Managing Enhanced Risk in the Mega Project Era (2022)

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NCHRP LRD 86 5 approved by the government agency.17 If governmental approv- als are required to be obtained aer contract execution, delays will occur if approvals are not given within a reasonable time frame.ere is also the risk that the nal approval will require modications to the proposed schematic design or other as- sumptions on which the proposals (and related pricing) were based. Since governmental approvals come from third parties and the process for obtaining the approvals can be cumbersome and time consuming, the contract will need to allocate the risks for obtaining any approvals that have not been obtained prior to contract execution, as well address potential delays in obtaining these approvals. While the risk can be shared, contractors oen are responsible for obtaining governmental approvals, particu- larly for DB and P3 projects. When the owner takes on responsi- bility for obtaining approvals, it is usually specied that only the owner must do so or would assist the contractor with obtaining them. e risk allocation for governmental approvals oen is dependent upon the type of governmental approval involved, the schedule for delivery of the project, and the project delivery method. a. Project Delivery Method e type of project delivery method will necessarily aect how governmental approvals will be obtained. Where govern- mental approvals will be required to accommodate project de- sign and the contractor is responsible for developing or com- pleting the design, such as for DB or P3 projects, the contractor will likely be responsible for obtaining those governmental ap- provals. For most of the DB and P3 projects surveyed, the owner took responsibility for obtaining certain specied approvals and, where the approvals were not already in hand at contract execution, the owner was contractually obligated to provide those approvals by a certain specied date. In addition, because the contractor is responsible for nal design of these types of projects, the DB and P3 contracts require the contractor to be responsible for obtaining any amendments or modications to any owner-provided approvals that are necessary to accommo- date the contractor’s nal design. (See Excerpt 1 from the Ari- zona Department of Transportation (ADOT) South Mountain P3 agreement.) Where the contractor is responsible for obtaining any gov- ernmental approvals, in addition to describing the contractor’s obligations, many of the contracts surveyed include provisions describing the owner’s obligations, such as provisions that re- quire the owner to assist the contractor in obtaining the approv- als and any modications to the approvals. In such cases, the contract may provide for reimbursement to the owner for its reasonable costs in providing such assistance. On many of the DB and P3 projects reviewed, the contractors were responsible for preparing permit applications yet, to allow the proposers to better assess the risks they would be bearing, the project owners 17 Thomas J. Kelleher, Jr., Thomas E. Abernathy, Hubert j. Bell, Jr., and Steven A. Reed, Smith, Currie & Hancock, Federal Government Construction Contracts: A Practical Guide for the Industry Professional, (Wiley, 2nd ed. 2010). (3) diering site conditions, and (4) delays in government ap- provals.16 Results of the interviews conducted under this project reported the highest risks as the utility and ROW risks, followed by geotechnical risks. e most common risk identied with respect to DB projects was geotechnical risk, followed by util- ity and ROW risks. For P3 projects, the most frequently cited risks were ROW and utility risks. For CM/GC, the most refer- enced risks were related to stang and management, as well as project cost estimates. Mitigation measures for these risks will be addressed in Section II of this digest, using specic contract requirements and provisions. II. RISK ALLOCATION STRATEGIES USING VARIOUS CONTRACT PROVISIONS Understanding how risk can best be allocated between the owner and contractor using specic contract provisions, is an important step to properly managing risks during project devel- opment. Eectively and eciently managing project risks mini- mizes litigation, reduces nancial liabilities, and ultimately helps to ensure a project’s success. Based on the ndings of this study, the following sections will discuss dierent approaches used to best manage and allocate common types of risks addressed in contracts for the development of transportation projects. ese sections are categorized based on project phases, starting from planning to pre-award, and then to post award. A. Planning e risks and respective contract provisions covered in this section are pertinent to the planning phase of the project. ese include government approvals that need to be secured early on, environmental requirements and approvals, project funding, hazardous materials management, as well as agree- ments with third parties (including ROW, utilities, and railroad agreements). 1. Governmental Approvals Transportation projects require dierent governmental ap- provals. Depending on the project type and scope, the extent of governmental involvement and the intricacies of the required approvals for the project will vary. A governmental approval may take the form of a permit, license, consent, or agreement that is provided by a federal, state, or local agency that autho- rizes or pertains to the work or the project. Governmental ap- provals include environmental approvals and permits, as well as municipal approvals for various aspects of a project, such as trac signals or aesthetic treatments. For contractors, obtaining governmental approvals entails submitting documents for review and approval by a particular governmental agency, which can create a potential source for delay. is is because contractors may not be able to proceed on a construction project until certain required submittals are 16 Dai Tran & Keith Molenaar, Critical Risk Factors in Project Delivery Method Selection for Highway Projects, Construction Res. Congress, ASCE (2012), at 331.

6 NCHRP LRD 86 Department of Transportation (PennDOT) Rapid Bridge Re- placement P3 agreement, shown in Excerpt 2, provides that the contractor is responsible for obtaining all governmental ap- provals other than the specically enumerated owner-provided approvals and is responsible for obtaining amendments to any owner-provided approvals required by the contractor’s design. e provisions include a timeline by which the owner must pro- vide the owner-provided approval. Section 5.1(b) of the agree- ment describes the owner’s responsibilities with respect to the contractor-provided governmental approvals. In the case of the Colorado Department of Transportation (CDOT) Military Access, Mobility and Safety Improvement CM/GC project, four discrete areas with various work compo- nents (including structural, drainage, and roadway improve- ments, and bridge construction) were delivered within the over- all program. is allowed work to progress in certain areas in each project, while the remaining areas awaited pertinent gov- ernmental approvals. b. Legislation ere are numerous federal and state regulations appli- cable to transportation projects that can aect the project and the project schedule. For federal DB, P3, and CM/GC projects, FHWA authorization is required prior to completion of the nal design and the commencement of construction20 Also, there are federal and state regulations concerning environmental and other requirements, a number of which may require approvals from a governmental entity before certain work on the project can proceed. To avoid potential schedule delays and other risks associated with obtaining necessary approvals from governmen- tal entities, as part of its due diligence activities prior to initiat- 20 See 23 C.F.R. § 635.309(p)(1)(i) - (v) (2021). used one-on-one meetings for bidders to meet with various gov- ernmental agencies prior to submitting bids.18 In addition to allocating responsibility for obtaining govern- mental approvals, contracts should describe the parties’ rights and obligations when there is a delay or failure to obtain the nec- essary governmental approvals. Many of the contracts studied include provisions that provide the contractor with schedule and cost relief where the owner fails to provide a governmen- tal approval within a specied timeframe or if the nal govern- mental approval is materially dierent from the dra version of the approval provided to bidders, so long as the dierences are not attributable to the contractor. e Virginia Department of Transportation (VDOT) Hampton Roads Bridge-Tunnel Expansion DB contract includes as a compensation event any express, material amendment or variation to the terms and con- ditions of any Governmental Approval set forth in Exhibit 19 aer the Setting Date not previously understood (and that could not reason- ably have been understood) by Design-Builder, as compared to those versions of such Governmental Approval provided to Design-Builder (including in dra form) as part of the Reference Information prior to the Setting Date, except to the extent such amendment or variation is caused by a dierence between the RFP [Request for Proposal] Con- cept Plans and Design-Builder’s nal design for the Project.19 Where the contractor is required to obtain the governmental approval, DB and P3 contracts generally do not provide the con- tractor with relief, since the contractor is in control of its own schedule and for coordinating with the governmental agency. e governmental approval section from the Pennsylvania 18 See, e.g., the North Carolina Department of Transportation (NCDOT) Herbert C. Bonner Bridge DB project discussed at Appendix B-2. 19 Comprehensive Agreement (Execution Version) Relating to the I-64 Hampton Roads Bridge-Tunnel Expansion Project, Exhibit 1, Article 9.2.7 (Adjustment of the Contract Price) (April 3, 2019). Excerpt 1- Governmental Approvals South Mountain Freeway, ADOT 4.3.5 As between ADOT and Developer, Developer shall be fully responsible for all necessary actions, and Developer shall bear all risk of delay and all risk of increased cost, attributable to, resulting from or arising out of: (1) any dierences between Developer’s Final Design for any portion of the Project and the Schematic Design or Developer’s Schematic Design, including dierences due to any Alternative Technical Concepts set forth in Exhibit 2-1, but excluding any dierences due to an ADOT-Directed Change; or (2) dierences between the construction means and methods (including temporary works) Developer chooses for any portion of the Project and those set forth, referred to or contemplated in the NEPA [National Environmental Policy Act] Approval, excluding any dierences due to an ADOT-Directed Change. Such Developer actions and risks shall include: (a) Any associated with change in the Project location due to Developer’s design; (b) Conducting all necessary environmental studies and re-evaluations and preparing all necessary environmental documents in compliance with applicable Environmental Laws; (c) Obtaining and complying with all necessary new Governmental Approvals; (d) Obtaining and complying with all necessary modications, renewals and extensions of the NEPA Approval or other existing Governmental Approvals; and (e) All risk and cost of litigation.

NCHRP LRD 86 7 Excerpt 2 – Governmental Approvals Rapid Bridge Replacement P3 Agreement, PennDOT 5.1 Governmental Approvals (a) Responsibility (i) Except in respect of Department Obtained Governmental Approvals and subject to the terms of the Project Documents, the Development Entity shall be solely responsible for securing and obtaining all Governmental Approvals (including any revision, modication, amendment, supplement, renewal or extension thereof), required in connection with its performance of this PPA. (ii) Without prejudice to Section 5.1(b)(ii), the Department shall obtain for the Development Entity the benet of each of the Department Obtained Governmental Approvals so as to ensure that the Development Entity shall have the use and benet of the Department Obtained Governmental Approvals no later than [March 31, 2015]. (iii) Notwithstanding Section 5.1(a)(i), other than in respect of any NEPA approval, the Development Entity shall be responsible for obtaining amendments or modications to any Department Obtained Governmental Approval necessary to reect the Development Entity’s Final Design and/or means and methods should the Final Design in respect of an Early Completion Bridge and/or means and methods deviate from the basis upon which the Department Obtained Governmental Approval was initially granted by the Governmental Entity. In the event that any modications are not permitted by the Governmental Entity, the Development Entity shall be responsible, at its own risk of delay and cost, for revising its Final Design in respect of the relevant Early Completion Bridge and/or means and methods as necessary to satisfy the requirements and conditions of the relevant Governmental Entity. (iv) e Development Entity shall at all times perform its obligations under this PPA in compliance with all Governmental Approvals. (v) e Development Entity shall promptly deliver to the Department true and complete copies of all applications for Governmental Approvals and new or amended Governmental Approvals obtained by it. (b) Cooperation with respect to Governmental Approvals (i) e Department will cooperate with the Development Entity in relation to any application by the Development Entity for a Governmental Approval and will, at the reasonable request of the Development Entity, and where necessary to obtain, renew, replace, extend the validity of, or arrange necessary amendments to any Governmental Approval: (A) execute such documents as can only be executed by the Department; (B) make such applications as required by Applicable Law, either in its own name or jointly with the Development Entity, as can only be made by the Department or in joint names of the Development Entity and the Department, as the case may be; and (C) attend meetings with appropriately qualied sta and cooperate with approval bodies as reasonably requested by the Development Entity, in each case within a reasonable period of time of being requested to do so by the Development Entity. (ii) To the extent that the Department provides any cooperation to the Development Entity pursuant to Section 5.1(b)(i) in respect of a Department Obtained Governmental Approval, the Development Entity shall reimburse the Department in respect of its reasonable and proper costs associated with the provision of such cooperation. (iii) e Development Entity shall cooperate with the Department in respect of the application by the Department for any Department Obtained Governmental Approvals, at the times and in the manner reasonably requested by the Department, including providing supporting drawings, data and technical information and the ling by the Development Entity of appropriate applications for the relevant Department Obtained Governmental Approvals with the relevant Governmental Entity.

8 NCHRP LRD 86 developed regulations that are binding on all federal agencies.30 Before construction can proceed on a federally funded project, the project must be analyzed to determine its categorical eect on the human environment. A categorical exclusion means that the agency has determined that the project ts in a category of actions that do not have a signicant eect on the human envi- ronment. A nding of no signicant impact (FONSI) means that a particular project not otherwise categorically excluded will not have a signicant eect on the human environment. An environmental assessment (EA) is prepared for projects where the signicance of environmental impacts is uncertain. An environmental impact statement (EIS) is a detailed written statement prepared where the environmental impacts are ex- pected to be signicant. e federal agency will determine what level of documentation to prepare based on the context and in- tensity of the potential impact.31 Mega projects usually involve an environmental analysis requiring an EIS and Record of Deci- sion (ROD).32 Laws in many states require a similar analysis by the sponsoring agency. Contractors may be hesitant to participate in construction projects, particularly if the project will require an EIS, due to the uncertainties associated with the NEPA process until the ROD is issued. Until the process is complete, it remains unknown which alternative will be adopted, or if the project should be built at all. In 2019, the median time for FHWA projects to com- plete the EIS process was 46 months.33 Under the updated NEPA rules, which became eective September 14, 2020, agencies have one year to complete an EA and two years to complete an EIS, although both can be extended by the lead federal agency. 34 While there are a number of risks associated with environ- mental approvals, the risks primarily fall into the following categories: (1) some environmental approvals cannot be ob- tained until the design has been advanced to a relatively high level and, for DB and P3 projects, there is also the possibility that the contractor may wish to pursue a design that would re- quire further environmental analysis; (2) the possibility that the project will receive a “no-build” determination or that the nal approval modies the scope of the project; and (3) the potential for delays to the project due to the time it takes to complete the environmental approval process or due to litigation challenging the environmental approval. e potential for delays to transportation projects associated with environmental approvals is seen as a major risk by both project owners and contractors. e NEPA process can result in signicant administrative delays relating to procedural issues, and NEPA-related litigation can result in injunctions causing further, extended delays. If the owner seeks to transfer environ- 30 40 C.F.R. pts 1500 – 1508 (2021). 31 See 40 C.F.R. § 1508.27 (2021). 32 See, NEPA and Agency Decision Making in cases requiring environmental impact statements. 40 C.F.R. pt. 1505 (2021). 33 Federal Highway Administration, Estimated Time Required to Complete the NEPA Process, Environmental Toolkit, https://www. environment. wa.dot.gov/nepa/timeliness_of_nepa.aspx. 34 Time Limits, 40 C.F.R. § 1501.10(b) (2021). ing a procurement for a transportation project, it is imperative that an owner investigates the proposed project site and analyze federal, state, and local laws to identify the governmental ap- provals that will be needed to construct and operate the project. 2. Environmental Approvals Transportation projects require a host of environmental approvals from various agencies. e most common envi- ronmental approvals include approvals under the National Environmental Policy Act (NEPA),21 sections 401, 402, and 404 of the Clean Water Act,22 section 4(f) of the U.S. Depart- ment of Transportation Act of 1966,23 sections 9 and 10 of the Rivers and Harbors Act,24 the Clean Air Act of 1963 (CAA)25 and amendments, and the Endangered Species Act of 1973 (ESA)26. Obtaining the required approvals requires coordina- tion with agencies such as the U.S. Environmental Protection Agency (EPA), FHWA, state transportation agencies, the U.S. Army Corps of Engineers, and the U.S. Fish and Wildlife Ser- vice (FWS). Federal environmental requirements are outlined by the EPA Oce of Compliance, which provides background for the construction industry. Furthermore, a checklist is pro- vided to help construction companies assign environmental responsibilities to dierent parties, as well as evaluate their compliance status. e checklist is designed for contractors, owners, and design professionals.27 FHWA’s website includes an Environmental Review Toolkit28 and a Technical Advisory29 that provide additional guidance regarding the environmen- tal approval process for transportation projects. Many state agency websites also provide guidance regarding the NEPA approval process. All transportation projects that are federally funded or require a federal permit are subject to a NEPA review. NEPA re- quires all federal agencies to prepare detailed statements assess- ing the environmental impact of and alternatives to projects that signicantly aect the environment. e Council on Environ- mental Quality (CEQ), which oversees NEPA implementation, 21 Pub. L. 91-190, 83 Stat. 852 (1970). 22 Pub. L. 92-500, 86 Stat. 816 (1972). 23 Pub. L. 89-670, 80 Stat. 931 (codied as amended at 49 U.S.C. § 303 (2021)). 24 30 Stat. 1151 (1899); See also, Neil J. Barker, Sections 9 and 10 of the River and Harbors Act of 1899: Potential Tools for Environmental Protection, 6 Ecology L.Q. 109 (1976). 25 Pub. L. 88-206, 77 Stat. 392. 26 Pub. L. 93-205, 87 Stat. 884. 27 Environmental Protection Agency, Managing Your Environmental Responsibilities: A Planning Guide for Construction and Development. (2005). 28 Federal Highway Administration, Environmental Toolkit, https:// www.environment. wa.dot.gov/about/topic_list.aspx (last visited Sep. 13, 2021). 29 Federal Highway Administration, NEPA Implementation: Guidance for Preparing and Processing Environmental and Section 4(F) Documents, Technical Advisory, T 6640.8A, https://www.environment. wa.dot.gov/legislation/nepa/guidance_preparing_env_documents. aspx#ce (Last visited Sep. 13, 2021).

