an agreed fixed amount (lump sum) payment; or

actual direct and related indirect costs.

For work performed by a utility with its own forces, or for work performed for the utility under contract, a fixed amount final payment based on an estimate of costs prior to construction is allowed. This is commonly known as the lump sum payment method.

Payment should be based on the methods that are customary and acceptable for the work involved, which include the lump sum payment method. If the utility uses an existing continuing contractor, payment should be by the method the utility has previously established with the contractor. If the continuing contract establishes a lump sum payment for certain types of work, this payment method can be used for the Federal-aid project if TxDOT believes the cost is reasonable.

FHWA regulations do not limit or cap lump sum contracts. However, all lump sum contracts greater than $500,000 require Right of Way Division's approval. When proposed utility relocation work on a project for a specific utility company can be clearly defined and the cost can be accurately estimated, TxDOT may approve a lump sum agreement without later confirmation by audit of actual costs.

The lump sum payment method should only be used where the project scope and costs can be clearly and concisely defined. The cost estimate in support of the lump sum agreement must be accurate, comprehensive, verifiable, and in sufficient detail to give a clear picture of the work involved and the cost of the individual items.

Whenever the lump sum payment method is used, TxDOT must verify that the eligible work has been satisfactorily completed in accordance with the approved agreement, plans, and specifications before reimbursement can be approved.

When utility relocation work is to be accomplished by a contract secured under a full competitive bidding process controlled by a utility, TxDOT will undertake all actions needed to verify that the utility awards the contract to the lowest qualified responsible bidder based on appropriate solicitation.

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.

Lump sum estimates should itemize wages and salaries anticipated on a particular adjustment by class and type. The costs 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.

Lump sum estimates require the reviewer to verify overhead costs to ensure that all items are eligible, and the rates are not established arbitrarily.

Buy America requirements or state Iron and Steel Preference Provisions must be identified on the cost estimate and evidence of compliance is required prior to installation of associated materials and payment.

Supporting documentation and evidence of actual costs are required at billing.

Records of actual costs incurred develop the basis for reimbursement to the utility. In many cases for billing purposes, certified ledgers and other indirect methods can be used to substantiate costs, but cost estimates need to be built from actual costs expected, whether internal or external resources are used to complete the adjustment.

Cost estimate should allow comparison with the actual records of cost accumulation at billing. The comparison of cost to actual cost is a requirement at billing.

When the utility is to be reimbursed based upon the actual cost incurred under the force account payment method, TxDOT should have a daily inspection record that can be used to verify billings for labor, materials, and major items of equipment used by the utility to complete the work.

Buy America requirements or state Iron and Steel Preference Provisions must be identified on the cost estimate and evidence of compliance is required prior to installation of associated materials and payment.

When construction assembly units are used in estimating the cost of the work, labor costs may be shown on an assembly unit basis.

The estimate may be prepared by construction units and quantities 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.

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.

Bonds and Insurance cannot be listed as a separate line item in the cost estimate.