WSPC03491

• File Number: 8220.106.O
• Description: Colorado River Water Projects - Animas La Plata - Project Funding
• State: CO
• Basin: Colorado Mainstem
• Water Division: 5
• Date: 11/1/2003
• Author: DOI-BOR
• Title: Animas La Plata Project - Construction Cost Estimates - Report to the Secretary - November 2003
• Water Supply Pro - Doc Type: Report/Study

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d) The lack of a cost ceiling appears to have contributed to the failure of
Reclamation in not examining cost data more rigorously earlier in the
process. Clearly, the focus was on completing construction within a
7-year period.

3. Factors contributing to missing opportunities to review and refine the
1999 peE after implementation.

a) Reclamation did not link cost estimates to accountability for future
performance in supporting construction authorization on this project
alternative. It is Reclamation's standard practice to do so. If the baseline-
performance link had been made for this project, the schedule and cost
estimate would have been reviewed in more detail, more items would have
been re-priced, and contingencies and schedule float would have been
scrutinized.

b) Opportunities to identify and analyze deficiencies, omissions, and risks
and set the contingency and schedule float amounts were not maximized
because available Project Management tools and techniques were not fully
utilized by Reclamation. Also, a specific decision-making process should
have been set up to manage, track, and report future cost and schedule
changes, and the depletion of float and contingencies. Until now, this type
of process does not appear to have been used by Reclamation for this
Project.

4. While the 2003 estimate is the most complete estimate to date, there are
still certain factors that may cause a revision in the 2003 estimate.

a) Inclusion of the 30 percent factor, the EDF, in the 2003 accounts for $43
million of the estimated increase to construct the Project. The EDF, a
contingency to account for additional costs that arise during the
negotiation process, was developed after comparing the difference
between the IGCE and the actual contract award amount for the initial
contracts using the direct source construction contracting process allowed
for in the ISDEA. Assignment of30 percent as the EDF is conservative
and could decrease in the future as Reclamation and the Ute Mountain Ute
Tribe become more familiar with the process, and because some of the
additional costs in the early contracts are for start up and other one-time
costs that will not occur in the future.

b) April 2003 cost estimates for the NNMP and Ridges Basin Dam Inlet
Conduit have refined 1999 estimates. However, additional investigation,
design data, and design work are needed to increase confidence in this
estimate. Also the 2003 PCE does not include any costs for operation and
maintenance (O&M) of the NNMP prior to its transfer to the Navajo
Nation for O&M.