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Section 2: Estimate Categories

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Categories

The estimate submitted in support of the agreement will set forth the items of work to be performed, as broken down into the following categories:

  • Materials and supplies
  • Labor
  • Overhead
  • Transportation and equipment
  • Traffic control
  • Right of way
  • Salvage, Abandoned Facilities, and Removal of Materials
  • Credits
  • Betterments
  • Miscellaneous.

All of the above items must be sufficiently detailed to provide TxDOT with a reasonable basis for analysis.

The estimate should allow comparison with the actual records of cost accumulation. It should contain a summary of all costs for the major accounts and should reflect all credits in order to indicate the net cost of adjustment. If contract work is to be utilized, the estimate should distinguish between the work being performed under contract and the work to be accomplished by utility force account.

Justification for all items and amounts in the estimate should be provided by the utility so that the reviewer can properly assess them. When estimates are prepared on a construction unit basis, a copy of the utility’s current specification sheet for each construction unit will be required.

Follow General Accounting Procedures (GAP) and Federal Acquisition Regulations (FAR).

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Materials and Supplies

Major items of materials must be itemized. Unit costs, such as assembly units of property (i.e., Rural Utilities Administration (RUA) construction specifications), may be used for estimating purposes if the utility uses such units in its own operations.

The estimate may be prepared by construction units to support any item included in any account. Where construction units are used, it is required that TxDOT approve the estimating and/or billing procedure. The factors that will be included in the utility’s construction overhead account must be clearly shown.

  • Materials should be shown by items and price:
    • Lump sum estimates should list major items of material and supplies by item, with a description and proper indications of the specific quantity required, and the unit price and extension.
    • Major items of materials and supplies may be shown as assembly units with unit prices.
  • Minor items may be shown as “Minor Items, Miscellaneous Hardware” and indicated as a lump sum price, if this is consistent with the utility’s own cost system.

A unique example of an adjustment cost is assembly units used primarily for adjustments involving RUA facilities. Specifications, sheets, or booklets, like those used in RUA Form Books 803, 804, and 805, itemize the components of each assembly. A copy of the current specification sheet for each unit itemized in the estimate should be included in the agreement assembly to support the estimate. No specification sheet will be required for poles, since the symbols for these items are obvious.

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Labor

  • For lump sum estimates, wages and salaries anticipated on a particular adjustment must be representative of actual rates per hour or average rates on the actual amount paid to individuals for productive time incurred under the agreement.
  • The estimate must show person-hours by the rate for the job title. Additionally, unit costs for labor will be acceptable when the utility’s system of accounts provides for this method of estimating. This type of cost estimating is usually done by cooperatives involving RUA facilities.
  • However, if items of overhead are included in the unit cost for labor, these items are detailed separately to be analyzed to assure the costs were incurred after execution of a Utility Agreement. The utility should also include in the estimate the amount of time anticipated for supervisory labor, costs incidental to the preparation of the plans, estimates, and agreement documents, and expenses that will be paid to individuals directly engaged in the proposed adjustment.
  • All labor charges and expenses shown must be in conformity with similar charges that are reflected in the accounts of the utility and incurred in its normal operations.
  • When construction assembly units are used in estimating the cost of the work, labor costs may be shown on an assembly unit basis.
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Overhead

  • Payroll additives and other overhead factors should be shown individually, with a statement of what is included in each account and an explanation of the method used for accumulating such costs.
  • On lump sum estimates, the reviewer should verify overhead costs to ensure that all items are eligible, and the rates are not established arbitrarily.
  • Common ineligible costs that may not be claimed in the utility’s overhead account are:
    • advertising and sales promotion;
    • interest on borrowed funds (allowance for funds used during construction (AFUDC);
    • charges for the utility’s own funds;
    • resource planning and research programs;
    • stock and stockholder’s expenses;
    • Federal and State income taxes;
    • provisions for contingent reserves;
    • directors’ salaries;
    • special management studies;
    • bad debts;
    • sales and rate studies;
    • contributions;
    • fines and penalties;
    • entertainment;
    • lobbying; and
    • revenue loss (not to be confused with product loss during construction).
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Transportation and Equipment

  • Transportation expenses
    • Charges should have sufficient documentation and explanation of necessity.
  • Personal expenses
    • Expenses may include meals and lodging required by use of the utility’s forces in remote areas. The costs should be in keeping with those normally incurred by the utility.
  • Equipment
    • Type, size, and rate should show equipment.
    • When equipment cost is based on a percentage of other costs, a statement should be included outlining the basis.
    • The charges should reflect the utility’s normal accounting procedures.
    • Rentals should also be shown by type, size, and rate.
    • Published equipment rates, instead of actual rate, are not allowable, (i.e., Petroleum Motor Transport Association (PMTA) rates).
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Right of Way

Right of way costs for replacement or damages should be in accordance with the utility’s normal methods.

