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Arrow Performance Contracting for Construction on M-115 in Clare County, MI

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Project Overview and Lessons Learned

Project Overview

This rural two-lane project is located on M-115 from the Osceola–Clare County line to Lake Station Avenue in Clare County. Within the 5.56 mi (8.95 km) length of this project are two small bridges over two creeks (Doc and Tom Creek and Norway Creek). This roadway is the primary connection for summer tourists and cottage owners traveling over the weekends from the Detroit metropolitan region to northwest Michigan. The pavement was in poor condition, with a 2006 remaining service life (RSL) of 1 year, a Pavement Surface Evaluation and Rating (PASER) system rating of 3 (needs structural improvement), and a sufficiency rating (SR) of 4.5 (very poor). The two bridges were also in extremely poor condition and needed significant rehabilitation.

The key innovation on this project was the use of performance contracting for construction (PCfC). PCfC is an innovative contracting technique in which the contract between the highway agency and the paving contractor defines what to achieve through a set of performance goals, but not necessarily how to achieve it. The key to PCfC is the flexibility it provides the contractor to innovate and take some control of the construction process, but also to bear some of the associated risks through incentives and disincentives. In PCfC, the agency specifies performance goals rather than construction methods, and it awards the contract on the basis of best value considering price, goals, and disincentives rather than the lowest cost bid.

Special provisions related to the minimum performance goals were established for this project. The performance goals focused on what the agency wanted the project to achieve and were established with stakeholder group input. Each goal included a measurement method and incentive and/or disincentive. Each goal was scored as part of the prescribed best-value factor in the overall selection of the contractor:

  1. Date open to traffic
  2. Construction and cleanup completion
  3. Pavement performance
  4. Worker safety during construction
  5. Work zone crashes
  6. Motorist delay

Phase I of the project, which included bridgework and the corresponding approach and leave areas, began May 27, 2008, and was completed July 1, 2008. Phase II, which included the road and shoulder work, began August 18, 2008, and all work including cleanup was completed on October 16, 2008. Because of the flexibility provided through the PCfC process, the prime contractor,Central Asphalt Inc., used a number of innovations throughout the construction process:

  • Bridge construction using Hyspan-type design
  • Elimination of joint repairs by rubblizing the underlying concrete pavement
  • Drainage improvements
  • Hot-mix asphalt (HMA) transfer and placement
  • Minimal impact on traffic (widening of existing shoulder to provide two-way traffic, traffic pulloff areas, 24-hour motorist assistance services)
  • Alternates routes posting to help the public find alternate routes and provide advance notice about the road work area, resulting in few minor traffic delays
  • Polymer-modified asphalt concrete (AC) in the top course to provide a greater chance of meeting the warranty requirements for the 5-year warranty

Central Asphalt Inc. earned the maximum incentives for date open to traffic, construction and cleanup completion, pavement performance, worker safety during construction, and work zone safety. Central Asphalt Inc. also earned the maximum motorist delay payments, but missed the bonus payment for user delay because one measurement was longer than 15 minutes. Incentives awarded to Central Asphalt Inc. totaled $340,100, which was more than 7 percent of the bid price of $4.44 million.

Data Collection

Safety, construction congestion, quality, and user satisfaction data were collected before, during, and after construction to demonstrate that PCfC can be used to achieve the HfL performance goals in these areas.

The HfL performance goals for safety include meeting both worker and motorist safety goals during construction. During the construction of the M-115 project, no workers were injured, so the contractor exceeded the HfL goal for worker safety (incident rate of less than 4.0 based on the OSHA 300 rate). MDOT had set a goal of less than 1.0 crash per month (excluding animal crashes) during construction, based on three other projects constructed between 2004 and 2006. Only two motorist incidents involving crashes with deer were reported over the 3.5-month construction period, resulting in a crash rate (excluding animal crashes) of 0.0 crashes per month.

The performance goal on motorist delay was that no vehicle should be delayed by contractor operations more than 10 minutes beyond its normal travel time. To attain the maximum incentives, Central Asphalt Inc. chose several innovations that were not part of MDOT's original plans, including precast bridge construction, self-adjusting temporary signals to control single-lane traffic during precast bridge construction, 24-hour roadside patrol within the construction zone to minimize any delays caused by breakdowns, and 11-foot (ft) wide (3.3-meter (m) wide) temporary traffic lanes during major construction stages to provide two-way traffic. As a result of these innovations, the average delay was 2 minutes and 16 seconds.

Quality was measured in terms of noise (OBSI) and smoothness (IRI), both before and after construction. The average preconstruction OBSI level was 99.4 dB(A), while the average postconstruction OBSI level was 95.2 dB(A), resulting in a substantial reduction of 4.2 dB(A).

The preconstruction average IRI was 115.5 inches per mile (in/mi), while the postconstruction IRI was 37.8 in/mi, resulting in a dramatic improvement in the pavement ride quality. Based on the field data collected following construction, the M-115 project exceeds both the HfL goals of IRI less than 48 in/mi and tire-pavement noise less than 96.0 dB(A) using the OBSI test method.

