33 CFR Part 277, Appendix B to Part 277 - Hypothetical Example of Cost Apportionment

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View PDF at GPO Pt. 277, App. B
Appendix B to Part 277—Hypothetical Example of Cost Apportionment
Following is the interpretation of the principles as applied to the alteration of a hypothetical highway—railroad bridge across Blank River between City A and City B.
Reference table
1. Total estimated cost of alteration project $10,917,300 A
The existing double deck swing span will be replaced with a new double deck lift span affording a horizontal navigation opening of 250 feet clear width between piers normal to the navigation channel and a vertical clearance of 125 feet above mean high water in the raised position.
2. Salvage $77,300
This value is deducted from the original cost to determine the actual capital cost (Table VII). It is also deducted from the Total Estimated Cost of Alteration Project to determine the cost to be apportioned.
3. Direct and special benefits:
a. Removing old bridge (owner's share) $165,489 I
b. Fixed charges (owner's share) 284,460 II
A fixed charge such as engineering, design and inspection costs, realtor's and counsel's fees, and bridge owner's administrative expenses is an undistributed cost shared in the ratio that each party shares the cost of construction less fixed charges. In computing the bridge owner's share of the fixed charges, all other financial liabilities assigned to the bridge owner shall be included in the computation. (Table II).
c. Contribution by third party $432,000
Section 6 of the Act provides that in the event the alteration or relocation of any bridge may be desirable for the reason that the bridge unreasonably obstructs navigation, but also for some other reason, the Secretary may require equitable contribution from any interested person, firm, association, corporation, municipality, county, or State desiring such alteration or relocation for such other reason, as a condition precedent to the making of an order for such alteration or relocation. In the instant case, testimony at the hearing developed that the bridge would require alteration because of the navigation project but also City A desires to relieve traffic on a nearby secondary road by providing access to the new bridge. It is considered that as an equitable contribution, City A should contribute an amount equal to one half of the expectable road user benefit accruing over the next 10 years. Other methods for determining the third party's contribution are acceptable depending on the circumstances.
d. Betterments $18,360 III
4. Expectable savings in repair or maintenance costs IV
Repair $100,000
Maintenance 16,288
The new bridge is designed for increased loading and width greater than that of the old bridge. Therefore, the estimated annual maintenance cost was based on a hypothetical bridge designed, but not constructed, for the same loading and width as the old bridge but with increased clearances as required to meet the needs of waterborne navigation, and not on the estimated annual maintenance cost of the new bridge. The savings in repair costs represents a savings to the bridge owner who will not have to restore the bridge that was recently damaged since it is being altered as a part of a proposed navigation improvement.
5. Costs attributable to requirements of railway and highway traffic $1,534,000 V
The old bridge carries a highway deck on the upper level consisting of a roadway 18 feet wide (no sidewalks) and a railway deck on the lower level with 110-lb. rails. The new bridge will carry a highway deck on the upper level consisting of one 28-foot roadway and two 5-foot sidewalks, and the railway deck will have new 130-lb. rails. In addition, the railway deck will be paved to carry highway traffic. Thus, the bridge may be kept in an intermediate raised position when not being used by railway traffic to pass small-boat traffic without delaying highway traffic. City A also desires to provide additional highway approaches and right-of-way to connect a nearby secondary road with the new bridge.
6. Expenditure for increased carrying capacity $2,330,000 VI
The highway deck of the old bridge was designed for a live loading equivalent to AASHO H15-44 and the railway deck for live loading of Cooper E 45. The highway deck of the new bridge will be designed for live loading AASHO HS20-44, and the railway deck will be designed for live loading of Cooper E 60. Accordingly, the bridge owner will pay the additional cost for the increased carrying capacity of the new bridge.
7. Expired service life of old bridge $511,300 VII
The structure of the old bridge was completed in 1908 and the superstructure completed in 1909. For this hypothetical example it was assumed the bridge would be replaced in 1970.
8. The following is an explanation of the procedure for determining the tabulation of proportionate shares of costs to be borne by the United States and the bridge owner presented in Table B.
(1) Cost of alteration to be apportioned is the total estimated cost of the project (excluding contingencies) less salvage value (§ 277.8(b)), less contribution by third party, if applicable (§ 277.8c(3)).