NCHRP LRD 86 9 the owner is responsible for obtaining the environmental approvals, including NEPA, and there is exibility for the con- struction services to be performed under multiple work pack- ages, allowing construction to begin on project elements that have received environmental approval even if all elements of the project have not been environmentally cleared. For many DB and P3 projects, certain environmental approvals cannot be ob- tained prior to completion of signicant design, which means that the contract will need to allocate the risk for obtaining such approvals, and how it does so may vary based on the type of environmental approval at issue. In some cases, e.g., if the project requires an EIS, the owner will have to advance the design to a relatively high level in order to receive the approval. is can be problematic for owners pursuing DB and P3 projects because the level of design re- quired to obtain the approval could limit the contractor’s ability to use innovative concepts and design changes to im- prove the project. One way to mitigate this risk is for the owner to ensure the NEPA document includes additional ROW to accommodate the contractor’s potential design. For the Texas Department of Transportation (TxDOT) Grand Parkway Segments F1, F2, and G project, TxDOT obtained NEPA clear- ance for 400 feet of ROW so that there would be exibility for the DB contractor’s design and drainage. Another option is for the owner to issue the RFP before the EIS is nalized and ask proposers to submit alternative technical concepts (ATCs) that could be incorporated into the nal EIS for review by the owner. e owner also may consider utilizing a PDB or a pre-development agreement, which would involve awarding the contract while the project is still in the planning stages. is would allow for the consideration and possible inclusion of innovative concepts proposed by the design-builder in the original environmental analysis. If NEPA approval is not obtained by the time a contract for a DB or P3 project is executed, the FHWA Design-Build Rule pro- vides that the RFP must identify the current status and state that no commitment will be made to any alternative under evalua- tion, including the no-build alternative35. If the nal decision is issued before proposals are due and includes requirements that do not match the scope description in the RFP, the owner must modify the RFP as necessary. In most of the DB and P3 projects surveyed, the owner re- tained responsibility for obtaining the NEPA approval because of the unwillingness of contractors to accept this risk. Because the NEPA approval can be such a large risk for a project, the contract will need to address what happens if the approval is not obtained or if there is a delay in obtaining the approval. In the P3 agreement for the TxDOT North Tarrant Express Segments 1 and 2 project, the owner retained responsibility for obtaining the NEPA approval and the contract included provisions that provided relief for the developer if the developer was unable to achieve nancial close within the specied time frame due to the 35 See, Federal Highway Administration, How does the NEPA process relate to the design-build process?, (Design-Build Rule), 23 C.F.R. § 636.109(3) (2021). mental risks to proposers, because the NEPA approval process is not complete at contract execution, the possibility of project delays can be an area of signicant concern to proposers who may experience higher costs. Proposers may ultimately with- draw from the procurement or choose not to bid. erefore, agencies when deciding how to structure the procurement and allocate the environmental approval must carefully consider the risks as perceived by contractors. To reduce the risk relating to environmental approvals, it is essential that owners conduct a preliminary site assessment of the proposed project site early on, well before solicitation docu- ments are issued, to determine what type of approvals may be needed. And, if possible, the owner should obtain or at least begin the process of obtaining, the environmental approvals needed for the project, particularly those that require a long lead time, such as the NEPA approvals. In some cases, the owner will not have received all environmental approvals required for the project prior to contract execution, and some of these approvals may not be possible to obtain until the contractor has submitted certain elements of its design. In such cases, the contracts will need to allocate the responsibility for obtaining specic envi- ronmental approvals, as well as address the risks of delays in the approval process and the potential that the nal approval requirements could require scope changes or additional miti- gation measures not anticipated by the owner or the contrac- tor. In general, the party that has responsibility for obtaining the approval should bear the risk of delays. For instance, failure of an owner to obtain an environmental approval by a certain time may entitle the contractor to a time extension. In addition, where third parties are involved (the governmental entities pro- viding the approvals), the parties may agree to share some of the risk where delays are caused by the third parties without the fault of the owner or contractor. a. Size and Complexity e risks relating to obtaining environmental approvals for a transportation project are oen directly related to the size or complexity of the project. is is because more complex and larger projects oen require an EIS, which requires a higher level of design than is required for other approvals. However, the location of the project also is a signicant risk factor, particu- larly if the project is located in an area that has strong opponents or the project potentially impacts navigable waters or wetlands that may require individual permits under sections 401 or 404 of the Clean Water Act. b. Project Delivery Method For DBB projects, the risks of potential project delays and increased costs relating to environmental approvals is signi- cantly reduced. is is because the owner typically has the envi- ronmental approvals in hand before the construction contract is awarded and the contractor will be required to comply with the owner-provided approvals. DB, P3, and CM/CG contracts can be executed prior to completion of the environmental approval process, although neither nal design nor construction can begin until the NEPA process is complete. For CM/GC projects,

10 NCHRP LRD 86 primary responsibility for reviewing the environmental docu- ments. e contractor also was responsible for obtaining the construction access permits, stormwater construction permits, and dewatering permits. On the VDOT I-64 Hampton Roads Bridge-Tunnel Expan- sion DB project, the timely acquisition of multiple environmen- tal permits (collectively sought under a joint permit application that was specic to the design-builder’s approach) was consid- ered a very signicant risk item. e contract was structured for the issuance of the NTP only aer receipt of these permits, with three limited NTPs issued beforehand for specic early work that was expected to be on the critical path. e maximum pay- ment was capped at $250 million until issuance of the project NTP, except that an additional $75 million would be available aer 540 days and the contract price would be re-indexed aer 720 days, so long as any delays in obtaining these permits were outside the control of the design-builder.36 Since the contractor would be responsible for the nal design of DB and P3 projects, where NEPA approvals were obtained prior to contract execution, a number of the contracts surveyed included provisions stating that the contractor was responsible for obtaining any reevaluations, amendments, and supplements to the NEPA approval required in connection with the contractor’s design, including any approvals related to any additional ROW that might be needed to accommodate the contractor’s design and construction. For example, see Excerpt 4 from the Nevada Department of Transportation (NDOT) Project Neon agreement. is was also the case for the Arizona Department of Trans- portation (ADOT) South Mountain Freeway project. 36 Comprehensive Agreement Relating to the I-64 Hampton Roads Bridge-Tunnel expansion Project, Project No. 0064-M06-032, Exhibit 1, Page 3 denition of “Department Caused Delay” (April 3, 2019). owner’s failure to obtain the NEPA approval. e contract also provided each party with the ability to terminate the contract if the NEPA approval was not obtained by the date specied in the contract. Oen the potential for delays in obtaining the NEPA approv- al can be addressed in the notice to proceed (NTP). In such a case, the owner will issue the rst NTP upon award, authorizing the design-builder to work on preliminary engineering, investi- gative eorts, etc., that support the environmental analysis. e contract will then provide that the second NTP will be issued only aer the environmental approval is received. If the contract includes a lump-sum DB price, the contract also may provide for escalation of the price based on the dierence between the originally projected date for issuance of a second NTP and the actual NTP issuance date. is was the approach taken on the Washington Department of Transportation (WSDOT) Alaskan Way Viaduct (SR 99) Bored Tunnel Alternative DB Project. (See Excerpt 3.) A similar approach was taken on the CDOT I-70 West Vail Pass Auxiliary Lanes Phase 1 CM/GC Project. CDOT retained responsibility for obtaining the NEPA approval, as well as the Clean Water Act §  404 permit. e RFP clearly stated that CDOT would not issue a NTP for the construction agreed price (CAP) package until receipt of the NEPA clearance for the iden- tied elements within the package. e RFP further required the contractor to ensure that all environmental, safety, and permit commitments specied in the plans, specications, and contract documents were implemented during construction if a CAP was successfully negotiated with CDOT. CDOT had sole responsibility for obtaining the environmental permits and clearances. Even though CDOT was responsible for obtaining the NEPA approval, the contractor and design consultant had Excerpt 3 – Environmental Approvals & ˜NTP Alaskan Way Viaduct (SR 99) Bored Tunnel Alternative DB Project, WSDOT 4.3 Notice to Proceed. e NEPA documentation and environmental permits for the Project will not be completed prior to Contract execution. Consequently, WSDOT will issue two notices to proceed for the Project (NTP 1 and NTP 2). WSDOT anticipates that NTP 1 will be issued shortly aer Contract execution, but WSDOT may defer issuance of NTP 1 for up to 30 days aer Contract execution. NTP1 will authorize Design-Builder to proceed with the NTP 1 Work consistent with FHWA’s design-build rule and NEPA. Work that is authorized in NTP 1 will focus on preliminary design, including investigations, and analysis necessary to support the Final EIS, the Section 106 process, Endangered Species Act consultation, and environmental permitting. … NTP 2 will be issued only if the nal NEPA documents, including the Record of Decision, choose the Bored Tunnel Alternative as the Selected Alternative. Upon the issuance of NTP 2, Design-Builder shall commence NTP 2 Work, which will generally consist of Final Design and construction. In the event that the nal NEPA documents select the “no-build” alternative or select an alternative other than the Bored Tunnel Alternative, WSDOT will terminate the Contract for convenience and Design-Builder will be paid for the NTP 1 Work as provided herein.

NCHRP LRD 86 11 Excerpt 4 – Environmental Approvals Project Neon DB Procurement, NDOT … in the event that the acquisition of Additional Properties [parcels needed in addition to those required to accommodate the owner’s schematic design] necessitates New Approvals or additional Governmental Approvals, [DB Contractor] shall (a) be solely responsible for the cost and schedule impact of any related review, analysis, assessment, approvals, permits and ndings; (b) be solely responsible for the risk that any New Approvals or Governmental Approvals are not (i) granted, issued, approved or obtained or (ii) timely granted, issued, approved or obtained; and (c) not be entitled to any increase in the Contract Price or extension of the Completion Deadlines as a result of any delay, inability or cost associated with the New Approvals or additional Governmental Approvals related to such Additional Properties.” Excerpt 5 – Environmental Approvals SR 30 - Pensacola Bay Bridge Replacement DB Project, FDOT e Design-Build Firm is responsible for coordinating with the District Environmental Management Oce (DEMO) on any information related to Environmental Reevaluations. e Design-Build Firm may propose changes which dier from the approved Environmental Assessment/Section 4(f) Evaluation and/or Project Development & Environment (PD&E) Study. Proposed changes must be coordinated through the Department. If changes are proposed to the conguration, the Design- Build Firm shall be responsible for preparing the necessary analyses and documentation required to satisfy requirements to obtain approval of the Department and, if applicable, FHWA. e Design-Build Firm shall provide the required documentation for review and processing. Approved revisions to the conguration may also be required to be included in the Reevaluation of the NEPA document, per Section N (Environmental Services/Permits/Mitigation) of the RFP. e Design-Build Firm will not be compensated for any additional costs or time resulting from proposed changes or changes associated with the Reevaluation(s). A number of the contracts surveyed also included provisions obligating the contractor to design and construct the project in accordance with the original NEPA approval and schematic design on which the NEPA approval was based if the contrac- tor was unable to get the requisite approvals for its schematic design. While most of the DB projects surveyed did not require a NEPA reevaluation, for those that did, the contracts placed the responsibility for obtaining the reevaluation on the party whose actions created the need for the reevaluation. In the California Department of Transportation (Caltrans) I-15/I-215 Interchange Improvement (Devore) Design-Build Project, a NEPA reevaluation was conducted for a noise study due to the design-builder’s proposed ATC. It did not cause any delays, but if there had been, such delays would have been borne by the contractor. On the North Carolina Department of Transpor- tation (NCDOT) I-77 Express (HOT) Lanes project, on the other hand, the NEPA reevaluations were required due to the planning organization’s request to expand the project scope to include two interchanges (around $90 million). NCDOT was contractually obligated to, and did, perform the work required to obtain these reevaluations. For the Florida Department of Transportation (FDOT) SR 30 -Pensacola Bay Bridge Replace- ment DB project, the design-builder was allowed to propose changes that diered from the approved environmental assess- ment/section 4(f) evaluation and was responsible for preparing the necessary analyses and documentation to obtain approval of the changes and for any related costs and schedule delays. (See Excerpt 5.) If a NEPA approval is obtained close to or aer contract execution, there is a potential that a third party may bring an administrative proceeding, litigation, or other legal action chal- lenging the issuance of the NEPA approval. e contract should address the parties’ respective rights and obligations under such circumstances. e NCDOT I-77 Express (HOT) Lanes P3 con- tract includes as a compensation event [a]ny change in the design concept of the Project or any portion thereof resulting from judicial or administrative action taken with respect to a legal challenge to any NEPA Approval or Major Permit as compared to the design concept indicated in the alternative that was the subject of the NEPA Approval, except to the extent the change in design concept had already been incorporated into developer’s de- sign schematics assumed in connection with the Base Case Financial Model.37 37 North Carolina Department of Transportation, Public Private Partnership Comprehensive Agreement for I-77 Express (HOT) Lanes, Executed Version, June 26, 2014, Exhibit 1, Abbreviations and Denitions, Compensation Event (n).

