The Gross Reservoir Expansion (GRE) Project progressed as planned over the reporting period. Notable milestones and activities during this reporting period include:

Completed negotiations with the Design Engineer and received Denver Water Board approval for the design contract on December 13, 2017.

Developed list of preferred Board of Consultant (BOC) members and submitted to the Federal Energy Regulatory Commission (FERC) and the Colorado State Engineer’s Office (SEO) for acceptance.

Completed negotiations with the Owner’s Representative for contract extension through the design phase. Received Denver Water Board approval for the extension on December 13, 2017.

Completed development of the Program Initial Budget (PIB) and received Denver Water Board acceptance on December 13, 2017.

The Program Management Team (PMT) successfully relocated from the Administration Building to the program office at Denver West in Golden, Colorado.

Program Progress Summary

Financial Metrics Snapshot

INERNAL USE ONLY

Risk Management

Risk Summary (notable risks and risk register summary chart)

The GRE Risk Management Plan (RMP) defines the process for identifying, assessing, monitoring, controlling, managing and reporting risks across all phases of the program. In short, the RMP involves frequent and regular review / updating of risks associated with the GRE.

The PMT developed a risk register that considers risks associated with possible technical challenges, regulatory issues, and outside influencers among other topics. The PMT continues to populate the risk register with newly identified risks and while continuing to update existing risks. Major updates to the risk register include recognition of the recent lawsuit associated with the Windy Gap Firming Project and appreciation for the effects of escalation on long duration civil projects.

Several major risks are described below and presented on the adjoining chart.

Co

nse

qu

en

ce

5 A,G C,F D

4

3 B E

2

1

1 2 3 4 5

Probability

High

Low

4

Volume 3 Project Summary Report: November/December 2017

Over the next couple of months the PMT will focus on engaging the Design Engineer, executing BOC contracts, and initiating the design process.

The BOC contracts will be in place and ready prior to the first workshop in March.

The PMT will continue to support public outreach actions, environmental compliance activities, and onboarding of the Design Engineer.

The Integrated Project Team (Denver Water, Black & Veatch – Owner’s Representative and Stantec/AECOM – Design Engineer) will continue mobilization to the Denver West office to co-locate for the design effort.

Design activities will begin with geotechnical investigation planning, and development of the initial dam raise configuration.

Timeline and Progress

Budget Category* Initial

Budget

Costs to

Date

Remaining Balance

% Spent

Construction $341.0 $0.0 $341.4 0.0

Engineering $24.0 $2.4 $21.2 10.0

Project/Construction Management

$54.0 $1.6 $52.4 3.0

Permitting $20.0 $20.4 $0 100.0

Mitigation/Compliance $24.0 $0.976 $23.1 4.0

Total $464.0 $25.4 $438.2 5.5

MWBE Participation (values from Jan 2014 to Dec 2017)

Current Cost* MWBE Costs % Participation

$7.73 $0.50 6.5

ID Risk Trigger Consequence Current Strategy and Investments

A Lawsuit against Corps (NEPA & CWA) Legal challenge is successful; project enjoined resulting in major delay

Monitoring/evaluating current lawsuit against the Windy Gap Firming project.

B FERC license amendment (Order)

delayed Major delay results in changes to project delivery approach

Regular contact with FERC staff on progress. Consultation with attorneys specializing in FERC proceedings.

C Accident on HWY 72 involving GRE

personnel and public

Diminished public trust; temporary work stoppage; extended schedule; increased scrutiny

Rail delivery options, bussing field staff, GPS based truck monitoring, safety culture development.

D Emergency response time to site slowed by poor communications

Exacerbating injury or fatality leading to diminished public trust and temporary work stoppage

Evaluating communication improvement options (cellular and radio).

E Overall project cost escalation

exceeds expectations Construction costs increase beyond budget (commodities or labor)

Coordinating with NWTP in evaluating market trends and local projects over $20M.

F Social mitigation or local permit

requires reliance on existing roads Increased cost to incorporate rail transport for materials

Exploit opportunity if cost or initial investment (infrastructure at rail siding) is acceptable.

