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Advance Construction

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​The N.C. Department of Transportation has utilized the federal Advance Construction technique for over 30 years. All states take advantage of this process in order to leverage federal revenue in the most efficient and effective way. 

Advance Construction can be complicated to understand. For a primer, people may view these documents and an FAQ found at the bottom of this page:

An Example​

If a construction project is estimated to be $40 million over three years, NCDOT may opt to use Advance Construction with the Federal Highway Administration (FHWA). As cost is expended on the project, the department can convert the cost and bill FHWA throughout the life cycle of the project. In the first year, the project cost may be $8 million. NCDOT will monitor the project and convert it to a billable federal source at the appropriate time as cost increases on the project. NCDOT maximizes its billing authority to the amount allowed by FHWA every year. 

In 2021, NCDOT established best practices guidelines for Advance Construction utilization. This analysis examines NCDOT’s utilization of Advance Construction for non-GARVEE projects using those guidelines.

Advance Construction Guidelines for Non-GARVEE projects:

  • Amount of unreimbursed state funds (by funding source) should not exceed one year of anticipated federal apportionments; and
  • Advance Construction balance (by funding source) should not exceed four years of anticipated federal apportionments.

These guidelines will provide a framework that allows for the continued use of Advance Construction while limiting the amount of state funds used on federal projects. ​

When the new policy is applied to federally funded projects, NCDOT anticipates the use of Advance Construction in both fiscal years 2022 and 2023 will remain within the appropriate parameters for all categories.

Comparison of Advance Construction Amounts to Allowables for FY24 & FY ​25

​Funding source
​Projected AC amount at end of FY 2024
​Allowable AC amount for FY 2024*
​​​Within prescribed limit?​​
Projected AC amount at end of FY 2025

Allowable AC amount for FY 2025*

​Within prescribed limit?​

​National Highway Performance Program (NHPP)
​$1,608 million 
$2,680 million ​

​Yes

$1,443 million

​$2,686 million
​​Yes
​Surface Transportation Block Grant (STBG)
$839 million 

​$1,524 million
​Yes
$1,229 million
​$1,524 million​
​Yes
​Highway Safety Improvement Program (HSIP)​
$201 million

​$328 million 
​Yes

$189 million

​$328 million
​Yes​

* Allowable AC amount is 4 times the annual apportionment

​Analysis of unreimbursed AC balances as of Sept. 30, 2023

NCDOT conducted an analysis of projects that are utilizing AC to determine how much has yet to be reimbursed to NCDOT. Based on that analysis, NCDOT is operating within the policy guidelines. This analysis is completed periodically throughout the fiscal year and updated accordingly. 

​Benefits of Utilizing Advance Construction:

Below are highlights of the benefits; more details of the advantages​ are available. ​
  • Accelerates project delivery – projects can begin when they are ready and do not have to wait for the accrual of federal dollars.
  • Reduces cost – Construction cost inflation rises faster than the return of investing idle cash.
  • Provides flexibility to substitute projects. If one project is not ready for construction when it was planned to be, NCDOT instead can begin a similar project.
  • Stabilizes construction contract award schedule. The private sector can maintain its businesses knowing that contracts will be awarded during the year. If NCDOT must wait for federal dollars to accrue before starting, NCDOT would award fewer contracts and at fewer times during the year.​​​​​
  • Allows for the use of federally approved bond issue projects. States can finance federally approved highway or bridge projects with bond issues that may be repaid with their federal highway funds. Such state debt issuances are referred to as Grant Anticipation Revenue Vehicle (GARVEE) bonds. Advance Construction allows the federal funds to be obligated each year to pay for annual debt service.

Frequently Asked Questions​​

Expand All
Collapse All
  • How does Advance Construction work?
  • What’s the alternative to Advance Construction?
  • How does Advance Construction save money?
  • What would happen if federal funds never came?
  • How can NCDOT ensure it is appropriately utilizing Advance Construction?
  • How does Advance Construction affect NCDOT’s federal obligation authority?

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Last updated Jan. 5, 2024