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iii niiiiiiniu iii <br />STATE OF COLORADO <br />MINED LAND RECLAMATION DIVISION F °° <br /> <br />Department of Natural Resources ~ <br />° <br />,~~/~ ~~~ <br />:. <br />P% <br />1313 Sherman St.. Room 215 . <br />r <br />cl~--'-71 ~ ~O <br />( <br />Denver, CO 80203 ' <br />~ ~/~:~/' <br />303 666-3567 ' ~--~~ <br />`e'6 <br />FA x: 303 832-6106 <br />March 2, 1990 <br />Mr. James Lunan <br />Peabody Coal Company <br />1300 South Yale <br />Flagstaff, Arizona 86001 <br />RE: Equipment Cost Estimating Methods, Stipulation No. 15 Response, <br />Seneca II-West, Permit C-62-057 <br />Dear Mr. Lunan: <br />Rov Romer. <br />Governor <br />Fretl R. Barra. <br />Dnris~on Duecior <br />The Division has completed the review of the Stipulation 15 response regarding <br />bond estimating methods and task changes and costs. In answer to one of <br />Peabody's requests in their letter of January 23, 1990, the Division <br />recognizes that the Stipulation 15 responses were submitted in a timely <br />fashion. Our review has identified the following concerns: <br />1. Multiple Shift Work - Equipment Ownership Costs <br />Peabody's proposed method of estimating equipment ownership costs for <br />multiple shift work consists of using Cost Reference Guide (CRG) base <br />data and utilizing doubled annual use hour values to reduce hourly <br />depreciation, overhead, and cost of facilities capital (CFC). This <br />proposed method, and the Division's method, were discussed and compared <br />in detail with Mr. Thomas Curl of Dataquest. Mr. Curl in turn met with <br />Bill Woodall and Don Hopkins of Dataquest to determine the most <br />appropriate method of using the CRG to estimate equipment ownership costs <br />for independent earthwork contractors and not large scale mining <br />operations. It was the conclusion of Dataquest personnel that the <br />Division's existing method of using CRG base values and adjustments based <br />on empirical independent contractor averages is a more appropriate method <br />than that proposed by Peabody. The minimum acceptable equipment costs <br />remain those previously forwarded to Peabody by the Division. Please <br />adjust the equipment cost sections of the bond calculations accordingly. <br />The Division's method of using CRG cost data consists of evaluating in <br />sequence the full range of adjustments available in Section 23 of the <br />CRG, "Cost and Production Formulas". For each cost element listed, the <br />Division compares the base value of each cost factor pertaining to that <br />cost element with average independent contractor cost factor values <br />obtained from annual survey data of Associated General Contractor (AGC) <br />members. This survey data is compiled by Dataquest and Dublished in the <br />Contractor's Equipment Cost Guide (CECG). The Division's adjustment for <br />multiple shift work is made as specified in Section 23,VII of the CRG. <br />