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I I I I I I I I I I I I I I I I I I I ~ '001229 methods of fulfilling the project needs. A detailed design is then prepared and cost estimates are computed using the final design specifications and quantities: This activity includes the development of the IGCE for use by the contracting award for solicitations. Once, construction is underway, cqst estimates are prepared as necessary to support contract change orders and to analyze contractor claims. Project Development Process - Project Management Team: A PMT is typically formed for all critical, complex, or controversial Reclamation projects. The team plans the implementation of activities leading to completion of construction. The PMT provides oversight to the various design teams developing individual solicitations to construct project features. The PMT also oversees development of projected budget needs for completion of the various project features which are provided to the regional staff for their use in formulating their region's total annual budget request during each annual budgeting cycle. While,no agency-wide guidance exists regarding the review of cost estimates prepared by others, cost estimates prepared by and for Reclamation are typically checked and reviewed as part of each Reclamation office's operating practices. Such review requirements are normally addressed in the individual agreements under which those estimates are provided to Reclamation. Administration of this review is the responsibility of the PMT for each project where a PMT is established. Where a PMT is not established, this is the responsibility of the originating Reclamation office. Preparation of the Office of Management and Budget (OMB) Form 300 report provides an additional management control tool to assure that attention is given to key project management issues on at least a quarterly basis. The report addresses project costs, schedules, and earned value analysis, and provides for the discussion and identification of risks for the project deviating from the plan. Project Budget Management Processes: In its normal course of business, Reclamation develops many types of estimates for several uses, PCEs are initially prepared for use in the authorizing legislation. An appropriations ceiling is typically established in the authorizing legislation for each project based on the PCE. The authorizing legislation usually addresses whether or not cost indexing is to be applied to the appropriations ceiling to reflect inflation through the duration of the project. In cases where there are significant changes to the project or significant time has passed since the project was authorized, the peE is updated, not merely indexed, in a Definite Plan Report prior to construction. As project features are completed, annual expenditures are subtracted from the appropriations ceiling and the remaining appropriation ceiling is carried forward to the next year. If allowed by the authorizing legislation, the remaining ceiling is increased to reflect inflation thus preserving the economic scope ofthe original appropriations. PCEs are indexed annually at the discretion of the responsible office during the budget process to revise estimates to October of the budget year prices (e.g., fiscal year 2005 budgets are in October 2004 prices). The use of cost indices over extended periods of time pose inherent risks to the accuracy ofPCEs. The cost indices do not contain any provision for either technology changes or legal changes but rather simply reflect the change in the dollar value of construction 2-4