12 NCHRP LRD 86 rivers, streams, lakes, ponds, wetlands, or other waters that are regulated by state or federal law, permits will be required to address potential impacts the project may have on these bodies of water, including permits required under the Clean Water Act. is could include permits under section 401 (required for the discharge of pollutants, usually during construction) and sec- tion 404 of the Clean Water Act (required for the discharge of dredge or ll material into waters of the United States), and many other state and federal permits. 39 In most of the DB and P3 projects surveyed, the owner took responsibility for obtaining Clean Water Act §§ 401 and 404 in- dividual permits and coast guard permits, because, similar to NEPA approvals, contractors were reluctant to accept the risks relating to obtaining the approvals. In all instances, the contracts placed the risk on the contractor for obtaining any approvals or permits required due to changes initiated by the contractor. For the TxDOT Grand Parkway Segments F1, F2, and G project, TxDOT had obtained the NEPA approvals prior to contract ex- ecution and retained the responsibility for obtaining the United States Army Corp of Engineers (USACE) individual permits under Clean Water Act sections 401 and 404 aer execution of the DB contract. e contractor was provided relief for material dierences in the conditions and requirements in the nal indi- vidual permits from the conditions and environmental commit- ments set forth in the NEPA approvals (See Excerpt 6). 39 See, e.g., Water Quality, La. Admin. Code, tit. 33, pt. IX (2021). ere is another approach that can be taken to mitigate the risks of delays relating to challenges to a NEPA approval for cer- tain DB or P3 projects. If the project includes multiple segments with independent utility, where one or more of the segments is less susceptible to challenge than others, the owner may limit any injunctive action to the more controversial segment(s). is will allow the design-builder or concessionaire to continue work on a portion of the project and limits the potential exposure for delays to the project schedule caused by the challenge.38 ADOT successfully used this strategy for the South Mountain Freeway DBM procurement. One segment of the project involved cuts through mountain slopes in parkland and lands considered sa- cred by a Native American tribe. ADOT expected environmen- tal litigation. ADOT estimated the time it would take to obtain a court order and built that timing into the contract through a separate NTP mechanism. is contractual mechanism helped persuade the court that no temporary injunction against con- struction for the rest of the project was necessary pending case outcome. Transportation projects may require environmental ap- provals other than NEPA. For transportation projects near 38 P3 concessions are public-private agreements in which the private sector takes on some of the risks and rewards of nancing, constructing (or leasing), and operating and maintaining a transportation facility in exchange for the right to future revenues or payments for a specied time. Federal Highway Administration, Oce of Innovative Program Delivery, Public-Private Partnership Concessions for Highway Projects: A Primer, FHWA-OIPD-10-005, 2010. Excerpt 6 – Environmental Approvals Grand Parkway Segments F1, F2, and G Project, TxDOT 6.10.1 TxDOT’s Responsibility for Approvals and Certain Mitigation 6.10.1.1 e following TxDOT-Provided Approvals had not yet been obtained as of the Proposal Due Date: the USACE Individual Permits for Segments F-1, F-2 and G under Section 404 of the Clean Water Act and Section 401 Water Quality Certication. All conditions and requirements, including mitigation requirements, contained in the NEPA Approvals for the Project shall automatically be deemed included in the scope of the Work. In addition, with respect to the USACE Individual Permits and Section 401 Water Quality Certication, Developer shall utilize Best Management Practices and shall be responsible for performance of the general conditions and requirements described in Federal Register Volume 72, No. 47, p. 1191, published March 12, 2007 (the “General Conditions”). 6.10.1.2 If the nal USACE Individual Permits obtained by TxDOT contain conditions or requirements that dier materially from the general conditions and environmental commitments set forth in the NEPA Approvals, and such conditions or requirements: (a) have a material adverse impact on Developer’s obligations hereunder, and (b) were not caused by modications to the Schematic Design that were initiated by Developer, Developer may request a Force Majeure Change Order pursuant to Section 13.8.3. If the nal TxDOT-Provided Approvals incorporate mitigation requirements addressing any modication in the Final Design from the Schematic Design, such additional mitigation requirements shall be Developer’s sole responsibility and shall not be considered a TxDOT-Directed Change or Force Majeure Event. TxDOT will be responsible for additional mitigation requirements resulting from TxDOT-Directed Changes, or as a result of modications to the USACE Individual Permit that are outside of the general conditions and environmental commitments set forth in the NEPA Approvals which do not arise out of modications to the Schematic Design initiated by Developer.

NCHRP LRD 86 13 Harbors Act, 42 relating to the construction of any bridge, cause- way, dam, or dike over or in any port, roadstead, haven, harbor, canal, navigable river, or other navigable water of the United States; the CAA; and the ESA. Also important is the FHWA Design-Build Rule, which addresses various considerations that must be accounted for in procurements starting before the en- vironmental approvals are obtained. At least 17 states also have their own NEPA equivalents43. 42 33 U.S.C. §  401 (2021) (Construction of bridges, causeways, dams, or dikes generally). 43 California Environmental Quality Act, Cal. Pub. Res. Code, §§  21000 -21194 (2021); Connecticut Environmental Protection Act, Conn. Gen. Stat. Ann. §§ 22a-1 – 27w (2021); Georgia Environmental Policy Act, Ga. Code Ann. §§ 12-16-1 to 12-16-9 (2021); Hawaii Environ- mental Impact Statement, Haw. Rev. Stat. §§  343-1 to 343-8 (2021); Indiana Environmental Impact Statement, Ind. Code §§  13-12-4-1 to 13-12-4-10 (2021); Maryland Environmental Policy Act, Md. Nat. Res. §§  1-301 to 305 (2021); Massachusetts Environmental Impact State- ment, Mass. Gen. Laws Ann. ch. 30, §§ 61 – 62L (2021); Minnesota Envi- ronmental Policy, Minn. Stat. Ann. §§  116D.01 to 116D.11 (2021); Most of the DB and P3 contracts included in the survey also require the contractor to comply with all mitigation require- ments set forth in the approvals. See, Excerpt 7 from the Min- nesota Department of Transportation (MnDOT) I-35W Min- nesota River Bridge Replacement DB project contract, which reects MDOT’s handling of the mitigation requirements and environmental approval for that project. c. Legislation Some of the most common environmental approvals re- quired for transportation projects include those under the NEPA: Sections 401, 402, and 404 of the Clean Water Act40; sec- tion 4(f) of the Transportation Act;41 section 9 of the Rivers and 40 33 U.S.C. §§ 1251 – 1388 (2021). 41 49 U.S.C. § 303 (2021). See also, 23 U.S.C. § 138 (2021), which provides for consideration of parks, recreation areas, and wildlife or waterfowl refuges, and historic site during transportation project development. Excerpt 7 – Environmental Approvals I-35W Minnesota River Bridge Replacement Project, MnDOT 6.3.1 Mitigation Requirements. Contractor must perform all environmental mitigation measures for the Project. (e phrase “environmental mitigation measures” will include all requirements of the Environmental Approvals and similar Governmental Approvals, regardless of whether these requirements fall within a strict denition of the phrase.) e Contract Price includes compensation for Contractor’s performance of all mitigation measures and for performance of all mitigation measures arising from New Environmental Approvals that Section 6.3.2 designates as Contractor’s responsibility, and the cost of all activities to be performed by Contractor as described in Book 2, Section 4. 6.3.2 New Environmental Approvals 6.3.2.1 Approvals to Be Obtained by MnDOT. MnDOT will be responsible for obtaining any New Environmental Approvals necessitated by a MnDOT-Directed Change, MnDOT-Caused Delay, change in a Governmental Rule under Section 13.3.1.2(d)(v), or Force Majeure event. Contractor must provide support services to MnDOT with respect to obtaining any such New Environmental Approval. Any Change Order covering a MnDOT-Directed Change, MnDOT-Caused Delay, or Force Majeure event may include compensation to Contractor for any changes in the Work (including performance of additional mitigation measures but excluding performance of the support services) resulting from such New Environmental Approvals, and any time extension necessitated by the MnDOT-Directed Change, or Force Majeure event, subject to the conditions and limitations contained in Section 13. 6.3.2.2 Approvals to Be Obtained by Contractor. If a New Environmental Approval becomes necessary for any reason other than those specied in Section 6.3.2.1, Contractor will be fully responsible for obtaining the New Environmental Approval and any other Environmental Approvals that may be necessary, and for all requirements resulting from these Approvals. Contractor will also be fully responsible for any litigation arising in connection with any New Environmental Approval. MnDOT will reasonably assist Contractor in obtaining any New Environmental Approvals. If the New Environmental Approval is associated with a Contractor-initiated Change Proposal, the Contractor will be responsible for obtaining the Approval and the costs of obtaining and complying with the terms of the New Environmental Approval will be considered in determining the Contract Price adjustment under Section 13.

14 NCHRP LRD 86 tion of state and local taxes and fees, and, for major projects, federal grants funded by national motor fuels taxes. Federal-aid highway funding is subject to FHWA concurrence, and should follow all federal rules and regulations, such as environmental laws, disadvantaged business enterprise (DBE) program re- quirements; and Davis-Bacon44 and Buy American45 Acts. Such compliance drives many of the contract requirements, and thus, results in additional administrative eorts. State transportation agencies interviewed (such as MnDOT) reported that the very close alignment of their departmental processes to the FHWA requirements results in very few changes on their federally funded projects. Each state also has its own funding sources and requirements for transportation projects. Other potential funding sources for transportation develop- ment include loans and other forms of credit assistance under the Transportation Infrastructure Finance and Innovation Act (TIFIA)46 and Private Activity Bonds (PABs). e TIFIA pro- gram provides credit assistance for qualied projects of regional and national signicance. State and local governments and pri- vate entities are eligible to apply for TIFIA. e “TIFIA credit program is designed to ll market gaps and leverage substantial private co-investment by providing supplemental and subordi- nate capital. Each dollar of federal funds can provide up to $15 in TIFIA credit assistance and support up to $50 in transporta- tion infrastructure investment.”47 “[PABs] are debt instruments authorized by the Secretary of Transportation and issued by a conduit issuer on behalf of a private entity for highway and freight transfer projects, allowing a private project sponsor to benet from the lower nancing costs of tax-exempt municipal bonds.”48 e PABs program authorizes the U.S. Department of Transportation to allocate up to $15 billion in tax-exempt PABs for qualied highway and rail-highway freight transfer facilities. To qualify for a PAB allocation, the activity must include a proj- ect receiving some level of federal assistance under title 23 of the U.S. Code (Highways), which may include receiving credit assistance under the TIFIA program. a. Project Delivery Method For projects that are large or complex, or both, or where a project owner may not otherwise have sucient funds to build a project utilizing traditional federal and state funding sources, the project owner may wish to consider an alternative delivery mechanism, such as a P3, where the project can benet from private sector nancing, including equity and additional federal funding, such as credit assistance under TIFIA and PABs. e TIFIA program allows P3 concessionaires to borrow directly rather than requiring the owner to do so, provides loans at 44 Pub. L. 71-798, 46 Stat. 1494 (1931). 45 Pub. L. 72-428, 47 Stat. 1489 (1933), and amendments. 46 23 U.S.C. §§ 601-610 (2021). 47 Build America Bureau, Financing, https://www.transportation. gov/buildamerica/nancing (last updated April 30, 2020). 48 See, Federal Highway Administration, Center for Innovative Finance, Private Activity Bonds, https://www. wa.dot.gov/ipd/ finance/tools_programs/federal_debt_financing/private_activity_ bonds/. d. Summary Recommendations Depending on the type of permit required for a project, the approval process may take a signicant amount of time. Project owners should perform the investigation needed at the planning stage to identify the permits that may be required and to start the process for obtaining those permits to the extent possible before beginning the procurement process. For DBB projects, the owner is responsible for obtaining the approvals and should have all approvals in hand prior to the commencement of con- struction. For CM/GC, DB, and P3 projects, the owner should begin the process of obtaining the necessary approvals prior to issuance of the nal RFP to avoid delays to the project and the potential that proposers will include huge risk contingen- cies in their bids. When an owner obtains the approval prior to issuance of the nal RFP, the owner may consider ensuring that there is some exibility in the environmental documents, such as expanding the proposed project ROW footprint, to ac- commodate the contractor’s design. If it is not possible to obtain a signicant environmental approval prior to issuance of the nal RFP, such as an EIS, it is best practices to include multiple NTP provisions in the DB or P3 contract to allow the contrac- tor to commence preliminary work (other than nal design and construction) prior to receipt of the approval. e contract also should clearly describe which party retains the risk for (i) delays in obtaining the approval and (ii) any increased costs or sched- ule delays resulting from requirements in the nal environmen- tal approval. For projects delivered under a CM/GC, the owner may consider allowing construction services to be performed under multiple work packages as project elements are approved for construction. Regardless of whether required environmental approvals are obtained prior to or aer contract execution, the contract should require the contractor to comply with such ap- provals and all permit and mitigation requirements during the contract term. 3. Project Funding As projects have increased in size and complexity and with the employment of various project delivery methods, the proj- ect funding structure and mechanism has signicantly evolved. Transportation projects are typically funded from a combina- Montana Environmental Policy Act, Mont. Code Ann. §§ 75-1-101 to 324 (2021); Tahoe (Nevada) Regional Planning Compact, Nev. Rev. Stat. §  277.190 -220 (2021); New Jersey Environmental Assessment, Exec. Order No. 215 of 1989; New York Environmental Quality Review, N.Y. Envtl. Conserv. §§ 8-0101 – 0117 (2021); North Carolina Pollution Con- trol and Environment statutes, N.C. Gen. Stat. §§ 113A-1 – 259 (2021); South Dakota Environmental Policy Act, S.D. Codied Laws §§ 34A-9-1 to 13 (2021); Virginia Environmental Reports of State Agencies, Va. Code Ann. §§ 10.1-1188 -1192 (2021); Washington State Environmental Policy, Wash. Stat. Ann. §§ 43.21C.010 – 914 (2021); and Wisconsin governmen- tal considerations of environmental impact, Wis. Stat. Ann. § 1.11 (2021), For a general discussion of some of these state-equivalents, see Patrick Marchman, “Little NEPAs”: State Equivalents to the National Environ- mental Policy Act in Indiana, Minnesota and Wisconsin, Duke Univer- sity (September 2012), http://dukespace.lib.duke.edu/dspace/bitstream/ handle/10161/5891/P.%20Marchman%20Little%20NEPAs_Final_w%20 endnotes.pdf?sequence=1.