(2) Share to be borne by the bridge owner is the sum of the direct and special benefits (§ 277.8(c)) expectable savings in repair or maintenane costs (paragraph 8d), costs attributable to requirements of railway and highway traffic (§ 277.8(e)), expenditure for increased carrying capacity (§ 277.8(f)) and expired service life of old bridge (§ 277.8(g))
(3) Share to be borne by the United States is the difference between the cost of alteration to be apportioned and the share to be borne by the bridge owner.
(4) The exact amount of costs to be borne by the bridge owner will be determined upon completion of the project.
(5) Contingencies may be included in the total shares to be borne by both the United States and the bridge owner.
Tables
A. Summary of Estimated Project Costs.
B. Tabulation of Proportionate Shares of Cost To Be Borne by the United States and the Bridge Owner.
I. Bridge Owner's Share of Removing Old Bridge.
II. Fixed Charges To Be Paid by Bridge Owner.
III. Betterments.
IV. Expectable Savings in Repair or Maintenance Costs.
V. Costs Attributable to Requirements of Railway and Highway Traffic.
VI. Expenditure for Increased Carrying Capacity.
VII. Value of Expired Service Life of Old Bridge.
Table A—Summary of Estimated Project Costs
No. and item Cost Fixed charges Total
1New bridge $8,104,052 $570,000 $8,674,052
2Removal of old bridge 521,908 500 522,408
3Approaches 50,000 5,000 55,000
4Additional highway approaches 1,530,000 15,000 1,545,000
5Railroad force account work 41,800 3,500 45,300
6Additional signaling 27,000 2,400 29,400
7Right-of-way 13,240 900 14,140
8Additional right-of-way 30,900 1,100 32,000
Total 10,318,900 598,400 10,917,300
Total estimated cost of project 10,917,300
Less salvage −77,300
Less contribution by third party −432,000
Total cost of alteration to be apportioned 10,408,000
Less right-of-way (Items 7 and 8) −46.140
Total Cost of construction 10,361,860
Table B—Tabulation of Proportionate Shares of Costs To Be Borne by the United States and the Bridge Owner
Note: The exact amount to be borne by the bridge owner will be determined after completion of the project.
Total estimated cost of project (excluding contingencies) (table A) $10,917,300
Less salvage 77,300
Less contribution by third party 432,000
Total cost of alteration to be apportioned 10,408,000
Share to be borne by the bridge owner:
Direct and special benefits:
Removing old bridge $165,489
Fixed charges 284,460
Betterments 18,360
Expectable savings in repair or maintenance costs:
a. Repair 100,000
b. Maintenance 16,288
Costs attributable to requirements of railway and highway traffic 1,534,000
Expenditure for increased carrying capacity 2,330,000
Expired service life of old bridge 511,300
Total 4,959,897
Share to be borne by the United States 5,449,103
Contingencies 15 pct 817,365
Total 6,266,468
Share to be borne by the bridge owner 4,959,897
Contingencies 15 pct 743,985
Total 5,703,882
Table I—Bridge Owner's Share of Removing Old Bridge
Item to be removed Age at time of removal (years)—(1) Owner's share percent—(2) Removal cost—(3) Owner's share of removal—(4) Years remaining—(5) Present worth factor—(6) Owner's present liability—(7)
Present Worth Factor based on 47/8%, FY 1970, as established by Water Resources Council. The actual factor to be used shall be that current at the time of alteration.
Substructure 62 62 $241,935 $150,000 38 .1639 $24,585
Protection Works 37 67 60,000 40,200 18 .4245 17,065
Superstructure 61 87 206,896 180,000 9 .6516 117,288
Signaling 61 100 440 440 0 1.0 440
Ties and Timber 20 67 6,000 4,000 10 .6213 2,485
Rail and Accessories:
Rail, 110 lb 33 100 1,000 1,000 0 1.0 1,000
Rail, 110 lb 13 65 5,637 3,664 2,626
Total 521,908 368,104 165,489
Table II—Fixed Charges To Be Paid by Bridge Owner
4,644,537×598,400=284,460
__________
9,763,460
Cost of construction $10,361,860
Less fixed charges 598,400
Total 9,763,460
Owner's share less fixed charges:
Removing old bridge 165,489
Betterments 18,360
Expectable savings in repair or maintenance costs:
a. Repair 100,000
b. Maintenance 16,288
Costs attributable to requirements of railway and highway traffic (less right-of-way) 1,503,100
Expenditure for increased carrying capacity 2,330,000
Expired service life of old bridge 511,300
Total 4,644,537
Fixed charges by owner 284,460
Table III—Betterments
New furniture and water cooler in control house $1,050
Increased cost of elevators over stairways 13,360
Increased cost of galvanized steel grating walkways over timber walkways 3,950
Total 18,360
Table IV—Expectable Savings in Repair or Maintenance Costs
Present worth factor based on 47/8 pct., F.Y. 1970, as established by Water Resources Council. The actual factor to be used shall be that current at the time of the study.
