Text from 'Determining Innovative Contracting Techniques to Reduce User Costs' PowerPoint Presentation
Slide 1
Determining Innovative Contracting Methods to Reduce User Costs
Stuart Thompson
Utah Technology Transfer Center
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FHWA Road User Survey
- 32% dissatisfied with work zones
- Travelers rated highway improvements that would most help overcome delays. Of more than 20, the top 3 relate to work zones and how we build roads
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FHWA Road User Survey
- Growth in reconstruction
- Growth in congestion
- Growth in crashes
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Innovative Contracting
- The primary goal of Innovative Contracting is to provide timely delivery of a quality project or facility with limited User & Social Impacts.
- User & Social Impacts- Costs incurred by the road user or public that are not directly accounted for in Traditional Contracts.
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Road User Impacts
- High Accident Rates
- Travel Delay Costs
- Additional Fuel Consumption
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- Smoothness
- Extended Service Life
- Maintenance Objectives
- Improved Serviceability
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- Warranty
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- Projects with Third Party Conflicts
- Cookie Cutter Projects
- Projects with Negligible Impacts to the Road User, Public, & Environment
- Projects with Potential Risks
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Design-Build- Decrease Time (Emergency/Event)
- Complex Design
- Complex Construction
- Technical Integration
- Limited In-house Resources
- Projects Procured Just-In-Time
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Design/Build Questionnaire Results
| State | # of Projects | Reduce Time Constraints | Design Construction Innovation | Limited Resources | Reduce User Cost | Quality Performance/ End Result | Risk Sharing | Reduce Total Project Cost | Emergency Construction |
|---|---|---|---|---|---|---|---|---|---|
| AZ | 4 | 1 | 2 | 7 | 3 | 6 | 5 | 4 | 8 |
| GA | 2 | 3 | 4 | 1 | 7 | 2 | 8 | 6 | 5 |
| IN | 5 | 2 | 3 | 1 | 5 | 7 | 4 | 8 | 6 |
| KY | 2 | 1 | 3 | 2 | 6 | 7 | 4 | 5 | 8 |
| MN | 1 | 1 | 2 | 5 | 3 | 6 | 4 | 7 | 8 |
| NC | 4 | 1 | 3 | 4 | 7 | 5 | 8 | 6 | 2 |
| PA | 17 | 2 | 1 | 8 | 7 | 4 | 6 | 3 | 5 |
| UT | 2 | 1 | 3 | 4 | 5 | 8 | 6 | 7 | 2 |
| WA | 1 | 2 | 3 | 6 | 1 | 4 | 5 | 7 | 8 |
| WV | 0 | 1 | 2 | 3 | 8 | 7 | 5 | 6 | 4 |
States known to have used design-build, but did not respond:
Alaska, Arkansas, California, Colorado, Florida, Maine, Michigan, New Jersey, Ohio, South Carolina, Utah
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- Decrease Time (Emergency/Event)
- Potential for High Road User Cost
- Potential Impact to Local Businesses
- Public Perception
- Vital Corridor
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- A+B Bidding is used to motivate the contractor to minimize the delivery time for high priority and highly trafficked roadways. This encourages contractors to finish early by:
- Offering bonuses for early completion.
- Assessing disincentives for late completion.
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Criteria for Selection of A+B Bidding as a Contracting Procedure
- Traffic restrictions, lane closures, or detours result in high road user costs.
- Safety concerns, or significant impacts to the local community or economy during construction warrant expediting the project.
- Traffic control phasing can be structured to maximize a contractor's ability to reduce the duration of construction.
- The project is relatively free of third party conflicts.
- It is in the public interest to complete the project as soon as possible.
