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Agreements & Cost Estimates

Agreements & Cost Estimates. Learning 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

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Agreements & Cost Estimates

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  1. Agreements & Cost Estimates

  2. Learning 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

  3. Legal Basis for Reimbursement • Code of Federal Regulations 23 CFR 645 • Indiana Code I C 8-23-2-6 • The Department is authorized to reimburse a utility for the relocation of its facilities as allowed under IC 8-23-2-6(a)(15), which appears on www.state.in.us/legislative/ic/code. A utility may be reimbursed for the relocation of its facilities based on the following: • 1. property interests • 2. unnecessary relocation • 3. customer service line • 4. interstate project • 5. extraordinary costs

  4. Reasons for Utilities to Be Reimbursed 1. The Utility has a property interest-need drawing showing the relocation, a detailed cost estimate to relocate the facilities, and documents that support their claim of property interests. 2. Extraordinary Cost – sometimes referred to as hardship 3. Unnecessary which includes second time 4. Interstate 5. Some customer service lines

  5. 1. Property Interest • Utility has a title to the property • Utility has a recorded easement • Utility can provide the legal documentation that it has obtained an easement by adverse possession, other wise known as aprescriptive easement, by demonstrating that the easement has been in continuous use for at least 20 years. Best Proved by Quiet Title action in court • A municipal utility exists on municipally owned property

  6. 2. Extraordinary Cost • For INDOT projects IC 8-23-26-5 states that the department may negotiate an agreement with a utility to reimburse the utility for extraordinary costs of facilities relocation caused by a highway or bridge construction or improvement project or a combination of highway or bridge construction or improvement projects. • The utility’s cost to relocate exceeds 10% of the utility’s Gross Annual Revenue • The utility’s cost to relocate exceeds 50 % of the INDOT project estimate cost – think about re-scoping

  7. 3. Unnecessary Relocations • The relocation did not take the utility out of conflict with the project • The utility remains in conflict with the final project • The utility would be out of conflict with the final project, but the project is not constructible in the relocated position • The utility did not need to relocate • A change of design or construction method took the utility’s original location out of conflict • The project was not constructed within two years after the utility completed its relocation.

  8. 4. Interstate Highways • Utilities are reimbursable for facility relocations on the interstate system except for the relocation of facilities installed on the interstate system after June 30, 1991 • Utility facilities within the interstate system that were placed solely to cross the interstate system are reimbursable even if they were installed after June 30, 1991

  9. 5. Customer Service Lines – Who Relocates? • The utility is responsible for relocating its customer service lines • IC 8-23-26-10 states: “If a highway or bridge construction or improvement project requires the relocation of customer service facilities, the utility providing service to the customer is responsible for arranging the relocation of the utility’s customer service facilities required to be relocated.”

  10. Customer Service Lines in New ROW– Who Pays? • If INDOT acquires new right of way that includes customer service lines: • IC 8-23-26-11 states: “If a highway or bridge construction or improvement project requires the acquisition of additional right of way and the relocation of customer service facilities that existed within the newly acquired right of way, the department is responsible for the cost of relocating those customer service lines.”

  11. Customer Service lines in Existing ROW – Who Pays? • IC 8-23-26-12 states: “If the utility does not own the customer service facilities, the department is responsible for the cost of the relocation of those facilities. “If the utility owns the customer service facilities, the cost of the relocation is the responsibility of the utility or the customer as determined by the operating rules of the utility or by a contract between the utility and the customer.”

  12. Reimbursement & Agreements

  13. 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 well in advance of letting

  14. 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%

  15. Partial Reimbursement • 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, less betterment • The last 300 LF are excluded • The overhead, equipment, etc. can be split 70%-30%

  16. Types of Agreements • INDOT employees can access all current agreements from the UTA • Consultants may request a copy of the correct agreement from their Oversight Agent or request access to the UTA • Work may be by Utility or by INDOT • General Agreements in 104-5.0 Highway Utility Agreements • Preliminary Engineering • Standard Agreement • Extraordinary Cost • Unnecessary Cost • Addenda to Agreements • LPA Utility Agreements • Utility-Specific Agreements

  17. EXHIBIT EXAMPLES • Agreements generally have two exhibits: • Exhibit A – Signed & Approved Work plan • Prioritize reimbursable utilities when planning coordination • Exhibit B – Itemized Cost Estimate • All pages should be numbered, i.e. Exhibit A – 1 of 4

  18. EXAMPLE

  19. EXAMPLE

  20. EXAMPLE

  21. EXAMPLE

  22. EXAMPLE

  23. 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 – Work plan • Generally, include the work in the contract

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

  25. EXAMPLE

  26. 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

  27. Cost Estimates

  28. 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: • State Road 256 in Austin • Estimated Project Cost: $315,000 • Utility Estimate: $31,500

  29. Cost Estimates • Ballpark Estimate: • Submitted by the utility with its 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

  30. Cost Estimates • Detailed Estimate: • Submitted by 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

  31. 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

  32. 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

  33. Invoices & Invoicing

  34. Reviewing an Invoice A good invoice should include three components • 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 • 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 Supporting Documentation • Work Logs • Contractor Invoices • Receipts

  35. 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

  36. 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

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