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Arrow Innovations - Innovative Contracting

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New contracting methods may enhance project results

State departments of transportation (DOTs) are increasingly exploring ways to complete highway projects faster while meeting stringent cost, quality, and safety performance measures. State DOTs must take into account project characteristics such as project size (cost), type (preservation, rehabilitation, or reconstruction), and complexity (urban or rural, significant traffic impact, number of project elements) when evaluating innovative contracting options that promote accelerated project completion or facilitate achievement of other performance objectives.

Most innovative contracting methods change how state DOTs procure and deliver a project, using the traditional design-bid-build delivery approach as the benchmark. A sampling of contracting alternatives used on highway projects include the following:

  • Cost-plus-time bidding (A+B) aims to expedite project completion through competitive bidding on the construction time (days).
  • Design-build is a method in which design and construction are performed under a single contract to deliver the shortest overall total project duration.
  • Lane rental encourages contractors to minimize road user impacts during construction by restricting lane use.
  • Warranty contracting focuses on improving project quality by securing a warranty on it for up to 5 years after construction is completed.

Although the process of selecting an innovative contract method for a project is not well established in the highway community, some DOTs set up innovative delivery and contracting method (IDCM) groups to evaluate contracting alternatives and promote their implementation. The group weighs the advantages and disadvantages of each contracting option relative to project criteria when determining which methods the DOT will implement. Most DOTs with experience using innovative contracting methods believe that project selection is critical for the successful implementation of all contracting techniques.

The number of innovative contracting methods available to DOTs has increased significantly since the early 1990s. The most comprehensive collection of innovative contracting methods (43 in all) is described in the American Association of State Highway and Transportation Officials publication Primer on Contracting for the Twenty-First Century.

For More Information

  • Primer on Contracting for the Twenty-First Century, A Report of the Contract Administration Section of the Subcommittee on Construction, 5th Edition, AASHTO, 2006,
  • Selection and Evaluation of Alternative Contracting Methods to Accelerate Project Completion, National Cooperative Highway Research Program, Synthesis Topic 38-12, Synthesis 379, 2008,
  • "Alternative Contracting," National Highway Institute Course FHWA-NHI-134058,


Gerald Yakowenko
Team Leader, Contract Administration Group
Office of Infrastructure

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Jerry Yakowenko
Office of Program Administration

Updated: 10/19/2015

United States Department of Transportation - Federal Highway Administration