6
Conclusions, Findings, and Recommendations

INTRODUCTION

As the study progressed it became apparent to the committee that a number of important factors, realities, and issues have major impacts on Reclamation’s ability to respond quickly and effectively to the many diverse pressures and rapid changes occurring today. Equally important are the capabilities that are needed within Reclamation to deal effectively with the challenges posed by these impacts. The factors affecting the management of construction and infrastructure and the capabilities that will be needed to respond to these impacts are identified in the following sections. The findings and recommendations are based on these factors and the detailed discussions in the preceding chapters.

The history of the Bureau of Reclamation was presented to the committee in terms of six eras:1

  • Establishment of Reclamation to the Colorado Compact, 1902-1928.

  • The Depression, 1928-1941.

  • World War II, 1941-1945.

  • Postwar construction, 1946-1968.

  • Building out after passage of the Colorado River Basin Projects Act, 1969-1988.

  • Dam safety/water management, 1989-present.

1  

Brit Storey, Reclamation historian, “Organizational history of the Bureau of Reclamation,” Presentation to the committee on February 28, 2005.



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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation 6 Conclusions, Findings, and Recommendations INTRODUCTION As the study progressed it became apparent to the committee that a number of important factors, realities, and issues have major impacts on Reclamation’s ability to respond quickly and effectively to the many diverse pressures and rapid changes occurring today. Equally important are the capabilities that are needed within Reclamation to deal effectively with the challenges posed by these impacts. The factors affecting the management of construction and infrastructure and the capabilities that will be needed to respond to these impacts are identified in the following sections. The findings and recommendations are based on these factors and the detailed discussions in the preceding chapters. The history of the Bureau of Reclamation was presented to the committee in terms of six eras:1 Establishment of Reclamation to the Colorado Compact, 1902-1928. The Depression, 1928-1941. World War II, 1941-1945. Postwar construction, 1946-1968. Building out after passage of the Colorado River Basin Projects Act, 1969-1988. Dam safety/water management, 1989-present. 1   Brit Storey, Reclamation historian, “Organizational history of the Bureau of Reclamation,” Presentation to the committee on February 28, 2005.

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation The committee believes that Reclamation is in a new era that has been shaped by the factors impacting its mission. These diverse factors, discussed below, expand the dam safety and water management focus of the last era. FACTORS IMPACTING THE MANAGEMENT OF CONSTRUCTION AND INFRASTRUCTURE Although the core of Reclamation’s basic mission remains much the same—to deliver water and to generate power—the way the mission is carried out is constrained by and must be responsive to several realities: Environmental factors. The environmental revolution of the last decades of the twentieth century imposed new requirements for environmental assessment, protection, and enhancement on virtually everything that the bureau does. These new requirements increase project costs and further constrain the availability of water for human uses. Consideration of the effects of a project on environmental costs and opportunities to increase sustainability must become ingrained from the outset, not simply an add-on to business as usual. Engineers and builders must be both environmental experts and water resource experts. American Indian water rights and rural water needs. America Indian water agreements and growing demands that adequate supplies of good quality water be provided to small rural communities place new demands on the regulation of river flow and storage and distribution systems. Urbanization. Land is being taken out of agricultural production in many areas of the West and being urbanized for industrial, commercial, and residential purposes. This changes the balance between irrigation and municipal and industrial (M&I) needs, which, in turn, impacts costs, treatment requirements, and the required infrastructure. Increasing budget constraints. Reclamation’s budgets have been effectively shrinking for many years, even as the needs have increased. Finding new and better ways to do more with less seems to be a way of life for almost all agencies. Development of rational methods for dealing with unpredictable events when they occur and defensible techniques for prioritization of projects in a competitive environment will be major challenges. Broader set of stakeholders. Water users of all types—farmers, power distributors, consumers, homeowners, environmentalists, American Indian tribes, and virtually anybody who uses water and power in the 17 western states—are impacted by and pay in some way for what the bureau does. Many more voices want to be heard now than during the building boom of the first two-thirds of the twentieth century. As projects have

