Transcript Determining Innovative Contracting Methods to Reduce User Costs Stuart Thompson

Determining Innovative
Contracting Methods to
Reduce User Costs
Stuart Thompson
Utah Technology Transfer Center
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
FHWA Road User Survey
Growth in reconstruction
Growth in congestion
Growth in crashes
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.
Road User Impacts
High Accident Rates
Travel Delay Costs
Additional Fuel Consumption
Product Quality
Smoothness
Extended Service Life
Maintenance Objectives
Improved Serviceability
Contracting Procedures
Traditional Contract (Design-Bid-Build)
Design-Build
A+B Bidding
Lane Rental
Warranty
Traditional Contracts
Projects with Third Party Conflicts
Cookie Cutter Projects
Projects with Negligible Impacts to the
Road User, Public, & Environment
Projects with Potential Risks
Design-Build
Decrease Time (Emergency/Event)
Complex Design
Complex Construction
Technical Integration
Limited In-house Resources
Projects Procured Just-In-Time
Design/Build
Questionnaire Results
State
# of
Projects
AZ
GA
IN
KY
MN
NC
PA
UT
WA
WV
4
2
5
2
1
4
17
2
1
0
Reduce
Design
Time
Construction Limited
Constraints Innovation Resources
1
3
2
1
1
1
2
1
2
1
2
4
3
3
2
3
1
3
3
2
7
1
1
2
5
4
8
4
6
3
Reduce
User Cost
Q uality
Performance/
End Result
Risk
Sharing
3
7
5
6
3
7
7
5
1
8
6
2
7
7
6
5
4
8
4
7
5
8
4
4
4
8
6
6
5
5
Reduce Total Emergency
Project Cost Construction
STATES KNOWN TO HAVE USED DESIGN-BUILD, BUT DID NOT RESPOND
Alaska
Arkansas
California
Colorado
Florida
Maine
Michigan
New Jersey
Ohio
South Carolina
Utah
4
6
8
5
7
6
3
7
7
6
8
5
6
8
8
2
5
2
8
4
A+B Bidding
Decrease Time (Emergency/Event)
Potential for High Road User Cost
Potential Impact to Local Businesses
Public Perception
Vital Corridor
A+B Bidding
Definition: A cost plus time bidding
procedure that selects the low bidder
based on a monetary combination of
the contract bid items (A) and the time
(B) needed to complete the critical
portion of the project.
Benefits of A+B Bidding
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.
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.
States Using A+B Bidding
Maryland
Colorado
California
Virginia
Texas
North Carolina
Wisconsin
Washington
New York
North Dakota
Iowa
New Jersey
Missouri
Idaho
Indiana
Kansas
Maine
Multi-Parameter Bidding (A + B)
Questionnaire Results
State
# Of
Projects
AZ
CA
GA
IN
KY
LA
MN
NY
NC
PA
UT
TN
TX
WA
WV
8
38
2
19
7
40
10
130
30
27
12
3
-5
5
0
Reduce
Quality
Design
Reduce
Time
Performance Construction Reduce Total
User Cost Constraints / End Result Innovation Project Cost
2
2
2
2
1
2
2
1
1
2
2
2
7
2
2
1
1
1
6
2
2
1
2
4
1
1
1
2
5
1
5
7
3
1
6
2
5
4
3
6
5
4
1
3
5
6
6
6
3
3
7
4
3
2
3
3
7
7
6
4
4
5
4
7
5
4
6
7
7
4
6
3
7
1
6
Risk
Sharing
Emergency
Limited
Resources
3
4
7
4
4
8
3
5
6
8
4
5
6
4
3
8
3
5
5
8
7
8
6
5
5
8
8
5
8
7
7
8
8
8
7
4
7
8
8
7
7
6
7
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
Lessons Learned – A + B
State
AR
Description
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 an
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 tim
New York’s A+B Bidding
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.
Lane Rental
Decrease Time (Emergency/Event)
Potential for High Road User Cost
Potential Impact to Local Businesses
No Alternative Routes
High ADT
Lane Rental
Definition: An innovative contracting
technique by which a contractor is
charged a fee for occupying lanes or
shoulders to do the work.
Why Pursue Lane Rental?
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.
Lane Rental Uses
Lane Rental has been used for projects
that contain one or more of the
following:
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.
Lane Rental Uses
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.
