Chapter 6: Utility Plans and Specifications

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Section 1: Initial Actions of the Utility

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Use of Consulting Engineers by a Utility Company

If the utility is not adequately staffed to perform engineering services for the required adjustment, it may secure consultant services for all or part of the preliminary study, design, and/or construction phase of work. The utility should notify TxDOT, in writing, that it is securing the services of a consultant.

The selection of an engineering firm should be based on an evaluation of the professional qualifications and the utility's knowledge of the consultant's work and services. The choice of a consulting engineering firm and a surveying firm can not be based on a competitive bidding procedure. The selection process should then be followed by negotiation of a mutually satisfactory fee. The establishment of the total consultant-engineering fee shall be project specific. The utility should consider the following factors in negotiating a fee:

The consultant can play an important role in coordination by:

The method of payment to compensate the consultant for all work required shall be set forth in the original contract and in any contract modifications. It may be a single method for all work or may involve different methods for different elements of work. The methods of payment that should be used are:

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  • The “lump sum fee” method shall not be used to compensate a consultant except when the agency has established the extent, scope, complexity, character, and duration of the work to be required so that fair and reasonable compensation, including profit, can be determined. The proposal must be accompanied by the consultant’s itemized estimate of costs.
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  • The “cost per unit of work” method is normally reserved for additional charges resulting from changes in the scope of work as detailed in the original contract. A list of fees for additional “cost of work” items should be included with the original contract. These costs usually include, but are not limited to, costs for additional sets of plans, inspection and rates for design changes.
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  • The “profit amount” method provides for reimbursement of actual costs of the consultant plus a predetermined profit. The determination of the amount of profit shall take into account the size, complexity, duration, and degree of risk involved. Profit exceeding 15% must be justified by the utility and approved by the ROW Division. A set percentage of the job should not be used as the profit. The utility and the utility consultant can negotiate the profit.
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  • The “specific rates” method is based on a unit of measure, such as linear feet, cubic yards, etc.
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  • The "direct cost times the multiplier” is based on unloaded (straight) rates times a calculated multiplier (indirect cost plus profit).

The “percentage of the cost of relocation” method of computing fees is not acceptable.

The District is responsible for reviewing all utility consultant contracts. TxDOT’s procedures for review and approval of consultant contracts are as follows:

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  • Necessity for consultant contracts. The utility must submit written notification describing the design work that will be performed by consultants.
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  • Qualification of the consultant. To ensure that the required work will be accomplished as required, a consulting engineering firm or consultant with a professional engineer on staff must be used. TxDOT may review the qualifications of the consultant. Factors to consider in selecting a consultant are the experience and knowledge of the consultant to accomplish the required utility work and the ability to accomplish the work in a timely manner.
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  • Services to be performed. The contract must define services the consultant will accomplish during all or part of the preliminary, design or construction phases. The reasonable cost of consultant engineering services performed under written continuing contracts is reimbursable when it is demonstrated that such work is performed regularly by the utility in the course of its own business.
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  • Fee. A maximum fee is specified in each contract.

The basis of compensation must be detailed enough to determine if the cost is reasonable for the services performed. When the basis of payment is other than a lump sum fee, the consultant contract will specify a maximum amount payable. Provisions should be made for adjustment of the maximum amount or lump sum fee when there is a substantial change in the scope of work.

There is no specific format for a consultant contract. However, the contract must be written and must include the services to be performed and the fee. These provisions will enable TxDOT to evaluate the necessity and fairness of charges. The consultant must adhere to Federal regulations when Federal-aid in right of way is involved.

The District does not have to include the consultant contract in the agreement assembly submitted to ROW Division. However, the cost associated with it must be shown in the estimate. The District must include a review and approval statement in accordance with TxDOT procedures. If the District has special concerns or specific questions about the consultant contract, the District may request the ROW Division to review for comments and/or suggestions, the contract should be included. Submissions of the consultant contract to the Division for approval will be returned to the District for their handling and approval.

Provided the consultant contract is approved, costs incurred for required preliminary work to prepare the contract and estimate of engineering services will be reimbursed to the utility. The consultant should defer incurring any other costs until the contract is approved.

The costs incurred by consultants are subject to audit; therefore, sufficient documentation must be provided for all costs.

Occasionally, a utility may use consulting engineer services for design and construction phases of utility work that has been included in the highway construction contract. This will, in some instances, result in duplication of services performed under the construction phase of the consultant agreement by the Department’s construction engineering forces. The FHWA will reimburse the State for such services either by:

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  • not participating in the utility agreement’s consultant charges, while participating entirely in the amount of State’s approved percentage for construction engineering; or
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  • participating in the utility agreement’s consultant charges and deducting such amount from the State’s approved rate for construction engineering.

This procedure is used for requesting reimbursement from the FHWA by the State. The utility company will be reimbursed by the State upon presentation of a billing for eligible consultant charges.

The following publications are available as guidelines for consulting engineering contracts:

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  • Procurement Procedures of 23CFR §172A, Administration of Engineering and Design Related Service Contracts
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  • Consulting Engineers Council and Texas Society of Professional Engineers ‑ General Engineering Services
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  • American Society of Civil Engineers Manual and Reports on Engineering Practices No. 45, “Engagement of Consultants for Engineering Services."
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Replacement of Utility Right of Way

Advise the utility to consider selecting an economical route from the standpoint of replacement right of way purchase.

While many utilities have staff experienced in evaluating utility right of way, others may have limited experience in purchasing real property interests. Although the decision to condemn or negotiate lies with the utility, adequate justification must be provided for the values paid in negotiation.

"The utility shall determine and make a written valuation of the replacement right of way that it acquires in order to justify amounts paid for such right of way. This written valuation shall be accomplished prior to negotiation for acquisition."

- 23CFR 645.111(2)

The valuation must be approved by TxDOT prior to negotiation. TxDOT may require an appraisal if the valuation is not adequately justified. The utility may offer more than the valuation or appraisal; however, the utility will only be reimbursed for the eligible cost.

TxDOT has no legal authority to acquire replacement right of way for a utility, but may participate in the eligible costs associated with the utility’s acquisition of replacement right of way.

Replacement right of way acquired by the utility before project release will not be eligible for reimbursement. After release, the cost of acquiring utility replacement right of way will be eligible for reimbursement if it is necessary and supported by the adjustment. The utility should avoid acquiring replacement right of way before approval of the utility agreement and proposed plan of adjustment by the District or Division. For more information, see the section on Replacement Right of Way Costs in Chapter 7, Section 2.

When replacement right of way is acquired and federal funds are used to cover some portion of the cost, the provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (the Uniform Act), and amendments thereto, apply to the acquisition. In these instances, the right of way personnel should be contacted for assistance.

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