Reimbursement & Agreements in Utility Engineering

1. Agreements & Cost Estimates Matthew L. Harding District Utility Engineer, INDOT 19 December 2019

2. Objectives • Reimbursement • Grounds for Reimbursement & the Appropriate Agreements • Partial Reimbursement • Agreements • Filling out an Agreement • Reviewing an Agreement • Extraordinary Cost Agreement • Cost Estimates • Parametric Estimates • Developing Estimates • Detailed Estimates • Invoices & Invoicing • Reviewing an Invoice • Itemized Cumulative Invoice • Sample Invoice • References • Examples

3. Reimbursement & Agreements

4. Reimbursable Positions • Reimbursable Positions should be determined by Stage 1 • A summary page should be drafted • Include all utilities seeking reimbursement • Grounds for Reimbursement • Further Explanation of their Situation • Submitted to Project Manager & State Director of Utilities at Stage 1 • Clarifies who has a qualified interest early in the project • Any disputes can be cleared in well in advance of letting

5. Partial Reimbursement • A utility may be partially reimbursable for a project • Different options to split the cost • Percentage of Overall Cost • Precise Breakdown • Should be noted in the agreement • Percentage is most appropriate for relatively uniform facilities • Example: 700 LF of a 1000 LF line is in a private easement • 70% Reimbursable from the total cost of the relocation • Includes Overhead, Equipment, etc. • Precise Method works best for non-uniform facilities • Example: Same as above except the last 500 LF is a larger pipe • The first 700 LF are 100% Reimbursable • The last 300 LF are excluded • The Overhead, Equipment, etc. can be split 70% - 30%

6. Types of Agreements • INDOT employees can access all current agreements • Y:/Div.design/Utilities & Railroads/Utility Coordination/Standard Agreements • Consultants may request a copy of the correct agreement from their Oversight Agent • Work may be by Utility or by INDOT • General Agreements • Preliminary Engineering • Standard • Extraordinary Cost • Unnecessary Cost • Addenda to Agreements • LPA Utility Agreements • Utility-Specific Agreements

7. Example Agreement - Prep

8. Example Agreement - Prep

9. Example Agreement - Prep

10. Agreements – Exhibits • Agreements generally have two exhibits • Exhibit A – Signed & Approved Workplan • Prioritize reimbursable utilities when planning coordination • Exhibit B – Itemized Cost Estimate • All pages should be numbered, i.e. Exhibit A – 1 of 4

11. Example Agreement - Review

12. Example Agreement - Review

13. Example Agreement - Review

14. Extraordinary Cost Agreements • EC Agreements require additional approval before proceeding with development • Extraordinary Cost Request • Internal Memo prepared by Oversight Agent • Exhibit A – Copy of the SPMS Schedule • Exhibit B – Letter from utility requesting hardship • Exhibit C – Revenues from the previous calendar year • Exhibit D – Itemized Cost Estimate • Exhibit E – Workplan • Generally, include the work in the contract

15. Extraordinary Cost Agreements • Cost Split • Utility is responsible for at least 10% of their gross annual revenue • PE & CE costs may be deducted from their share • INDOT is responsible for the remainder of the estimated cost

16. Example Agreement – Ex. Cost

17. Reimbursement & Agreements • There must be a clear conflict between the INDOT Project and the utility’s facilities • Betterment of utility facilities is not reimbursable • Original signed hardcopy must be sent to CO for approval & execution • Ensure the Address on the front page is the Utility's remit to address • Ensure all exhibits are correctly labeled and numbered • Flag the signature pages before sending to CO • Affix a Memo & Routing Slip to the front of the packet • LPA stands in for the State Transportation Department (STD) in regards to all FHWA Requirements

18. Cost Estimates

19. Cost Estimates Parametric Estimate • Used to populate a basic amount of money when a project is initially developed • Does not take any site/utility conditions into consideration • The project manager can decline these recommendations • Example: • SR 256 in Austin • Estimated Project Cost: $315,000 • Utility Estimate: $31,500

20. Cost Estimates Ballpark Estimate • Submitted by the utility with their initial notice response • Educated Guess • Specific to the project • Based on initial anticipated accommodation • Can be as simple as a cost per foot x length • Refined as the project develops • As more is known about the relocations • Develops towards a detailed estimate

21. Cost Estimates Detailed Estimate • Submitted Reimbursable Utilities • May be refined multiple times • Preferably formatted similarly to an invoice • Contingencies are not accepted by FHWA • Labor • Surcharge • Materials • Salvage • Transportation • Equipment • Overhead • Preliminary Engineering • Construction Engineering • Inspections • Legal Fees • Betterment

22. Cost Estimates • Credits • Salvage • Materials that can be returned to stock at current market value • Proceeds from sale of materials can be credited to the project • Betterment • Definition: Wholly at the election and for the benefit of the utility • Methods of Calculation • Determined to be a percentage of the total cost • Precise Itemization • Exceptions: • Required by the Project • Equivalent Standards • Next highest grade/size for obsolete materials • Required by government law or regulatory commission code • Current utility design practices & there is a direct benefit to the highway project