NCHRP LRD 86 15 attractive rates of interest to help reduce the cost of borrowing, and provides exible loan provisions, such as deferred payment periods. PABs may be used to help reduce the cost of borrowing for P3 projects, especially for larger projects that will be nanced from a stream of revenue during the operations and mainte- nance term of the P3 project. PABs were used in a number of the P3 projects studied for this digest, including the NCDOT I-77 Express (HOT) Lanes project, the PennDOT Rapid Bridge Replacement project, and the TxDOT North Tarrant Express Project. e TxDOT North Tarrant Express Project is a large and relatively complex project that involved the reconstruction, widening, and addition of toll managed lanes along approxi- mately 31 miles of roadway north and east of Fort Worth, Texas. Because TxDOT had limited public funds for the project, TxDOT decided to pursue the project as a P3, requiring pro- posers to include a mandatory minimum project scope and up to nine optional improvements for the maximum amount of public funds ($600 million). TxDOT applied for TIFIA credit assistance as well as an allocation of PABs based on a pro forma plan of nance, which was in turn based upon its estimates of project costs and available revenues. TxDOT provided a TIFIA term sheet and information on the PABs allocation request to proposers. e P3 contract gave the developer the sole respon- sibility for obtaining the funds made available under the TIFIA and PABs allocations and for complying with any conditions required for the funds. Because nancial close for the project did not occur until aer execution of the contract, the contract provided the developer with excuses from reaching nancial close if the failure was due to the inability to obtain the TIFIA and PABs allocations in the anticipated amounts. e NCDOT I-77 Express (HOT) Lanes project was also funded through a combination of PABs and TIFIA in addition to public funding, equity contribution, interest income, and bond premiums. A unique example of a funding and nancing mechanism was seen in the TxDOT SH 360 Project, which was funded sole- ly with state funds provided through a loan that TxDOT made to its regional tolling authority, North Texas Tollway Authority (NTTA). NTTA is required to pay back the loan from TxDOT through project revenues during the operations and mainte- nance phase. In addition, there is a nancial backstop for certain expenditures provided by the North Central Texas Council of Governments. Because NTTA will ultimately take over opera- tions and maintenance of the facility and is required to pay back the construction costs advanced by TxDOT through project revenues, NTTA was involved as an “observer” during the en- tire procurement process, and specic requirements requested by NTTA were included in the long-term maintenance contract that the design-builder was required to enter into. One funding issue that may arise in transportation P3 proj- ects is when any portion of funding for the project comes from public funds that are subject to appropriation by the state. e risk is that the state will fail to obligate sucient funds into the budget to enable the project owner to pay the developer, fund construction, or to pay availability payments over the term of the contract. To address this concern, P3 contracts typically contain provisions that state that any payments due to the de- veloper are subject to appropriation, but also include a covenant that the project owner will include in its budget, a request for ap- propriation of sucient funds to pay the amounts due. In some cases, the contract also states that if such funds are not available, the project owner will attempt to obtain funds through other lawfully available means. Excerpt 8 details an example appro- priation provision included in the PennDOT Rapid Bridge Re- placement P3 agreement. e selection of the CM/GC project delivery method also provided the owner with funding opportunity arrangements. For example, in the Military Access, Mobility and Safety Im- provement Project, CDOT was able to break the work into packages and begin work on critical safety projects with local funds (such as the Pikes Peak Rural Transportation Authority fund) and state dollars, while waiting on the Better Utilizing Investments to Leverage Development grant approvals for other elements of the project. b. Tolling as a Potential Funding Source Tolls are another potential source of funds for the con- struction and maintenance of transportation projects. For P3 projects, tolls may be a source of revenue by which the private concessionaire can recover its investment in the nancing, con- struction, and operation of the project, including debt repay and equity contribution recoup.49 e agency may retain the revenue risk and agree to compensate the concessionaire with availabil- ity payments or may choose to transfer the risk of toll revenue to the private concessionaire. For P3s that are full concessions, the concessionaire is granted the right to the revenues. is means that the concessionaire bears the risk of less than anticipated revenues, but also retains the benets of greater than expected revenues. For projects delivered through the availability pay- ment or DB methodologies, the owner retains the right to the tolls and bears the revenue risk. Where toll revenues are used as a funding source, there is a potential that the revenue forecasts that assess corridor trac demand, projected ridership, user willingness to pay, toll policy and system requirements, and future growth characteristics, among other factors, may be optimistically biased in P3s. is is because private developers may overestimate trac ows due to diculty in predicting economic conditions, demographic trends, or technological changes. e developers may also be inating trac and revenue predictions in order to win the bid. In reality, the trac volume and toll revenue may not be as fore- casted or desired. While some developers are discouraged to bid for this type of job, others continue to do so but are likely to 49 Colorado High Performance Transportation Enterprise, US 36 Public Private Partnership Frequently Asked Questions, https://www. codot.gov/programs/high-performance-transportation-enterprise- hpte/projects/us-36/us-36-phase-ii/p-3/us-36-p3-faq-1-30-14.pdf (last visited November 16, 2021); Sophie Guiny, Dolly Mirchandani, Benjamin Clark, Marcel Ham, Varun Hallikeri, and Sasha Page, Public- Private Partnership Toll Concessions Model Contract Guide, Federal Highway Administration, FHWA-HIN-17-001 (2016).

16 NCHRP LRD 86 for the parties to adjust tolling requirements aer the facility is in operation. To the extent these issues can be evaluated even earlier, decisions can be made that may alter the plans for de- velopment of the project. For example, in the planning for the I-64 Hampton Roads Bridge-Tunnel Expansion DB Project, VDOT requested input from prospective proposers on whether to structure the procurement as a DB or a P3 (DB-Finance- Operate-Maintain -DBFOM) contract. Because potential toll revenues from the project were forecast to cover only a small portion of the project’s large capital cost, and because sucient public funding was already available, the private sector advised that the project was not an attractive candidate for toll-funded P3 delivery, and ultimately VDOT decided on the DB delivery method. e P3 toll projects studied took dierent approaches with re- spect to toll revenue risk. According to the East End Crossing P3 agreement the project owners took the entire toll revenue risk for the 35-year concession term, with 50 percent of the toll revenues allocated to Indiana and 50 percent allocated to Kentucky. e developer was to be paid quarterly availability payments based on the performance/availability of the facility and amounts would be deducted from such payments for unavailability events described in the contract, including unpermitted closures of the facility. In the P3 agreements for the NCDOT I-77 Express (HOT) Lanes project, and the TxDOT North Tarrant Express Segments 1 and 2 Project, the public agencies delegated all toll revenue risk to the private developer. (See Excerpt 9, which describes NCDOT’s toll revenue risk provisions. For those projects, because the toll revenue risk was trans- ferred to the private developer, the contract addressed circum- price the contract higher to assume the toll revenue loss risk. is can result in the agency paying more for the project than is warranted. Public agencies may suer from the risk in revenue projec- tions even if they choose to retain the revenue risk from the tolls. For availability payment P3s, the agency is obligated to pay the developer a xed payment as long as the project is con- structed and operated in accordance with the requirements of the contract, regardless of whether toll revenues meet forecasted projections. At the end of the day, it is the public agencies that absorb much of the toll revenue risk, which necessitates risk bal- ancing between the public and private concessionaires50. To lessen the potential risk for the agency with respect to the toll revenue risk, it is benecial for the agency to develop its own trac/ridership and revenue study. In developing these projections, agencies should consider various issues that span the operating life cycle of the facility. For example, for highway toll concessions, agencies should consider whether there are any policies related to tolling, such as limitations on toll rates, the schedule for toll rate increases, and any discounts or exceptions that may be provided for local or high-volume users, if possible, prior to initiating a procurement. e more these issues can be analyzed early on, and relevant information communicated to prospective proposers, the more the parties can analyze the risks before the contract is awarded. It can be very dicult and costly 50 Sasha Page, Wim Verdouw, Marcel Ham and John Helwig, Revenue Risk Sharing for Highway Public-Private Partnership Concessions, Federal Highway Administration, FHWA-HIN-17-005 (2016). Excerpt 8 – Project Funding Rapid Bridge Replacement P3 Agreement, PennDOT 14.6 Appropriations and Source of Funds (a) Appropriations (i) e Department hereby covenants and agrees to: (A) Include in the budgetary request, which the Department shall submit to the Commonwealth’s Oce of the Budget no later than November 1 each calendar year during the Term, a request for appropriation . . . of funds sucient to pay the amounts due and owing or scheduled to become due and owing from the Department to the Development Entity during the succeeding scal year; and (B) use its best eorts to cause the General Assembly of the Commonwealth to appropriate . . . amounts that will be sucient to enable the Department to pay all such amounts to the Development Entity under this PPA, including exhausting all available reviews and appeals and doing all other things lawfully within its power to do if such common amounts are not appropriated. (ii) e obligation of the Department to pay all amounts due and owing or scheduled to become due and owing from the Department to the Development Entity hereunder is a contractual commitment of the Commonwealth and does not constitute a debt or pledge of the Commonwealth or any political subdivision thereof within the meaning or application of any constitutional provision or limitation. e Department has no taxing power. e Development Entity has no right to have taxes levied or compel appropriations by the General Assembly of the Commonwealth for any payment of any amounts due and owing or scheduled to become due and owing from the Department to the Development Entity hereunder.

NCHRP LRD 86 17 stances that aect the developer’s ability to collect tolls by pro- viding for potential compensation to the developer, including for loss of toll revenues due to certain specied compensation events, such as events caused by the project owner and discrimi- natory changes in law. A model demand risk transferal contract provision states: Except for its specic obligations to the [Developer] under the terms and conditions of this [Concession Agreement], the [Department] will not have any risk or liability related to actual trac volume and toll revenue, including but not limited to the risk that actual trac volume is less than the trac volume projected in the [Base Case Financial Model].51 . A delay in opening a project or a disruption in the opera- tions that generates revenue, such as tolls or fare boxes, can be devastating to the entity that retains the revenue risk. ere are various contractual mechanisms that the owner can employ to 51 Guiny, et al., supra note 49, at 2-10. allocate and manage such risks. For example, where there is an owner-caused delay to the opening of a full concession project, the contract could make the owner liable for damages, including lost revenues. Whereas a contractor delay to the opening of a DB or availability payment project may result in the imposition of liquidated damages set forth in the contract, where the loss of a revenue component is calculated based on historic informa- tion, trac counts, and other inputs. is allows for the owner to recover close to its actual losses, while the contractor under- stands at the outset of the project the amount of damages it would be liable for in the event of a delayed opening. ese pro- visions can also allow for graduated damages or grace periods to mitigate some of the costs that otherwise would be borne by the contractor.52 52 See, Section II.B.6 in this digest, “Incentives and Disincentives” for a further discussion regarding liquidated damages. Excerpt 9 – Toll Revenue Risk I-77 Express (HOT) Lanes P3 Project, NCDOT 3.1 Tolling of HOT Lanes 3.1.1 Except as provided in this Article 3 and Exhibit 18, Developer shall have the exclusive right to (a) impose tolls and Incidental Charges upon the Users of the HOT Lanes, (b) establish, modify and adjust the rate of such tolls and Incidental Charges in accordance with Law, and (c) enforce and collect tolls and Incidental Charges from the Users of the HOT Lanes, all in accordance with and subject to the terms and conditions contained in the CA Documents. 3.1.2 Developer has no authority or right to impose any toll or Incidental Charges (a) on any HOT Lanes until the Substantial Completion Date for the applicable Project Section or (b) for use of any portion of the Project other than the HOT Lanes. Developer has no authority or right to impose any fee, charge or other amount for use of the Project other than the tolls and Incidental Charges specically authorized by this Article 3. Prior to setting initial toll rates and a toll rate setting methodology on the HOT Lanes, Developer, in coordination with NCDOT, shall hold a public hearing as required by, and in accordance with, applicable Law. 3.1.3 Developer shall implement toll collection systems that charge, debit and collect tolls only at or through the electronic tolling facilities physically located on the Project Right of Way or through global positioning system technologies or other remote sensing technologies that charge, debit and collect tolls only for actual vehicular use of the HOT Lanes; provided, however, that such toll collection method is in compliance with the requirements of Section 8.6. 3.1.4 Except as otherwise provided in Section 19.9, nothing in this Agreement shall obligate or be construed as obligating NCDOT to continue or cease tolls aer the end of the Term. 3.2 Toll Collection Administration 3.2.1 Subject to Developer’s rights and remedies under Exhibit 18, NCDOT shall provide certain electronic toll collection services in accordance with Exhibit 18, and Developer shall pay NCDOT the charges for such services in accordance with Exhibit 18. 3.2.2 Developer understands and agrees that, notwithstanding anything to the contrary in this Agreement or any other CA Document, the risk of collection of tolls and Incidental Charges that may be payable to Developer remains with Developer, and that NCDOT does not, and will not be deemed to, guarantee collection or collectability of such tolls and Incidental Charges to Developer or any Person; provided, however, that the foregoing will not limit NCDOT’s obligations or duties under Exhibit 18 or any other CA Documents.

18 NCHRP LRD 86 use of the project ROW prior to the development of the project. Prudent owners should perform an environmental investiga- tion/assessment of the site prior to letting a contract. In general, it is essential that owners identify the type, location, and quan- tity of pre-existing hazardous materials that may be encoun- tered on a proposed project site and provide owner’s disclosure statements to prospective proposers containing information on the environmental condition of the site. e information pro- vided should include environmental assessments, as well as information related to various permits issued for the site (i.e., notices of violations, nes for releases or discharges, and vari- ous hazardous substances used or in use at the site).57 In this way, prospective proposers will be able to evaluate the informa- tion and make informed decisions regarding the potential risks prior to bidding on a project. In addition to owner-provided information regarding the project site, to reduce the hazardous materials risks for contractors on alternative delivery projects, owners may consider allowing proposers to perform additional site investigations on the project site prior to the submission of proposals. Contractors will be able to price the risk of hazardous materials to the extent they are known. With unknown hazard- ous materials, however, the owner will need to consider how the contract should address the potential hazardous materials risks that may come to light aer contract execution and the extent to which risk should be shied to the contractor, whether through full responsibility, cost sharing, or other methods. Contracts should allocate between the owner and the contractor who has responsibility for the management and removal of hazardous materials encountered on the project site during construction, as well as who is responsible for the costs and schedule delays associated with such removal. In addition, disposal of any haz- ardous materials that are encountered pose the risk of liability under the Comprehensive Environmental Response, Compen- sation, and Liability Act (CERCLA)58 for generators and trans- porters of the hazardous materials, as well as the owner of the property from which it was transported. e CERCLA risk should be considered and allocated between the parties in the contract. Various contract provisions have been developed to address the numerous risks associated with hazardous materials. ese include provisions relating to responsibility (and liability) for the transport and disposal of hazardous waste found or gener- ated at the site, provisions relating to pre-existing conditions (indemnifying the contractor in the event of environmental liability due to the existence of pre-existing contamination on the site) and provisions that may provide schedule or cost relief specic to environmental conditions or contamination, in case contamination is found during the course of work. 57 Je Slivka, Managing Environmental Liabilities through Contracts, IRMI (2003), https://www.irmi.com/articles/expert-commentary/ managing-environmental-liabilities-through-contracts (last visited November 15, 2021). 58 Pub. L. 96-510, 94 Stat. 2767 (1980) (codied at 42 U.S.C. § 9601 – 9628 (2021)). c. Legislation Funding for transportation projects typically comes from a combination of state and local taxes and fees and, for major projects, federal grants funded by national motor fuels taxes. Apportioned federal-aid highway funds are those authorized under the federal-aid highway formula programs, including the National Highway Performance Program53 and the Surface Transportation Block Grant Program.54 ese funds are appor- tioned to the states on a formula basis for eligible capital im- provements. It is up to each state to decide how to use the allo- cated funds on eligible projects.55 Federal-aid highway funds are subject to FHWA concurrence, and should comply with all fed- eral rules and regulations, such as NEPA federal environmental laws, DBE requirements, and Davis-Bacon and Buy American acts. State and local authorities also have their own laws that impact rates, what funding sources an owner may use and any requirements or restrictions to the use of those funds.56 d. Summary Recommendations It is essential that project owners determine all potential sources before starting a procurement. Dierent laws will apply depending on the funding source. If the owner or contractor fail to comply with all applicable laws, the project could lose its funding source. For projects that rely on federal funds, the procurement and the contract will need to comply with all ap- plicable federal laws and requirements, including among others, NEPA, DBE, and Davis-Bacon and Buy America Acts. If a proj- ect intends to rely on TIFIA or PABs or to utilize tolls as a source of funds, additional federal and state laws also may apply. ere also may be restrictions on the number or types of projects that can utilize these funding sources. is is particularly true for projects that intend to be funded with toll revenues. Where a project is dependent on toll revenues for funding, there are sev- eral ways the owner can mitigate risks, including developing its own trac/ridership and revenue study and performing suf- cient due diligence regarding the issues that could arise over the life cycle of the facility. If an owner intends to transfer toll revenue risk to the developer, the owner may consider includ- ing provisions in the contract that provide relief for specied events that aect the developer’s ability to collect tolls where such events are beyond the developer’s control. 4. Hazardous Materials Management Nearly every transportation project site will contain a level of potential environmental hazards that pose risks and need to be assessed in light of applicable state and federal environmental laws and regulations. Project sites, particularly browneld sites and rehabilitations, may contain hazardous materials from the 53 23 U.S.C. § 119 (2021). 54 Id. § 133 (2021). 55 Id. § 145 (2021) (Federal – State Relationship). 56 See Id. §§  129 and 166 and the Value Pricing Pilot Program (VPPP), https://ops. wa.dot.gov/congestionpricing/value_pricing/. ese provisions describe the types of facilities and projects that may be subject to tolls, and how toll revenues may be used.

