Minnesota Department of Transportation

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Contract Changes

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Encumbrances

To request an encumbrance fill out the following Request for Encumbrance form (xls) and submit to the appropriate contract changes specialist (John-North, Bob-Central, Eric-South).

Procedures, rules, and guidance

Fund Encumbrances

Fund encumbrance is a legal process governed by State laws to ensure money has been designated or set aside to pay the Contractor.

In addition to the original encumbrance, encumber additional funds under the following conditions:

1.  Contract Changes
OCIC will encumber funds at the time the Change Order Level 2 is approved in the Central Office. Ensure the proper distribution of funds by project and category on the Change Order and in subsequent requests for funds to cover over-runs on the Change Order.

2.  Anticipated Overrun in Contract Items
Review all pay items in the Contract and Change Orders for over-runs and under-runs when the certified value of work completed on a partial estimate is equal to 80 percent of the total encumbrance to date. Estimate the final amount of each pay item. If the estimate indicates that the amount encumbered is inadequate to make final payment to the Contractor, submit a request for encumbrance to OCIC sufficient to meet the estimated value of the final payment for each project/category.

List the amount needed by project/category in the request for encumbrance. One encumbrance request may have multiple projects/categories needing funds. Include explanations for encumbrance requests equal to or greater than $100,000. Explanations can include particular Change Order Level 1s as well as the items that are overrunning that are contributing to the need for the encumbrance. Submit as many requests for encumbrance as are needed.

An estimate cannot be processed if the amount on the estimate exceeds the amount encumbered to date. This applies at the project/category level; insufficient funds in a project/category will halt the payment process.

Fund De-encumbrances

When the Contract work is completed, review the final quantities and determine the amount of excess encumbered funds, if any. When the final estimate is received from the Contractor, or the 90-day clock has expired, whichever comes first, request a de-encumbrance of excess funds.

To request an De-encumbrance fill out the following Request for De-Encumbrance form (xls) and submit to the appropriate contract changes specialist (John-North, Bob-Central, Eric-South).