On Friday I had a pretty good question from one of our clients. They had confirmed their available STP balance with TDOT, and were told how much money had been obligated on the project so far. The question was:
Where do the obligated funds go?
Our client knew that the obligated funds had not gone to the City. Did they go to TDOT? Were they paid to their consultant? Considering how important getting funds on your TDOT Locally managed project are, this deserves a brief explanation.
So I have several blog posts talking about what is required to get funds obligated, I need to clarify what actually happens. The short answer is that obligated funds are moved into an imaginary checking account set up by TDOT and the FHWA. This checking account can only be used for reimbursable project expenses. TDOT can bill against it, but only for the oversight activities of that specific project. Things like plans reviews, or TDOT site inspections.
This imaginary checking account is what the City/County will be paid out of as they send in their reimbursement requests. From a certain perspective, the money does not “go” anywhere. It sits there waiting for the City/County to send in a bill against it.
Remember, funds are obligated for each phase of work, and it’s corresponding Notice to Proceed (NTP). Meaning you can’t send in a bill for ROW work (or do any ROW work!), when you only have a NTP for PE-Final Design. You can’t be paid for any construction activities at all until you have done everything in the process and have been issued a Construction NTP. This includes advertising for the bids on the project.
Hope that clears some of the mystery about how these funds work.