23. Cost Estimates • Non-Participating Items The following items are not reimbursable with federal money • External Relations • Marketing • Lobbying • Research Programs • Returns on Investments • AFUDC (Allowance for Funds Used During Construction) • Interest • Financing Costs • Float (Considered to be interest) • Capital Stock Tax • Contingencies • In the event of conflicting policies we follow FHWA guidelines

24. Cost Estimates – Sample

25. Invoices & Invoicing

26. Reviewing an Invoice • The Ledger • Cost Item ID • Cost Item Category • Date cost was incurred • Name of Contractor • Type of goods or services • Rate for each unit of goods or services • Number of units of the goods or services • Total Cost of the goods or services • The Bill • Single Page Letter • Utility Name • Remit to Address • Invoice Number • Date of Invoice • Start & End Dates • Project & Permit Information • Purchase Order Number • Utility Representative Contact Information • Summary of Charges • A good invoice should include three components • The Supporting Documentation • Work Logs • Contractor Invoices • Receipts

27. Itemized Cumulative Invoice • The Final Bill • Summary listing of the charges for the entire project • Should use the same categories as the ledgers • Include a total amount due • Can be compared directly to estimate • Facilitate an explanation of Cost Overruns • Must be submitted within 90 days of utility work complete per the agreement

28. Example Invoice

29. Example Ledger

30. References

31. References • For More Information • IC 8-23-2-6 • http://www.fhwa.dot.gov/reports/utilguid/ • FHWA 23 CFR 645, Subpart A • http://www.fhwa.dot.gov/reports/utilguid/ • Commentary • Appendix A – Legal Code • INDOT Utility Coordination Website • http://www.in.gov/indot/2389.htm • Indiana Design Manual: Chapter 104 • http://www.in.gov/indot/design_manual/files/Ch104_2013.pdf

32. Examples

33. Example 1 • Franklin Petroleum has asked for reimbursement • Remove their casing and replace the pipeline under the road • Current industry practice is to install pipes without casings • There are no grounds for reimbursing the removal of the casing • The pipe is not in conflict with the project • It is the current standard but not in the best interest of the project • Extending the casing to the new edge of the road could qualify

34. Example 2 • Boilertown Electric Company has claimed a Second Time Move • They must relocate their facilities out of the way of construction • They must move to temporary and return to permanent Right of Way • There are no grounds for reimbursement of the second time move • Two moves is part of their workplan • They should understand that this is an intermediary step • A single move to final placement is not always possible • The same holds true for all attached utilities

35. Example 3 • Boilertown Electric has asked for reimbursement • Municipal Utility on municipal RoW • There are grounds for partial reimbursement • They are crossing municipal RoW several times • Percentage of poles if they are similar • Itemized if the poles vary considerably • Only if the attached utility was municipally owned

36. Example 4 • Boilertown Electric has asked for reimbursement • Municipal Utility on another municipality’s RoW • There are no grounds for reimbursement • They have no property interest in Hoosiertown • Municipal utility only has rights within its municipality unless property rights were secured in another municipality

37. Example 5 • All three have asked for reimbursement • Boilertown Electric pole line is on a private easement • Cardinal Communications has a private easement • Bulldog Bandwidth is attached to a pole with a property interest • There are grounds for reimbursement • BEC is reimbursable in full • Cardinal Communications is reimbursable in full • The CC Easement overlaps with their current • There are no grounds for reimbursement • Bulldog Bandwidth has no property interest • BEC is the holder of the property interest as owner of the poles

38. Example 6 • Extraordinary Cost Agreement • The upgrade to 4” PVC does not qualify as betterment • Replacing the AC with equivalent PVC does not qualify as betterment • Changing from 6” to 8” is betterment The estimated cost of relocation is $__________ (See Exhibit “B” for itemization). The utility represents that the total operating revenue received by the Utility during the utility’s most recent fiscal year was $_________. The estimated cost of betterment to the utility’s facilities is $_________. The total cost of INDOT’s construction project is $_________. Therefore the estimated cost of the Utility’s relocation to be reimbursed by INDOT is $________. The utility understands that INDOT will not reimburse the Utility for the cost of betterment. 90,000 500,000 8,000 450,000 32,000

39. Example 7 • Cost Estimates • A) would make a satisfactory ballpark estimate • Not enough detail regarding construction • No labor, material, equipment, transportation breakdowns • B) would make a satisfactory detailed estimate • Has enough detail for materials, labor etc. • Is very clear on what all associated costs are expected • C) would be a sufficient ballpark estimate • Shows the expected material credit • D) would be a good detailed estimate • Breaks down the overhead • Breaks down construction costs, disposal costs, restoration costs

40. Questions