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation aged and O&M costs have increased, the growing financial burden on Reclamation’s contract customers has increased their interest and insistence on participating in all phases of Reclamation’s management processes. Aging workforce. The baby boomers will be retiring in large numbers over the next 5 to 15 years, not only from Reclamation, but also from all government agencies. This provides both challenges and opportunities for Human Resources, not the least of which will be loss of institutional memory and changes in workforce culture. Aging infrastructure. Most of Reclamation’s major dams, reservoirs, hydroelectric plants, and irrigation systems are 50 years or more old. As a result, maintenance, rehabilitation, and replacement programs can be expected to form an increasing portion of Reclamation’s future workload. Shift from design and construction to operations and maintenance. It is unlikely that new Hoover- and Grand Coulee-type projects will be constructed in the foreseeable future. O&M activities will form a major part of the workload. New workforce skills and interests will be needed. Outsourcing of activities that were once undertaken by Reclamation personnel is likely to grow. Congressional mandates. Political pressures, the inclusion of special mandates in new congressional legislation, and the earmarking of funds for pet projects and special interests are not new to the bureau, nor does anything in the current political climate suggest that they will ever go away. Title transfer. Transferring ownership of government-owned facilities to nonfederal agencies and the private sector, while reducing Reclamation’s O&M workload, introduces budgetary and oversight issues that may necessitate new business models. Reclamation’s customers vary greatly in how they feel about the desirability of accepting title to facilities. Water user operation of government-owned facilities. Reclamation has turned over and will undoubtedly continue to turn over some of its facilities to water user groups, often local water districts, for operation, maintenance, and—sometimes—rehabilitation and new construction. Equitable policies for cost sharing and recovery, distribution of user fees, oversight, and engineering, design, and construction services are needed. New modes of augmenting the water supply. In the absence of significant climate change or major technological breakthroughs, water resources will remain constant, while demand can be anticipated to increase. Droughts will have an even greater impact. It can be anticipated that the costs and environmental consequences will make constructing major new dams and storage reservoirs unlikely within the next several years. Ac-

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation cordingly, alternative means for meeting the water needs of the western states will need to be explored. Calls for more research and development in the areas of water conservation, water recycling, and desalination are likely to become louder and more frequent. Increase in the number of small projects. Although demand for large new projects will remain low, it is likely that demand for small water storage, irrigation, and distribution projects will increase as more and more agricultural land is transformed for municipal development. Conservancy districts and environmental restoration and enhancement projects will have special requirements where Reclamation will be a resource and have oversight responsibilities. Findings and Recommendations Centralized Policy and Decentralized Operations Finding 1a. For the past decade many of Reclamation’s functions have been decentralized and directed by regional office directors and area office managers. Concurrent with implementation of the decentralized organizational model, Reclamation-wide directives, known as Instructions, were withdrawn, although in some cases they continue to be used for guidance in the field. Mandatory requirements that replace the Instructions have been and continue to be developed and published as policy and directives in the Reclamation Manual.2 However, some issues either have not been addressed or need additional detail. This has led to inconsistencies in understanding and implementing the functions to be performed at each level of the organization, the standards to be applied, and the authority and accountability at each level. Consistently implementing Reclamation’s mission will require clear statements of policy and definitions of authority and standards. Finding 1b. Reclamation’s customers and other stakeholders want close contact with empowered Reclamation officials. They also want consistency in Reclamation policies and decisions as well as decision makers with demonstrated professional competence. Finding 1c. Decentralization has meant that some area and project offices housing a dedicated technical group are staffed by only one or two individuals. The committee is concerned about the effectiveness of such small units and whether their technical competencies can be maintained. 2   The Reclamation Manual is a Web-based collection of policies and directives that is continually updated and revised. Available at http://www.usbr.gov/recman/.