Repair Cost
Cost in 1970 to repair damaged bridge $100,000
Savings in repair costs 100,000
Maintenance Cost
Average annual maintenance cost for old bridge 16,875
Estimated annual maintenance cost for new bridge 16,000
Total decrease in annual maintenance costs 875
Annual savings capitalized (50 years) @ 47/8%:875÷0.05372 16,288
Table V—Costs Attributable to Requirements of Railway and Highway Traffic
Heavier running rail (130 lb in lieu of 110 lb) $11,200
Paving, lower deck 34,900
Additional signaling 27,000
Additional highway approaches 1,430,000
Subtotal 1,503,100
Additional right-of-way 30,900
Total 1,534,000
Table VI—Expenditure for Increased Carrying Capacity
1 Excludes all items in Table III and first two items in Table V.
Cost of new bridge designed for Cooper E 60 and AASHO HS20-44 loading 1 $8,609,592
Cost of replacement-in-kind (hypothetical) bridge designed for Cooper E 45 and AASHO H15-44 loading 1 6,279,592
Total 2,330,000
Table VII—Value of Expired Service Life of Old Bridge
[Replacement year—1970]
Item to be removed Year built—(1) Original cost—(2) Salvage value—(3) Actual capital cost (2)-(3)—(4) Estimated service life—(5) Expired service life Value of expired service life (4)×(7)—(8)
Years 1970-(1)—(6) Percent of total (6)(5)—(7)
1 Held at 50% if maintained in good condition.
2 Roadway approaches to be abandoned.
3 Weighted average 100 ×492, 038/633, 678=78%.
Explanation of Columns for Table VII:
Column (1): Year Built is the original date that an item to be removed became a part of the bridge or the last known date that it was replaced. The items to be removed should be broken down to show as much detail as possible, particularly where there is a variation in the year built and/or the estimated service life.
Column (2): Original cost shall be supported by records furnished by bridge owner. Engineering cost should be estimated if unknown.
Column (3): Salvage—refer to § 277.8(b).
Column (4): Actual capital cost is the original cost of the item to be removed minus the salvage value.
Column (5): Estimated Service Life—refer to § 277.8(g).
Column (6) & (7): Expired Service Life—refer to § 277.8(g).
Column (8): Value of expired service life is the actual capital cost of the item to be removed multiplied by the percent of expired service life.
Substructure:
Pivot Pier 1908 $34,500 $0 $34,500 100 62 62 $21,390
Right End Pier 1908 18,580 0 18,580 100 62 62 11,520
Left End Pier 1908 21,410 0 21,410 100 62 62 13,274
Right Abutment 1908 8,600 0 8,600 100 62 62 5,332
Left Abutment 1908 11,410 0 11,410 100 62 62 7,074
Protection Works:
Pivot Pier 1909 5,800 0 5,800 37 61 1 50 2,900
Right End Pier 1942 3,200 0 3,200 37 28 1 50 1,600
Superstructure:
Swing Span 1909 168,920 19,400 149,520 70 61 87 130,082
Electrification 1957 5,000 500 4,500 22 13 59 2,655
Left Approach Spans 1909 142,017 16,300 125,717 70 61 87 109,374
Right Approach Spans 1909 156,692 19,300 137,392 70 61 87 119,531
Signaling 1909 15,000 1,000 14,000 35 61 100 14,000
Ties and Timber 1909 8,120 0 8,120 20 61 1 50 4,060
Rail and Accessories:
Rail, 110 lb 1937 6,600 2,200 4,400 20 33 100 4,400
Rail, 110 lb 1957 43,679 18,600 25,079 20 13 65 16,301
Roadway Approaches: 2
Pavement 1908 17,841 0 17,841 20 62 1 50 8,921
New Lane 1961 43,609 0 43,609 20 9 45 19,624
Subtotal 77,300 633,678 492,038
Engineering 24,695 0 24,695 3 78 19,262
Total 77,300 511.300

Title 33 published on 2013-07-01

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