United states department of agriculture

Rural Utilities Service

# BULLETIN 1780-3

**SUBJECT: [Preliminary Engineering Report -- Wastewater
Facilities]{.underline}**

**TO:** Rural Development State Directors, RUS Program Directors, State
Engineers

**EFFECTIVE DATE:** Date of approval.

**OFFICE OF PRIMARY INTEREST:** Environmental and Engineering Staff,
Water and Environmental Programs.

**INSTRUCTIONS:** This bulletin replaces previous RUS Bulletin 1780-3,
Preliminary Engineering Report -- Sewerage Systems.

**AVAILABILITY:** This bulletin is available on the Rural Utilities
Services' website at www.usda.gov/rus/water.

**PURPOSE:** This Bulletin provides applicants and their consultants
with instructions on how to prepare a Preliminary Engineering Report for
a wastewater system application.

![](media/image1.png){width="3.329861111111111in" height="1.39375in"}

*October 2, 2003*

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Gary J. Morgan Date

Assistant Administrator

Water and Environmental Programs

# TABLE OF CONTENTS

1.  GENERAL 3

2.  PROJECT PLANNING AREA 3

3.  EXISTING FACILITIES 4

4.  NEED FOR PROJECT 4

5.  ALTERNATIVES CONSIDERED 4

6.  SELECTION OF AN ALTERNATIVE 5

7.  PROPOSED PROJECT (RECOMMENDED ALTERNATIVE) 6

8.  CONCLUSIONS AND RECOMMENDATIONS 7

INDEX:

Application Document

Preliminary Engineering Report

Project Planning

Wastewater Facility

# ABBREVIATIONS

O&M -- Operations and Maintenance

PER -- Preliminary Engineering Report

RUS -- Rural Utilities Service

1.  GENERAL

A Preliminary Engineering Report (PER) should clearly describe the
owner's present situation, analyze alternatives, and propose a specific
course of action from an engineering perspective. The level of effort
required to prepare the report and the depth of analysis within the
report are proportional to the size and complexity of the proposed
project. Rural Utilities Service (RUS) projects must be modest in
design, size and cost, and be constructed and operated in an
environmentally responsible manner. Pursuant to\
7 CFR Part 1794, guidance in RUS Bulletin 1794A-602, "Guide for
Preparing the Environmental Report for Water and Waste Projects", and
the Agency's environmental State Supplement, the applicant shall perform
the environmental review concurrently with the project engineering
planning. This document must indicate that environmental issues were
considered as part of the engineering planning. Information provided in
the PER will be used to process the funding request, therefore
completeness and accuracy are essential for timely processing of the
application. Other outlines may be utilized, but the essential
information must be readily identifiable. Contact the Rural Development
office for further guidance. The following should be used as a guide for
the preparation of PERs for RUS financed wastewater systems.

2.  PROJECT PLANNING AREA

Describe the area under consideration. The project planning area may be
larger than the service area determined to be economically feasible.
Service may be provided by a combination of central, cluster, or
individual facilities. The description should include information on the
following:

a [Location]{.underline}. Maps, photographs, and sketches. These
materials should indicate legal and natural boundaries, major obstacles,
elevations, etc.

b [Environmental Resources Present]{.underline}. Maps, photographs,
studies and narrative. This section should provide information on the
location and significance of important land resources (farmland,
rangeland, forestland, wetlands and 100/500 year floodplains, including
stream crossings), historic sites, endangered species/critical habitats,
etc., that were identified in the applicant's environmental information
(normally an Environmental Report) and that must be considered in
project planning. A narrative summary with reference to the applicant's
environmental submittal is adequate.

c [Growth Areas and Population Trends]{.underline}. Specific areas of
concentrated growth should be identified. Population projections for the
project planning area and concentrated growth areas should be provided
for the project design period (typically 20-years). These projections
should be based on historical records with justification from recognized
sources.

