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APPENDIX B Definitions Acquisition: The act or process of acquiring fee title or some interest therein other than fee title of real property (real estate). Allowance: An amount included in an estimate for items that are known (expected) but the details of which have not yet been determined. Appraisal: A written statement independently and impartially prepared by a qualified appraiser setting forth an opinion of defined value of an adequately described property as of a specific date, supported by the presentation and analysis of relevant market information. Base Estimate: The most likely project estimate, exclusive of Project Contingency, for known costs for all known design, engineering, cooperative agreements, right-of-way, environmental, utilities, preconstruction, and construction work. Baseline Cost Estimate: The most likely Total Cost Estimate, which serves as the approved proj- ect budget and the basis for Cost Control. The approved budget must correspond to an approved scope of work and work plan. Condemnation: The legal process of acquiring private property for public use or purpose through the acquiring agency's power of eminent domain. Condemnation is usually not used until all attempts to reach a mutually satisfactory agreement through negotiations have failed. An acquiring agency then goes to court to acquire the needed property. Contingency: An estimate of costs associated with identified uncertainties and risks, the sum of which is added to the Base Estimate to complete the Project Cost Estimate. Contingency is expected to be expended during the project development and construction process. Cost Control: The process of controlling deviations from the estimated project costs and mon- itoring the risks and contingencies associated with changes. Two principles apply: (1) there must be a basis for comparison (e.g., the Baseline Cost Estimate); and (2) only future costs can be controlled. Cost Estimate: A prediction of quantities, cost, and/or price of resources required by the Scope of a project. As a prediction, an estimate must address risks and uncertainties. The cost estimate consists of the Base Estimate for known costs associated with identified uncertainties and risks. Cost Estimating: The predictive processes for approximating all project costs such as design, engineering, cooperative agreements, right-of-way, environmental, utilities, preconstruction, and construction work. As a predictive process, estimating must address risks and uncertainties. Project cost estimating generally involves the following steps: determine Estimate Basis, prepare Base Estimate, determine Risk and set Contingency, and review total estimate. B-1
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B-2 Procedures Guide for Right-of-Way Cost Estimation and Cost Management Cost Management: The process for managing the cost estimate through reviews and approvals, communicating estimates, monitoring of scope and project conditions, evaluating the effect of changes, and making estimate adjustments as appropriate. Damages: A loss in value of the remaining property caused by the acquisition, planned use, or construction. Normally, the value of the damage is based on the before-and-after appraisal or cost to cure. An owner is entitled to payment of damages and receives this payment as a part of just compensation. Easement: In general, an easement is the right of one person to use all or part of the property of another person for some specific purpose. Easements can be permanent or temporary (i.e., lim- ited to a stated period of time). Eminent Domain: The right of a government to take private property for public use. In the United States, just compensation must be paid for private property acquired for federally funded programs or projects. Estimate Basis: A documentation of the project type and scope for each Cost Estimate, includ- ing items such as drawings that are available (defining percent engineering and design comple- tion), project design parameters, project complexity, unique project location characteristics, and disciplines required to prepare the cost estimate. Fair Market Value: Fair market value is the market value that has been adjusted to reflect con- stitutional and other legal requirements for public acquisition. Forecasted Cost: The sum of actual expenditures through a given time period plus the estimate cost to complete the activity to 100 percent expended. Highest and Best Use: The legal use (or development or redevelopment) of a property that makes the property most valuable to a buyer or the market. Just Compensation: The price an agency must pay to acquire real property. The price offered by the agency is considered to be fair and equitable to both the property owner and the public. The agency's offer to the owner is just compensation and may not be less than the amount established in the approved appraisal report as the fair market value for the property. If it becomes neces- sary for the acquiring agency to use the condemnation process, the amount paid through the court will be just compensation for the acquisition of the property. Market Value: The sale price that a willing and informed seller and willing and informed buyer agree to for a particular property. Negotiation: The process used by acquiring agencies to reach amicable agreements with prop- erty owners for the acquisition of needed property. An offer is made for the purchase of prop- erty in person or by mail, and the offer is discussed with the property owner. Parcel: Any plot of land. For the purposes of this report, "parcel" generally refers to the part being acquired, but it may also be used in association with original or remainder parcels. Partial Taking: Acquisition in which the original property is severed to form two parcels, leav- ing a "remainder." Damages are most often associated with partial takings, which may require the removal of access, parking, buildings, or other improvements. Project Management: Coordinating the organizing, planning, scheduling, directing, control- ling, monitoring and evaluating of prescribed activities to ensure that the stated objectives of a project are achieved. Qualitative Risk Analysis: Performing a qualitative analysis of risks and conditions to prioritize their effects on project objectives. It involves assessing the probability and impact of project
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Appendix B B-3 risk(s) and using methods such as the probability and impact matrix to classify risks into cate- gories of high, moderate, and low for prioritized risk response planning. Quantitative Risk Analysis: Measuring the probability and consequences of risks and estimat- ing their implications for project objectives. Risks are characterized by probability distributions of possible outcomes. This process uses quantitative techniques such as simulation and decision tree analysis. Rehabilitation: The act or process of returning a property to a state of utility through repair or alteration that makes possible an efficient contemporary use while preserving those portions or features of the property that are significant to the property's historical, architectural, and cultural values. Restoration: The act or process of accurately recovering the form and details of a property and its setting as it appeared at a particular period of time by means of the removal of later work or by the replacement of missing earlier work. Right of Way: A linear corridor of land used for transportation or other facilities, such as high- ways, roads, streets, railroads, trails, light rail, and utilities. Risk: An uncertain event or condition that, if it occurs, has a negative or positive effect on a proj- ect's objectives. Risk Assessment: A component of risk management that bridges risk identification and risk analysis in support of risk allocation. Risk assessment involves the quantitative or qualitative analysis that assesses effect and probability of a risk. Risk Identification: Determining which risks might affect the project and documenting their characteristics. Tools used include brainstorming and checklists. Risk Management: All of the steps (phases) associated with managing risks: Risk Identification, Risk Assessment, Risk Analysis (Qualitative or Quantitative), Risk Planning, Risk Allocation, and Risk Monitoring Control. Risk Management Plan: A document detailing how risk response options and the overall risk processes will be carried out during the project. This is the output of Risk Planning. Risk Monitoring and Control: The capture, analysis, and reporting of project performance, usu- ally as compared with the risk management plan. Risk Planning: Analyzing risk response options (i.e., Acceptance, Avoidance, Mitigation, or Transference) and deciding how to approach and plan risk management activities for a project. Risk Register: A document detailing all identified risks, including description, cause, probabil- ity of occurring, effects on objectives, proposed responses, owners, and current status. Scope: Encompasses the elements, characteristics, and parameters of a project and work that must be done to deliver a product with the specified requirements, features, and functions. Scope Changes: Changes in the requirements, features, or functions on which the design or esti- mate is based. Examples would include changes to project limits, work types, or changes to capacity factors such as traffic loads, vehicles per lane, or stormwater factors. Scope Creep: An accumulation of Scope Changes that incrementally change project scope and cost. Total Cost Estimate: The sum of the Base Cost Estimate and Contingency. Whole Taking: An acquisition that involves the taking of the original parcel in its entirety.