BOARD00809

• Board Meeting Date: 1/27/2004
• Description: WSP Section - Animas-La Plata Project Cost Overrun Issue
• Board Meetings - Doc Type: Memo

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additional costs.l The cost estimates were prepared by qualified engineers hired
by the Ute Mountain Ute Tribe (UMUT) who relied upon several years of
Reclamation data and analyses. This inaccurate cost estimate was due primarily
to dependence on incomplete data inCluding:

. some information at appraisal level (see Appendix 2, p. 2-2) within the
1999 feasibility cost estimate;

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. mischaracterizatiori of site conditions; and

. under-estilllation of construction impacts of environmental and legislative'
constraints.

Project omissions and refmements that occurred after completion of the
1999 estimate also caused an increase in the construction cost estimate for the
Project between 1999 and 2003, including:

. costs as~ociated with changes to site locations (relocations) of Project
components;

. . omission of costs in the 1999 estimate associated with the
Congressionally mandated P.L. 93-638 contract process; and

. . inadequate review of the draft cost estimates.

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Communications and discussions between Reclamation Project staff and sponsors
of the Project about cost factors related to. design options have been inadequate,
Specifically, communication as required by existing contracts was not detailed or
timely enough to allow sponsors input on construction plans and progress,
changing conditions, or other information associated with the construction of the
Project. 2

. II. Introduction

The Animas-La Plata Project is located in southwestern Colorado and
northwestern New Mexico. It has been the subject of public interest and
environmental review since soon after it was first authorized by the Colorado
River Basin Project Act of 1968 (p.L. 90-537). In 1988,it was incorporated into

. I The 1999 estiIDate was included in the fmal supplemental environmental impact statement
(FSEIS}.
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It is important to note that all project sponsors are entitled to full'and open communication about
all aspects of the Project. The non-tribal sponsors who have paid capital costs upfront are also
entitled to consultation under the tenns of their repayment contracts on project construction,
including any possible increased repayment obligations because of reasonable and unforeSeen
circumstances during construction.

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