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I I I I I I I I I I I I I I I I I 0012H It does not appear the 2000 FSEIS unit price cost estimates were adjusted for the reduced quantities ofthe smaller features, but rather were indexed only using the 'initial Reclamation cost estimate. h) Cost contingencies were not rigorously analyzed in terms of unknowns, future risk, and levels of uncertainty. The detailed estimate showed various contingencies for the line items, but the summary tables showed a contingency of 20 percent for all major features, which is expected for a feasibility-level estimate. However, a review found that some of the costs for features were more typical of appraisal level. i) The 1999 PCE failed to include the additional costs of contracting in a direct-source ISDEA environment, even though the legislation authorizing the project specifically provides for the application ofthis law to the construction of the Project. Project sponsors and the United States were aware that its application was an important issue to the Tribes tfroughout the water rights negotiations process. In early 2000, representatives of the San Juan Water Commission also raised the issue of possible higher Project costs arising because of application of the ISDEA contracting process. 2. Factors contributing to lack ofreview ofthe 1999 PCE prior to implementation. a) Because the 1999 PCE was included in the 2000 FSEIS, Reclamation was ultimately responsible for the acc1,!facy ofthe PCE. There was adequate time for Reclamation to review the design and cost estimates between the DSEIS and the FSEIS. However, Reclamation did not complete a rigorous review. Although internal questions were raised about the completeness of the cost estimates provided to Reclamation in the 1999 PCE, the focus was clearly on completing environmental compliance and supporting efforts to reach internal agreement on a plan for the Project. b) Reclamation strategy meetings in January and March 2001 did not focus on the accuracy ofthe 1999 PCE, but on developing an implementation strategy to complete the project during the 7-year construction period recognized by the Congress. The review did not find evidence that an in- depth review of the cost estimate was considered by Reclamation during this time. c) Although a Project Management Team (including a construction manager) was formed in mid-200l, the project construction engineer did not arrive until early 2002. This contributed to a delay in identifying significant omissions or understanding of site conditions. 13