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation Recommendation 1a. To optimize the benefits of decentralization, Reclamation should promulgate policy guidance, directives, standards, and how-to documents that are consistent with the current workload. The commissioner should expedite the preparation of such documents, their distribution, and instructions for their consistent implementation. Recommendation 1b. Reclamation’s operations should remain decentralized and guided and restrained by policy but empowered at each level by authority commensurate with assigned responsibility to respond to customer and stakeholder needs. Policies, procedures, and standards should be developed centrally and implemented locally. Recommendation 1c. The design groups in area and project offices should be consolidated in regional offices or regional technical groups to provide a critical mass that will allow optimizing technical competencies and providing efficient service. Technical skills in the area offices should focus on data collection, facility inspection and evaluation, and routine operations and maintenance. Technical Service Center Finding 2a. The Technical Service Center (TSC) is a large, centrally located, highly structured organization with numerous separate subunits. Many Reclamation customers and stakeholders believe that its costs are excessive, it imposes overly stringent requirements, it too often fails to complete specified work on time, and it sometimes executes projects in a manner contrary to the concept of decentralization. The size of TSC is perceived to be excessive and its organization to be inefficient. Finding 2b. TSC’s response to criticisms has been to benchmark itself against private sector architecture and engineering organizations and to adopt some private sector business practices. In an effort to remain cost competitive, TSC has developed a business plan that provides some services that are not inherently governmental.3 A strategy of cost averaging, which blends the costs of specialized technical services and oversight with 3   The basic definition of an inherently governmental function from the Office of Management and Budget Policy Letter 92-1 is as follows: “As a matter of policy, an ‘inherently governmental function’ is a function that is so intimately related to the public interest as to mandate performance by Government employees. These functions include those activities that require either the exercise of discretion in applying Government authority or the making of value judgments in making decisions for the Government.” See Chapter 3 for a detailed discussion.

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation those of other services such as collection of field data and development of construction documents, will continue to subject TSC to fire from Reclamation customers and its private sector competitors and is inconsistent with current federal outsourcing initiatives. Finding 2c. Regional offices, area offices, water and power beneficiaries, and other stakeholders all perceive an ongoing need for a centralized, high-level center of science and engineering excellence within Reclamation. The committee believes that a thorough review and evaluation of TSC and its policies and procedures could result in a smaller, more efficient and effective TSC. Recommendation 2a. The commissioner should undertake an in-depth review and analysis of TSC to identify the needed core technical competencies, the number of technical personnel, and how the TSC should be structured for maximum efficiency to support the high-level and complex technical needs of Reclamation and its customers. The proper size and composition of TSC are dependent on multiple factors, some interrelated: Forecast workload, Type of work anticipated, Definition of activities deemed to be inherently governmental, Situations where outsourcing may not be practical, Particular expertise needed to fulfill the government’s oversight and liability roles, Personnel turnover factors that could affect the retention of expertise, and Needs for maintaining institutional capability. This assessment and analysis should be undertaken by Reclamation’s management and reviewed by an independent panel of experts, including stakeholders. Recommendation 2b. The workforce should be sized to maintain the critical core competencies and technical leadership but to increase outsourcing of much of the engineering and laboratory testing work. Recommendation 2c. Alternative means should be developed for funding the staff and operating costs necessary for maintaining core TSC competencies, thereby reducing the proportion of engineering service costs reimbursable by customers.

