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| FHWA > Engineering > Construction > Contract Admin > SEP-14 > Proposal For Innovative Contracting Practices |
Proposal For Innovative Contracting PracticesSpecial Experimental Project No. 14December 14,2005 Kentucky Transportation Cabinet Alternate Pavement Bidding with Bid Adjustment (using LCCA) A. IntroductionThe Kentucky Transportation Cabinet (KYTC) submits this work plan for review and approval as a programmatic innovative contracting bidding procedure for select projects under the provisions of Special Experimental Project No. 14 (SEP 14). The Cabinet is submitting this plan to facilitate implementation of a new Pavement Type Selection Policy (Attachment 3). The Cabinet proposes this procedure in an effort to increase competition by affording both the asphalt and concrete pavement industries the opportunity to bid on projects where engineering and economic factors are determined to be equivalent. Alternate pavement designs and alternate bids have been used in Kentucky on previous projects, however, there is a desire to include consideration for the future rehabilitation needs of the alternate pavements using a Life Cycle Cost Analysis model. Three projects have been selected for initial use of this experimental bidding procedure: (1) Item Nos. 3-10.15 & 10.16, 1-65 in Simpson County; (2) Item No. 2-100.3, Breathitt Parkway Extension in Christian County; and (3) item No. 5-326.01, Shelbyville Bypass in Shelby County. B. PurposeThe proposed bid specification, ALTERNATE PAVEMENT BIDDING WITH BID ADJUSTMENT, (Attachment 1) is considered experimental in that it incorporates the following project elements: A) The contractor's bid for construction; B) A time component for project completion; and C) A valuation of the future rehabilitation costs, which are different for each alternate and which are based on Life Cycle Costs. The form of the bid specification is therefore A+B+C, where the contract will be awarded to the contractor producing the lowest sum of these quantities. The (B) component may be used on projects where user costs are determined to be a primary concern. This component will allow prospective bidders to determine the number of days necessary to complete a project. A value will be assigned to the (B) component and this value multiplied by the number of days bid will be included into the total bid amount. For projects where user costs are not determined to be as significant the formula for bidding will be A+C. The Cabinet anticipates this process will provide additional competition, which could serve to lower bid prices. In addition, it is desired to determine the success of the bidding process as evidenced from understanding by contractors of the experimental bidding procedures and general acceptance of the process by industry. Inclusion of the LCCA adjustment provides the benefit of documenting future rehabilitation strategies and anticipated pavement performance. The procedure used in Kentucky for LCCA is described in Attachment 2. The model represents a process that has evolved over a period of years based on pavement performance experience in Kentucky and technical information from FHWA. An example of the LCCA from the 1-65 project (3-10.15 & 10.16) is attached. C. SCOPEIt is requested that the Kentucky Transportation Cabinet be authorized to use the procedures outlined in this proposal on a programmatic basis. The initial list of projects identified to use alternate bidding with a bid adjustment is as follows: Project 1 1-65, Simpson County, Kentucky Pavement Alternates:
Project 2 Breathitt Parkway, Christian County Pavement Alternates:
Project 3 (This project is 100% state funded) Shelbyville Bypass, Shelby County Pavement Alternates:
Life-cycle-cost analysis comparing the asphalt and PCC alternatives have been evaluated based on a 40-year analysis period. The results of this analysis did not differentiate between the two alternatives. Other factors associated with pavement type selection identified in the AASHTO Guide for Design of Pavement Structures-Appendix B did not clearly indicate the selection of one pavament type over another pavement type. Based on this analysis and other considerations, no clear-cut alternative could be selected by the Department. D. ScheduleThe three trial project listed above are scheduled to be included in the February 2006 letting. E. MeasuresImmediately following the letting, the KYTC Awards Committee will review all bids to determine whether there were irregularities associated with this bid process. A meeting with paving association representatives