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- Maryland
- Colorado
- California
- Virginia
- Texas
- North Carolina
- Wisconsin
- Washington
- New York
- North Dakota
- Iowa
- New Jersey
- Missouri
- Idaho
- Indiana
- Kansas
- Maine
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Multi-Parameter Bidding (A + B)
Questionnaire Results
| State | # Of Projects | Reduce User Cost | Reduce Time Constraints | Quality Performance/ End Result | Design Construction Innovation | Reduce Total Project Cost | Risk Sharing | Emergency | Limited Resources |
|---|---|---|---|---|---|---|---|---|---|
| AZ | 8 | 2 | 1 | 5 | 6 | 4 | 3 | 8 | 7 |
| CA | 38 | 2 | 1 | 7 | 6 | 5 | 4 | 3 | 8 |
| GA | 2 | 2 | 1 | 3 | 6 | 4 | 7 | 5 | 8 |
| IN | 19 | 2 | 6 | 1 | 3 | 7 | 4 | 5 | 8 |
| KY | 7 | 1 | 2 | 6 | 3 | 5 | 4 | 8 | 7 |
| LA | 40 | 2 | 2 | 2 | 7 | 4 | 8 | 7 | 4 |
| MN | 10 | 2 | 1 | 5 | 4 | 6 | 3 | 8 | 7 |
| NY | 130 | 1 | 2 | 4 | 3 | 7 | 5 | 6 | 8 |
| NC | 30 | 1 | 4 | 3 | 2 | 7 | 6 | 5 | 8 |
| PA | 27 | 2 | 1 | 6 | 3 | 4 | 8 | 5 | 7 |
| UT | 12 | 2 | 1 | 5 | 3 | 6 | 4 | 8 | 7 |
| TN | 3 | 2 | 1 | 4 | 7 | 3 | 5 | 8 | 6 |
| TX | -5 | 7 | 2 | 1 | 7 | 7 | 6 | 5 | 7 |
| WA | 5 | 2 | 5 | 3 | 6 | 1 | 4 | 8 | 7 |
| WV | 0 | 2 | 1 | 5 | 4 | 6 | 3 | 7 | 8 |
States known to have used a + b, etc but did not respond:
Arkansas, Colorado, Delaware, Idaho, Iowa, Maine, Maryland, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Oklahoma, South Carolina, Missouri
Slide 17
Lessons Learned - A + B
| State | Description |
|---|---|
| AR | A + B: Contractors have earned incentives on almost every project let with these provisions, even though they consistently use less than the maximum days allowed in their days bid. |
| AZ | A + B causes jobs to be completed quicker and operations to be better planned. |
| CA | Although on the current projects employing A+B have averaged a 14% reduction in Contract Time (Contractor's Bid vs. the Engineer's Estimate), the advantage of this bidding can be lost if there are constraints beyond the contractor's control such as |
| GA | A + B With Incentive. When used the contractor dedicates resources at the expense of other projects. Quality reduced to marginally acceptable. |
| IN | A + B, A + B + C + Design/Build, A + B + PRS C = Warranty. All A + B contracts reduce construction time and save user costs. The B amount must be large enough to influence contractor. |
| KY | Contractor work at night, more overtime to get incentives. Some other projects suffer from lack of resources. |
| LA | Reduced construction time. |
| MN | We've found that quality contractor seem to get more of these projects. There is a time savings. The Low A Bidder normally is the overall low bidder. |
| NC | Good process, we do not normally tie to incentives so guarantee nothing. |
| NY | A + B: Very positive results on most projects. Should only be used for critical projects or project phases. Need clear description of work to be performed. Need good CPM scheduling provisions and experienced schedulers. Staff must be available day and |
| PA | Too early to assess any impacts. |
| TN | A + B: Make sore jobs are in good shape, (good plans, no utility conflicts, row available, etc) |
|
TX |
Maximize bonus/incentive |
|
UT |
A+B was used on several projects. Time became the overall driver on the project with quality suffering. Projects must be well defined with no utility or R/W delays. Contractor will always expect to achieve total incentive amount. Contractors tend to |
|
WA |
A+B Bidding is being used in Washington. So far, it has not been well received by contractors. Designers tend to set the maximum allowable time at the smallest calculated CPM schedule. This does not leave contractors with much room to decrease the time |
Slide 18
- New York has completed 33 projects since 1994.
- Projects were completed an average of 19 days earlier than bid and an average of 87 days earlier than the engineer's estimate.
- An average of 9 days were added for change orders.
- Only one project took more days to complete than engineer's estimate and only two took more days than bid.
- An estimated 20.32 million dollars in road user costs were saved.
- 4.75 million dollars were paid for incentives.
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Slide 21
- Primary Objective
- To motivate the contractor to minimize the time that a lane, a shoulder, or a combination of lanes and shoulders are out of service so there is minimized traffic delay to highway users.
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- Lane Rental has been used for projects that contain one or more of the following:
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Lane Rental Uses
- Traffic restrictions or lane closures result in high road user costs.
- The use of alternate routes or off-site detours is impractical.
- The traffic control plan allows the contractor flexibility in scheduling work to minimize the impact of lane closures.
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- The agency seeks contractor expertise to minimize the time that lanes are out of service.
- The project is relatively free of third party conflicts (I.e. right-way issues, utilities, etc.).
- The benefit in terms of reduced impact to the highway user is greater than the additional cost to minimize lane closures.
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- Major reconstruction of a 2.08 mile stretch of a primary commuter route from the west suburbs to downtown Portland.
- ADT ranges from about 100,000 to 130,000 vpd, with less than 2% trucks.
- Rates for every 15 minutes ranged from $0 to $21,000 for lane use.
