Phase: Applied learning · Worked scenarios · Calculations · Audit findings · Document drills
Apply what you've read — scenario by scenario, calculation by calculation
E-76, PED, At-Risk PE, advance construction, toll credits. Each exercise has a hidden solution — work through your answer before revealing.
I
Scenario 01
PE work before authorization — At-Risk PE eligibility
Setup
In March 2026, Newman begins PE work on a federal-aid bike path project. The project was added to the FSTIP via amendment, federally approved on November 10, 2025. The PE phase E-76 is finally authorized on September 1, 2026.
The LPA wants to know whether PE costs incurred between March 2026 and September 1, 2026 can be reimbursed.
Question
Can the LPA invoke Section 1440 At-Risk PE? If so, what is the effective reimbursement date, and what documentation is required?
Solution
Yes — Section 1440 of the FAST Act allows reimbursement of pre-authorization PE costs if the project and phase are in a federally-approved FSTIP and the project is otherwise eligible.
Effective PE Reimbursement Date: The later of (a) October 1, 2015 (FAST Act effective date), or (b) the federal approval date of the FTIP/FSTIP documenting PE phase inclusion. Here: November 10, 2025.
Reimbursable window: November 10, 2025 (FSTIP federal approval) through any time after September 1, 2026 (PE authorization). Costs from March 2026 to September 1, 2026 are eligible.
Required documentation on the LAPM 3-A: original AND current FSTIP listings/amendments showing PE phase inclusion. Include the Effective PE Reimbursement Date (Nov 10, 2025) on all invoices.
Key caveat: This does NOT waive CMSR (Ch 10), DBE goals (Ch 9), Clean Air Act conformity, or federal A&E requirements. And — critically — if this project required a CTC allocation (it does not here, since it's a Lump Sum STBGP project), only costs after CTC allocation would be eligible.
Authority: LAPM Ch 3 §3.3.1 At-Risk PE; FAST Act §1440
Scenario 02
Construction contract advertised before E-76
Setup
The City of Ceres advertises a federal-aid construction project on August 4, 2026. The construction phase E-76 authorization is received on August 20, 2026, after the LPA realizes the timing mistake. The bid opening is scheduled for September 10, 2026.
Question
What is the consequence for federal reimbursement? What are the LPA's options?
Solution
Consequence: LAPM Ch 3 §3.3.5 is explicit: "Projects advertised for a construction contract prior to federal authorization are not eligible for federal reimbursement." The advertisement, not the bid opening or work start, is the structural gate.
Options:
1. Cancel the current advertisement and re-advertise after the E-76 is in hand. The re-advertised contract is a fresh procurement and federal-eligible. Cost: 3-6 weeks of schedule loss plus re-advertisement expense.
2. Proceed with the current advertisement and award the contract with non-federal funds only. Forfeit federal participation on this project.
3. Some practitioners attempt a "deemed re-advertisement" via formal contract revision and re-publication, but this is risky — the original advertisement date governs unless the procurement is clearly restarted.
Most LPAs choose Option 1 — the schedule loss is preferable to forfeiting federal funds. The DLAE can typically help expedite the re-advertisement coordination.
Note: The construction-phase advertisement gate is harsher than PE — there is no At-Risk Construction equivalent of Section 1440 At-Risk PE.
Authority: LAPM Ch 3 §3.3.5
II
Calculation 01
Computing the Project End Date (PED)
Given
Modesto submits an RFA for the PE phase of a federal-aid project on April 1, 2026. The LPA estimates the anticipated advertising date for construction as October 15, 2027.
Find
What PED should be entered on the LAPM 3-A? What is the corresponding final-invoice submission deadline?
Worked solution
Workings
- For PE phase: completion estimate = anticipated advertising date for construction (LAPM Ch 3 §3.3.7).
- Estimated PE completion: October 15, 2027.
- PED = completion estimate + 12 months = October 15, 2028.
- Invoice window: PED + 120 calendar days = October 15, 2028 + 120 days = February 12, 2029.
Answer: PED: October 15, 2028. Final invoice submission deadline: February 12, 2029. After Feb 12, 2029, costs are ineligible for federal reimbursement.
Authority: LAPM Ch 3 §3.3.7
Calculation 02
6-year state budget authority lapse
Given
Federal funds were encumbered for a project on PSA execution in state fiscal year 2024-25. The state fiscal year 2024-25 begins July 1, 2024.
Find
(a) On what date does state budget authority lapse? (b) When must the LPA apply for a Cooperative Work Agreement (CWA) extension if liquidation cannot be completed by then? (c) What is the maximum extended liquidation deadline?
