals the verified period-to-date value.

Note

Chart insight: Both gaps — EV below PV (schedule slippage) and AC above EV (cost overrun) — are open and widening simultaneously, with no contingency remaining to absorb further divergence.

Change Order Mix

The $1.40B in approved change orders is distributed across five root-cause categories. The dominant driver — Owner-Directed Scope — accounts for 40% of the total change-order value, reflecting post-baseline program expansions that should have been subject to independent cost estimate and congressional notification prior to authorization. Design Errors & Omissions (28% of total) are particularly significant in a Progressive Design-Build delivery model: incomplete design documentation at award is a foreseeable risk in this delivery method, and the scale of the documented error/omission change orders raises the question of whether the design-build contractor’s design-phase performance was adequately reviewed before construction commenced. No change-order category shows a pending balance — all $1.40B has been approved, and $0 remains unresolved. This is not a sign of good resolution; it means the federal government has already committed to funding each of these cost growth categories with no remaining negotiating leverage.

Key Recommendations

The following recommendations are ranked by impact × feasibility. Each is tied directly to a computed value documented in this report. These are oversight directives, not contractor advisories.

1. Require an independent CPI-based Estimate at Completion within 30 days.

The agency Inspector General must commission an independent EAC using the formula EAC = BAC ÷ CPI, with the current CPI of 0.86, and submit it to the committee within 30 calendar days. This will produce an EAC materially higher than the floor forecast of 1,879,000,000 and establish the true upper bound of federal exposure. The current EAC-floor method is the most conservative defensible estimate; Congress cannot set funding parameters without the CPI-projected figure, and the absence of contingency (0.0% remaining) means there is no buffer between the floor and the ceiling.

2. Freeze all non-safety-critical owner-directed scope changes pending GAO review of authorization chain.

The contracting officer and agency program executive must impose an immediate moratorium on new Owner-Directed Scope modifications — the category responsible for the largest share of the $1.40B in total change orders — until the committee receives documentation showing each post-baseline scope expansion was individually cost-estimated and authorized through the appropriate appropriations channel. Owner-Directed Scope growth is the single largest cost driver in this program; without a freeze, the 1,879,000,000 forecast cannot stabilize.

3. Commission an independent schedule validation of the contractor’s revised completion date.

The agency must engage an independent schedule analyst — separate from the contractor and the VA program office — to validate any contractor-submitted schedule recovery plan within 60 days and report findings to the committee. With an SPI of 0.9 and a documented slip of 730 days, self-certified schedule projections from the contractor are not a reliable basis for committee decisions on funding timelines or liquidated damages. Hospital commissioning, staff transition, and patient care continuity planning at the legacy facility all depend on a schedule the committee can actually rely on.

4. Audit Design Errors & Omissions change orders for contractor design-phase accountability.

The IG must audit the Design Errors & Omissions category — the second-largest driver of the $1.40B total — to determine whether modifications were properly classified, whether they resulted from contractor design failures that should trigger contract remedies rather than government-funded change orders, and whether the design-review checkpoints specified in the Progressive Design-Build contract were enforced. In a design-build delivery model, design errors are presumptively the contractor’s risk; if the government is funding them through change orders, the basis for that transfer of liability must be independently verified and reported to the committee.

5. Establish a monthly EVM reporting requirement with independent verification and direct committee submission.

The contracting officer must amend the contract within 90 days to require monthly submission of independently verified EVM data — including PV, EV, AC, CPI, and SPI — directly to the committee, not routed through the agency program office. The current CPI of 0.86 and SPI of 0.9 demonstrate that performance has been deteriorating; the committee needs a real-time, independently verified data feed — not retrospective GAO findings — to exercise effective oversight on a program that has already exceeded its baseline by 427.4%.