3 EXISTING FACILITIES

Describe the existing facilities including at least the following
information:

a [Location Map]{.underline}. Provide a schematic layout and general
service area map (may be identified on project planning area maps).

b [History]{.underline}. Provide a brief description of when major
system components were constructed or renovated.

c [Condition of Facilities]{.underline}. Describe present condition;
suitability for continued use; adequacy of current facilities; and, if
any existing central facilities, the treatment, storage, and disposal
capabilities. Note the quantity of inflow and infiltration/exfiltration
associated with the existing collection system. Also, describe
compliance with Clean Water Act and applicable State requirements.

d [Financial Status of any Existing Facilities]{.underline}. (Note:
Owner will be submitting most recent audit or financial statement as
part of the application package.) Provide information regarding current
rate schedules, annual operations and maintenance (O&M) cost, other
capital improvement programs, and tabulation of users by monthly usage
categories for the most recent typical fiscal year. Give status of
existing debts and required reserve accounts.

4 NEED FOR PROJECT

Describe the needs in the following order of priority:

a [Health, Sanitation, and Security]{.underline}. Describe concerns and
include relevant regulations and correspondence from/to Federal, and
State regulatory agencies.

b [System O&M]{.underline}. Describe the concerns and indicate those
with the greatest impact. Investigate infiltration and inflow,
management adequacy, inefficient designs, and problem elimination prior
to adding additional capacity.

c [Growth]{.underline}. Describe the reasonable growth capacity that is
necessary to meet needs during the planning period. Facilities proposed
to be constructed to meet future growth needs should generally be
supported by additional revenues. Consideration should be given to
designing for phased capacity increases. Provide number of new customers
committed to this project.

5 ALTERNATIVES CONSIDERED

This section should contain a description of the reasonable alternatives
that were considered in planning a solution to meet the identified need.
Documentation of alternatives considered is often a PER weakness. The
following alternatives should be considered, if practicable: building
new centralized facilities, optimizing the current facilities (no
construction), interconnecting with other existing systems, and
developing centrally managed small cluster or individual facilities.
These alternatives should be consistent with those considered in the
environmental review. Mitigation measures necessary to avoid or minimize
any adverse environmental effects must be integrated into project
design. The description should include the following information on each
alternative:

a [Description]{.underline}. Describe the facilities associated with the
alternative. Describe all feasible wastewater treatment technologies and
provide comparison of such. Also, describe collection facilities. A
feasible system may include a combination of centralized and
decentralized (on-site or cluster) units.

b [Design Criteria]{.underline}. State the design parameters used for
evaluation purposes. These parameters must comply with RUS design
policies (7 CFR 1780.57) and state regulatory requirements.

c [Map]{.underline}. Schematic layout.

d [Environmental Impacts]{.underline}. Do not duplicate the information
in the applicant\'s submittal of environmental information. Describe
only those unique direct and indirect impacts on floodplains, wetlands,
other important land resources, endangered species, historical and
archaeological properties, etc., as they relate to a specific
alternative. RUS must conduct an environmental assessment prior to
project approval.

e [Land Requirements]{.underline}. Identify sites and easements
required. Further specify whether these properties are currently owned,
to be acquired, or leased.

f [Construction Problems]{.underline}. Discuss concerns such as
subsurface rock, high water table, limited access, or other conditions
which may affect cost of construction or operation of facility.

g [Cost Estimates]{.underline}. Provide cost estimates for each
alternative, including a breakdown of the following costs:

\(1\) Construction.

\(2\) Non‑Construction.

\(3\) Annual Operations and Maintenance.

h [Advantages/Disadvantages]{.underline}. Describe how the specific
alternative meets the owner\'s needs with respect to financial,
managerial, and operational resources. Explain how the proposal complies
with regulatory requirements and existing comprehensive area-wide
development plans. Explain how the proposal satisfies public and
environmental concerns.

6 SELECTION OF AN ALTERNATIVE

> a Present Worth (life cycle) cost analysis (an engineering economics
> technique to evaluate present and future costs for comparison of
> alternatives) should be completed to compare the feasible
> alternatives. All of the items from the cost estimate should be
> included in the analysis. The "real" federal discount rate from
> Appendix C of OMB Circular A-94 should be used for determining the
> present worth of the uniform series of O & M values (in today's
> dollars) and the salvage value. This rate may be found at:
> [www.whitehouse.gov/omb/circulars/a094/a94_appx-c.html](http://www.whitehouse.gov/omb/circulars/a094/a94_appx-c.html)
>
> b A matrix rating system could be useful in displaying the information
> on each alternative.
>
> c Note that if the range of present worth values is small, then
> non-monetary factors should be considered in determining which
> alternative should be selected.