will be conducted and any concerns documented. The effect on unit bid prices due to alternate bidding is unknown. Unit bid prices will be compared to the Engineer's estimates and to previous bid prices for similarly sized projects for comparison. After the three trial projects are awarded the Cabinet will examine whether the alternate bidding stimulated greater competition by attracting a larger number of bidders on the trial projects. The Cabinet will also document the number of projects awarded with each pavement type. Attachment 1 Alternate Pavement Bidding ProcedureThe procedure for evaluation of bids involves an "A+B+C" concept There are two pavement alternates for this project. Each contractor should select their preferred alternate to hid. The process for bidding and the award of this project will take into account not only the contract amount bid, but also a time component and a life cycle cost adjustment factor (life cycle cost adjustment factors are provided by the Cabinet). This method will only be used to determine the successful bidder. It will not be used to determine the award amount or final payment to the Contractor. Definition of Terms
Consideration of Bids The "A" component of the bid involves the dollar amount for all work to be performed under the contract. The "B" component of the bid involves the total number of calendar days required to complete all work. (This component will only be used on projects where user costs are determined to be a substantial factor.) The "C" component involves the life cycle cost adjustment factor for the project. The best bid will be the bid with the lowest sum of "A+B+C." Attachment 2 Life Cycle Cost Analysis Procedure (KYTC)Life Cycle Cost Analysis (LCCA) is being used by the Kentucky Transportation Cabinet to make better transportation investment decisions over a predetermined analysis period. The basis for the methodology used to conduct LCCA follows an interim technical bulletin published by the Federal Highway Administration as publication number FHWA-SA-98-079, Life Cycle Cost Analysis in Pavement Design. The LCCA performed by the KYTC is a process for evaluating the difference in pavement costs of a roadway segment by analyzing initial construction costs, and discounted future costs, such as rehabilitation and resurfacing costs over a predetermined analysis period for the transportation facility. LCCA considers differential costs among viable alternative pavement design strategies. Costs common to the different alternatives cancel and are not included in the LCCA. The LCCA is dependent on the estimate of construction costs. Future costs are estimated using real dollars discounted to the present using a real discount rate. The discount rates used in LCCA reflect historical trends over periods of time. KYTC currently uses 4% as the discount rate in LCCA calculations. The construction costs used for these analyses are estimated and provided by the Engineering Estimating Section in the Division of Contract Procurement. The user costs are incurred by highway users traveling on the facility and are composed primarily of user delay and vehicle operating expenses. User costs are the traveling public's expenses resulting from construction, maintenance, and/or rehabilitation of a transportation facility. At this time the Cabinet is only incorporating user costs during the initial construction. These costs are accounted for with the use of a time component (B) in the bidding procedures. User costs are estimated according to FHWA publication number FHWA-SA-98-079. User costs are not included in the LCCA at this time. The Cabinet is continuing to analyze user costs and the elements associated with calculating these costs. KYTC intends on incorporating user costs into the LCCA procedure at some point in the future. A summary of the LCCA for the 1-65, Simpson County project (3-10.15 & 10.16) is attached. Attachment 3 Kentucky Transportation Cabinet Pavement Type Selection PolicyDecember 9, 2005 Chapter 1 Introduction1.1 Type Selection GoalThe Kentucky Transportation Cabinet (KYTC) has determined that the primary goal of pavement type selection is to provide well performing, durable, safe and cost-effective pavements. 1.2 PurposeThe objective of this document is to define the process that the KYTC will use to determine Pavement Type Selection for major projects. This document addresses the procedural approach for type selection determination and defines the responsibilities of each group that is involved in the pavement type selection process. This document also further defines the technical processes that are to be used for pavement type selection. These include, but are not limited to, Pavement Design Procedures, Primary Engineering Factors and Cost Analysis. 