Techniques that Consider Driver Impact,
Use of A+B Bidding
Innovations in Technologies,
Practices, and Products Workshop
Innovative Contracting Techniques that consider Driver Impacts
Use of A+B Bidding
David L Kent P.E.,
New York State Department of Transportation
I. Introduction and Background
NYSDOT policy initiatives emphasize the need to assess traffic impacts due to construction, and develop and implement ways to minimize those impacts, such as:
- Mandatory phased construction
- Temporary roadways and bridges
- Off-site detours
- Work hour restrictions, i.e., off-peak hours, nighttime, weekends
- Lane closure restrictions
- Special scheduling provisions
Although these methods have been used successfully for many years, an increase in the number of infrastructure repair contracts in the Department's construction program, coupled with increasing traffic volumes created the need for better ways to mitigate the impacts of construction on the public. In 1994 NYSDOT introduced A+B bidding on a trial basis under the provisions of FHWA Special Experimental Project Number 14, Innovative Contracting Practices. A+B bidding, also referred to as cost plus time bidding, is intended to encourage Contractors to more actively manage their work schedule and, when necessary, to adopt innovative and aggressive scheduling and construction management processes that will shorten the construction duration and reduce inconvenience to the public.
Since implementation in 1994, NYSDOT has used A+B bidding on over 140 contracts and has developed and refined guidelines for its use. This paper provides a summary of key implementation guidelines, lessons learned and results achieved using this method of bidding.
II. Description of the Practice or Method or Technology
A+B bidding is a method of awarding a project based on both cost and time. Each bid submitted consists of two parts:
- The "A" portion of the bid is the sum bid for the contract work items.
- The "B" portion of the bid is the time in calendar days proposed by the bidder to complete the project or a portion of the project, multiplied by a daily road user cost determined by the Department.
The contract is awarded based on the sum of the "A" portion and the "B" portion of the bid. The contract amount after award is limited to the "A" portion of the bid.
A disincentive provision is incorporated into the contract (based on road user costs) should the Contractor fail to complete the work in the length of time bid. An incentive provision is also included to pay for acceleration costs and to reward the Contractor for earlier completion.
A cap on the amount of incentive paid under A+B provisions is required for budgeting and other fiscal reasons. The maximum number of days of incentive for each incentive period is limited to 10 % of the number of days estimated by the Engineer rounded to the nearest whole day. In addition, the sum of all incentives for a single contract is limited to 5% of the Engineer's estimated contract amount. Although this cap limits the number of days of incentive payment, keep in mind that the Contractor must bid on the time in order to get the project, and it is to their advantage to bid fewer days in order to be the lowest bidder.
III. Identification of Need / Reasons For Use
The use of A+B provisions is primarily intended for critical projects or project phases where traffic inconvenience and delays must be held to a minimum. User delay costs or public benefit must be significant enough to warrant construction acceleration. It must be emphasized that A+B provisions should not be used routinely. Generally, the use of these provisions should be limited to those projects or project phases that would severely disrupt highway traffic. As a guide, user delay and other documented delay costs should be at least $3,000 per day to warrant the use of incentive provisions.
The following characteristics are associated with projects appropriate for A+B bidding:
- High traffic volume facilities generally found in urban areas,
- Projects that will complete a gap in a significant highway system,
- Major reconstruction or rehabilitation on an existing facility that will severely disrupt traffic,
- Major bridges out of service,
- Projects with lengthy detours of high volumes of traffic,
- Projects which have preconstruction level of D or worse, and
- Projects with high accident locations which may be exacerbated by non standard features during construction.
A+B bidding may be used for projects or phases which produce user delay costs less than $3,000/day if extraordinary concerns exist such as interference with public events or significant public interest and benefit.
When selecting projects for A+B bidding, the total "B" portion of the bid must also be an amount large enough to influence the bidding. If a very large project has a very short "B" portion completion time, the time element may have little impact on the overall results of the bidding. For example, a $30,000 B portion (10 days X $3,000/day) would have minimal effect on a $20 million project ("A" portion) due to its small percentage of the total A+B bid. On the other hand, a $1,250,000 "B" portion (250 days X $5,000/day) on a $5 million project ("A" portion) would provide a significant incentive to a Contractor to reduce the number of days bid because the "B" portion, as a percent of the total A+B bid, is significant
IV. Benefits of Use
Benefits of A+B include:
- Encourages potential Contractors to develop even more detailed well thought out plans in order to bid on the time to complete a project or project phase. Since the time bid by each Contractor is based on their own capabilities to perform the work, the more efficient Contractors can generally bid shorter times.
- Encourages Contractors to schedule their operations to maximize the efficiency of their work crews and equipment in order to meet the time bid.
- Encourages Contractors to work overtime, double shifts and at night to reduce construction time.
- Encourages Contractors to develop innovative ways to reduce construction duration at the lowest cost during bid preparation and during construction.
- Road user costs and inconvenience are minimized.
- Reduces the number of congestion related complaints from the road users and local communities.
