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<br />Implementation Plan <br /> <br />consider that the most cost-effective proposals often have a degree of <br />performance risk and decide whether this risk is acceptable. <br /> <br />Performance risk evaluation will be used to adjust the proposal ranking to <br />consider the reliability of the cost and salt load reduction estimates used in <br />the cost-effectiveness computations. The evaluation will include: <br /> <br />. Investment security - Upfront funding or high initial payments for <br />projects may add to the program's exposure to cost overruns, failures, <br />and defaults. Proposals where the program pays as salt is produced <br />or as facilities are completed, inspected, and placed into operation <br />greatly reduce this risk. All proponents will be required to limit (cap) <br />the program's costs through performance bonds or other guarantees. <br /> <br />Otherwise the lack of detailed plans, geological surveys, cost <br />estimates, adequate contingencies, environmental compliance <br />documents, detailed fish and wildlife mitigation plans, or State and <br />local permitting, zoning, and water rights would increase the potential <br />costs to the program and severely downrate the proposal's cost- <br />effectiveness ranking. <br /> <br />· Cost escalation - In the case of privately financed projects that are <br />reimbursed annually, broad based inflation adjustments may add a <br />small degree of risk. Highly volatile indexes may add a higher degree <br />of risk. <br /> <br />. Methods used to predict salt load reduction - For example, <br />industrial use or desalting of a known quantity and concentration of <br />brine would normally have few risks associated with this category of <br />performance risk, as long as the waste stream was handled correctly. <br />Irrigation projects and other nonpoint source projects, where the <br />regional salt loading is directly measured, computer modeled, and <br />allocated to each of the different sources, will have somewhat more <br />risk in this category depending upon the accuracy of the regional salt <br />loading measurement. Projects that relied on only one measurement <br />(like soil salinity), which are not corroborated through other <br />independent methods or measurements, would have the highest risk. <br /> <br />· Project life - The project life is used in the amortization of the <br />project's capital costs and cost-effectiveness computation. Overly <br />optimistic estimates of project life bias the cost-effectiveness <br />computation. The life expectancy of new technologies are generally <br />less reliable than older, "time-tested" technologies. Also, some " ,., r, <br />technologies tend to have more risk than others. Deep well injectiorO 0 G '" 0 t:.. <br />has a relatively high risk because of the uncertainties involved in <br />estimating the well's receiving capacity and life. Pipelines tend to be <br />more reliable than open ditches which are exposed to the local <br />weather. <br /> <br />15 <br />