User satisfaction surveys were conducted both before and after construction. The preconstruction survey results indicated a high level of dissatisfaction with the pavement condition and ride quality. A majority of those surveyed also indicated a high level of satisfaction with the proposed construction schedule and the daytime construction plan. The postconstruction survey results indicated that a majority of the respondents were very satisfied with the pavement condition and ride quality. The postconstruction survey also showed that more than half of the respondents were somewhat to totally dissatisfied with delays experienced in the work zone. This was a surprising find to MDOT because the average measured delay was 2 minutes and 16 seconds beyond the normal travel time and only one delay measured was beyond the 10 minute performance goal established for the project.

Economic Analysis

The benefits and costs of this innovative project approach were compared with those of a project of similar size and scope with a more traditional delivery approach. MDOT supplied most of the cost figures for the as-built project, and the cost assumptions for the traditional approach were determined from discussions with MDOT and MDOT's preconstruction estimates. The economic analysis revealed that the as-constructed roadway resulted in net higher costs of $690,226 over conventional construction practices, after considering the reduced user delay costs. However, the higher initial costs were more than offset by the lower life-cycle costs.

A life-cycle cost analysis (LCCA) was performed to compare the conventionally-constructed roadway with the as-constructed roadway. The 5-year warranty term and the flexibility provided to the contractor as a result of PCfC, resulted in the contractor opting to mill the existing HMA overlays, rubblize the underlying portlant cement concrete (PCC) pavement, and place an asphalt stabilized crack relief layer (ASCRL), prior to placing the HMA overlays. The MDOT design included in the original request for proposal (RFP) only required the contractor to perform full-depth repairs of deteriorated areas prior to placing the HMA overlays. Because of this difference, the as-contructed pavement is expected to perform better and last longer than the baseline pavement, which is reflected in the LCCA. The LCCA shows that the baseline project will cost MDOT and the users of the roadway $7,801,876 in terms of net present value (NPV) based on a 20-year analysis period. By comparison, the as-constructed project will cost $6,150,201 in terms of NPV, for a total savings of $1,651,675.

Lesson Learned

MDOT learned many valuable lessons through its first PCfC project. These lessons are summarized in MDOT's Special Experimental Project No. 14 (SEP-14) report and include the following:

  • Pavement warranty—The original contractor selected submitted a 6-year pavement warranty that it could not obtain. Long-term warranties may be difficult for smaller companies to obtain, depending on the economic climate. One possible solution is to allow multiterm bonds.
  • Provisions for site change—During development of the project, MDOT assumed the contractor would follow the agency's normal process for site changes by using the claim procedures. However, the process to follow was unclear to the contractor. For example, the existing bridge's as-built plans had inaccurate dimensions and caused additional work. Although MDOT eventually paid for this additional work through the normal claim process, the contractor was not always sure if these site changes were warranted for payment because MDOT paid for the project in a lump sum. The contractor recommended that MDOT provide clearer direction on future projects.
  • Proposal innovations in violation—One bidding contractor proposed a narrow bridge width of 40 ft (12.1 m). Although this width met American Association of State Highway and Transportation Officials (AASHTO) minimum width standards, it did not meet MDOT's minimum width of 44 ft (13.4 m), an additional 2 ft (0.6 m) beyond the shoulders. While this contractor was not selected for other reasons based on best value, future contracts need to state that design standards must meet both AASHTO and MDOT standards. Another bidding contractor proposed to eliminate slope restoration adjacent to the aggregate shoulder. This proposal was in clear violation of project requirements for slope seeding. The PCfC process undertaken as part of this project did not address how to handle situations in which a contract is accepted that proposes innovations that violate project requirements. Future contracts should allow for conditions of acceptances in addition to the PCfC requirements.
  • Temporary object markers—These devices were set up along the edge of the temporary lane just outside the shoulder. Historically this roadway experienced high recreational vehicle runoffs beyond the shoulder and into the ditches, which these signs helped eliminate.
  • Precast bridge construction—The two smaller bridges were constructed using Hyspan-type design. This allowed the contractor to reduce the time needed for construction and for single-lane traffic compared to cast-in-place construction.
  • Rubblizing existing underlying concrete pavement—The contractor chose to substitute all joint repairs and HMA overlay with milling of the existing hot-mix asphalt (HMA) layer and "rubblizing" of the underlying concrete pavement. A structural HMA pavement was then placed over the "rubblized" concrete.The method reduced the contractor's risk on the 5-year pavement warranty while providing MDOT with a superior pavement compared to a pavement with an overlay over repaired joints.
  • 24-hour roadside patrol—The contractor provided 24-hour roadside service in the construction zone. This helped minimize delays from vehicle breakdowns.
  • Temporary traffic lane—During the major construction stages, the contractor used an 11-ft-wide (3.3-m-wide) temporary traffic lane. This provided two-way traffic, which reduced delays and flag control-type crashes while increasing speed of construction work.


From the standpoint of speed of construction, motorist and user safety and delay, cost, and quality, this project was an unqualified success and embodied the ideals of the HfL program. MDOT learned many valuable lessons through the PCfC process. Because of the success of this project, MDOT would use performance-based contracting on future projects when appropriate. Currently, MDOT is working on similar projects that use design-build contracting in conjunction with industry to incorporate the lessons learned from this project in the projects under development.

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Mary Huie
Center for Accelerating Innovation

This page last modified on 04/04/11

United States Department of Transportation - Federal Highway Administration