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4. If PROJECT is not on STATE-owned right of way, PROJECT shall be designed and constructed in accordance with Chapter 1000, Bikeway Planning and Design of the Highway Design Manual that describes minimum statewide design standards for bikeways and roads where bicycle travel is pemutted and the California Manual on Uniform Traffic Control Devices that describes the uniform standazds and specifications for all official traffic control devices. 5. If PROJECT involves work within or partially within STATE-owned right of way, that PROJECT shall also be subject to compliance with the policies, procedures and standazds of the STATE Project Development Procedures Manual, Highway Design Manual, and California Manual on Uniform Traffic Control Devices and where appropriate, an executed cooperative agreement between STATE and LOCAL AGENCY that outlines the PROJECT responsibilities and respective obligations of the PARTIES. LOCAL AGENCY and its contractors shall each obtain an encroachment permit through STATE prior to commencing any work within STATE right of way or work which affects STATE facilities. ARTICLE III -Engineering 1. LOCAL AGENCY eligible costs for preliminary engineering work includes all preliminary work directly related to PROJECT up to contract awazd for construction, including, but not limited to, preliminary surveys and reports, laboratory work, soil investigations, the preparation of plans, specifications and estimates (PS&E), advertising for bids, awarding of a contract and project development contract administration. 2. LOCAL AGENCY eligible costs for construction engineering includes actual inspection and supervision of PROJECT construction work; construction staking; laboratory and field testing; and the preparation and processing of field reports, records, estimates, final reports, and allowable expenses of employees/consultants engaged in such activities. 3. Preliminary and construction engineering costs included in the estimate contained in Exhibit A are eligible project costs. STATE reimbursement to LOCAL AGENCY will be on the basis of the actual cost thereof to LOCAL AGENCY including compensation and expense of personnel working on PROJECT, required materials, and automotive expense provided, however, LOCAL AGENCY shall contribute its general administrative and overhead expense. 4. LOCAL AGENCY employees or its subcontractor engineering consultant shall be responsible for all PROJECT engineering work. 5. LOCAL AGENCY shall not proceed with final design of PROJECT until final environmental approval of PROJECT. Final design entails the design work necessary to complete the PS&E and other work necessary for a construction contract but not required earlier for environmental clearance of that PROJECT. 4 25G-6