G Boulder County 1041 permit

required by FERC or court order

Major delay results in changes in delivery approach and pushing completion beyond 2026

Leverage FERC process and procedural opportunities. Continue to work toward an IGA based on the FERC Order which generally meets the 1041 requirements.

1 Attorney-Client Communication - Privileged Attorney-Client Communication - Privileged

Moving Forward …

*All Costs in $Millions

Volume 3 Project Summary Report: November/December 2017

Program Costs (Actuals vs. Budget 2017)

Distribution of 2017 Actual Costs

Project Initial Budget

3 2

Stakeholder Outreach

Program Spotlight

Water development projects are ambitious and expensive. The GRE project is no exception, yet the value of water storage and yield for the GRE is high compared to other projects in Colorado and the Front Range. More importantly, the resiliency benefit specific to water storage in Denver Water’s North System is fundamental in achieving a secure water future for our customers.

The 2015 all-in program budget (permitting through reservoir first filling) was established at about $380,000,000. As part of GRE project work in 2017, an updated program budget (i.e. Program Initial Budget) was developed. Attributes of the PIB include the following:

Considers the estimated construction, permitting, environmental mitigation and compliance, and management (program and construction) costs.

Considers market escalation (labor and commodities), contingency, and potential risk occurrences.

The first budget developed since completing two major engineering studies (Design Flood and Seismic Hazard), finishing the 404 permit process, and finalizing procurement of the Owner’s Representative, and Design Engineer.

The resulting all-in program cost is estimated at approximately $420,000,000 ($464,000,000 in 2026 dollars). Future GRE spending is founded on this established PIB value.

GRE costs finished the year within 2.8% of the Variance Budget. Expenditures for this reporting include the accrual of the final payments for the Owner’s Representative, which finished below budget for the year. Payment was also made to City of Boulder Open Space and Mountain Parks IGA of $549k.

The Program maintains an active minority, woman owned and small business enterprise (MWBE and SBE) outreach platform. At present, 6.5% program wide participation has been achieved since 2014.

Program Budget

The GRE program budget was formally updated in November of 2017 to account for inflation and escalation of key commodities such as cement, fly ash, and labor. The above budget reflects the estimate at completion in 2026 at $464 million.

The current budget will continue to be refined over the next three years as design progresses.

*IN $MILLIONS *In $Thousands

Denver Water and CU Boulder Engineering have partnered to bring the GRE project and opportunities to current engineering students. GRE program staff will provide guest lectures on general dam engineering design and on the project itself. Touch points include both the Senior Design Class (using the GRE as the case study) and to incoming Freshmen students through the Introduction to Civil Engineering Class.

As the project moves forward, the partnership will provide engineering students the opportunity to study and work on the GRE project.

Board of Consultants

As one of two dam safety regulatory bodies overseeing the GRE, the FERC requires the use of a BOC to provide independent oversight during the design and construction phases of complex projects. The BOC is a collection of senior technical experts representing specialties unique to the project. For Denver Water, the BOC not only represents regulatory compliance with FERC but a quality control function for the PMT and Design Engineer.

For the GRE, the BOC was assembled jointly by Denver Water, the SEO, and the FERC and will serve each entity as their experts in evaluation of the design and construction of the project. The BOC includes experts in RCC dam construction, engineering geology, spillway hydraulics, structural engineering, and Roller Compacted Concrete (RCC) dam design. The BOC will work through Denver Water, but may occasionally be asked to respond directly to the FERC or SEO.

It is anticipated that the members of the BOC will be involved through the entire project to enable continuity and consistency. The first BOC workshop is planned for March 2018 with five to six additional workshops anticipated during the three year design phase. The workshops will occur in Denver and will involve multi-

day sessions for presentation of information, deliberation amongst BOC members, and presentation of BOC responses. Each BOC meeting will have one or more specific topics and Denver Water will provide questions for the BOC to deliberate and answer.

Learning from History – St. Francis Dam Failure

- An excerpt from the Verdict of Coroners Jury in St. Francis Dam Inquisition Report.

