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102191 1 (1977-05-11)

handle is hein.gao/gaobacxnx0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE INTERNATIONAL DIVISION LATIN AMERICAN BRANCH % AMERICAN EMBASSY Box 2016, BALBoA, CANAL ZONE OFICE OF THE DiaECTOR r-4 May 11, 1977 ('J q) Mr. Walter D. Bjorseth Financial Vice President RELEASED Panama Canal Company Balbra Heights, Canal Zone Dear Mr. Bjorseth: The General Accounting Office has completed a survey of the Canal Organization's fiscal year 1977 Capital Investment Program. The survey svdluated the Program's mangement process to identify areas or projects for which costs could be reduced or eliminated. We chtained information on the capital budget cycle, analyzed the clak-,.Tng and approval process, examined selected capital pro- Deat!, 61a nterviewed officials. The fknama Canal Company incurred an operating loss in fiscal year 1)7:'. and losses have continued through fiscal year 1976. Consequent.y, greater operating expenses are eliminating the margin tKL &was being used for financing capital improvements and more str* cent capital investment planning is required. The Canal Organization's planned capital investment projects for fiscal year 1977 have an estimated cost of $32,211,000. We reviewed four of these projects totaling $7,963,000. We found that (1) $93,068 was requested and received in excess of needs on one project, (2) $6.5 million was approved to procure towing locomotives, even though the justification of need for them was incomplete, and (3) $1.2 million was authorized and approved for two other projects without considering cost-saving alternatives or providing project coordination. In our view, better planning and more detailed analysis of project justification is needed to avoid requesting funds in excess of pro- ject needs and to preclude the implementation of questionable projects. Advance engineering, planning, and design -- $247,000 Funds for advance engineering, planning, and design are included in the capital budget program. The Engineering Division, responsible RELEASED

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