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation Reclamation Laboratory and Research Activities Finding 3. Reclamation’s laboratory and research activities came of age during the era of large dam construction in the twentieth century, when much of the needed expertise resided in the federal government and there were no laboratories capable of handling the necessary work. The needs for large materials, hydraulics, and geotechnical laboratories are much different today because the types of capabilities needed to carry out Reclamation’s mission have evolved and are available from other organizations (government, university, and private). Although the need for research on environment and resource management continues to grow, the committee believes that the laboratory organization and its physical structure may be too large. Recommendation 3a. Reclamation’s Research Office and TSC laboratory facilities should be analyzed from the standpoint of which specific research and testing capabilities are required now and anticipated for the future; which of them can be found in other government organizations, academic institutions, or the private sector; which physical components should be retained; and which kinds of staffing are necessary. The assessment should also recognize that too much reliance on outside organizations can deplete an effective engineering capability that, once lost, is not likely to be regained. In making this assessment Reclamation should take into account duplication of facilities at other government agencies, opportunities for collaboration, and the possibility for broader application of numerical modeling of complex problems and systems. Recommendation 3b. Considering that many of the same factors that influence the optimum size and configuration of the TSC engineering services also apply to the research activities and laboratories, Reclamation should consider coordinating the reviews of these two functions. Outsourcing Finding 4a. From its inception, Reclamation has undertaken difficult, highly technical projects with a talented and dedicated workforce of engineers and craftsmen. Reclamation’s tasks have changed and the composition of its workforce has changed accordingly, but it continues to be an organization that primarily executes engineering and construction for O&M and some rehabilitation and modernization. Reclamation has been outsourcing some of its O&M functions, primarily in nontechnical areas, but could outsource more. The committee believes that many of Reclamation’s activities are not what would generally be considered es-

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation sentially governmental. The committee further believes that although water operations policy decisions are essentially governmental, implementation of these decisions is not and could be almost completely outsourced. Finding 4b. Decisions on which personnel to use—area, regional, TSC, or contractors—tend to be made at the regional level and on an ad hoc basis. Decisions often hinge on the availability of federal employees to do the work. There is increasing pressure on Reclamation to allow water districts, American Indian tribes, and other customers to undertake their own planning, design, and construction management functions. Recommendation 4. Reclamation should establish an agency-wide policy on the appropriate types and proportions of work to be outsourced to the private sector. O&M and other functions at Reclamation-owned facilities, including field data collection, drilling operations, routine engineering, and environmental studies, should be more aggressively outsourced where objectively determined to be feasible and economically beneficial. Planning for Asset Sustainment Finding 5a. The committee observed effective systems for planning and executing facility O&M in some regions. The 5- and 10-year plans based on conditions assessments and maintenance regimes form the core of the process. The result is an infrastructure that appears able to support Reclamation’s mission for the foreseeable future. Finding 5b. The O&M burden for an aging infrastructure will increase, and the financial resources available to Reclamation, its customers, and contractors may not be able to keep up with the increased demand. Some water customers already find full payment of O&M activities difficult, and major repairs and modernization needs, if included in the O&M budget, impose an even greater financial burden that cannot be met under the current repayment requirements. Long-term sustainment will require more innovation and greater efficiency in order to get the job done. Finding 5c. The committee observed extensive efforts and success in benchmarking Reclamation’s hydropower activities; however, there appears to be little effort to benchmark the O&M of water distribution facilities. The committee believes that benchmarking can help improve the efficiency of Reclamation’s water management and distribution activities as well as those of the water contractors responsible for transferred works.

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation Recommendation 5a. Because effective planning is the key to effective operations and maintenance, Reclamation should identify, adapt, and adopt good practices for inspections and O&M plan development for bureauwide use. Those now in use by the Lower Colorado and Pacific Northwest regions would be good models. Recommendation 5b. Reclamation should formulate comprehensive O&M plans as the basis for financial management and the development of fair and affordable repayment schedules. Reclamation should assist its customers in their efforts to address economic constraints by adapting repayment requirements that ease borrowing requirements and extend repayment periods. Recommendation 5c. Benchmarking of water distribution and irrigation activities by Reclamation and its contractors should be a regular part of their ongoing activities. Project Management Finding 6a. Reclamation does not have a structured project management process to administer planning, design, and construction activities from inception through completion of construction and the beginning of O&M. Projects are developed in three phases: (1) planning (including appraisal, feasibility, and preliminary design studies), (2) construction (including final design), and (3) O&M, with each phase having a different management process. Finding 6b. The Reclamation Manual includes a set of directives for managing projects, but it is incomplete, and there is insufficient oversight of its implementation. Central oversight of some projects is being developed in the Design, Estimating, and Construction Office, but policies and procedures have not yet been completed. Finding 6c. Reclamation needs to recognize project management as a discipline requiring specific knowledge, skills, and abilities and to require project management training and certification for its personnel who are responsible for project performance. The committee observed the appointment of activity managers in the Pacific Northwest region who were responsible for communications and coordination among project participants for all phases of the project. These activity managers appeared to be beneficial for the execution of projects, but the committee believes that a project manager with responsibility and authority to oversee projects from inception to completion could be even more effective.