How are Lane Charges
Calculated?
Charges for lanes or shoulders can be
on either an hourly or daily basis.
Charges per lane can vary depending
on time of day, amount of traffic, and
other road user costs.
Oregon Example
Traditionally the State of Oregon
specified times at which lane closures
were not allowed.
State law did not permit the use of road
user costs in the determination of
liquidated damage amounts.
Therefore: no disincentive for closures
or incentive to keep lanes open.
Oregon DOT US 26
Reconstruction Lane Rental
Project
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.
States Using Lane Rental
Colorado
New York
North Carolina
Utah
Oklahoma
Oregon
Washington
Lane Rental
Questionnaire Results
State
AZ
CA
KY
LA
NY
PA
TN
UT
WA
WV
WY
Reduce
Quality
Design
# of
Reduce
Time
Performance Risk Construction
Projects User Cost Constraints / End Result Sharing Innovation
5
0
5
2
25
7
5
2
0
0
6
1
1
1
2
1
2
2
1
1
1
1
2
6
2
2
5
1
1
2
5
2
2
3
3
4
3
3
7
4
0
6
5
3
4
2
3
8
4
5
5
3
2
4
7
8
5
5
5
2
3
7
6
3
3
5
5
4
7
7
7
6
3
8
7
7
4
STATES KNOWN TO HAVE USED LANE RENTAL BUT DID
NOT RESPOND
Colorado Indiana
Maine
Oklahoma
Reduce
Total
Project
Oregon
Limited
Emergency
Resources Constructions
6
7
6
6
8
8
6
5
4
6
8
7
8
8
8
6
4
8
7
8
8
6
Lessons Learned – Lane Rental
State Description
Used successfully 4 times. Reduces congestion and caused contractor to carefully plan and perform at
maximum efficiency during lane closure.
Originally, on contracts where user delay costs for late lane closure pickups would exceed $6,000/hour we
CA 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.
Contractor works at night, more efficient and organized. Gets in, traffic control good. Does job right so will
KY
not have to return
LA Reduced lane closures.
MN N/A
NC Tried once - bids to high. Getting reason to try again.
Method of allocating Lane Rental charges within the bid items is problematic. It causes unbalanced bids, cash
NY
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
Constant and continuous monitoring is required to document times and enforce specifications. Potential for
UT 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.
AZ
New York’s Lane Rental
New York has completed 6 projects since 1995.
Total project costs were 3.6 million dollars below the
engineer’s estimate.
Three projects were above and three projects were
below the engineer’s estimate.
Warranty
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
Warranty
Definition: “A guarantee of the integrity
of a product and of the makers
responsibility for the replacement or
repair of deficiencies.”
Advantages of Warranty
Contracting
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.
States Using Warranties
Wisconsin
Michigan
North Carolina
California
Missouri
Ohio
Montana
New Hampshire
Warranty
Questionnaire Results
State
# of
Projects
Quality
Performance
/ End Result
Risk
Sharing
CA
IN
KY
LA
MI
NY
PA
TN
TX
WA
WI
WV
17
7
2
1
1
89
1
2
6
1
40 +
0
1
1
1
3
1
2
1
1
7
1
NR
2
2
2
2
8
2
1
3
2
3
3
NR
1
Design
Construction Reduce
Limited Reduce Time
Total
Emergency
Innovation User Cost Resources Constraints Project Cost Constructions
3
3
4
8
3
6
2
6
8
2
2
3
4
7
3
8
4
4
7
4
6
5
NR
6
5
4
7
8
5
8
5
5
4
4
1
4
6
6
5
8
6
3
6
7
7
6
NR
5
STATES KNOWN TO HAVE USED
WARRANTIES BUT DID NOT RESPOND
Michigan Missouri
Montana
North
Carolina
7
8
6
8
7
5
4
3
6
7
4
7
8
5
8
8
8
7
8
8
8
8
3
8
Lessons Learned - Warranty
User Id Description
CA
Piloting one-year warranties. Construction Evaluation currently being performed.
MN
PA
TX
WA
We are requiring a 5-year workmanship warranty for the Design/Build project which will
start this summer. We may pilot short-term workmanship warranties on some Design/Build
projects next year.
Only one project currently underway. Too early to assess impacts.
Will evolve into more in Texas.
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.
Innovative Contracting
Methods –
Selection Flow Chart
Questions?