- Congestion related pollution and environmental impacts are reduced.
V. Applicability of Use in Other Locations
A+B bidding is being used in many areas of the US. Legal staff must review State bidding laws to ensure that A+B bidding is in compliance with State Laws.
VI. Lessons Learned
Project selection - Projects or project phases where A+B bidding is used must be chosen carefully. Projects with high user delay that warrant acceleration may also have characteristics that could potentially impede the ability to succeed. Projects that typically experience delays using normal contracting will also experience delays using A+B bidding unless additional measures are taken. If unanticipated subsurface conditions are likely to be encountered due to the nature of the work or its location, i.e. utilities, rock, historical artifacts etc. either exclude this work from the A+B provisions or invest additional design effort to minimize the potential impact and be prepared to make adjustments if required during construction. Bridge deck repair or pavement repair quantities must be estimated conservatively to avoid time extension requests. Projects with sensitive environmental conditions must also be evaluated carefully. Provisions must be included in the contract to protect environmentally sensitive areas from high production construction operations. Lane closure restrictions and time of work restrictions must be clearly stated. Instead of making the whole project duration the B portion time period, consider using A+B provisions for the most critical phases. Consider multiple contractual methods in the same contract to achieve the desired objective, i.e., A+B bidding with night work, Incentive/Disincentives or Lane Rental.
A good project for the use of A+B bidding is a bridge replacement project with an off site detour and no utility involvement. New construction is typically easier to define vs. rehabilitation and when the contractor has clear access and control of the work, the chances for success are better.
- User delay cost calculations - need a standard way to estimate user delay. Several computer programs are available. Factors that are not included in the user delay calculations that impact the decision making process include, loss of business due to construction, fire and ambulance routes, school bus routes, wear and tear due to rough or ground pavement.
- Description of "B" portion work - work included and starting and ending events must be clearly stated to avoid disputes.
- Constructability reviews - Pay particular attention to time related requirements, coordination with utilities etc.
- Accuracy of Department estimate of time - must be sufficiently accurate and detailed to be able to evaluate reasonableness of Contractors bid. Have had a few instances where no bids were received because the Engineers maximum bid time frame was too tight. A good Design schedule can also aid the Engineer in charge when evaluating the Contractors construction schedule.
- Time as a pay item - time is money on A+B contracts. Need to continually monitor time and document like other pay items.
- Critical path method scheduling - CPM is the method of measurement for incentives or disincentives. Also, used for making time adjustments. Need experienced trained schedulers for both the contractor and the State DOT.
- Time adjustments due to changed conditions - 50 % of completed projects required time adjustment - reasons sited for the need for time adjustments include: unanticipated additional work such as additional bridge deck repairs additional pavement repair quantity, utility relocation delays, unanticipated utilities, drainage redesign, changes to bridge elements, additional quantity for piles or revised pile foundation design, lane closure delays, added or revised lane closure restrictions, delayed award or notice of award, restricted site access or unavailability of ROW, unanticipated rock.
- Overtime pay for inspection, night work, and multiple shifts - offset by shorter duration. Must consider impact on resources when planning inspection requirements. Must have decision making authority and support staff available so as to not delay the contractors operations.
- Contractors tend to shift more experienced staff to A+B contracts to the potential detriment of other contracts in the same geographical area. Other resources may also be shifted which could delay other projects.
- Some Contractors have proposed innovative ways to accelerate construction including revised M&PT schemes, use of precast construction items, use of new technology. Some time saving proposals are also cost saving proposals submitted under Value Engineering provisions.
VII. Summary and Conclusions
Experience has shown that A+B bidding is an effective way to reduce construction induced congestion and delays by allowing the cost of work and time to be balanced through the open competitive bidding process. Contractors bid on average 32% below the Department's estimated time and complete the work ahead of schedule.
A Summary of A+B bidding and performance results in New York State is shown below:
- 120 contracts completed "B" portion work. Approximate original contract value of these contracts is $2.0 billion.
- 90 of the 120 contracts were awarded to the low "A" portion bidder. i.e., Bidder with lowest A+B total also had the lowest "A" portion contract amount. The other 30 contracts were awarded to a bidder with a higher "A" cost and a shorter "B" duration. Added "A" cost of these 30 contracts is less than 1%.
- 103 Contractors earned incentives. Total incentives paid = $49,069,174. Total incentives paid are approximately 2.5% of original contract value for these 103 contracts.
- 9 Contractors completed on time. No incentives or disincentives.
- 8 Contractors accessed disincentive. Total disincentives = $592,000
- 59 contracts (50% of completed contracts) required B time adjustments.
- Estimated user cost savings for completed contracts = $246 million.
- Estimated construction days saved = 20,000.
Additional information regarding NYSDOT procedures for A+B bidding can be found in Engineering Instruction 99-033, Guidelines for the Use of Time-Related Contract Provisions, http://www.dot.state.ny.us/cmb/consult/eib/files/ei99033.pdf