  • Definitions:
    • "Right of way costs" are defined as those instances where there is an interest in land acquired.
    • “Replacement right of way” may be defined as the land and interests in land acquired outside existing highway right of way for or by the utility. These costs may include salaries and expenses of utility employees engaged in the valuation of and negotiation for right of way, amounts paid to independent fee appraisers for appraisal of the right of way, recording costs, deed fees and similar costs normally paid that are incidental to land acquisition. These costs must never be lumped together, but should be broken down as separate line items in the estimate.

A valuation of the replacement right of way must be conducted before the initiation of negotiations.

Payment of property damages necessary for a utility adjustment is reimbursable when properly documented. Losses to improvements such as crops, timber, fences, and gates caused by utility construction will be considered as damages and properly chargeable by the utility as a construction or adjustment expense. No reimbursement is permitted for damages caused by negligence on the part of the utility or its employees.

An affidavit and existing record documentation affirming a utility’s property interest at the present facility location needs to be submitted to the District. Upon completion of the utility adjustment, the utility’s prior property interest will be quitclaimed to the State.

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Traffic Controls

Develop a TMUTCD-compliant traffic control plan, to include:

  • Appropriate signs, markings, and barricades per the traffic control plan
  • Safety equipment, such as:
    • barrels,
    • signage,
    • flagmen,
    • positive barriers, and/or
    • vertical panels.
  • Clear zone protection devices, such as:
    • concrete traffic barriers,
    • metal beam guard fencing,
    • appropriate end treatments, and
    • other appropriate warning devices.
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Salvage, Abandoned Facilities, and Removal of Materials

The estimate must contain appropriate credits for salvage and accrued depreciation value, if applicable.

  • Salvage
    • If existing materials are to be removed from the project as part of the adjustment or relocation of the utility’s facilities, a credit must be given for their value against the net cost of the adjustment.
    • If materials are to be re-stocked, the credit should be in an amount comparable to the prices charged for similar materials when issued from the utility’s stock.
    • If the salvaged materials are to be sold as junk or for scrap value, that amount should be credited to the net cost of the adjustment.
    • If the salvaged materials are deemed to have no value and are disposed of with no value being returned to the utility, then a credit does not need to be applied to the adjustment’s net cost. Justification should be provided to substantiate removal.
    • The State or LPA should verify the disposition of salvage materials in their construction diary and a statement as to the disposition should accompany the billing for the adjustment.
  • Abandoned Facilities
    • Abandoned lines are the responsibility and property of the abandoning utility owner. Abandonment does not relieve the owner of financial responsibility.
    • Utilities may request that their abandoned lines be left in the ground; such request must be reviewed and approved by the District, which will notify ROW Division of its decision.
    • Without valid justification, all abandoned facilities shall be removed.
  • Required Removal of Materials
    • Environmentally sensitive material should be removed if there is a direct construction conflict.
    • If abandoned materials are to be removed by the utility, the cost must be reflected in the estimate. A description of the removal work performed must be detailed in the scope of work narrative.
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Credits

  • General Federal and State regulations require that, in most cases, credits to the utility adjustment project must be given. Generally, these credits will fall into one of the following categories:
  1. Betterment credits due to electiveincreases in functional capacity, improvement of utility service, or superior and improved materials in the replacement facility that are not required because of the highway project.
  2. Capital Improvements. There may be occasions when, to clear right of way for highway construction, the cost of any required adjustment of buildings and other similar structures of a utility used primarily for the production, transmission, or distribution of the utility’s products is eligible for reimbursement. These include:
    • switching stations
    • power substations
    • pumping stations
    • metering and regulatory stations
    • lift stations
    • storage tanks
    • field offices
    • garages, and
    • other similar structures.

When it is not necessary to retain the existing building and/or facilities in service until a replacement is constructed, reimbursement will be limited to the most economical method of adjustment.The