NCHRP LRD 86 19 lief only for hazardous materials encountered on the site that are not included in the information provided to proposers regard- ing pre-existing hazardous materials. (See Excerpt 10.) A number of the P3 and DB projects surveyed preclude the contractor from recovering any costs or schedule relief relating to immaterial quantities of hazardous materials and, because the contractor is responsible for design and construction, any hazardous materials that could have been avoided by reason- able design modications or construction techniques. ey also oen preclude recovery of hazardous materials costs that are subject to reimbursement through the proceeds of insurance. An example of this type of provision can be found in the Riv- erside County Transportation Commission (RCTC) Route 91 Corridor Improvement DB Project contract. (See Excerpt 11.) Some contracts reect a shared risk approach where the con- tractor is responsible for costs and delays up to a specied ceil- ing, above which the owner would be responsible for such costs and delays. In the P3 agreement for the TxDOT North Tarrant Express Segments 1 & 2 Project, the developer was responsible for the management/remediation of all hazardous materials en- countered on the project. TxDOT was responsible for any costs relating to TxDOT releases of hazardous materials and, for pre- existing hazardous materials, TxDOT would reimburse the de- veloper for 50 percent of remediation costs from $3 million up to $6 million and 100 percent over $6 million. e developer was responsible for all other hazardous materials management costs. P3 and DB contracts also address the potential for liability under CERCLA, which establishes the framework for federal cleanup of sites containing hazardous materials and the govern- ment’s ability to require payment for such by responsible parties. CERCLA includes as a “responsible” party: “any person who by contract, agreement, or otherwise arranged for disposal or treat- ment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, or by any other party or entity.”60 is is gener- ally described as “arranger” status, which can potentially expose owners or contractors to CERCLA liability. Arranger status in- cludes hazardous waste generators61 who decide to dispose of 60 Pub. L. 96-510, § 107, 94 Stat. 2767 (1980). 61 Hazardous waste is a subset of hazardous materials. Generally, released hazardous material becomes a hazardous waste for purposes of determining the method of disposal. e hazardous waste management system regulations, at 40 C.F.R. § 260.10 (2021), dene “generator” as “any person, by site, whose act or process produces hazardous waste identied or listed in part 261 of this chapter or whose act rst causes a hazardous waste to become subject to regulation.” a. Size and Complexity e extent of the hazardous materials risk for a particular transportation project is not typically directly related to the size or complexity of the project, although the larger the project site, the more potential there is for encountering hazardous mate- rials, particularly for browneld projects. In addition, a more complex project that requires signicant excavation for devel- opment of depressed lanes or bridge structures has increased potential for encountering hazardous materials. b. Project Delivery Method Regardless of the contract delivery method, the contracts will need to allocate risks for handling hazardous materials. In traditional DBB contracts and in some of the DB contracts stud- ied, the owner retains responsibility for handling the hazardous materials, even hazardous materials released by the contractor. For the DB and P3 contracts surveyed, where the contractor is responsible for the construction site and site safety, the contracts obligate the contractor to manage and remediate the hazardous materials found on the site. In the VDOT Hampton Bridge DB contract, the [DB contractor was] responsible for the management, treatment, handling, storage, monitoring, remediation, removal, transport and/ or disposal of any Hazardous Materials, the presence of which con- stitutes a Hazardous Environmental Condition, that are discovered on, in or under the Project Right-of-Way. For each such Hazardous Environmental Condition, [DB contractor] will be responsible for waste document and manifest preparation, tracking, obtaining and providing the Department with terminated manifests and certicates of disposal, and other reporting requirements related to disposal re- quired by the Legal Requirements.59 ere are dierences in how the contracts studied allocate responsibility for the costs and schedule delays related to the handling of hazardous materials. DBB contracts typically al- locate such responsibility to the owner. In nearly all the con- tracts surveyed, regardless of delivery method, the contractor is responsible for costs relating to its own releases of hazardous materials. In most of the P3 and DB contracts reviewed, cost and schedule responsibility for handling known pre-existing hazardous materials is shied to the contractor, because these are known risks and contractors can build the potential cost and schedule impacts into their bids. e Alaskan Way Viaduct (SR 99) Bored Tunnel Alternative DB Project contract provides re- 59 Comprehensive Agreement (Execution Version) Relating to the I-64 Hampton Roads Bridge-Tunnel Expansion Project, Exhibit 1, Article 4.1.1 (Hazardous Materials, General Obligations) (April 3, 2019). Excerpt 10 – Hazard Materials Management Alaskan Way Viaduct (SR 99) Bored Tunnel Alternative DB Project, WSDOT “. . . [DB contractor] shall be entitled to a Change Order priced in accordance with section 11.8 for cost impacts and Critical Path delays associated with remediation Work for Hazardous Materials not described in the Contaminated Materials Baseline Report or in the Technical Requirements generally.”

20 NCHRP LRD 86 tain third-party spills, in which the project owner explicitly dis- claimed liability for third-party spills. c. Legislation While each state will vary in the legislation governing the management of hazardous materials, there are many federal environmental requirements that must be taken into consider- ation when working on construction projects. ese include but are not limited to: CERCLA; the Hazardous Materials Transpor- tation Uniform Safety Act of 1990;62 the Resource Conservation and Recovery Act of 1976; 63 the Toxic Substances Control Act;64 and the Clean Water Act. States also have their own laws that 62 Pub. L. 101-615, 104 Stat. 3244. 63 Pub. L. 94-580, 90 Stat. 2795. 64 Pub. L. 94-469, 90 Stat. 2003 (1976). their waste at a facility other than that at which the hazardous waste was generated. For many of the projects surveyed that address generator and arranger liability, the contracts typically place generator liability on the developer for developer releases of hazardous materials and, in some instances, place generator liability for hazardous materials other than contractor releases of hazardous materials on the project owner. is occurs primarily where the owner retains responsibility for designating the location for disposal of the hazardous materials. is is seen in Excerpt 12 which de- scribes the Michigan Department of Transportation (MDOT) I-75 Modernization Project P3 contract. In other contracts, the project owner may retain generator risk for pre-existing hazardous materials (whether known or unknown) encountered within the project ROW, but not cer- Excerpt 11 – Hazardous Materials Management Route 91 Corridor Improvement Project, RCTC \ 6.10.1.4 No compensation or time extension shall be allowed with respect to: (a) removal, disposal and/or remediation of (i) asbestos or asbestos-containing materials (other than mineral asbestos naturally occurring in the ground) on or in the Site, removed in accordance with TP Sections 6.3 and 6.4 and the approved Environmental Management Plan, or (ii) any other Hazardous Materials not falling within the denition of Hazardous Waste that are encountered during or in connection with the demolition of buildings, xtures or other improvements on any parcels within the Site; (b) handling and disposal of aerially deposited lead as provided in TP Sections 6.3 and 6.4 and the approved Environmental Management Plan; (c) [Intentionally omitted]; (d) Release(s) of Hazardous Materials or threatened Release(s) of Hazardous Materials for which DB contractor is responsible under Section 18.1.1(g); (e) immaterial quantities of Hazardous Materials; (f) any Hazardous Materials that could have been avoided by reasonable design modications or construction techniques; or (g) any Hazardous Materials on property outside of the RCTC-Provided Property, except that compensation will be allowed for environmental remediation work on such property to the extent that it is integrally intertwined with environmental remediation work required within the RCTC-Provided Property. 6.10.1.5 To the extent that any proceeds of insurance are available to pay the cost of any Hazardous Materials Management, DB contractor shall rely on insurance to provide compensation, in lieu of requesting a Change Order. Excerpt 12 – Hazardous Materials Management I-75 Modernization Project, MDOT As between Developer and MDOT, MDOT shall be considered the generator and assume generator responsibility for Hazardous Materials other than Developer Release of Hazardous Materials. MDOT has exclusive decision-making authority regarding selection of the destination facility to which Hazardous Materials other than Developer Release of Hazardous Materials will be transported. . . . Notwithstanding the foregoing, Developer (and not MDOT) shall be considered the generator with respect to any Developer Release of Hazardous Materials.

NCHRP LRD 86 21 work for such facilities proceeds according to schedule. Similar- ly, risks relating to project operations can be reduced by third- party agreements establishing the rules that will apply aer completion of construction. Ideally, the agency should start to negotiate these agreements during the pre-procurement phase and continue negotiations during subsequent phases, with the goal of nalizing the agreements well in advance of the proposal due date. e risk of costs and delays to the project due to failure of utility owners and other third parties to cooperate with the con- tractor may be addressed in dierent ways in the contract. P3 and DB agreements oen include provisions obligating the con- tractor to take the lead in seeking approvals required from third parties and to work with them to ensure that their facilities are relocated in a timely manner, but also recognize that, in some cases, a third party may fail to cooperate with the contractor despite its best eorts to address the third party’s concerns. Such a situation can quickly create schedule delays and signicant additional project costs. Contracts may provide the contractor with cost or schedule relief, or both, for the delay. e P3 or DB contract also may require the owner to assist the contractor in dealing with the third party if reasonably requested to do so by the contractor. e P3 or DB contract should identify all exist- ing third-party rights and agreements aected by the project and any contractual rights or obligations under such agreements that will be assigned to the contractor or that the contractor will be required to assume. It should also identify requirements that the contractor must meet before it has the right to call on the agency for assistance or obtain relief. a. Right-of-Way Acquisition ROW acquisition, from a sliver to a full take of a signicant number of parcels, presents a major risk for transportation projects, and therefore should be addressed early on in project planning. e risk arises from the fact that transportation projects are linear and may require a signicant number of par- cels to establish the proposed project ROW, the length of time it typically takes to complete the environmental review processes required for ROW acquisition, and the various legal and com- pliance issues that must be addressed to acquire the properties for a public purpose.70 Without ROW, the project cannot be fully built. Accordingly, the timing of ROW acquisition is a risk that must be accounted for in any contract where all the prop- erty is not in the owner’s possession at the outset.71 70 ese include the appraisal processes, procedures and timelines for proceeding with condemnation actions and using the power of eminent domain if negotiated agreements cannot be reached with property owners, as well as compliance with the Uniform Relocation and Real Property Acquisition Policies Act of 1970, Pub. L. 91-646, 84 Stat. 1894 (1971) (codied at 42 U.S.C. §§ 4601-4655 (2021)), (hereinafter “Uniform Act”). 71 See, omas Waters, NCHRP Synthesis 292: Innovative Practices to Reduce Delivery Time for Right-of-Way in Project Development, Transportation Research Board of the National Academies of Sciences, Engineering, and Medicine, Washington, D. C., 2000, for a discussion of practices to deliver ROW for highway projects in a timely manner rough surveying all 50 state transportation agencies, it was evident may apply with respect to the release, handling, and transpor- tation of hazardous materials, e.g., the California Environmen- tal Quality Act; the California Hazardous Waste Control Act, Health and Safety Code;65 the California Hazardous Substance Account Act;66 the Louisiana’s Environmental Quality Act;67 the Virginia Waste Management Act;68 and Florida’s Environmental Protection Act.69 d. Summary Recommendations Hazardous materials present a risk for any transportation project, regardless of the size of the project. For larger and more complex projects that may require signicant ROW or that involve bridge structures or tunneling, there may be more risk than for smaller, less complex projects, particularly if the project is a browneld project. To mitigate hazardous materials risk, project owners should perform environmental assessments of potential project ROW to identify any potential hazardous materials on the project site and provide all available informa- tion to potential bidders. For DB and P3 projects, owners should also consider allowing proposers to perform their own due dili- gence during the procurement to ensure that proposers have sucient information to price their bids accordingly. For these types of projects, the owner also should consider retaining some or all responsibility for costs and delays due to the discovery of hazardous materials on the project ROW that were not known and could not be avoided by the contractor. is ensures that the owner pays for the actual discovery of the hazardous materials and limits the owner’s exposure to risk contingencies in pricing. To the extent a contract allows a contractor to designate ROW outside the schematic ROW, the contractor should be responsi- ble for costs and delays relating to its own releases of hazardous materials. Where the contractor is responsible for site safety and hazardous materials management, it also may be appropriate to allocate responsibility for costs and delays relating to third-party spills to the contractor. For DBB projects, hazardous materials risks, other than for the contractor’s own release of hazardous materials, should be allocated to the owner. Where an owner retains responsibility for designating the location for disposal of hazardous waste, the owner should consider retaining generator status under CERCLA. 5. Agreements with Third Parties In transportation mega projects, signicant concerns revolve around the potential for delays to the project if utility owners or other third parties fail to take action required for project construction to proceed in a timely manner. e risk of delays relating to project construction can be reduced by entering into agreements that establish the rules to be followed to obtain ap- proval of those elements of the project’s design that aect utility and other third-party facilities and to ensure that construction 65 Cal. Health & Safety Code §§ 25100-25259 (2021). 66 Cal. Health & Safety Code §§ 25300-25395.45 (2021). 67 La. Stat. Ann. §§ 30: 2001 – 2588 (2021). 68 Va. Code Ann. § 10.1 – 1400 to 1458 (2021). 69 Fla. Stat. Ann. § 403-412 (2021).

22 NCHRP LRD 86 DBB projects, the owner typically develops the design to 100 percent, which establishes the project alignment, secures the re- quired environmental clearances. e owner then acquires the necessary ROW to construct the project before the DBB con- tract is awarded and construction can begin. us, by the time the contractor is selected, ROW related risks have largely been managed by the owner. Under a CM/GC contract, the owner may require the construction contractor to perform ROW ac- quisition services during the preconstruction/design phase, before a construction price is established. In addition, construc- tion services could be performed under multiple work packages and project phasing, which could allow for construction of one portion of the project while ROW is secured for additional proj- ect elements; thus, reducing the risks that the ROW acquisition process could delay the project. e DB and P3 delivery methods allow for the contract to be entered into with the design-builder or concessionaire early enough in design development to allow for creative thinking to improve the feasibility and functionality of the project overall, which may result in adjustments to the proposed project align- ment. As more states are utilizing DB contracting on transpor- tation projects, they also include ROW acquisition in the con- tract because the properties that need to be acquired to create the ROW will not be identied with certainty until the design is advanced.73 While this single procurement of both design and construction brings greater exibility and time-savings benets, the inclusion of ROW acquisition may have an impact on the overall construction schedule. Based on successful application of such ROW practices from several state representatives re- sponding to the survey for this digest, the following suggestions regarding the contract were made: • ROW certication can be included in the DB contract, which states that construction cannot begin until ROW acquisition is completed. For large-scale and long-term projects, phasing in ROW and certication can be utilized, which would allow construction to begin on certain elements of the project for which the ROW has been acquired; • If only compensation needs to be determined, the contract should spell out the methods and steps to do so, and which party is responsible for doing so; • e contract should list out properties owned by the trans- portation agency that can be used for staging; and • If the ROW acquisition cost is borne by the state, safeguards should be built into the actual cost method in the contract to prevent incentive payments to the property owners for dicult acquisitions, as that would violate the Uniform Act that requires fair and equitable treatment to all property owners.74 Because the ROW acquisition oen needs to occur during the term of the P3 or DB contract, delay in the ROW acquisi- 73 Federal Highway Administration, Realty: Right-of-Way Design/ Build, (2001), https://www. wa.dot.gov/real_estate/right-of-way/ design-build/index.cfm. 74 Id. If ROW needs and applicable requirements are not identi- ed and coordinated early in the project planning phase, proj- ects will face a signicant risk of delays and unanticipated costs associated with ROW acquisition. Even where most of the prop- erty required for a project has been acquired, it is likely that at least some of the parcels that need to be obtained will be on the critical path for the construction of the project. It is important that the owner understands the available options and timing for ROW acquisition, and their related costs and risks, in order to develop an eective and achievable project schedule and to properly allocate responsibilities and risks between the procur- ing entity and the contractor.72 e rst step in mitigating ROW risks on a transportation project is for the owner to engage its ROW sta early on in the project to help identify the required parcels, determine if the entity has early acquisition authority that it can use for the proj- ect, and develop a schedule and process for commencing ROW acquisitions. Regulations found at 23 C.F.R. part 710, subpart E, allow state agencies to begin ROW acquisition for transpor- tation projects before the NEPA process is complete. If a con- tract is awarded before issuance of a nal NEPA decision, the agency will be required to comply with relevant FHWA regula- tions, including requirements for the procurement documents and requirements that limit the work that may proceed before completion of the NEPA process. If early acquisition authority is not available, ROW acquisition may begin aer the NEPA pro- cess is complete. (1) Size and complexity. In general, a larger project will re- quire more ROW, which means that there is more opportunity for things to go wrong in the ROW acquisition process. Conse- quently, ROW risk is a signicant risk for transportation mega projects. (2) Project delivery method. e project delivery method necessarily impacts how the ROW risk will be addressed. For that timely ROW delivery was increasingly important as it was bound by penalty and incentive clauses in contracts. Some transportation agencies pointed out that the complexity of the contracting process and insucient training for sta for ROW services and contract administration were hindering the eciency of ROW delivery. e Utah Department of Transportation (UDOT) ROW Division utilized innovative methods to improve their ROW process eectiveness. is included the use of a production time/motion analysis of typical activities in the ROW acquisition process (including residential relocation and appraisals for dierent land uses), to allow setting realistic contract costs, workload distribution, and project schedule. UDOT also incorporated into its processes ‘binding appraisals’ in case of disagreements in negotiations, which allowed UDOT and the property owner to commit contractually to a subsequent appraisal by a certied appraiser (selected by both parties) paid by UDOT. 72 For information regarding issues to consider in developing ROW acquisition strategy, see Michael C. Loulakis, Nancy C. Smith, Donna L. Brady, Rick E. Rayl & Douglas Gransberg, NCHRP LRD 68: Liability of Design-Builders for Design, Construction, and Acquisition Claims, Transportation Research Board, National Academies of Sciences, Engineering, and Medicine of Washington, D.C. (2015) [hereinaer referred to as Loulakis, NCHRP LRD 68.]