The Coroner’s findings on the St. Francis Dam Failure ultimately led to many dam safety regulations throughout the nation and specifically for independent review of new dam design and construction including the (then) planned Boulder (Hoover) Dam, and (now) for projects like the GRE.

*In $Millions (2026)

Program Costs (Actuals vs. Budget 2017)

Distribution of 2017 Actual Costs

Project Initial Budget

3 2

Stakeholder Outreach

Program Spotlight

Water development projects are ambitious and expensive. The GRE project is no exception, yet the value of water storage and yield for the GRE is high compared to other projects in Colorado and the Front Range. More importantly, the resiliency benefit specific to water storage in Denver Water’s North System is fundamental in achieving a secure water future for our customers.

The 2015 all-in program budget (permitting through reservoir first filling) was established at about $380,000,000. As part of GRE project work in 2017, an updated program budget (i.e. Program Initial Budget) was developed. Attributes of the PIB include the following:

Considers the estimated construction, permitting, environmental mitigation and compliance, and management (program and construction) costs.

Considers market escalation (labor and commodities), contingency, and potential risk occurrences.

The first budget developed since completing two major engineering studies (Design Flood and Seismic Hazard), finishing the 404 permit process, and finalizing procurement of the Owner’s Representative, and Design Engineer.

The resulting all-in program cost is estimated at approximately $420,000,000 ($464,000,000 in 2026 dollars). Future GRE spending is founded on this established PIB value.

GRE costs finished the year within 2.8% of the Variance Budget. Expenditures for this reporting include the accrual of the final payments for the Owner’s Representative, which finished below budget for the year. Payment was also made to City of Boulder Open Space and Mountain Parks IGA of $549k.

The Program maintains an active minority, woman owned and small business enterprise (MWBE and SBE) outreach platform. At present, 6.5% program wide participation has been achieved since 2014.

Program Budget

The GRE program budget was formally updated in November of 2017 to account for inflation and escalation of key commodities such as cement, fly ash, and labor. The above budget reflects the estimate at completion in 2026 at $464 million.

The current budget will continue to be refined over the next three years as design progresses.

*IN $MILLIONS *In $Thousands

Denver Water and CU Boulder Engineering have partnered to bring the GRE project and opportunities to current engineering students. GRE program staff will provide guest lectures on general dam engineering design and on the project itself. Touch points include both the Senior Design Class (using the GRE as the case study) and to incoming Freshmen students through the Introduction to Civil Engineering Class.

As the project moves forward, the partnership will provide engineering students the opportunity to study and work on the GRE project.

Board of Consultants

As one of two dam safety regulatory bodies overseeing the GRE, the FERC requires the use of a BOC to provide independent oversight during the design and construction phases of complex projects. The BOC is a collection of senior technical experts representing specialties unique to the project. For Denver Water, the BOC not only represents regulatory compliance with FERC but a quality control function for the PMT and Design Engineer.

For the GRE, the BOC was assembled jointly by Denver Water, the SEO, and the FERC and will serve each entity as their experts in evaluation of the design and construction of the project. The BOC includes experts in RCC dam construction, engineering geology, spillway hydraulics, structural engineering, and Roller Compacted Concrete (RCC) dam design. The BOC will work through Denver Water, but may occasionally be asked to respond directly to the FERC or SEO.

It is anticipated that the members of the BOC will be involved through the entire project to enable continuity and consistency. The first BOC workshop is planned for March 2018 with five to six additional workshops anticipated during the three year design phase. The workshops will occur in Denver and will involve multi-

day sessions for presentation of information, deliberation amongst BOC members, and presentation of BOC responses. Each BOC meeting will have one or more specific topics and Denver Water will provide questions for the BOC to deliberate and answer.

Learning from History – St. Francis Dam Failure

- An excerpt from the Verdict of Coroners Jury in St. Francis Dam Inquisition Report.

The Coroner’s findings on the St. Francis Dam Failure ultimately led to many dam safety regulations throughout the nation and specifically for independent review of new dam design and construction including the (then) planned Boulder (Hoover) Dam, and (now) for projects like the GRE.

*In $Millions (2026)