Worked solution
Workings
- LAPM Ch 3 §3.5.2: "Since 2008-09, each annual State Budget Act has provided six years to encumber and liquidate (expend) all state and federal Local Assistance funding. The six-year term begins on July 1 of the appropriation year. State budget authority lapses on June 30, six years after the appropriation period."
- Appropriation period begins: July 1, 2024.
- Initial lapse date: June 30, 2030 (6 years from July 1, 2024).
- CWA application: Fall of the 5th year — Fall 2028 (state fiscal year 2028-29 begins July 1, 2028).
- CWA extends up to 2 years: maximum extended lapse = June 30, 2032 (8 years total).
Answer: (a) June 30, 2030. (b) Fall 2028 (the LPA must apply in the fall of the fifth year of the appropriation period). (c) June 30, 2032, if a full 2-year CWA is granted. After that, any remaining encumbrance lapses and the LPA must finance any remaining work with its own funds.
Authority: LAPM Ch 3 §3.5.2; Cal Gov Code §16304 and §16304.3
Calculation 03
$250K de-allocation trigger
Given
A Caltrans-administered project on SHS, financed with Local Assistance funds, was authorized with $1,400,000 federal share. Updated estimates now show the federal share will be $1,120,000.
Find
Is de-allocation required? Why or why not?
Worked solution
Workings
- LAPM Ch 3 §3.4.1: "If the estimated federal share of project costs has decreased by $250,000 or more, the Caltrans Project Manager must submit Exhibit 3-H... to de-allocate the reimbursement authority to comply with 23 CFR 630.106(a)(4)."
- Decrease: $1,400,000 − $1,120,000 = $280,000.
- $280,000 ≥ $250,000 → de-allocation required.
Answer: Yes — de-allocation is required. The Caltrans Project Manager must submit Exhibit 3-H to de-allocate $280,000 of reimbursement authority. The threshold is $250,000 of decrease, and this $280,000 decrease exceeds it.
Authority: LAPM Ch 3 §3.4.1; 23 CFR 630.106(a)(4)
Calculation 04
Toll credit funding — three-scenario comparison
Given
A $100,000 federal-aid project, legal pro rata rate 88.53% (RSTBGP). All costs are federally participating.
Find
Compute the federal share, local match share, and toll credit required under three funding scenarios:
(a) Traditional pro rata, no toll credit.
(b) 100% federal with toll credit substituting for local match.
(c) The LPA wants to know the maximum toll credit needed for a single fund.
Worked solution
Workings
- (a) Traditional: Federal share = $100,000 × 0.8853 = $88,530. Local match = $100,000 − $88,530 = $11,470. Toll credit = $0.
- (b) 100% federal with toll credit: Federal share = $100,000 (100% federal). Local match = $0. Toll credit needed = $11,470 (equals the non-federal match that would otherwise be required).
- (c) The toll credit amount always equals the would-be non-federal match — $11,470 in this case.
Answer: (a) $88,530 federal / $11,470 local / $0 toll credit. (b) $100,000 federal / $0 local / $11,470 toll credit applied. Toll credits do NOT generate additional federal funds — they substitute for the non-federal match requirement. Annual toll credit availability is OA-limited. Caltrans restricts toll credit use for HBP and HSIP because those programs are fully programmed.
Authority: LAPM Ch 3 §3.10
III
Audit Finding 01
Read the fact pattern — what's the finding?
Facts
Audit reviews an RFA package submitted by Hughson on July 8, 2026. The package includes the LAPM 3-A and supporting documents. The audit identifies that the LPA had not submitted its Exhibit 9-C ADA Annual Certification for FFY 2027 (starting October 1, 2026) prior to submitting the RFA. The Exhibit 9-C deadline was June 30, 2026.
Analysis
What is the finding and the corrective action? Can the RFA proceed?
Finding · Citation · Corrective action
Finding: Non-compliance with LAPM Ch 3 §3.2: "Each LPA must provide the DLAE with a completed Exhibit 9-C: Local Agency ADA Annual Certification Form by June 30 of each year for the following federal fiscal year (October 1 to September 30). The form must be received prior to submitting a Request for Authorization to proceed with a Federal-aid project."
The RFA cannot proceed for the new FFY 2027 until Exhibit 9-C is received.
Corrective action: LPA submits Exhibit 9-C immediately. Once received and accepted by the DLAE, the RFA can be processed (assuming all other elements are complete). The RFA submitted on July 8 will need to wait until the Exhibit 9-C clears.
