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<br /> <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />001239 <br /> <br />the Colorado Ute Indian Water Rights Settlement Act (P.L. 100-585) (1988 <br />Settlement Act). The most recent authorization, the Colorado Ute Settlement Act <br />Amendments of2000 (Title III ofP.L. 106-554, December 21, 2000) provides for <br />implementation and completion of the Project. The Commissioner of the Bureau <br />of Reclamation granted approval to begin construction in October 2001, and <br />initial site work staI!ed in April 2002. <br /> <br />A construction cost estimate for the Project was developed in 1999 for inclusion <br />in the July 2000 Final Supplemental Environmental Impact Statement <br />(2000 FSEIS). This estimate was also used to support the 2000 authorizing <br />legislation. The 2000 legislation did not include a cost ceiling for the Project, but <br />was limited to "those amounts as are necessary" to complete construction of the <br />Project within 7 years. Reclamation began updating the project cost estimate <br />(PCE) in January 2003 to index costs for inflation, include changes related to final <br />designs on key features, and reflect early experience from contract awards. This <br />process, completed in July 2003, identified a substantial increase in the estimated <br />construction co~t. The PCE in Reclamation's fiscal year 2004 budget justification <br />document was $337.9 million at the October 2003 price level. The new PCE is <br />$500 million (note: this value will be indexed annually) at the January 2003 price <br />level, an increase of$162.1 million. <br /> <br /> <br />As a result ofthis cost increase, Secretary of the Interior Gale Norton directed the <br />Bureau of Reclamation in July 2003 to complete a review and report to her on <br />why the PCE increased from the 1999 estimate. The Secretary also directed <br />Reclamation to work with the Project sponsors in Colorado and New Mexico to <br />determine if ways of reducing actual costs of construction could be identified and <br />implemented. <br /> <br />III. Project Cost Estimates <br /> <br />Approach <br /> <br />The 1999 PCE was selected as the starting point for identifying why costs <br />increased. It was selected because it is included in the 2000 FSEIS that described <br />the current project, it was used to support the December 2000 authorizing <br />legislation, and it was the estimated Project cost used in negotiation of repayment <br />contracts for some of the Project sponsors. The review of the difference between <br />the 1999 and 2003 cost estimates (see Appendix 3) considered: <br /> <br />. cost estimates for Project plans prior to 1999, the associated level of <br />detail of these estimates (e.g. appraisal or feasibility), and the use of <br />these estimates (if any) in preparing the PCE; <br /> <br />. activities associated with preparing and refining the 1999 PCE and the <br />2000 FSEIS from early 1999 through authorization in 2000; <br /> <br />3 <br />