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation Finding 6d. Reclamation has long-standing experience and expertise in planning, designing, and constructing water management and hydroelectric facilities, yet recurring problems are affecting the agency’s credibility for estimating project costs. The cost estimating problems associated with the Animas–La Plata Project are a notable example. This project was submitted for appropriations with an incomplete estimate and became a serious problem for Reclamation. Comprehensive directives on the cost estimating process have been drafted but have not yet been published. These directives require that a feasibility estimate must be completed before a project is submitted for appropriations. Recommendation 6a. Reclamation should establish a comprehensive and structured project management process for managing projects and stakeholder engagement from inception through completion and the beginning of O&M. Recommendation 6b. Reclamation should develop a comprehensive set of directives on project management and stakeholder engagement that is similar to TSC directives for agency-wide use. Recommendation 6c. Reclamation should establish a structured project review process to ensure effective oversight from inception through completion of construction and the beginning of O&M. The level of review should be consistent with the cost and inherent risk of the project and include the direct participation of the commissioner or his or her designated representative in oversight of large or high-risk projects. The criteria for review procedures, processes, documentation, and expectations at each phase of the project need to be developed and applied to all projects, including those approved at the regional level. Recommendation 6d. A training program that incorporates current project management and stakeholder engagement tools should be developed and required for all personnel with project management responsibilities. In addition, project managers should have professional certification and experience commensurate with their responsibilities. Recommendation 6e. Reclamation should give high priority to completing and publishing cost estimating directives and resist pressures to submit projects to Congress with incomplete project planning. Cost estimates that are submitted should be supported by documents for design concept and planning, environmental assessment, and design development that are sufficiently complete to support the estimates. Reclamation should

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation develop a consistent process for evaluating project planning and the accuracy of cost estimates. Acquisition and Contracting Finding 7. Different Reclamation regions employ different contracting approaches and use a variety of contracting vehicles to meet their acquisition needs. These range from indefinite delivery/indefinite quantity (IDIQ) contracts with multiple vendors to reverse auction or performance-based contracting techniques to achieve more cost-effective results. In addition, regions are employing innovative approaches for maintaining stakeholder involvement in the contracting process. Recommendation 7. Reclamation should establish a procedure and a central repository for examples of contracting approaches and templates that could be applied to the wide array of contracts in use. This repository should be continually maintained and upgraded to allow staff to access lessons learned from use of these instruments. Relationships with Sponsors and Stakeholders Finding 8. The committee believes that the key to effective relationships between Reclamation and its sponsors and stakeholders is open communication and an inclusive process for developing measures of success. In addition, the more transparent and consistent the processes used by Reclamation, the easier it will be to obtain buy-in from sponsors and stakeholders. The Lower Colorado Dams Office’s interactions with its coordinating committee of sponsors illustrate the beneficial effects of these factors and their contribution to successful operation of the project. Recommendation 8. Making information readily available about processes and practices, both in general and for specific projects and activities, should be a Reclamation priority. Successful practices, such as those used in the Lower Colorado Dams Office, should be analyzed and the lessons learned should be transferred, where practical, throughout the bureau. CAPABILITIES FOR THE MANAGEMENT OF CONSTRUCTION AND INFRASTRUCTURE Dealing with the challenges identified in the preceding section will necessitate a workforce with special skills and a mindset that can look at old problems in new ways and attack new problems effectively. Commit-