NCHRP LRD 86 23 intended, however, ROW issues did delay the DB contrac- tor. ese issues were related to obtaining possession and use agreements. Given the unusually large number of par- cels that needed to be acquired for the project, there were challenges to scheduling the hearings required to complete the eminent domain proceedings. In addition, about the same time the project was procured, a large oil campus was announced in the vicinity of the project, which increased ROW prices. • Requiring the contractor to negotiate and undertake ROW acquisitions, with the project owner retaining responsibil- ity for prosecuting eminent domain actions and sharing in the land purchase costs that exceed specied limits. is was the approach adopted by NCDOT for the I-77 Express (HOT) Lanes project. (See Excerpt 14.) (3) Legislation. ROW acquisition for federally funded proj- ects must comply with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Uniform Act)75 and meet applicable state law requirements. e Uniform Act and related regulations apply to any projects that use federal funds, even if federal funds are not used to acquire real property for the project.76 FHWA’s rules may be found at 23 C.F.R. pt. 710 (2021), which includes FHWA’s primary regulations addressing real property interests, reimbursement, and management); 23 C.F.R. § 635.309 (2021) (FHWA’s regulations concerning ROW certication); and 23 C.F.R. §  710.313, which discusses the ROW procedures specically applicable to federal-aid DB proj- ects.77 In addition to the federal requirements, states have laws applicable to ROW acquisition, including state condemnation laws, as well as the availability of “quick take”78 authority and other eminent domain requirements. ese are oen set forth in ROW manuals issued by the owner. (4) Summary recommendations. Prior to initiating a pro- curement for a transportation mega project, project owners should consider implementing best practices, including: (1) starting the ROW acquisition process as early as possible; (2) initiating title searches as soon as an alignment is determined; and (3) identifying potentially dicult acquisitions early in the process and concentrating early eorts on acquisitions that will require more lead time. e owner also may establish a local ROW oce near the project location and implement a project 75 Pub. L. 91-646, 84 Stat. 1894 (1971), (codied at 42 U.S.C. §§ 4601-4655 (2021)). 76 See, Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally assisted Programs, 49 C.F.R. pt. 24. (2021). 77 See also, Federal Highway Administration, Real Estate Acquisi- tion Guide for Local Public Agencies, http://www. wa.dot.gov/real_ estate/uniform_act/program_administration/lpa_guide/ch02.cfm. 78 Quick Condemnation, Black’s Law Dictionary (11th ed. 2019), is dened as “e immediate taking of possession of private property for public use, whereby the estimated compensation is deposited in court or paid to the condemnee until the actual amount of compensation can be established – Also termed ‘quick-take.’” tion can have a signicant impact on the contractor’s ability to proceed with the work. e ROW acquisition risk can include (i) the risk that certain ROW parcels will not be acquired by the time the contractor needs to access the parcels to timely ex- ecute the work and meet completion deadlines; (ii) the cost of redesign due to inability to obtain specic parcels; and (iii) the cost of acquisitions. ere are various strategies used in the DB or P3 contract documents to allocate and mitigate the ROW acquisition risks. One technique for dealing with the ROW acquisition risk is for the owner to take the risk of ROW acquisition delays and to pro- vide a matrix of the parcels required for the project and a sched- ule of when each parcel will be made available to the contrac- tor. From there, the contractor is responsible for scheduling the work to match the ROW acquisition schedule. If the owner does not acquire a parcel by the date specied in the contract and the design-builder’s work is delayed as a result, the owner would be liable for delay damages subject to the design-builder’s duty to mitigate, for instance, by resequencing the work. Another ap- proach is to place the responsibility for ROW acquisition and associated delay risk on the contractor, with the owner retaining responsibility for property acquisition and relocation costs. A less common approach would place full responsibility for ROW acquisition, including paying the costs of acquisition and reloca- tion costs, on the design-builder. In general, the more respon- sibility the contractor has for ROW acquisition, the less liability the owner will have for acquisition delays. However, not all ROW risk can be transferred to the contractor because the power of eminent domain can only be exercised by the government. e contracts studied indicate that owners have taken dierent ap- proaches in addressing ROW acquisition risk, including: • Requiring the contractor to provide acquisition services for ROW parcels, other than certain designated owner-provid- ed parcels that the project owner is obligated to provide to contractor by the dates specied in the contract, with the owner retaining the obligation to undertake eminent domain proceedings and pay the purchase price for all par- cels acquired in the schematic ROW. is is the approach taken by ADOT for the South Mountain Freeway DBM project. • Requiring the contractor to negotiate and undertake ROW acquisitions, with the project owner retaining responsibil- ity for prosecuting eminent domain actions and paying for land purchase costs for all parcels in the schematic ROW, with the contractor responsible for costs for any contrac- tor-designated ROW. is is the approach taken for the TxDOT Grand Parkway Segments F1, F2, and G project (see Excerpt 13). For this greeneld project, ROW acqui- sition services were provided by the contractor for all 433 parcels. e contractor had the schedule risk with limited relief for signicant delays to the critical path due to con- demnation delays. TxDOT was responsible for paying the purchase price for ROW and prosecuting eminent domain actions through the Attorney General. As per the inter- viewees, the provisions were successfully implemented as

24 NCHRP LRD 86 Excerpt 13 – Right-of-Way Acquisition Grand Parkway Segments F1, F2, and G Project, TxDOT 1.1.1 Acquisition of Project ROW 1.1.2 All Project ROW, including Additional Properties but excluding temporary interests in property for Project Specific Locations, shall be acquired in the name of the State. Developer shall undertake and complete the acquisition of all Project ROW, including Additional Properties, in accordance with Section 7 of the Technical Provisions, the approved Right of Way Acquisition Plan and all applicable Laws relating to such acquisition, including the Uniform Act. 1.1.3 TxDOT shall: (a) provide review and approval or disapproval of Acquisition Packages for Project ROW, and (b) except as provided below, undertake eminent domain proceedings, if necessary, for Project ROW in accordance with the procedures and time frames established in Section 7 of the Technical Provisions and the approved Right of Way Acquisition Plan. 1.1.4 Except as otherwise authorized by Law for temporary Project Specific Locations, (a) TxDOT shall not be obligated to exercise its power of eminent domain in connection with Developer’s acquisition of any such temporary right or interest, (b) TxDOT shall have no obligations or responsibilities with respect to the acquisition, maintenance or disposition of such temporary rights or interests, and (c) Developer shall have no obligation to submit Acquisition Packages to TxDOT for, or obtain TxDOT’s approval of Developer’s acquisition of, any such temporary right or interest. 1.1.5 Costs of Acquisitions 1.1.6 TxDOT shall be responsible for the purchase price for all parcels within the Schematic ROW. Subject to Sections 6.2.7, Developer shall be responsible for performing and the costs (excluding the purchase price) of all right of way engineering, surveying, appraisals, administration, acquisition, environmental permitting . . . and related services for all such parcels . . . Notwithstanding the foregoing, TxDOT shall be responsible for the legal costs for the State Attorney General counsel or fees for private counsel retained as directed by the State Attorney General in connection with any condemnation actions . . . 1.1.7 TxDOT shall pay the purchase price of any real property outside the Schematic ROW that must be acquired due to a TxDOT-Directed Change, a Necessary Basic Configuration Change or a Force Majeure Event, subject to TxDOT’s reasonable determination that the property is necessary, as well as, for Additional Properties that must be acquired due to a TxDOT-Directed Change or a Force Majeure event, any other costs and expenses incurred by Developer to acquire such real property, subject to the limitations in Section 13. Developer shall perform all right of way engineering, surveying, appraisals, administration, acquisition, archeological surveys, environmental and other permitting and related services for such property. . . Developer shall be responsible for and shall pay directly all costs and expenses in connection with acquiring all Developer-Designated ROW . . . 6.5.3 Except as provided in Section 6.2.6, Developer shall be entitled to a time extension in accordance with Section 13.8.5 for delays to the Critical Path due to failure of TxDOT to deliver the petition for the parcel to the Developer within 105 days from the date of approval of the condemnation package or provide the payment for the parcel within 45 days in accordance with Section 6.5.2, excluding any delay caused in whole or in part by an act, omission, negligence, intentional misconduct, or breach of applicable Law, contract or Governmental Approval by any Developer-Related Entity in performing the services required under the Contract Documents. Furthermore, except as provided in Section 6.2.6, delays to the Critical Path due to failure of TxDOT to make available the portion of Schematic ROW described in a condemnation packet within 365 days aer approval of the condemnation package, excluding any delay caused in whole or in part by an act, omission, negligence, intentional misconduct, or breach of applicable Law, contract or Governmental Approval by any Developer-Related Entity in performing the services required under the Contract Documents, shall be considered a TxDOT-Caused Delay; provided, however, that the risk of delay following the expiration of such 365-day period, on an individual parcel basis, shall be borne equally by each Party for the rst 100 days thereaer (i.e., for each parcel, Developer shall be entitled to one day of time extension for every two days of delay). Following the expiration of the rst 100 days aer the initial 365-day period, Developer shall be entitled to one day of time extension for each day of eligible delay.

NCHRP LRD 86 25 Excerpt 14 – Right-of-Way Acquisition I-77 Express (HOT) Lanes Project, NCDOT 7.3 Project Right of Way Acquisition 1.1.1 Developer shall undertake and complete the acquisition of Proposed Right of Way and Additional Properties in accordance with this Section 7.3 and Section 7 of the Technical Provisions. Subject to Section 7.3.3 of this Agreement and Section 7 of the Technical Provisions, NCDOT shall exercise its condemnation powers to acquire Proposed Right of Way and Additional Properties; provided, however, that Developer has demonstrated due diligence in efforts to acquire such properties prior to requesting NCDOT to exercise its condemnation powers and has complied with the requirements therefor set forth in the Technical Provisions (including Section 7 of the Technical Provisions). Subject to Section 7.3.3, as a condition precedent to NCDOT exercising its condemnation powers and the Office of the Attorney General initiating any condemnation proceedings with respect to a parcel, Developer shall pay to NCDOT the estimated amount of the payment to be made to the property owner of such parcel for the acquisition thereof (including any relocation costs). Such costs with respect to the acquisition of Proposed Right of Way shall be eligible for treatment as ROW Acquisition Costs and subject to the provisions of Section 7.3.3. 1.1.2 All Proposed Right of Way and Additional Properties shall be acquired in the name of NCDOT. Developer shall undertake and complete the acquisition of Proposed Right of Way and Additional Properties in accordance with Section 7 of the Technical Provisions and all applicable Laws relating to such acquisition, including the Uniform Act. 1.1.3 Developer shall be responsible for all costs and expenses associated with acquiring all Proposed Right of Way required under the CA Documents, Additional Properties and Project Specific Locations, except that responsibility for ROW Acquisition Costs shall be allocated between the Parties as follows: 7.3.3.1 ROW Acquisition Costs Overage. To the extent that the ROW Acquisition Costs are in excess of the ROW Acquisition Baseline Costs, the overage shall be allocated between the Parties as follows: (a) Developer and NCDOT each shall be responsible for 50 percent of the ROW Acquisition Costs in excess of 100 percent but less than or equal to 120 percent of the ROW Acquisition Baseline Costs; and (b) NCDOT shall be responsible for 100 percent of the ROW Acquisition Costs in excess of 120 percent of the ROW Acquisition Baseline Costs. 7.3.3.2 ROW Acquisition Costs Savings. To the extent that the ROW Acquisition Costs are less than the ROW Acquisition Baseline Costs, the savings shall be allocated between the Parties as follows: (a) Developer shall pay NCDOT 50 percent of those savings that amount to greater than zero and up to 20 percent of the ROW Acquisition Baseline Costs; and (b) Developer shall pay NCDOT 100 percent of the savings that exceeds 20 percent of the ROW Acquisition Baseline Costs. e overage and savings of the ROW Acquisition Costs shall be paid in accordance with Part H of Exhibit 5. 1.1.4 All reports, studies, specifications, estimates and other documentation related to Project Right of Way acquired by Developer shall become and remain the sole property of NCDOT upon completion of the acquisition process. 1.1.5 NCDOT shall not be obligated to exercise its power of eminent domain in connection with Developer’s acquisition of any temporary right or interest, including Project Specific Locations, and NCDOT shall have no obligations or responsibilities with respect to the acquisition, maintenance or disposition of such temporary rights or interests.

