(d) ADMINISTRATIVE OVERHEAD CALCULATION AND APPLICATION
For the purpose of estimating project costs and calculating fees for THE PLAN, the formula used for the Measure I administrative overhead was applied to THE PLAN projects. Currently, all indirect costs for labor, services, supplies, and overhead are paid initially out of the County Road Fund. THE PLAN will reimburse the County Road Fund for THE PLAN’S share of those indirect costs. This is consistent with existing Department policy concerning reimbursement of the County Road Fund from Measure I revenues through direct labor costs attributable to Measure I projects. Applying an overhead administrative reimbursement rate against THE PLAN’S direct labor costs will place an equal burden for indirect overhead costs on revenues generated by THE PLAN and reduce negative impacts to the funding necessary for routine maintenance needs of the County Maintained Road System.
The methodology for calculating the administrative overhead rate was a two-step process. The first step entailed analysis of actual project costs for the period of Fiscal Years 2000/2001 through 2004/2005 to determine the percentage of direct labor costs for similar projects. The type of projects analyzed was limited to capital improvement projects such as new road construction, road widening, pavement rehabilitation, construction of left turn lanes, and traffic signal installation. Roadway resurfacing, routine maintenance such as roadway grading and pothole repair, erosion control, and drainage improvements were excluded. Direct Labor Costs included all engineering, technical, and force account job functions. The analysis determined that 21.1% of the total expenditures on these historical projects can be identified as direct labor costs.
Once the direct labor cost percentage was calculated for each Plan project, the Department of Public Works – Transportation Administrative Overhead Rate was applied to the estimated direct labor cost. This method was discussed with, and approved by, the Auditor/Controller-Recorder's Office prior to the initial calculation of the FY 1992/1993 overhead rate. The "cost driver", or denominator, for the overhead equation is a "Direct Labor Costs" (burdened), taken from the County FAS report, less "Indirect Labor". The "Direct Labor" consists of all engineering, technical, and operations job functions. The "Indirect Labor" consists of all non project-specific, administrative-type functions. Calculations made from this formula and averaged over the prior five fiscal years showed and average rate of 39.8%.
The administrative overhead rate is then applied to total estimated direct labor costs for each project. Graphically, the calculations can be shown as:
Step 1: (Total Estimated Project Cost) * (.211) = Estimated Direct Labor Costs
Step 2: (Estimated Direct Labor Cost) * (.398) = Total Administrative Overhead Costs
The result of the above calculations produces an Administrative Overhead Rate of 8.4%. This rate has then been applied to all major arterial and traffic signal projects identified in THE PLAN.
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Section 7 - FEE CALCULATIONS
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(a) PURPOSE OF THE FEE
The purpose of the fees is to fund the fair-share new development contribution of improvement costs for specific transportation facilities as identified in Appendix 1 – Project Lists and Cost Estimates of THE PLAN. Fees vary between PLAN SUBAREAS due to the unique project lists and growth projections for those unincorporated areas. In all PLAN SUBAREAS, a residential fee is required for each dwelling unit. Non-residential fees are based upon the predominate use of the building or structure as identified in the building permit and calculated on the total square footage of the building or structure.
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(b) METHODOLOGY OF FEE CALCULATIONS
Fees for each PLAN SUBAREA are calculated by dividing the total fair-share of project costs attributable to new development by the total growth in Passenger Car Equivalent (PCE) trip generation (see Section 4 – Growth Forecasts) attributable to new development. This produces a “fee-per-trip” rate which is then multiplied by the trip generation rates associated with residential and non-residential types of development to establish a fee schedule. Adjusted Institute of Transportation Engineers (ITE) trip generation rates are used in the calculations. A step-by-step explanation follows.
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