1.3 Scope1.3.1 InterstatesThis policy applies to projects on the Interstates that are new construction, reconstruction, major widening, or include pavement rehabilitation. Major widening includes projects that add additional traffic lanes to the current system. Pavement rehabilitation projects are defined as projects greater than one (1) mile in len@h that include more than 1 1/2" of grade change or greater than 2" of pavement milling. 1.3.2 Parkways and all other NHS RoutesThis policy also applies to projects on the Parkway system and all other National Highway System (NHS) projects greater than four (4) lane-miles in length that are new construction, reconstruction, major widening, or include major pavement rehabilitation. Major widening includes projects that add additional traffic lanes to the current system. Major pavement rehabilitation projects are defined as projects that include more than 4"of new pavement. 1.3.3 Other Projects Off the NHSThis policy also applies to all new construction, reconstruction, and pavement rehabilitation projects over four (4) lane-miles in total length that have:
1.3.4 IntersectionsIntersections can present situations that require special attention. Intersections are to be analyzed on a case-by-case basis by the designer or project team. Type selection for intersections may be brought to the Central Office Pavement Branch at the discretion of the designer or project team. 1.4 GeneralThe Commissioner of Highways will administer this policy, with the approval of the Federal Highway Administration (FHWA) on projects where federal aid funds are involved. The Pavement Branch of the Division of Highway Design will provide technical assistance, advice, training, and support. Any request for change in pavement type on projects covered by this document once a project has been awarded for construction must come before the Commissioner's Office for approval. 1.5 BackgroundThis document will supercede the original Pavement Type Selection Policy that took effect on October 3, 2003. This document will take effect immediately upon approval by the KYTC Commissioner of Highways and the FHWA Kentucky Division Administrator. Chapter 2 Organization and Responsibilities2.1 Commissioner of Highways OfficeThe Commissioner of Highways will have primary approval authority for type selection on all projects covered under Section 1.3 of this document. 2.2 Division of Highway Design Pavement BranchThe Pavement Branch will he responsible for developing pavement designs and engineering analyses for all projects on the NHS and all other projects that fall outside of the scope of the Pavement Design Guide (>20,000,000 ESALs, 215,000 ADT, or 220% Trucks). The Pavement Branch will submit a type selection report on these projects to the State Highway Engineer and the Commissioner of Highways for their consideration and approval. The Pavement Branch will maintain the pavement design records and documentation concerning project decisions for these projects for a time period that exceeds the life of the pavement design. The Pavement Branch will also be responsible for:
2.3 District Offices and Project TeamsThe Districts will he responsible for all project-related design activities including pavement design and engineering analysis for projects that fall under the scope of the Pavement Design Guide (<20,000,000 ESALs, <15,000 ADT, <20% Trucks, and off the National Highway System). Districts will be responsible for maintaining pavement design records and documentation concerning project decisions for a time period that exceeds the life of the strategy. 2.3.1 Project Team ResponsibilityThe Project Team will develop a type selection report on all projects that fall under the Pavement Design Guide covered under Section 1.3.3. The Project Team will transmit the report to the Division of Highway Design Pavement Branch under the signature of the Branch Manager for Pre-Construction. 2.3.2 Other Project ResponsibilityThe Project Team will recommend for approval type selection for ail projects not covered under Section 1.3 of this document. The Branch Manager for Pre- Construction will approve type selection for these projects recommended by the Project Team. 2.4 University of Kentucky Transportation Research CenterThe Transportation Research Center at the University of Kentucky will work with the Pavement Branch in a research and technical advisory capacity. They will be utilized as consultants on pavement design and type selection issues. Chapter 3 Pavement Type Selection Procedures3.1 Primary Engineering FactorsThese factors will he considered and documented in all pavement type selection reports. 