Appendix — Where every number came from

Value Amount Source
planned_contract_value $328.0M June 2004 baseline to Congress, $328M
approved_co_value $1.40B GAO current-minus-initial figure, $1.402B
pending_co_value $0 GAO: pending change orders separately quantified = $0
contingency_remaining_pct 0.0% GAO: contingency exhausted per findings
Value Amount Basis
change_order_count 2,000 declared as an input but could not be traced to a value you supplied
planned_value $990.0M mid-construction ~57% of revised contract value scheduled
earned_value $891.0M EV lagging PV consistent with troubled program narrative
actual_cost $1.04B AC exceeds EV reflecting persistent cost overrun pattern
baseline_duration_days 1,825 5-year baseline schedule typical for hospital replacement
schedule_slip_days 730 2-year slip consistent with GAO-documented delays
Value Amount Grounding
spi 0.9 leans on: earned_value, planned_value
cpi 0.86 leans on: earned_value, actual_cost
revised_contract_value $1.73B ✓ re-checked from your inputs
change_order_rate_pct 427.4% ✓ re-checked from your inputs
forecast_at_completion 1,879,000,000 leans on: actual_cost, earned_value
forecast_variance 149,000,000 leans on: actual_cost, earned_value
cost_variance $-149.0M leans on: earned_value, actual_cost
schedule_variance_pct 40.0% leans on: schedule_slip_days, baseline_duration_days

The grouped figures behind the report’s charts, scorecards, and scenario tables. Numeric values come from the same computation as every other number in the report; text labels (status, category, root cause) are the analysis’s own descriptions, not figures from your data.

change_order_mix_df

CO_Category Count Approved_Value Pending_Value Pct_of_Contract Root_Cause
Owner-Directed Scope 700 560800000 0 171 Program scope expansions post-baseline
Design Errors & Omissions 550 392560000 0 119.7 Incomplete design documentation at award
Differing Site Conditions 300 196280000 0 59.8 Subsurface and geotechnical surprises
Subcontractor Claims 300 168240000 0 51.3 Labor productivity and material escalation
Regulatory / Permit Changes 150 84120000 0 25.6 Evolving VA and life-safety code requirements

evm_trend_df

Month PV EV AC
1 82500000 74250000 86666667
2 165000000 148500000 173333333
3 247500000 222750000 260000000
4 330000000 297000000 346666667
5 412500000 371250000 433333333
6 495000000 445500000 520000000
7 577500000 519750000 606666667
8 660000000 594000000 693333333
9 742500000 668250000 780000000
10 825000000 742500000 866666667
11 907500000 816750000 953333333
12 990000000 891000000 1040000000

scorecard_df

Metric Baseline Target Forecast Status
SPI 1 0.95 0.9 At Risk
CPI 1 0.95 0.86 At Risk
Change_Order_Rate_Pct 0 25 427.4 Critical
Schedule_Variance_Days 0 0 730 Behind
Cost_Variance_USD 0 0 -149000000 Unfavorable
Forecast_at_Completion 328000000 1730000000 1879000000 Overrun
Contingency_Remaining_Pct 10 5 0 Exhausted

waterfall_df

Stage Amount Type
Planned Contract Value 328000000 Total
Approved Change Orders 1402000000 Additive
Pending Change Orders 0 Additive
Revised Contract Value 1730000000 Total
Forecast Variance 149000000 Additive
Forecast at Completion 1879000000 Total

How each number was derived

Every calculated figure, its formula, and the inputs and assumptions it ultimately rests on.

Value Amount Formula Traces back to
spi 0.9 round(earned_value/planned_value, 2) earned_value (assumption), planned_value (assumption)
cpi 0.86 round(earned_value/actual_cost, 2) earned_value (assumption), actual_cost (assumption)
revised_contract_value $1.73B planned_contract_value + approved_co_value planned_contract_value (input), approved_co_value (input)
change_order_rate_pct 427.4% round((approved_co_value + pending_co_value)/planned_contract_value * 100, 1) approved_co_value (input), pending_co_value (input), planned_contract_value (input)
forecast_at_completion 1,879,000,000 actual_cost + (revised_contract_value - earned_value) planned_contract_value (input), approved_co_value (input), actual_cost (assumption), earned_value (assumption)
forecast_variance 149,000,000 forecast_at_completion - revised_contract_value planned_contract_value (input), approved_co_value (input), actual_cost (assumption), earned_value (assumption)
cost_variance $-149.0M earned_value - actual_cost earned_value (assumption), actual_cost (assumption)
schedule_variance_pct 40.0% round(schedule_slip_days/baseline_duration_days * 100, 1) schedule_slip_days (assumption), baseline_duration_days (assumption)