Airport Improvement Project Cost Comparison & Independent Fee Estimates

Consultant Fee Analysis Project Cost Comparison/Independent Fee Estimate An Informational Guide for Michigan Airport Sponsors Updated: June 6, 2024

Airport Improvement Project Handbook The Airport Improvement Handbook states the following: Price or Cost Analysis is a Mandatory Sponsor Action. Sponsors are required to perform a cost or price analysis for every procurement action that uses AIP funds, including contract modifications. Per FAA policy, this includes all procurement actions including contract modifications that are below the simplified acquisition threshold (provided in Table U-7). The only exception is for micro purchases discussed in Paragraph U-13. AIP HB Reference: Table U-13 AIP Handbook Clarification of 2 CFR 200.323 - Contract Cost and Price; (1), (4) and (5)

Airport Improvement Project Cost Analysis A cost analysis can be performed in one of two ways, and the decision is based on the total project cost: Contracts less than $100,000 A comparative analysis can be done with similar projects either by MDOT or by the airport staff. If completed by a qualified airport staff member, the analysis must be approved by MDOT. Contracts more than $100,000 - A detailed fee/cost analysis is required and typically referred to as an IFE, or independent fee estimate. This is completed by a consultant that is not the same consultant hired by the airport to complete the project. Note: MDOT has a list of approved consultants that perform these IFEs and will share it upon request.

MDOT Cost Comparison Cost Comparisons for Contracts Less Than $100,000 Comparative analysis of similar work at the project airport can be performed by a qualified sponsor employee. Comparative analysis of similar work at another airport will be performed by MDOT. See the sample MDOT Cost Comparison document to the right.

Independent Fee Estimates for Contracts More Than $100,000 Preparation of an Independent Fee Estimate (IFE) can be completed by: A sponsor with staff experienced in estimating professional services. An independent engineering, architecture, or planning consultant retained to prepare an IFE, provided this consultant was not on the pre-selection short-list. The latest list of consultants who have agreed to perform IFEs on Michigan airport projects can be provided upon request. 1. 2. 3.

IFE forContracts More Than $100,000 Important notes for sponsors: To perform an IFE, the sponsor should first obtain a clear scope of professional services from the project consultant. The scope shall not include details about number of hours the project consultant will charge but may contain the rates for different personnel that will be involved to aid the IFE consultant. The IFE is intended to be used as a negotiation tool by the sponsor and shall not be shared with the project consultant. The project consultant and the IFE consultant shall not be in direct contact and shall always work through the sponsor to communicate about the project. The IFE must address direct labor work hours, labor rates, general and administrative overhead, non-salary expenses, and a reasonable profit (11 percent maximum on MDOT Aero contracts). An IFE is an AIP-eligible and reimbursable cost. Sponsors must present IFE reimbursement requests to their Aero project manager at time of project funding for MAC transfer.

Sponsor Negotiations with Project and IFE Consultants When: After developing a detailed scope of services, and after the IFE requirements have been satisfied, the sponsor may enter into negotiations with the project consultant. What: A standard used within the industry by sponsors is to confirm if the total fee proposal, as well as individual tasks within the proposal, are within 10 percent of the IFE. Differences that exceed 10 percent: The sponsor shall review those areas with both project and IFE consultant to determine if there is a misunderstanding of the scope of services or level of effort required to complete the work.

Record of Negotiations If negotiations result in a change of scope and/or a change of fee from the project consultant, or if the IFE changes, the sponsor must provide MDOT with a Record of the Negotiations. The Record of Negotiations should include details such as: Dates of contact with the IFE and/or project consultant Major points of negotiation Details on newly negotiated fees or changes of scope Final negotiated IFE Final negotiated scope and fee

After Negotiations Submit a letter of cost reasonableness along with any supporting documentation, such as a Record of Negotiation to your MDOT project manager. The MDOT Office of Aeronautics retains the right to disallow negotiated fees that are determined to be unreasonable. Reference FAAAC 150/5100-14E and SOP 11.0 for more information. If you have any questions, please reach out to your project manager or the project manager supervisor at MDOT.