Time-Related Incentive and Disincentive Provisions in Highway Construction Contracts (2010) / Chapter Skim
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Chapter 2 - Discussion of I/D Impacts on Project Factors
Chapter 2 - Discussion of I/D Impacts on Project Factors
Pages 10-23
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From page 10... ...
It is the research team's informed opinion that if any of the acceleration costs required to complete these projects in one season was passed on to Kansas DOT, it was minimal. This conclusion is based on the fact that one member of the research team was formerly employed as the chief estimator for one of the unsuccessful bidders on the Harvey County project, and the base bid prices reflected contractor bid prices that were very competitive (acceleration costs were offset by lower profit margins)
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From page 11... ...
Bidder Base Bid: Complete in Two Seasons Alternate Bid: Acceleration Cost to Complete in One Season Total Bid to Complete in One Season Bidder 1 $18,482,549 $1 $18,482,550 Bidder 2 $20,636,141 $812,270 $21,448,411 Bidder 3 $21,035,433 $1,202,000 $22,237,433 Table 4. Kansas DOT Harvey County accelerated bid results (I-135, October 1999)
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From page 12... ...
Thus, acceleration costs will be greater when the construction sequence and plans have limited areas of simultaneous work activities. Contractors are acutely aware of their unit costs, and the vast majority of successful contractors go to great efforts to track them.
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From page 13... ...
An overall cost adjustment factor should be applied that considers the estimated net effect of market influence and acceleration cost impacts. A primary concern of STAs is understanding the relationship between I/D amounts, cost, and acceleration.
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From page 14... ...
This is the amount that it takes to get the contractor's attention and makes the endeavor worthwhile." Targeting the maximum incentive at a given percentage of the total contract value may be desirable from a policy standpoint, but will fail to yield effective results from I/D provisions. Incentives and disincentives should be adjusted based on the project conditions, market influences, and the level of acceleration required to meet schedule objectives.
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From page 15... ...
STA Cost Increase from Unbalanced Bid = $1,200,000 A Figure 9. Unbalanced bid example.
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From page 16... ...
Under the capped incentive scenario, contractors should not be required to negotiate a new schedule simply because the innovation will save time and they will earn incentive. Requiring contract time reductions when innovative methods or materials are proposed defeats the motivation for innovation and the associated early completion.
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From page 17... ...
Risk sharing strategies should be implemented that 17 1 2 3 4 5 6 Le ve l o f A gr ee m en t Contractor Responses Contractor Perspective Median (All Contractors) strongly agree agree strongly disagree disagree not sure Figure 12.
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From page 18... ...
Under FDOT's modified no-excuse clause, contract time may be adjusted when an excusable delay has a schedule impact greater than 15% of the remaining contract time when it occurs. This type of solution is a compromise that allows the contractor to potentially recoup some of its acceleration costs incurred while overcoming excusable project delays.
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From page 19... ...
• An analysis of variance (ANOVA) was used to evaluate the net quality adjustment as a percent of contract value for 19 1 2 3 4 5 6 Le ve l o f A gr ee m en t Contractor Responses Contractor Perspective Median (All Contractors)
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From page 20... ...
was unchanged even after removing two contractors from the non-I/D data set that accounted for 20% of the non-I/D projects that were charged only negative quality adjustments. • A third analysis evaluated the results for a single contractor that included 4 I/D projects and 3 non-I/D projects; again, no statistical difference existed for the net quality adjustment as a percent of contract value.
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From page 21... ...
Acceleration strategies that allow for a less restricted traffic flow condition through the winter certainly have positive safety benefits to the public. However, the reality is that construction work zones are inherently more dangerous than normal free flow traffic conditions.
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From page 22... ...
Acceleration strategies are normally used on higher traffic volume facilities, and all interviewees supported the concept of reducing the overall work zone exposure time. What strategies and considerations can a STA use to reduce risk to the motoring public, pedestrians, and construction workers on accelerated projects?
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From page 23... ...
In the time frame that a contractor has to bid a project, it is impossible to look at all situations that may arise and the owner should bear some of the risk." • "The STA should realize that I/D provisions are "insurance" to protect contractor markups. These cost reimbursements are for the inefficiencies and unproductive nature of compressed schedules.
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