3.1.1 TrafficBoth total volume and the percentage of truck traffic should he considered when determining pavement type. The percentage of commercial traffic and frequency of heavy load applications can have a major effect on the structural design of a pavement. For heavily traveled facilities in congested locations, the need to minimize the disruptions and hazards to traffic may dictate the selection of those strategies having long initial service life with little maintenance or rehabilitation regardless of relative economics. 3.1.2 Soils CharacteristicsThe load-carrying capacity of a native soil is of paramount importance in pavement performance. The characteristics of native soils not only directly affect the pavement structure design hut may, in certain cases, dictate the type of pavement economically justified for a given location. 3.1.3 Construction ConsiderationsStaged construction of the pavement structure may dictate the type of pavement selected. Other considerations such as speed of construction, maintenance of traffic, anticipated future widening and ease of replacement may have a strong influence on pavement type selections in specific cases. 3.1.4 Cost ComparisonWhere there are no overriding engineering factors and several alternate pavement types would serve satisfactorily, cost comparison can be used to assist in determining pavement type. Such costs should include the initial construction cost, the cost of subsequent stages or corrective work, anticipated life, maintenance costs and costs to road users during periods of reconstruction or maintenance. It should he noted that should budget constraints warrant, selection of pavement type may be based on initial cost. 3.1.4a Initial Cost AnalysisInitial cost analysis is to be performed on all projects. Unit costs should be obtained from the Engineering Estimating Section in the Division of Highway Design for all projects listed in Section 1.3. For all other projects the average unit bid prices for the previous calendar year may be utilized unless more regionally specific data is available. 3.1.4b Life Cycle Cost AnalysisLife Cycle Cost Analysis is to be performed on all projects where the (l)Traffic, (2)Soils Characteristics, (3)Construction Considerations, or (5)Initial costs between pavement alternates do not overwhelmingly favor a particular alternate. The current KYTC Pavement Design Guide Excel spreadsheet incorporates these computations into the cost analysis for projects designed by District offices and consultant personnel. A more detailed LCCA spreadsheet will used by Central Office Pavement Design staff for all projects on the National Highway System and projects with greater than 20,000,000 ESALs. Life Cycle Cost Analyses will only include agency costs at this time. The life cycle costs for user delay will be analyzed separately. Analysis FactorsListed below are the factors that are to be used in all Life Cycle Cost Analysis for KYTC projects.
3.2 Secondary Engineering FactorsThese factors should be considered and documented in pavement type selection reports. When all primary factors arc found to be equivalent the secondary factors may be referenced for pavement type selection determination. 3.2.1 Performance of Similar Pavement in the AreaPast performance is a valuable guide, provided there is good correlation between conditions and service requirements between the reference pavements and the designs under study. Certain pavements in specific locations have been able to remain in service well beyond their design lives. Certain pavements have been able to function better and have longer lives between rehabilitation cycles. 3.2.2 Adjacent Existing PavementsProvided there is no radical change in conditions, the choice of paving type on a highway may be influenced by adjacent existing sections which have given adequate service. The resultant continuity of pavement type will also simplify maintenance operations. 3.2.3 District Maintenance CapabilitiesThe selection of pavement type on a highway should consider input from District Maintenance Staff relative to their experience and ability to service and maintain alternative pavement types. 3.2.4 Incorporation of Experimental FeaturesIn some instances, the performance of new materials or design concepts must be determined by field testing under actual construction, environmental, or traffic conditions. Where the material or concept is adaptable to only one paving type, the incorporation of such experimental features may dictate pavement type selection. 