BOARD00809

• Board Meeting Date: 1/27/2004
• Description: WSP Section - Animas-La Plata Project Cost Overrun Issue
• Board Meetings - Doc Type: Memo

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STATE OF COLORADO

Colorado Water Conservation Board

Department of Natural Resources
1313 Sherman Street, Room 721
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]
www.cwcb.state.co.u5

MEMORANDUM

Bill Owens
Governor

TO:

Colorado Water Conservation Board Members

Russell George
Executive Director

FROM:

Carolyn Fritz
Randy Seaholm /k

January 16, 2004

~?d Kuharich
pCWCB Director

Dan McAuliffe
Deputy Director

DATE:

SUBJECT: Agenda Item 29, January 27-28 Board Meeting
Water Supply Protection, Animas-La Plata Project Cost Overrun Issue

Back2round

The Bureau of Reclamation recently released a report detailing the reasons for the $162.1 Million
increase in the estimated cost of constructing the Animas-La Plata Project (ALP). The estimated
total cost for ALP now stands at $500 million and will escalate for inflation until construction is
expected completed, estimated in 2008. The reservoir is expected to fill by 20 II.

Several factors contributed to this latest increase, including a lack of oversight by the Bureau, a lack
of accounting for the increased cost of contracting via the P.L. 93-638 process (Indian Self-
Detennination and Education Assistance Act (ISDEA)), and design changes. Attached is a
comparative list that shows the differences between the 1999 FSEIS estimates and the 2003
estimates and some explanatory pages from the report.

Specific, large item cost increases include:
. Changes to the design of the Durango Pumping Plant -$52 million
. Relocation of gas pipelines and County Road 211 - $28 million
. Estimating Difference Factor to account for unlisted items and contingencies - $43 million

The remaining $40 million dollars appears to be a result of an improper and incomplete cost
analysis. According to the report, the 1999 FSEIS cost estimates were based on the potential costs
of construction in a competitive bidding environment. Under the ISDEA, the tribes have first right
of refusal on all contracts for proj ects that affect them. The regulations under the Act state that
negotiations should-arrive at-a-fair-andequitable.price- for the award, but do not have to necessarily
arrive at the lowest possible price as would a competitive bid process.

Colorado Water Conservation Board
Flood Protection. Water Supply Planning and Finance. Stream and Lake Protection
Water Supply Protection. Conservation and Drought Planning