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Agreements & Cost Estimates Matthew L. Harding District Utility Engineer, INDOT November 19, 2013

This article discusses the process of reimbursement in utility coordination projects, including the grounds for reimbursement, different types of agreements, and cost estimation methods. It also provides examples and tips for filling out agreements and reviewing invoices.

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Agreements & Cost Estimates Matthew L. Harding District Utility Engineer, INDOT November 19, 2013

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  1. Agreements & Cost Estimates Matthew L. Harding District Utility Engineer, INDOT November 19, 2013

  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 – Sample

  24. Invoices & Invoicing

  25. 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

  26. 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

  27. Example Invoice

  28. Example Ledger

  29. References

  30. 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

  31. Examples

  32. 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

  33. 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

  34. 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

  35. 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

  36. 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 • 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

  37. 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

  38. 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

  39. Questions

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