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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over time. Unit prices are designed to reflect the current ~id value for construction. Estimates
should be periodically re-priced due to changes in equipment, design, and construction
techniques that continually affect the unit prices. Changes in laws are also continually occurring
which result in additional )Vork or changes in construction practices. As a result, the Rls
contained a recommendation that "Cost indices should not be applied to cost estimates over
5 years old; the estimates should be re-priced" (RI Part 150, Chapter 152,1993).

For long-term projects, Reclamation periodically (typically after no more than 5 years)
re-estimates the PCE for the remaining features. This is done to ensure an accurate projection of
budget needs is available to be compared to remaining appropriations ceiling to assure that PCEs
reflect the latest and most accurate information available about the project, and that the prices
used in the estimate reflect the current costs ofthe construction where the project is located.
This updated estimate is then compared to the remaining appropriations ceiling to ensure
sufficient funding is available to complete the project.

The PCE is a vital tool that impacts project construction schedules, repayment contracts, cost
sharing agreements, and Reclamation's annual appropriations request. PCEs are typically
prepared by the Reclamation Area Office with project jurisdiction in consultation with
construction cost estimators, and sp'ecialists in land, environmental, and cultural aspects of
projects. Regional Directors assign staffto track project expenditures on a monthly basis and
compute remaining appropriations (with or without indexing as prescribed by the project
authorization) during budget formulation with a comparison to actual costs incurred. Regional
staff also prepares annual budget requests with a goal of completing projects within their region
in accordance with each project's authorizing legislation. A Reclamation-wide Budget Review
Committee considers all such requests and develops Reclamation's annual budget request. This
process is repeated each year and provides the agency with a means to address project and
agency-wide budget needs in a reasonably flexible manner.

If these processes reveal potential appropriations ceiling concerns, cost containment measures
are evaluated with the project stakeholders and, if necessary, additional legislation is sought to
address the future budget and appropriations needs.

Recent Experience With Project Management Process: The Dam Safety Program is managed
on a Reclamation-wide basis. Projecting current projects through the end of2004, 65 SOD
construction projects will have been completed. Ofthese projects, 16 exceeded their estimated
cost by more than 10 percent. The total estimated cost presented to the Congress in the
Modification Reports for these 65 projects is just under $1.1 billion. The actual cost to complete
the projects was $927 million (about 86 percent oftotal estimated cost).

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