26 NCHRP LRD 86 additional cost of acquiring separate right-of-way for the exclusive accommodation of utilities.81 Researchers have recommended that utility agreements be added to the technical requirements sections of contracts.82 “e Department’s standard utility process should be followed and provided in the scope development. is includes identi- cation of the utility by owner, plan and prole location, require- ment for relocation and/or adjustment, and all owner stipulated design and construction requirements.”83 ey also recommend that the owner provide a schedule for relocations or adjustment, which should identify the party responsible for performing the work and the schedule by which the work should be com- pleted.84 A 1968 FHWA Circular Memorandum indicated that time extensions are normally not approved due to either a utility or ROW delay. However, exceptions to this may be made under the following conditions: construction was delayed; contractor did all they could under the contract to minimize the delay; and despite the state’s best eorts, it could not control the situation.85 Some of the most signicant risks associated with utility re- locations that can aect a transportation project include risks relating to unknown/unidentied utilities, risks relating to incomplete or inaccurate information regarding existing utili- ties, new utilities encountered in the project ROW, incorrect assumptions as to the utility work required, cost liability deter- minations, utility owner nonpayment for contractor’s relocation work, project design changes causing extra utility work, and risks arising from a utility owner’s failure to cooperate with a needed utility relocation. As many utility facilities are underground, project owners should perform subsurface utility engineering (SUE) studies of the proposed project ROW during the pre-procurement phase to identify any underground utilities and minimize risks to the project for “unknown” utilities.86 Performing these investiga- tions facilitates the owner’s ability to commence negotiations 81 Id. 82 Baabak Ashuri, Hamed Kashani, Recommended Guide for Next Generation Transportation DB Procurement and Contracting in the State of Georgia, 89, Ga. Tech Res. Corp. (2012). 83 Id. 84 Id. 85 G. M. Williams, Federal Highway Administration Director of Engineering and Operations, September 9, 1968, Circular Memorandum to Regional Federal Highway Administrators and Division Engineers. 86 SUE is an engineering practice that combines civil engineering, surveying, and geophysics to obtain information about underground utilities. Combining these activities with traditional records research and site surveys and utilizing technologies such as geophysical methods and non-destructive vacuum excavation, provides dierent “quality levels” of information. e higher the “quality level” of the SUE, the more condence the owner and potential proposers can have in the accuracy of the utility information, thus reducing the potential that pro- posers will assign large contingencies for risks of costs and schedule delays attributable to utility relocations. See, Federal Highway Adminis- tration, Design, Subsurface Utility Engineering, https://www. wa.dot. gov/programadmin/sueindex.cfm. tracking system that shows the appraisal, acquisition, and relo- cation status of all ROW parcels for the project. For P3 and DB projects, if any ROW must be acquired aer execution of the contract, the owner may consider turning over responsibility for ROW acquisition to the contractor. Since eminent domain can only be exercised by the government, regardless of who will be responsible for ROW acquisition, the contract should clearly specify timelines for completion of the condemnation process and provide schedule and cost relief where the owner fails to meet the specied schedule and the ROW at issue is on the con- tractor’s critical path. b. Utilities Above ground and below ground utilities pose a number of challenges, both from a design and construction perspec- tive, and also from the perspective of needing to negotiate an agreement with a third-party utility owner. ere are a variety of ways that risks can be allocated for projects impacted by utilities, which can be dependent on funding, state and local laws, property rights considerations, specic utility facility at- tributes, and the particular owners of the utilities. Utility delays, utility easements, contractual relationships, betterments, un- identied utilities, new facilities, utility use requirements, and self-performance are all matters that pose risk to transportation projects and are, therefore, subject to risk allocation. Almost all transportation projects will require the reloca- tion or adjustment of existing utilities, whether aerial or under- ground. “Some [utilities] are privately owned and others are owned by municipalities, such as a local water company.”79 In general, transportation agencies work directly with utility com- panies to address utility issues. Depending on the type of proj- ect, the procedures for adjusting and accommodating utilities will follow federal, state, local, and non-reimbursable utility procedures. e FHWA website provides a list of federal laws, regulations, policies, and guidance relating to utilities in high- way projects.80 Various federal laws address the relocation of utilities for federally funded transportation projects, including 23 U.S.C. §  123 (2021) (Relocation of utility facilities), which addresses reimbursement for the relocation of utility facilities necessitated by the construction of a project on any federal-aid highway and 23 C.F.R. pt. 645, subpt. B (2021) (Accommoda- tion of utilities). e FHWA website states: It has been recognized that it is generally in the public interest for util- ity facilities to jointly use the right-of-way of public roads and streets when such use and occupancy does not adversely aect highway or trac safety, or otherwise impair the highway or its aesthetic quality, and does not conict with the provisions of Federal, State, or local laws and regulations. e opportunity for such joint use avoids the 79 omas R. Warn, NCHRP Synthesis 413: Techniques for Eective Highway Construction Projects in Congested Urban Areas, National Academies of Sciences, Engineering, and Medicine, Washington, D.C. 2011, p. 15. 80 Federal Highway Administration, Construction Program Guide, § Utilities, (updated June 27, 2017), https://www. wa.dot.gov/ construction/cqit/utilities.cfm.

NCHRP LRD 86 27 conditions that it will transfer to the contractor. One promising practice is for the agency to seek proposers’ input early in the procurement process regarding the types of data they believe are most critical to eciently price the project so that the agency can provide that data during the procurement. Another promis- ing practice is for the owner to provide the proposers with the opportunity to identify additional SUE locations in the early stages of the procurement to allow the agency time to perform additional investigations and provide information to all propos- ers prior to the submission of bids. By conducting these inves- tigations and providing key information relatively early in the procurement process, the agency can avoid the need to delay the procurement to obtain necessary data. is helps to ensure that price proposals do not include unnecessary contingencies for these risks. In the contracts reviewed for this study, various methods have been used to allocate the risks for unidentied utilities. One method that was used in the NDOT Project Neon was to allow the design-builder time to verify that NDOT provided in- formation aer award, and if the design-builder identied any additional utilities within the stated time period, that the design- builder would be entitled to a change order. (See Excerpt 15.) A similar approach was taken by the San Bernardino County Transportation Authority (SBCTA) in the I-10 Corridor DB contract, pursuant to which the DB contractor was provided with 240 days from the issuance of the NTP1 to obtain SBCTA with the utility owners and other third parties identied dur- ing this process. By identifying the location of utilities ahead of time, relocations can be minimized, and costs and delays caused by cutting, damaging, or discovering unidentied utility lines will be reduced. Unknown/unidentied utilities. For alternative delivery projects, performing SUE investigations early, prior to initiat- ing the procurement, will enable the project owner to provide proposers with baseline information that it assembles as part of the procurement package, including the identication of known utilities. It would be ideal if all conicting utilities for a trans- portation project could be relocated before construction begins. However, this may not be achievable for DB and P3 projects be- cause budget and schedule constraints may aect the owner’s ability to identify and relocate utilities. In addition, similar to ROW acquisition, nal utility relocation requirements will depend on the contractor’s nal design. It may not be in the owner’s best interest to relocate the utilities that it considers to be conicting based on a preliminary schematic design, as the owner could end up relocating utilities that do not need to be moved or may fail to relocate utilities that end up being on the contractor’s critical path. e project owner should determine the extent to which the proposers/contractors will be entitled to rely upon the SUE data and site conditions data included in the RFP documents, as well as the level of risk associated with utility relocation and site Excerpt 15 – Utilities Project Neon DB Procurement, NDOT 6.4 Accuracy of Department-Supplied Information Concerning Existing Utility Information and Supplemental Utility Investigation by Design-Builder 6.4.1 Utility Information and Supplemental Utility Investigation e Department has provided certain Utility Information in the Reference Information Documents. Design-Builder shall analyze the Utility Information, contact and make inquiries of Utility Owners, perform surface inspections of the Project ROW and such additional inspections, including potholing, as it deems appropriate to verify, fully and accurately identify all Utilities, address all eld conditions, and supplement the Utility Information. Within one hundred twenty (120) days from the eective date of NTP1, Design- Builder shall submit, to the Department, Design-Builder’s Utility Conict Matrix reecting the existence of any and all Utilities likely to be impacted by the Project; provided, however, that for any Department- Provided Property for which the Department has not yet provided Design-Builder with access within such one hundred twenty (120) day period, Design-Builder shall have a period of thirty (30) days aer Design- Builder obtains access to the property to provide the Department with an updated Design-Builder’s Utility Conict Matrix reecting any impacted Utilities on that property. 6.4.2 Claims for Inaccuracies in Utility Information Identied in Design-Builder’s Utility Conict Matrix Subject to the provisions of this Section 6.4 and Section 13, if any Utility located within the Planned ROW Limits and requiring actual relocation is not identied in the Utility Information or is misidentied therein but is timely identied by the Design-Builder in the Design-Builder’s Utility Conict Matrix pursuant to this Section 6.4, then Design-Builder shall be entitled to a Change Order increasing the Contract Price to compensate Design-Builder for any material increase in Design-Builder’s costs of performing the Work that is directly attributable to such lacking or inaccurate information.

28 NCHRP LRD 86 Other projects provide schedule but not cost relief for util- ity owner delays. For the Gerald Desmond Bridge Replacement Project in Long Beach, California, the contractor was entitled to schedule relief for “Utility Delays,” dened as any failure of a utility owner (other than the project owner) to meet any time parameters for performance of utility work by the utility owner that would delay the critical path so as to impair the contractor’s ability to meet a completion deadline. However, the contractor bore the cost risks associated with any such delays. In some cases, the risk of utility delays may be shared with a utility delay “relief event” resulting in the contractor receiving a one-day time extension for every two days of delay. Another commonly used approach is to establish “bands” for allocation of risk, typically with the contractor responsible for a certain number of days of delay (the rst band), both parties sharing the risk of delays within an intermediate band, and the owner responsible for delays in excess of the maximum number of days in the intermediate band. Some projects may use a combina- tion of risk sharing mechanisms. (See the provisions from the TxDOT SH 360 Project contract at Excerpt 18.) In most of the contracts reviewed, however, the contractor would not be entitled to a time extension for utility owner delays unless the contractor met the conditions specied in the con- tract for obtaining such relief. (See Excerpt 19 from the Caltrans I-15/I-215 Interchange Improvement Project.) One means of managing the risk of a third party’s failure to cooperate is to establish a framework for the relationship be- tween the future contractor and the utility owner through a negotiated “master agreement” that establishes the essential terms for the utility relocations with a particular utility owner. To obtain the maximum benet from a master agreement, the best practice is for the owner to ensure that the agreement is completed prior to contract award. To the extent possible, approval of the “DBC [Design-Build Contract] Utility Informa- tion Submittal” that identied all potential utility conicts on the project. e contract also placed the risk on the DB contrac- tor for any additional costs or delays relating to the handling of any utilities that were not included in the nal approved DBC Utility Information Submittal. Other contracts allocate the risks for unidentied utilities dierently. For the TxDOT SH 360 DB project, TxDOT and the design-builder share the risks of unidentied utilities that exceeded the threshold amount set forth in the contract. (See Excerpt 16.) Utility owner delays/failure to cooperate. In addition to risks related to unidentied utilities, there is a risk of increased cost and schedule delays due to failure of utility owners and other third parties to cooperate in utility relocation. For DB and P3 projects, the contractor has responsibility for design and construction and the contracts oen require the contrac- tor to take the lead in seeking approvals required from utility owners to ensure that their facilities are relocated in a timely manner. ese contracts also recognize that, in some cases, a third party may fail to cooperate with the contractor despite its best eorts to address the third party’s concerns. Such a situ- ation can quickly create signicant additional project costs, and a contractor prejudiced by such lack of cooperation may be entitled to schedule relief and/or compensation from the owner for the delay. In the PennDOT Rapid Bridge Replace- ment P3 project, which required signicant interaction with third parties, provisions in the contract treated excessive delay caused by negligence or deliberate inaction on the part of utilities as compensation events, but only if the concessionaire demonstrated it had done everything in its power to obtain cooperation, including giving PennDOT an opportunity to intervene. (See Excerpt 17.) Excerpt 16 – Utilities SH 360 Project, TxDOT 6.8.1.2. Unidentied Utilities. (a) DB Contractor shall be entitled to an increase in the Price in connection with certain increases in the cost of the Work due to Unidentied Utilities within the Schematic ROW. Such increase shall be determined on a facility-by-facility basis, and shall apply for a particular Unidentied Utility facility only if the Basic Costs for the Utility Adjustment for that facility are greater than $50,000. e amount of the Price increase in any Change Order issued under this Section 6.8.1.2 for each such Unidentied Utility facility shall be equal to the Basic Costs for that facility, less $50,000 (which amount shall be DB Contractor’s sole responsibility). Notwithstanding the foregoing, an aggregate cap of $1,000,000 shall apply to the total amount of such $50,000 “deductibles” that are DB Contractor’s responsibility. In determining whether the aggregate cap has been reached, Utility Adjustments of Unidentied Utilities with Basic Costs of less than $50,000 shall not be counted towards the aggregate $1,000,000 cap and such amounts shall be DB Contractor’s sole responsibility. If the $1,000,000 aggregate cap is reached, the amount of the Price increase in any Change Order thereaer issued under this Section 6.8.1.2 for a Utility Adjustment of any Unidentied Utility for which the Basic Costs are in excess of $50,000 shall be equal to the Basic Costs for that facility. In no event shall DB Contractor be entitled to a Change Order for increased costs due to Utility Adjustments for Unidentied Utilities for which the Basic Costs are $50,000 or less, regardless of whether the aggregate cap is reached.

NCHRP LRD 86 29 Excerpt 17 – Utilities Rapid Bridge Replacement P3 Project, PennDOT Compensation Event means any of the following: …. (y) in respect of a Replacement Bridge, any failure of a Utility Owner to cooperate with the Development Entity in relation to a Utility Relocation (including but not limited to an unreasonable request by a Utility Owner that, in connection with any Utility Relocation Work, a Utility Enhancement be completed) in such manner that would: (i) in the case of any Utility Relocation where the anticipated completion date of such Utility Relocation is prior to the commencement of Construction Work for such Replacement Bridge (i.e., “prior work”), delay the commencement of that Construction Work (as set out in the Development Entity’s Project Baseline Schedule) beyond the relevant ROW Acquisition Period; and (ii) in the case of any Utility Relocation which can only be performed concurrently with the Construction Work for such Replacement Bridge (i.e., is not “prior work”), result in a delay to that Construction Work (as set out in the Development Entity’s Project Baseline Schedule) of more than thirty (30) days; provided, that the Development Entity shall have continued to satisfy the “conditions to assistance” set out in Section 5.2(e)(ii)(A) for the duration of such failure to cooperate by the Utility Owner. Excerpt 18 – Utilities SH 360 Project, TxDOT 6.8.5 Delays by Utility Owners 6.8.5.1 Developer shall bear 100 percent of the risk of Critical Path delays caused by a Utility Owner’s failure to timely comply with the requirements of a Utility Agreement which has been executed by Developer and such Utility Owner. 6.8.5.2 e term “Utility Owner Delay” shall mean a delay to a Critical Path that is directly attributable to a Utility Owner’s failure to cooperate with Developer in performing Utility Adjustment Work within the time period reasonably scheduled by Developer for performance of such work, where Developer and Utility Owner have not yet executed a Utility Agreement addressing such Utility Adjustment Work. Developer shall bear 100 percent of the risk of each Utility Owner Delay prior to and during the 90-day period following TxDOT’s receipt of evidence required by Section 6.8.4.2 that is reasonably satisfactory to TxDOT. e risk of any Utility Owner Delay aer such 90-day period shall be borne equally by each Party (i.e. any aected Completion Deadline shall be extended by one day for every two full days of Utility Owner Delay occurring aer expiration of the 90-day period). If a Utility Owner Delay is concurrent with another delay which is Developer’s responsibility hereunder, Developer shall not be entitled to a time extension on account of such Utility Owner Delay. If a Utility Owner Delay is concurrent with another Utility Owner Delay by the same Utility Owner or by another Utility Owner, only one of the delays shall be counted. If a Utility Owner Delay is concurrent with any other delay for which Developer is entitled to a time extension under Section 13, the delay shall be deemed a Utility Owner Delay and the provisions of this Section 6.8.5 shall apply. such agreements should specify timelines for approvals and other utility owner obligations and should identify each party’s (the project owner’s and the utility owner’s) respective cost obligations. To the extent that these agreements are entered into prior to award of the contract, the contractor will not normally be a party to the agreement. In that case, the agreement should make it clear that the owner intends to assign responsibility for perfor- mance of certain aspects of the agreement to the contractor. e terms and conditions of these agreements may require extensive negotiation, as they will need to address (i) impacts to the util- ity’s operations, (ii) schedule requirements and commitments, (iii) the costs of performing the relocation, and (iv) the potential liability for the cost of any delay to the contractor if the utility

