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Although the physical life of the project will be at least 100 years, a 50-year period of analysis was selected in accordance with the intent of Section 205 of the Flood Control Act, approved 30 June 1948, as amended by Section 205 of the Flood Control Act, approved 23 October 1962. The development of costs and benefits follows standard Corps of Engineers practice. The value of all goods and services used in the project is estimated on the cost side. Damages prevented are esti- mated on the benefit side. The development of damages prevented is based on flood damage surveys made in the town of Holly in 1973 and from problem areas having like characteristics that have detailed damage survey data, and depth-damage relationships. This material is,then related to frequency data to convert it to average annual values. The plan would confine flows to a nondamaging area, reducing the res idual damages in Holly to produce damage prevention benefi ts. Another consideration is maximizing net tangible benefits. This is an, economic concept aimed at sizing a project, or investment, to the point where the greatest excess of benefits over costs occurs. In effect, this is the point where the last increment in project size has an incremental cos t equal to incremental benefi ts, and any further increase in size would not be economically justified. COSTS The estimated first costs and annual changes of improvement, based upon January 1977 prices, are summarized in Table 7. An allowance of approximately 12 percent for contingencies is included. The estimate includes engineering' and design, and supervision and administration, based on the cost of items for similar projects. The non-Federal cost represents an estimated value for use in comparing annual cost to benefits and does not necessarily reflect actual cash outlay. Project life is considered at 50 years. Interest and amortization are hased upon a rate of 6-3/8 percent. The detailed cost estimate, presented in Appendix 3, is within 7 percent of tbe preliminary costs computed during the project formulation stage; therefore, no reformulation was necessary. BENEFITS Estimates of monetary benefits are based on normalized and Decemher 1976 price levels and 1979 economic conditions. The projected 1979 economic conditions were selected for use in the study because this is the most probable date for construction of the recommended project, if such action is realized. The area which would be protected con- sists of the entire urban area of Holly, Colorado, plus some adjacent farmland. The total present and future benefits, attributable to the project equal $191,300. A detailed discussion of benefits is presented in Appendix 3, Economics of the Selected Plan. 23