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation tee members were most favorably impressed by the high morale, enthusiasm, optimism, loyalty, and dedication to mission of the Reclamation personnel they met during this study. Building on these strengths, even as the aging workforce transitions out and new personnel come on board, should be a goal. The following traits and skills are considered essential for effectively carrying out the Reclamation mission in the years ahead: Integrated decision-making processes for assessment and management of risk and for the prioritization of projects. Integrated and expanded expertise for dealing with environmental, financial, social, legal, and resource conservation issues. Ability to work collaboratively with others, both within and outside the bureau. Clear, effective, and responsive communicators with sponsors, customers, contractors, Congress, state and local officials, tribal leadership, other governmental agencies, and the public. Technical, administrative, and management knowledge needed to define, assign, supervise, review, and evaluate outsourced work—people with such know-how are known as smart buyers. Technical and craft skills to accomplish inherently government functions that must be retained by Reclamation. Strong asset management skills for dealing with the operation, maintenance, rehabilitation, and replacement of aging infrastructure. Coordinated project management that incorporates continuous communication among all participants. Dedication to healthy research and development activities that focus on future needs and areas not duplicated by others. Findings and Recommendations Workforce and Human Resources Finding 9a. Reclamation and other federal agencies recognize that successful outsourcing of technical services requires maintaining technical core competencies to develop contract scope, select contractors, and manage contracts, and that it is necessary for agency personnel to execute projects as well as to receive continuing training in order to maintain those competencies. Finding 9b. Reclamation’s current work is dominated by two categories of tasks: (1) the operation, maintenance, and rehabilitation of existing structures and systems and (2) the creation and brokering of agreements among a variety of groups and interests affected by the management of

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation water resources. The need to include a broad spectrum of stakeholders, particularly groups that represent environmental issues and American Indian water rights, considerably alters both the tasks of the agency and the skills required to accomplish them. Finding 9c. Reclamation employees appear on the whole to be more motivated by complex technical tasks than by tasks that are socially and politically complex. However, an increasing proportion of the work that employees at all levels engage in involves tasks that are socially and politically complex. Reclamation’s current mission requires personnel to be equipped to address both technical uncertainties and the ambiguities of future social and environmental outcomes. Recommendation 9a. Reclamation should do an analysis of the competencies required for its personnel to oversee and provide contract administration for outsourced activities. Training programs should ensure that those undertaking the functions of the contracting officer’s technical representative are equipped to provide the appropriate oversight to ensure that Reclamation needs continue to be met as mission execution is transferred. Recommendation 9b. In light of the large number of retirements projected over the next few years and the potential loss of institutional memory inherent in these retirements, a formal review should be conducted to determine what level of core capability should be maintained to ensure that Reclamation remains an effective and informed buyer of contracted services. Recommendation 9c. Reclamation should recruit, train, and nurture personnel who have the skills needed to manage processes involving technical capabilities as well as communications and collaborative processes. Collaborative competencies should be systematically related to job categories and the processes of hiring, training, evaluating the performance of, and promoting employees. Recommendation 9d. Reclamation should facilitate development of the skills needed for succeeding at socially and politically complex tasks by adapting and adopting a small-wins approach to organizing employee efforts and taking advantage of the opportunities to celebrate and build on successes.

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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation ALTERNATIVE SCENARIOS FOR FUTURE INFRASTRUCTURE MANAGEMENT The Nobel laureate physicist Nils Bohr once said that “prediction is very difficult, especially if it’s about the future.” However, the scenarios presented in this report are not predicting the future; they are only suggesting what is possible consistent with trends in workload and governmental mandates. Finding and Recommendation Finding 10. While the committee recognizes that the major changes suggested by the alternative scenarios are inappropriate for immediate implementation, the continuation and intensification of identified trends, as described in this report, could lead to a need for dramatic changes in Reclamation’s operations and procedures in the years to come. The three future scenarios presented in this report—(1) a centrally located project management organization, (2) outsourced O&M, and (3) federal funding and local execution—provide a basis for anticipating future trends and preparing for future change. Recommendation 10. Reclamation should consider the suggested future scenarios as a basis for analyzing longer-term trends and change.

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