Chapter 9: Forms and Agreements

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Section 1: Overview

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Comparison

The following chart compares requirements of lump sum and actual cost agreements.

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Actual Cost

Lump Sum

No limitation

Limited to $500,000.00

Detailed estimate

Very detailed and a verified estimate

Detailed itemization of billing

No itemization of billing

Partial payments

No partial payments

Audit required

No audit required

10% retained until audit

100% reimbursement at billing

One review of plan and estimate

One review of plan and estimate

Reconcile final billing to approved plan and estimate

Proof of Buy America compliance

Proof of Buy America compliance



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Actual Cost Agreements

Agreements are approved on an estimated cost basis that will be adjusted to reflect the actual cost of the adjustment at the time of billing and be verified by audit. If any costs are incurred for a reimbursable utility adjustment before an approved agreement, TxDOT will not reimburse the utility for those costs.

Federal Utility Procedure (FUP) All utility adjustments are eligible for reimbursement by State law for Interstate projects. Districts will ensure that appropriate funds are programmed in the STIP for maintenance operations. The necessity for, and justification of, interstate adjustments depends on whether the existing facilities need to be adjusted to accommodate the highway and are in the best interests of the public. The ROW Division has been empowered by the FHWA to act in its capacity and must be consulted concerning all proposed adjustments on interstate highways. The approval authority of the agreement assembly lies with the District. The agreement assembly must contain the following:

To verify that the adjustment is necessary, justified, feasible, economical, and UAR-compliant, utility plans will be reviewed by the District. Plans shall include existing and proposed Right of Way and Utilities, main lane stationing, easements etc.

A utility may estimate the cost of work to be performed by contract forces without securing bids. However, the utility must include a reasonable basis for estimating the contract work. The plans and estimates should also reflect the necessity for the adjustment.

State Utility Procedure (SUP) Utility adjustments on Federal-aid (non-interstate), Off-System, State, and FM highway projects require a determination of eligibility. The justification for cost participation depends on whether the existing facilities have real or compensable property rights, in addition to the need to be adjusted to accommodate the highway, and are in the best interests of the public. The ROW Division has been empowered by the FHWA and State to approve all such adjustments and can be consulted before approval. The Districts have been empowered by ROW Division to approve the estimate, plans, and general agreements. The agreement assembly must contain the same information required for the Federal Utility Procedure above, plus the following:

To verify that the adjustment is necessary, justified, feasible, economical, and UAR compliant, utility plans will be reviewed by the District.

A utility may estimate the cost of work to be performed by contract forces without securing bids. However, the utility must include a reasonable basis for estimating the contract work. The plans and estimates should also reflect the necessity for the adjustment.

Local Utility Procedure (LUP) On local public agency (LPA) projects with TxDOT cost participation, a written agreement between TxDOT and the utility is not required. TxDOT does not require the LPA to execute a formal contract with the utility, but it is recommended. The responsibility for approval of payments rests with the ROW Division. Before any payments to the LPA can be made, an audit will be made to a make a determination of upper limit. The LPA must furnish the same information as required for an agreement under the State Utility Procedure above. Upon project release by the ROW Division, the LPA can initiate the utility adjustment. Negotiation, communication, and coordination of work with the utility, relative to accommodation and/or reimbursement, are the LPA’s responsibilities.

To verify that the adjustment is necessary, justified, feasible, economical, and UAR compliant, utility plans will be reviewed by the District. For adjustments that are less than fully eligible for State cost participation, the plans must clearly show the explanations and calculations used in deriving the eligibility percentage.

A utility may estimate the cost of work to be performed by contract forces without securing bids. However, the utility must include a reasonable basis for estimating the contract work. The plans and estimates should also reflect the necessity for the adjustment.

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Lump Sum Agreements

Agreements are approved based on very detailed plans and supported estimates of cost that will not be adjusted to reflect changes in costs or be verified by audit. Requirements for a lump sum agreement are:

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  • Plans must be of sufficient detail to allow verification of placements, methods of placement and materials used and removed.
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  • A highly itemized cost estimate (or actual bids) plus supporting documentation must be included. The cost estimate must be verified by the District;
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  • Utility Joint Use Agreements must be executed, if applicable.
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  • The estimate must contain appropriate credits for salvage and betterment, and accrued depreciation value, if applicable.
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  • No contingency or miscellaneous items in the estimate are allowed.
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  • Quitclaims, if applicable, must be supplied at the time of billing.
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  • Buy America documentation must be approved with Form 1818, MTR's and/or Certifications.
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  • Form ROW-U-48 Statement Covering Utility Construction Contract Work must be reflected to the portion of the work to be performed by contract forces.
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  • Bid documents must be submitted with agreement.
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  • Fee schedule(s) for continuing construction contract and engineering contract must be submitted with agreement.
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  • The agreed lump sum amount cannot be changed unless there is a change in the scope of work.

Federal Utility Procedure (FUP) 23CFR, Section 645.113(f) permits reimbursement of utility relocation costs based on an estimated lump sum amount. However, ROW Division has placed a ceiling of $500,000.00 on all lump sum agreements. This level of authority may be increased, if requested, in writing, by the District Engineer to the ROW Division. The option to use the lump sum method rests with the utility company.

State (SUP) The State permits reimbursement of utility relocation costs based on a lump sum amount with the same requirements as stated for a Federal Utility Procedure Lump Sum agreement with the exception that the eligibility of costs for reimbursement must have been determined and approved by the Districts and are based on real and compensable property rights.

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Advance Funding Agreements (AFAs)

Utility work to be included in the highway construction contract may include items that are ineligible for TxDOT cost participation. Therefore, it will be necessary for the utility to place the estimated amount of ineligible costs in escrow with TxDOT. A statement should be added to the highway PS&E, in the section where utility items are addressed, stating that the ineligible utility items are financed by an AFA which is included in the Utility Agreement with the utility.

The eligibility ratio and betterment ratio calculated within the Standard Utility Agreement should be applied to all costs included in the highway contract.

Any changes or revisions to the work in the approved utility agreement may require the betterment percentage and/or escrow amount to be recalculated.

The AFA should be coordinated with Contract Services Division and the District. The AFA must be reviewed by the ROW Division prior to execution of the AFA.

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