7 PROPOSED PROJECT (RECOMMENDED ALTERNATIVE)

This section should contain a fully developed description of the
proposed project based on the preliminary description under the
evaluation of alternatives. At least the following information should be
included:

a [Project Design]{.underline}.

(1) [Collection System Layout]{.underline}. Identify general location of
    line improvements: lengths, sizes, and key components.

(2) [Pumping Stations]{.underline}. Identify size, type, site location,
    and any special power requirements.

> \(3\) [Treatment]{.underline}. Describe process in detail and identify
> location of any treatment units and site of any discharges.

b [Total Project Cost Estimate]{.underline}. Provide an itemized
estimate of the project cost based on the stated period of construction.
Include development and construction, land and rights, legal,
engineering, interest, equipment, contingencies, refinancing, and other
costs associated with the proposed project. The engineer may rely on the
owner for estimates of cost for items other than construction,
equipment, and engineering. (For projects containing both water and
waste disposal systems, provide a separate cost estimate for each
system.)

c [Annual Operating Budget]{.underline}. Provide itemized annual
operating budget information. The owner has primary responsibility for
the annual operating budget, however, there are other parties that
provide assistance. This information will be used to evaluate the
financial capacity of the system. The engineer will incorporate
information from the owner's accountant and other known technical
service providers.

> \(1\) [Income]{.underline}. Provide a proposed rate schedule. Project
> income realistically for existing and proposed new users separately,
> based on existing user billings, wastewater treatment contracts, and
> other sources of income. In the absence of historic data or other
> reliable information, for budget purposes, base residential wastewater
> generation on 60 gallons per capita per day, or 150 gallons per
> residential-sized connection per day, or 4,500 gallons per
> residential-sized connection per month. Higher per person or per EDU
> flows may be used with adequate justification. When large agricultural
> or commercial users are projected, the report should identify those
> users and include facts to substantiate such projections and evaluate
> the impact of such users on the economic viability of the project.
>
> \(2\) [Operations and Maintenance (O&M) Costs]{.underline}. Project
> costs realistically. Provide actual costs for existing systems and
> projected costs for operating the system as improved. In the absence
> of other reliable data, base on actual costs of other existing
> facilities of similar size and complexity. Include facts in the report
> to substantiate operation and maintenance cost estimates. Include
> salaries, benefits, water purchase, taxes, accounting and auditing
> fees, legal fees, interest, utilities, oil and fuel, insurance, annual
> repairs and maintenance, supplies, chemicals, office supplies and
> printing , and miscellaneous.
>
> \(3\) [Debt repayments]{.underline}. Describe existing and proposed
> financing from all sources. All estimates of RUS funding should be
> based on loans, not grants. RUS will evaluate the proposed project for
> the possible inclusion of RUS grant funds.
>
> \(4\) [Reserves]{.underline}. Describe the existing and proposed loan
> obligation reserve requirements for the following:

5.  

-   [Debt Service Reserve]{.underline} - Unless otherwise required by
    State statute the debt service reserve should be established at
    one‑tenth (1/10) of annual debt repayment requirement (amount of
    debt that must be repaid to government in a given fiscal year).

-   [Short-Lived Asset Reserve]{.underline} - Additional reserve amounts
    may be needed to provide for timely replacement of short-lived
    assets. Prepare a schedule of short-lived assets and a recommended
    annual reserve deposit recommended to fund replacement of
    short-lived assets. Examples of short-lived assets include
    pump/motor overhaul or replacement, painting, and small equipment
    replacement. Short-lived assets include those items not included
    under O&M, however, it should not include long-lived assets such as
    pump station or treatment facility replacement that should be funded
    with long-term financing.

8 CONCLUSIONS AND RECOMMENDATIONS

Provide any additional findings and recommendations that should be
considered in development of the project. This may include
recommendations for special studies, highlight the need for special
coordination, a recommended plan of action to expedite project
development, etc.