Also check: Exhibit 9-B DBE Annual Submittal and Exhibit 9-A DBE Implementation Agreement — both have the same June 30 deadline and both must be on file.
Authority: LAPM Ch 3 §3.2
Audit Finding 02
Read the fact pattern — what's the finding?
Facts
A 2026 review finds that an LPA revised the PED on a federal-aid project AFTER the originally authorized PED had already expired. The LPA had incurred reimbursable PE costs continuously through and beyond the original PED. The PED was revised retroactively to extend by 6 months.
Analysis
What is the finding? What is the reimbursement consequence?
Finding · Citation · Corrective action
Finding: Retroactive PED extension violates LAPM Ch 3 §3.3.7: "If the PED is revised after the authorized PED has past, any costs incurred between the expiration of the authorized PED and the revised PED are ineligible for reimbursement."
Reimbursement consequence: All costs incurred between the original PED expiration and the revised PED are ineligible for federal reimbursement. The retroactive extension does not cure the gap.
Lessons:
1. Monitor PED proactively. Use the PED Extension Tool (or LAPM 3-A) BEFORE the PED expires.
2. The 120-day invoicing window after PED is separate — even if work was performed within PED, invoices must be submitted within PED + 120 days.
3. The "Justification" field on the LAPM 3-A or PED Extension Tool can document legitimate reasons (litigation, environmental issues, claims, weather, etc.) but only for forward-looking extensions.
Authority: LAPM Ch 3 §3.3.7
IV
Document Drill 01
LAPM 3-A package — Construction Authorization
Drill
Stanislaus County is submitting an RFA for construction authorization on an HBP bridge replacement project. List the minimum package contents required for a complete Construction Authorization Package.
Model answer
Minimum Construction Authorization Package contents (LAPM Ch 3 §3.3.5):
1. LAPM 3-A: Project Authorization/Adjustment Request — the cover request form, completed with the PED calculated for construction phase (board acceptance estimate + 12 months).
2. Approved NEPA document (CE, FONSI, or ROD).
3. NEPA/CEQA Re-Validation Form (if applicable — required when significant time has elapsed since NEPA approval).
4. Approved Right of Way Certification.
5. Engineer's estimate (may be on LAPM 3-A or attached).
6. Exhibit 12-D: PS&E Checklist.
7. PS&E package (plans, specifications, and estimate).
Prerequisites that must already be on file:
- Master Agreement executed.
- Pre-Award audit cleared (Ch 4 §4.4, Ch 20).
- Exhibits 9-A (DBE Implementation Agreement), 9-B (DBE Annual Submittal), and 9-C (ADA Annual Certification) on file for the current FFY.
Additional requirements for HBP projects:
- If total project cost ≥$100M: Financial Plan (IFP and FPAU). Submitted with construction authorization. ≥$500M Major Projects require CSRA prior to construction authorization (LAPM Ch 2 §2.9).
- If Caltrans source inspection requested: submit/justify request at least 30 days prior to RFA submittal.
Processing time: minimum 3 weeks when complete.
Authority: LAPM Ch 3 §3.3.5
V
Decision Tree 01
Federal funds run out near end of FFY
Setup
In September 2026, an LPA wants to authorize a federal-aid project but FHWA has insufficient Obligation Authority for the remaining FFY 2026.
Decision path
01
What are the LPA's options?
Three paths: (1) Wait until FFY 2027 OA becomes available (October 1, 2026). (2) Request Local Advance Construction (AC) authorization. (3) Look for alternate fund sources.
02
If Advance Construction is selected, what are the requirements?
LPA uses its own funds initially. Eligible programs: CMAQ, RSTBGP, HBP, ER. AC does not constitute a commitment of federal funds. NO PSA is issued at AC authorization. Federal authorization date establishes the start date for federally reimbursable work.
03
When does the project become eligible for federal reimbursement?
When federal funds become available, a follow-up Authorization to Proceed (E-76) must be processed to obligate the federal funds. Only then is reimbursement possible.
04
What is the key risk?
"The LPA must consider the risk that the federal funds may never become available." If the federal program is suspended, funding category changes, or OA continues to be insufficient, the LPA could be left financing the entire project. Also: tapered match cannot be used with Advance Construction.
Authority: LAPM Ch 3 §3.7
Applied learning · Companion chapter
These exercises apply the procedural framework presented in LAPM Chapter 03: Project Authorization. For the full chapter reference, glossary, and recall quiz, see the deep chapter file.