|FHWA > Engineering > Construction > Contract Admin > SEP-14 > M-39 (Southfield Freeway)|
Printable version of this project (.pdf, 1.85 mb)
Innovative Contracting Practices Special Experimental Project No. 14
Best Value – Performance Based Contracting
M-39 (Southfield Freeway)
Michigan Department of Transportation
June 8, 2010
The Michigan Department of Transportation (MDOT) is planning the rehabilitation of M-39 (Southfield Freeway) in Southfield, Detroit, Dearborn, Dearborn Heights, and Allen Park Michigan. This section of M-39 is a major urban freeway essential to the economic viability of the Metro Detroit area, serving over 164,200 vehicles per day. It is primarily a commuter route, linking western suburbs and the city, and interchanging with other major urban freeways, such as I-94, I-96 and M-10, and other principal urban arterials, including US-12 (Michigan Avenue), M-153 (Ford Road), M-5 (Grand River Avenue) and M-102 (Eight Mile Boulevard). The freeway profile runs at grade with the adjacent land use and then dips to go under bridges at road crossings. Four foot tall screen walls or cyclone fence separate the freeway from parallel service drives. The area predates the construction of noise walls, and because of both department policy and physical constraints, construction of new noise walls is not possible.
The majority of the significant project work includes bridge rehabilitation and pavement reconstruction through what is primarily a residential area of northwest Detroit. In recognition of the importance of the roadway to the adjacent community, and the impact the freeway, and its rehabilitation, has on the neighborhoods it traverses, MDOT is engaging them in a context sensitive solutions process, to understand and address the communities needs, concerns, and ideas for the project – both the physical infrastructure that will result from the project, as well as how the project is executed.
Initial outreach with the community has revealed that several "Quality of Life" concerns are consistently raised by members throughout the community. Most notably among these are:
MDOT has had some success addressing similar sorts of issues with communities when building projects in the past. However, the extent of success has been limited by the creativity of just part of the project team – the MDOT designers and construction administration staff. We determine what we believe to be reasonable solutions then specify the desired outcomes or parameters that the contractor must follow. Under traditional contracting methods, we cannot easily seize upon the good ideas and abilities of the contractor to find unique ways to address the concerns of the community. While standard contracts provide the ability for contractors to propose value engineering alternatives, there is no real incentive for contractors to do so, as approaches that add community value usually do not add contractor value. Furthermore, in this process, we place ourselves, as the owner, in the middle between the contractor and the community, creating at times a contentious situation, pushing the contractor to perform above contract requirements in response to community feedback. A more productive approach might be to share the ownership of the community concerns with the contractor, so that we are all working toward the same goals.
MDOT recently completed a Best Value – Performance Based (BV-PB) contract as part of the Federal Highway Administration’s (FHWA) "Highways for Life" (HfL) program. The project was located on M-115 in Clare County and consisted of the rehabilitation of 5.5 miles of two lane, two way rural trunkline and the replacement of two large culverts. The M-115 HfL project was regarded nationally as a huge success, both in terms of the project outcomes and the process and lessons learned on how to deliver higher degrees of value through innovative contracting methods.
One notable aspect of the M-115 HfL project was the degree of attention the contractor paid to the performance criteria and achieving the desired performance outcomes and incentives. They took not only a vested interest, but a proactive role in discovering and applying innovative solutions and adjusting their work processes to ensure that the performance outcomes were achieved. Rather than meeting the baseline or minimum requirements of a specification, as is often the case in standard low bid contracts, the contractor put serious thought and effort into addressing the core issues of the project, as defined by the project performance criteria – both to ensure that they received the award of the contract, and to ensure that they received of the performance incentives, or avoidance of the disincentives.
The purpose of this proposal is to investigate if improved response to community concerns on an urban project can be realized through the application of the contracting techniques applied on the M-115 HfL project. The M-115 HfL project proved successful in leveraging the benefits of contractor innovation and engagement in providing value around largely technical project criteria. On the M-39 project, we propose to expand those criteria to also include "Quality of Life" criteria to determine if the same innovative contracting techniques can result in improved overall value for our customers. The expanded "Quality of Life" criteria will be based on input received through the context sensitive solutions outreach process with the community.
Two innovative contracting methods are being proposed in this application – a Best Value procurement of the contract, which varies from the standard low-bid process and Performance Based contract specifications, affecting contract administration and how payment is determined for certain contract items. Specific, measurable project performance criteria will be established around key community concerns for the project.
This project is scheduled to be constructed in the 2011 construction season. The contract is expected to be let in September or October, 2010, depending on funding availability. The contract will be awarded by December, 2010, following the best-value selection process and in accordance with MDOT standard contracting processes. The Performance Based contracting specifications will be in effect throughout the duration of the contract.
MDOT will develop the specifications for Best Value bidding instructions and Performance Based contracting immediately after approval of this SEP-14 proposal. MDOT will consult with the contracting industry in an open and unbiased manner during the development of the specifications, to help prepare the industry for the innovative selection and contract administration processes. MDOT will obtain approval of the final specifications from the FHWA Michigan Division.
The effectiveness of the Best Value contract selection process will be measured by:
The effectiveness of the Performance Based contracting process will be measured by:
MDOT will prepare two reports of this innovative contracting proposal. An interim report will be prepared shortly after contract award and will address the Best Value selection process and results. A final report will be prepared within six months after completion of the project work and will address the entire project and all evaluation measures for both the Best Value selection process and the Performance Based contracting process.
PDF files can be viewed with the Acrobat® Reader®