3.2.5 Stimulation of CompetitionIt is desirable that improvement in products and methods be encouraged through continued and healthy competition among industries. Where alternative pavement designs have comparable costs and there are no overriding engineering factors favoring one alternate, the Cabinet may elect to take alternate bids. In general, comparable costs are defined as initial and life cycle costs for the agency within ten (10) percent or where the proposed bid adjustment is less than five (5) percent of the total project cost. However, circumstances may exist where the Department of Highways may choose to allow for alternate bids where costs may exceed these percentages. This exception may be allowed with the approval of the Commissioner of Highways wherc granting this exception is expected to improve competition and benefit the Department of Highways. 3.3 Alternate Pavement BiddingThere may he certain projects where the primary and secondary engineering factors are determined to be equivalent for both pavement types. In these instances the use of alternate pavement bidding may be considered. 3.3.1 Alternate Pavement Bid AdjustmentsWhen alternate pavement bidding is used to determine pavement type a bid adjustment will be used in the bidding process to determine the successful bidder. The bid adjustment value will he determined based on the future agency costs as calculated in the Life Cycle Cost Analysis. The actual value will be the net present value of the future agency costs calculated based on a 4% discount rate. The actual bidding procedure will add the bid adjustment value for either the asphalt or the concrete alternate to the bid of the contractor bidding the respective alternate. The bid adjustment value will only be used to determine the low bidder and will not be used to determine final payment to the contractor. The following formulas will be used for alternate bidding: Total Bid (Concrete Bidder) = A + Cconcrete, Total Bid (Asphalt Bidder) = A + Casphalt where, A = The dollar amount for all work to be performed under the contract C = The Bid Adjustment Value for the respective pavement alternate 3.3.2 Project Completion Time ("B" Component)When alternate bidding is used on a project and the user costs during initial construction are calculated to be greater than $2,000,000 for either alternate a time comnponent may he added for bidding purposes. The "B" component will he added to allow contractors to bid the number of calendar days necessary to complete all work associated with a project. The value of the "B"component will be calculated using the procedures outlined in FHWA-SA-98-079 "Life Cycle Cost Analysis in Pavement Design". The daily work zone costs should be determined based on the maintenance of traffic strategy specified in the plans or proposal. The following formula will be used for alternate bidding with a time component: Total Bid =A + B + C where. A = The dollar amount for all work to be performed under the contract APPROVED Marc Williams, P.E. Commissioner of Highways Date APPROVED Jose Sepulveda, P.E. Kentucky Division Administrator, FHWA Date
Pavement Design and Bid Adjustment Information3-10.15 & 10.16, I-65, Simpson County (4.88 miles) Alternate A (Asphalt)Driving Lane Overlay
1 1/2" CL4 Asph Surf 0.5A PG76-22 Shoulder Overlay 1 1/2" CL3 Asph Surf 0.5D PG64-22 Driving Lane Full-Depth 1 1/2" CL4 Asph Surf 0.5A PG76-22 Shoulder Full-Depth 1 1/2" CL3 Asph Surf 0.5D PG64-22 Alternate A Bid Adjustment = $2,001,710 Alternate B (Concrete)Diving Lane Overlay 11" JPC Pavement Shoulder Overlay 11" JPC Pavement Diving Lane Full-Depth 11" JPC Pavement Diving Lane Full-Depth Shoulder Full-Depth 11" JPC Pavement Alternate B Bid Adjustment = $1,581,875 2-100.3. Breathitt Parkway Extension, Christian Countv (1.77 miles)Altemate A (Asphalt)Driving Lanes 1 1/2" CL3 Asph Surf 0.5A PG76-22 Shoulders 1 1/2" CL2 Asph Surf 0.5D PG64-22 Alternate A Bid Adjustment = $576,957 Alternate B (Concrete)Driving Lanes 12" JPC Pavement Shoulders 1 1/2" CL2 Asph Surf 0.5D PG64-22 Alternate B Bid Adjustment = $402,826 5-326.01, Shelbvville Bypass, Shelby Countv (4.5 miles)Altemate A (Asphalt)Driving Lanes 1 1 1/2" CL3 Asph Surf 0.5A PG76-22 Shoulders 1 1/2" CL2 Asph Surf 0.5D PG64-22 Alternate A Bid Adjustment = $827,376 Alternate B (Concrete)Driving Lanes 10" JPC Pavement Shoulders 1 1/2" CL2 Asph Surf 0.5D PG64-22 Alternate B Bid Adjustment = $356,240 |
ContactJerry Yakowenko |
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Updated: 04/07/2011 |