30 NCHRP LRD 86 Excerpt 19 – Utilities I-15/I-215 Interchange Improvement (Devore) Project, Caltrans 6.2.5 Utility Delays 6.2.5.1 Allocation of Risk of Schedule Impacts Design-Builder shall bear the risk of schedule impacts associated with the rst four Days of Utility Delays per Utility Owner for the Project not to exceed forty Days for all Utility Delays by all Utility Owners. Subject to the limitations and conditions set forth herein, if aggregate Utility Delays caused by a particular Utility Owner exceed four Days or if aggregate Utility Delays caused by all Utility Owners exceed forty Days, then any Completion Deadline(s) aected thereby shall be extended for one Day for every Day of Utility Delay caused by such Utility Owner(s) in excess of these limits identied in this Section 6.2.5.1 so long as the Utility Delay impacts the Project’s Critical Path. Failure of the parties to reach agreement regarding Design-Builder’s entitlement to an extension due to Utility Delays shall be a Dispute to be resolved in accordance with Section 19. Design-Builder shall not be entitled to any extension of any Completion Deadline on account of any Utility Delay except as provided in this Section 6.2.5.1. 6.2.5.2 Conditions to Extensions for Utility Delays With respect to each Utility Delay claimed by Design-Builder, Design-Builder shall not be entitled to any extension of any Completion Deadline(s) pursuant to Section 6.2.5.1, and such Utility Delay shall not be counted toward the four-Day cap on Design-Builder’s risk per Utility Owner set forth in Section 6.2.5.1, unless all of the following conditions are satised: (a) Design-Builder has provided evidence reasonably satisfactory to Department that (i) Design-Builder has fullled its obligation under the applicable Utility Agreement(s) to coordinate with the Utility Owner to prevent or reduce such delays, and (ii) Design-Builder has otherwise made diligent eorts to obtain the timely cooperation of the Utility Owner but has been unable to obtain such timely cooperation; (b) If Design-Builder is responsible for the Relocation, Design-Builder has provided a reasonable Relocation plan to the Utility Owner and Design-Builder has obtained, or is in a position to timely obtain, all applicable approvals, authorizations, certications, consents, exemptions, lings, leases, licenses, permits, registrations, options and/or rulings required by or with any Governmental Person in order to design and construct such Relocation; and (c) No circumstances exist which have delayed or are delaying the aected Relocation, other than those which t within the denition of a Utility Delay. fails to perform. ese agreements may be easier to negotiate if the owner will pay the utility’s costs, but the owner should not assume it can take on the obligation to pay such costs (or require its contractor to pay them), as the question of cost liability for relocations must be determined pursuant to applicable state law. e development of a master agreement is not always fea- sible or appropriate, and the project owner may choose instead to provide template forms of utility agreements for relocations managed by either the contractor or utility owner. Template utility agreement forms oen are based on utility agreements that have been accepted by utility owners, but the contracts that utilize them typically provide that the forms are not contract documents that can be relied on by the contractor. e TxDOT Grand Parkway Segments F1, F2, and G contract is an example that references the standard utility forms utilized by TxDOT and includes them as attachments to the contract’s Technical Provisions section. (See Excerpt 20.) (1) Size and complexity. In general, the larger and more complex the transportation project, the more potential there will be for utility conicts. is is particularly the case for browneld projects and projects that impact existing trac. For these types of projects, owners may consider alternative project delivery methods. (2) Project delivery method. For traditional DBB trans- portation projects, the owner of the project typically takes the responsibility for the utility relocations needed for the project ROW based on the owner’s design. is approach signicantly reduces the risk for the contractor relating to the utility reloca- tions but does not allow for potential changes to project design that could reduce utility conicts, which would be available under an alternative project delivery approach. Alternative project delivery methods, such as CM/GC, DB, and P3, provide

NCHRP LRD 86 31 (3) Legislation. Some of the common requirements of man- aging utility risks include: Standards, 23 U.S.C. § 109(l) (2021), which addresses the accommodation of utilities on the ROW of federal-aid highways; Relocation of Utility Facilities, 23 U.S.C. § 123 (2021), which addresses reimbursement for the relocation of utility facilities necessitated by the construction of a project on any federal-aid highway; Utility Relocations, Adjustments, and Reimbursement, 23 C.F.R. pt. 645 subpt A (2021); and Ac- commodation of Utilities, 23 C.F.R. subpt B, (2021). States laws also address utility relocations.87 (4) Summary recommendations. Regardless of the project delivery method, it is essential for the owner to perform SUE studies in the proposed project ROW prior to the procurement to identify any underground utilities and minimize risks to the project for “unknown” utilities that could increase costs or delay the project. Alternative project delivery oers more opportuni- ties for the contractor to get involved in reducing the risks asso- ciated with utility relocations. For CM/GC projects, the owner may consider requiring the construction contractor to perform utility investigation services during the preconstruction/design phase to ensure the contractor is incentivized to identify poten- tial utility conicts that the owner can include in its design. For P3 and DB projects, the owner may consider allowing propos- ers to identify the types of data and locations for investigations early in the procurement and to submit ATCs that could reduce the need for some utility relocations that otherwise would be required by the owner’s schematic design. To address the risks of utility owner delays and failure to cooperate, the owner may consider entering into master agreements with utility owners, particularly for utilities that may require long lead time. Where master agreements aren’t feasible and the developer or design- builder is responsible for utility relocations, the owner may provide template forms of utility agreements for utility reloca- tions. e owner also should consider including provisions in the contract that provide the developer or design-builder with 87 See, e.g., Cost sharing for Water Supply Enhancement, Tex. Transp. Code Ann. §. 203, subch. E. (2021). more opportunity for the owner to resolve utility conicts ear- lier in the project development process. Under a CM/GC method, the owner may require the con- struction contractor to perform utility investigation services during the preconstruction/design phase, before a construction price is established. e owner can then incorporate the infor- mation discovered in its design. e fact that the contractor that will be responsible for constructing the facility is also respon- sible for utility investigation reduces the potential for utility conict delay claims. For DB projects, the contractor is responsible for design and construction of the project and will integrate all information concerning utilities whether provided by the owner or other- wise known to the contractor into its design. Because the con- tractor will be responsible for both designing and constructing the project, the contractor will be incentivized to design around potential utility conicts, beneting the contractor, the owner, and project. Moreover, if allowed, proposers may submit ATCs regarding utility relocations that could benet the project. For the Hastings Bridge DB project, MnDOT accepted ATCs from the successful contractor that changed the foundation design and included a plan for transferring utility services from the existing service provider to a new service provider. is reduced the construction schedule. For P3 projects, the contractor is responsible for design and construction, as well as providing nancing for the project. In many cases, the contractor also will be responsible for operating and maintaining the facility for an extended term. As the pri- vate contractor will be responsible for all aspects of the project, the contractor will be in control of all utility coordination and may be able to utilize mechanisms that are not available to the owner, such as reimbursing the utility for completing its reloca- tion work. is option is not available to public agencies, whose ability to reimburse utilities is governed by statute. Moreover, as part of its nancial analysis in determining whether to pursue a project, the private contractor and its lenders will perform a utility risk analysis, which will provide input and guidance on the contractor’s utility strategy throughout the design and con- struction of the project. Excerpt 20 – Utilities Grand Parkway Segments F1, F2, and G Project, TxDOT As described in Section 6.1.3 of the Technical Provisions, Developer is responsible for preparing and entering into Utility Agreements with the Utility Owners, and TxDOT agrees to cooperate as reasonably requested by Developer in pursuing Utility Agreements, including attendance at negotiation sessions and review of Utility Agreements. TxDOT is not providing any assurances to Developer that the Utility Owners will accept, without modification, the standard Utility Agreement forms specified in Section 6.1.3 of the Technical Provisions. Developer is solely responsible for the terms and conditions of all PUAAs and UAAAs into which it enters (subject to the requirements of the Contract Documents, including Section 6.1.4 of the Technical Provisions). Utility Agreements entered into by Developer shall not be considered Contract Documents. Developer shall not be entitled to any increase in the Price or to any time extension on account of the terms of any Utility Agreement (including those related to any Betterment).”

32 NCHRP LRD 86 level of risk relating to railroad coordination for a transporta- tion mega project, and it may be advisable for the project owner to share responsibility for obtaining necessary approvals, due to the importance of maintaining good relations with the railroad operators for current and future projects. (1) Size and complexity. In general, the larger a transpor- tation project is, the greater the chance that the project will in- clude conicts with railroad operations in some manner. More complex projects that include elevated or depressed structures that cross over or under railroad tracks may require a more extensive level of coordination and approval than would be required for highway projects running parallel to railroad ROW.91 (2) Project delivery method. For transportation projects that cross railroad ROW or otherwise require coordination with a railroad operator, the contracts will need to address the rights and obligations of the project owner and the contractor with respect to use of the railroad ROW and railroad coordi- nation. Depending on the project, railroad-related risks may be signicant, and contractors oen feel that the owner is in a better position to negotiate railroad agreements with the rail- roads. e owner may wish to coordinate with the railroad to maintain control over how relationships with the railroad are managed. As a result, the project owner will typically enter into an agreement with the railroad that sets forth the parties’ re- spective obligations and require the contractor to comply with the requirements of the executed railroad agreement. If the rail- road agreement is not executed prior to award of the DB or P3 contract, it may be prudent to include the dra railroad agree- ment in the RFP package and then provide schedule and/or cost relief to the contractor if the nal railroad agreement includes material changes from the requirements described in the dra agreement. is was the approach taken by the RCTC in the Route 91 Corridor Improvement Project DB contract. (See rel- evant contract provisions set forth in Excerpt 21.) Many alternative delivery contracts provide relief for delays to the contractor’s critical path resulting from obtaining the nal railroad agreement or otherwise. e Tappan Zee Hudson River Crossing DB Project agreement provides that delays caused by third parties, including railroads, that could not have been rea- sonably anticipated by the contractor constitute an excusable delay, for which the design-builder would be entitled to sched- ule relief. (See Excerpt 22.) Other projects may include a risk sharing mechanism for railroad-caused delays. e contract could provide for a one- day extension for each two days of delay attributable to a delay by a railroad in performing its obligations under a railroad agreement. 91 Note that some transit projects conduct operations within shared ROW and sometimes share trackage. Such projects require extensive coordination with the railroads and are subject to various regulatory requirements to ensure safety. some form of risk sharing mechanism where utility owner de- lays cannot be avoided. c. Railroad Agreements Transportation mega projects oen cross over or run under or parallel to railroad ROW, necessitating agreements with rail- road owners and coordination of construction and operation activities. Contractors must obtain railroad approval of any de- sign and construction activities that are within or adjacent to railroad ROW or that impact railroad operational activities and must comply with all railroad requirements, including federal and state safety requirements. As commercial general liability insurance normally excludes work within 50 feet of railroad property or railroad ROW, it is necessary for the contractor to either obtain an endorsement to the policy to remove the ex- clusion or to obtain separate railroad protective liability insur- ance to cover the risk. Because railroads are third parties with no direct interest in the project, in most cases the sponsoring agency does not have signicant leverage in negotiating with the railroads, and the need to obtain approvals, therefore, has the potential to result in increased costs and delay during project development and construction. To mitigate these potential delays and increased costs, it is essential for the owner to iden- tify any railroad conicts and begin coordinating with the rail- road in the project planning stages. States also regulate railroad operations. In California, the California Public Utilities Com- mission (CPUC) has jurisdiction over grade crossing safety and as a result, CPUC approvals are required for projects that in- clude railroad crossings.88 TxDOT’s website discusses construc- tion and maintenance (C&M) agreement requirements with railroad companies,89 and provides the documents required for the development of C&M agreements with various railroad companies. e C&M agreement provides TxDOT with per- mission to perform work within railroad ROW. e contractor will also need to enter into a separate contractor right-of-entry agreement with the railroad company to give the contractor ac- cess rights within the railroad ROW.90 While coordination with railroads is required where any el- ement of a transportation project touches railroad ROW, each aected railroad may handle coordination dierently. While one railroad operator may be willing to enter into a railroad agreement based on limited (e.g., 30 percent) design, others may require nal design to be completed before executing an agreement. e need to obtain future approvals can impact the 88 For information about the CPUC requirements, see CPUC Rail Crossings and Engineering Branch, Section 190 Grade Separation Pro- gram, July 2021, https://www.cpuc.ca.gov/-/media/cpuc-website/ divisions/rail-safety-division/rceb/190gradesepoverview-070121.pdf and Caltrans, Railroad/Highway At-Grade Crossings – Section 130 Guidelines, https://dot.ca.gov/programs/rail-and-mass-transportation/ railroad-highway-at-grade-crossings-section-130-guidelines. 89 A C&M agreement is an agreement between a project owner and a railroad that “provides the owner license and permission to perform work within railroad right-of-way.” TxDOT, Construction and Maintenance Agreement Requirements (2021), https://www.txdot.gov/ inside-txdot/division/rail/agreements.html. 90 Id.

NCHRP LRD 86 33 Excerpt 21 – Railroad Agreement Route 91 Corridor Improvement Project, RCTC 6.1.7 Railroad Agreements 6.1.7.1 Design-Builder shall comply with the requirements contained in the BNSF [Burlington Northern Santa Fe Railway Company] Construction & Maintenance Agreements to be entered into by and among BNSF, RCTC, and Caltrans that apply to Work hereunder, including the obligation to enter into the “Agreement Between BNSF Railway Company and the Contractor” attached to said agreement as Exhibit C-1 and the obligation to comply with the “Contractor Requirements” provisions attached to said agreement as Exhibit C. Design- Builder further agrees, at its sole cost, to pay, at RCTC’s option, BNSF or RCTC, for BNSF’s expenses relating to Work hereunder that the BNSF Construction & Maintenance Agreements state are payable by RCTC, within the time specified in the BNSF Construction & Maintenance Agreements, including all costs associated with BNSF flaggers. Notwithstanding anything to the contrary contained in the BNSF Construction & Maintenance Agreements, Design-Builder shall be responsible for maintenance of the structures described therein until it is relieved of maintenance liability in accordance with Section 10.2.2. The costs of all such compliance and payments required under the BNSF Construction & Maintenance Agreements are included in the Contract Price. 6.1.7.2 RCTC shall deliver the final BNSF Construction & Maintenance Agreements to Design-Builder upon execution. Subject to the provisions of Section 13, any changes in the scope of the Work to be performed by Design-Builder as a result of material modifications contained in the final BNSF Construction & Maintenance Agreements from the requirements of TP Section 8 and TP Attachment 8- 1 that (a) have a material adverse impact on Design-Builder’s obligations hereunder, and (b) were not caused by modifications to the Project Schematics that were initiated by Design-Builder or result from the design solutions furnished by or construction means, methods and techniques employed by Design-Builder, shall be treated as an RCTC- Directed Change. Excerpt 22 – Railroad Agreement Tappan Zee Hudson River Crossing Project, NYDOT and New York State ruway Authority DB 108-6 Extensions of Contract Time … If the Authority’s Project Manager finds that a delay in the critical path has occurred that is directly attributable to any of the following events, the Authority’s Project Manager may extend the Contract Time in such amount as the conditions justify, provided such event and the delay resulting from the event are beyond the control, and without the fault, of the Design-Builder: A) Authority-Caused Delays; B) Delays caused by third parties (including railroads but excluding utility owners) present on the Site or of other contractors or personnel employed by the Authority on the Site, excluding any delays that could reasonably be anticipated from the Contract Documents or that are ordinarily encountered or generally recognized as inherent in the Work; C) Delays due to the act, or failure to act, of any public or governmental body or railroad, transportation company or corporation (excluding utility owners), including delay in issuance of approvals or permits, or imposition of unanticipated restrictions in such approvals or permits, but excluding any such delay that is attributable to the Design-Builder’s ATCs or its means and methods of construction, and excluding any such delay arising from or related to any violation of a permit condition by the Design-Builder or its Subcontractors;