Advance Funding Agreements are agreements where a local government is providing either resources or money to a project. Typically, these Advance Funding Agreements are road-related contracts and the projects are authorized under statutes that either allow or require local governments to contribute toward road-related expenditures.

Interlocal agreements are also agreements with a local government. However, TxDOT uses the term “Interlocal” to indicate agreements that are not Advance Funding Agreements. Instead, Interlocal agreements are used when contracting to acquire

non-roadway governmental functions and services

.

Interlocal agreements require a detailed Scope of Work and Advance Funding Agreements do not.

Interlocal agreements do not allow for construction. Construction projects must be handled through Advance Funding Agreements.