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- Colorado
- New York
- North Carolina
- Utah
- Oklahoma
- Oregon
- Washington
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Lane Rental
Questionnaire Results
| State | # of Projects | Reduce User Cost | Reduce Time Constraints | Quality Performance/ End Result | Risk Sharing | Design Construction Innovation | Reduce Total Project Cost | Limited Resources | Emergency Constructions |
|---|---|---|---|---|---|---|---|---|---|
| AZ | 5 | 1 | 2 | 3 | 4 | 8 | 5 | 6 | 7 |
| CA | 0 | 1 | 6 | 3 | 2 | 5 | 4 | 7 | 8 |
| KY | 5 | 1 | 2 | 4 | 3 | 5 | 7 | 6 | 8 |
| LA | 2 | 2 | 2 | 3 | 8 | 5 | 7 | 6 | 8 |
| NY | 25 | 1 | 5 | 3 | 4 | 2 | 7 | 8 | 6 |
| PA | 7 | 2 | 1 | 7 | 5 | 3 | 6 | 8 | 4 |
| TN | 5 | 2 | 1 | 4 | 5 | 7 | 3 | 6 | 8 |
| UT | 2 | 1 | 2 | 0 | 3 | 6 | 8 | 5 | 7 |
| WA | 0 | 1 | 5 | 6 | 2 | 3 | 7 | 4 | 8 |
| WV | 0 | 1 | 2 | 5 | 4 | 3 | 7 | 6 | 8 |
| WY | 6 | 1 | 2 | 3 | 7 | 5 | 4 | 8 | 6 |
States known to have used lane rental but did not respond:
Colorado, Indiana, Maine, Oklahoma, Oregon
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Lessons Learned - Lane Rental
| State | Description |
|---|---|
| AZ | Used successfully 4 times. Reduces congestion and caused contractor to carefully plan and perform at maximum efficiency during lane closure. |
| CA | Originally, on contracts where user delay costs for late lane closure pickups would exceed $6,000/hour we employed a spec. that charged the contractor a liquidated damage of $1,000 for every 10 minutes or portion of 10 minutes for late pickups. |
| KY | Contractor works at night, more efficient and organized. Gets in, traffic control good. Does job right so will not have to return |
| LA | Reduced lane closures. |
| MN | N/A |
| NC | Tried once - bids to high. Getting reason to try again. |
| NY | Method of allocating Lane Rental charges within the bid items is problematic. It causes unbalanced bids, cash flow problems. Best use is for short duration daily lane closure operations. |
| PA | Too early to assess impacts. |
| TN | We used a variation of lane rental. We give contractor x number of days of lane reduction and apply incentive/disincentive for the number of days above or below the target. |
| UT | Constant and continuous monitoring is required to document times and enforce specifications. Potential for decreasing road user costs is high. Efficiency in the contractor's operations and use of innovative materials and methods are encouraged with this |
| TX | Effective for minimizing disruptions to traffic. |
| WY | This concept works well if on the correct project. |
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Slide 32
- Projects in which Performance can be Measured
- Minimize Overall Life-Cycle Costs
- Project Conditions are Well-Defined
- Incorporation of New Technology in Materials, Equipment, and Construction Processes
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Slide 34
- Less owner risk.
- Eliminates cost of owner QA/QC by transferring this responsibility to the contractor.
- Creates an incentive for overall project quality.
- Assures acceptable level of service or performance for a work item and/or major project element.
Slide 35
- Wisconsin
- Michigan
- North Carolina
- California
- Missouri
- Ohio
- Montana
- New Hampshire
Slide 36
Warranty
Questionnaire Results
| State | # of Projects | Quality Performance/ End Resul | Risk Sharing | Design Construction Innovation | Reduce User Cost | Limited Resources | Reduce Time Constraints | Total Project Cost | Emergency Constructions |
|---|---|---|---|---|---|---|---|---|---|
| CA | 17 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| IN | 7 | 1 | 2 | 3 | 7 | 4 | 6 | 8 | 5 |
| KY | 2 | 1 | 2 | 4 | 3 | 7 | 5 | 6 | 8 |
| LA | 1 | 3 | 8 | 8 | 8 | 8 | 8 | 8 | 8 |
| MI | 1 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| NY | 89 | 2 | 1 | 6 | 4 | 8 | 3 | 5 | 7 |
| PA | 1 | 1 | 3 | 2 | 7 | 5 | 6 | 4 | 8 |
| TN | 2 | 1 | 2 | 6 | 4 | 5 | 7 | 3 | 8 |
| TX | 6 | 7 | 3 | 8 | 6 | 4 | 7 | 6 | 8 |
| WA | 1 | 1 | 3 | 2 | 5 | 4 | 6 | 7 | 8 |
| WI | 40 + | NR | NR | 2 | NR | 1 | NR | 4 | 3 |
| WV | 0 | 2 | 1 | 3 | 6 | 4 | 5 | 7 | 8 |
States known to have used warranties but did not respond:
Michigan, Missouri, Montana, North Carolina
Slide 37
Lessons Learned - Warranty
| User Id | Description |
|---|---|
| CA | Piloting one-year warranties. Construction Evaluation currently being performed. |
| MN | We are requiring a 5-year workmanship warranty for the Design/Build project that will start this summer. We may pilot short-term workmanship warranties on some Design/Build projects next year. |
| PA | Only one project currently underway. Too early to assess impacts. |
| TX | Will evolve into more in Texas. |
| WA | WSDOT incorporated a five-year pavement warranty into its first design-build project. All three bidders incorporated the cost of a future overlay into the bid to ensure a successful warranty. Not cost effective for WSDOT. |
Slide 38
Innovative Contracting Methods - Selection Flow Chart
Slide 39
Questions?
