1. Agreements & Cost Estimates
Gail Lee, P.E. Highway Utility Engineer INDOT
June 14, 2017

2. Learning Objectives Reimbursement Agreements Cost Estimates
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
The Legal basis for reimbursement derives from the Code of Federal Regulations 23 CFR 645 and Indiana Code I C

4. Reasons for Utilities to Be Reimbursed
1. The Utility has a property interest 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 a prescriptive 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 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 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 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 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
Preliminary Engineering
Standard
Extraordinary Cost
Unnecessary Cost
Addenda to Agreements
LPA Utility Agreements
Utility-Specific Agreements

17. Example Agreement – Prep

18. Example Agreement – Prep

19. Agreements – Exhibits 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
Very large reimbursements could impact our ability to fund a project!

20. Example Agreement – Review
Be sure these sections have the appropriate responses circled.

21. Example Agreement - Review

22. Example Agreement - Review

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 Agreement – Ex. Cost

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
Non-Interstate
Interstate
Rural 5%
10%
Urban
15%
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. Cost Estimates – Sample

34. Invoices & Invoicing

35. 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

36. 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

37. Example Invoice

38. Example Ledger

39. References For More Information IC 8-23-2-6 FHWA 23 CFR 645, Subpart A
FHWA 23 CFR 645, Subpart A
Commentary
Appendix A – Legal Code
INDOT Utility Coordination Website
Indiana Design Manual: Chapter 104

40. Questions?