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Alternative Pavement Bidding

Michigan Department of Transportation
I-69 Design Build Finance Project Interim Report
Control Section 77024, Job Number 74766A

Prepared by:

Christian Youngs, P.E.
Design Build Program Manager
Michigan Department of Transportation

Benjamin Krom, P.E.
Pavement Selection Engineer
Michigan Department of Transportation

July 10, 2009


The Michigan Department of Transportation (MDOT) submitted a final SEP-14 report for the use of alternative pavement bidding on M-6 in August 2001. The SEP-14 work plan was developed in September of 2000 to allow both the concrete and asphalt paving industries to compete for the paving work on M-6, a new limited access freeway near Grand Rapids, Michigan.

MDOT's typical process selects one pavement option early in the design based on the results of a life cycle cost analysis (LCCA). The SEP-14 work plan permits MDOT to develop concrete and hot mix asphalt (HMA) pavement cross sections for a project that is structurally equivalent. HMA and concrete paving contractors are then allowed the opportunity to competitively bid on the project. This process is expected to increase competition which may result in more favorable bids for MDOT.

In 2008, MDOT initiated a pilot alternate pavement bidding program based on the original SEP-14 work plan developed for M-6. The pilot program allows a limited number of highway projects to proceed with an alternate pavement bidding component. MDOT requested to incorporate additional projects with an alternative pavement bidding component into the SEP-14 work plan approved for MDOT's M-6 project. In 2008 and 2009, the Federal Highway Administration (FHWA) approved adding projects to the SEP-14 work plan developed for M-6, and a list of the projects approved as of May 5, 2009 is provided in Exhibit 6.

This interim report provides an update on an alternate pavement project along I-69. The I-69 project is the first alternate pavement project let by MDOT since the M-6 project. Additional reports will be provided as additional alternate pavement projects are completed.

I-69 Design Build Finance Project Background
(MDOT Control Section 77024, Job Number 74766A)

MDOT selected a section of I-69 in St. Clair County to pilot a Design Build Finance (DBF) project that contained an alternate pavement bidding component. I-69 is the first project awarded since M-6 that contains an alternative pavement component. The I-69 project will reconstruct a six mile section of rural freeway, including the reconstruction of one interchange, pavement rehabilitation of an existing rest area, and rehabilitation of five structures.

The I-69 DBF project was awarded on September 2, 2008, with a final completion date of June 15, 2010. Concrete cross-overs were constructed in 2008, and the majority of the work will be completed in 2009. The I-69 DBF project requires the contractor to provide the financing of the project during construction. MDOT will make a small initial payment to the contractor when the project is substantially completed. MDOT will then make small incremental payments every three months until fiscal year 2012 when the balance of the contract will be paid.

I-69 DBF Project Procedures

Life Cycle Cost Analysis
MDOT developed the concrete and HMA pavement designs through the department's standard procedures, which utilize the 1993 AASHTO Guide for Design of Pavement Structures. During the advertisement of this DBF project, contractors were not permitted to propose changes to the design of the pavement structure. In order to account for the varying life cycle costs by each pavement structure, MDOT developed equations that would consider the initial construction costs, future maintenance costs, and user delay costs for each pavement alternative. The equations convert a contractor's bid to an Equivalent Uniform Annual Cost (EUAC) for each pavement type. The contractor whose bid equated to the lowest EUAC would be selected for the project. The initial construction costs and the user delay costs were to be provided by the contractor in their bid, and MDOT estimated the future maintenance costs based on historical data. The contractor's bid was then entered into the equation associated with the specified pavement type. The contractor's bid includes all work to construct the project including the pavement, earthwork, signing, restoration, etc. Exhibit 5 contains the pay items used on this project.

To account for delays to the traveling public, MDOT incorporated lane rental costs into the project. Contractors were required to include a lump sum dollar amount in their bid that would reflect the cost of the delays to the public. MDOT provided the hourly rate contractors would be charged for each hour they had lane restrictions on I-69. Exhibit 3 contains the final lane rental special provision used on this project.

The I-69 project incorporated MDOT's frequently used special provisions for concrete and HMA paving, and for the material and workmanship warranty requirements (Exhibits 4 and 5).

Contracting Industry Involvement
Throughout this project MDOT has reinforced the concept that early coordination with industry is critical when introducing new methods of contract procurement. There were several industry meetings regarding the DBF concept, as well as the alternate pavement component, prior to advertising the project.

A letter (See Exhibit 1) was provided to the Michigan Concrete Paving Association (MCPA), the Asphalt Paving Association of Michigan (APAM) and the Michigan Infrastructure and Transportation Associates (MITA) that detailed the development of the EUAC. This letter gave Michigan's contracting associations detailed information on how the EUAC equation was developed, and how it would be utilized in the I-69 DBF project. It also explained that user delay costs were determined by a lane rental pay item.

MDOT held a meeting with MCPA, APAM and MITA to seek concurrence on the proposed alternate paving methodology. MCPA, APAM and MITA had no objections to MDOT's proposed methods on the I-69 DBF project. The APAM stated that they believe the 26 year evaluation period currently used in MDOT's LCCA process should be a longer duration in order to adequately assess the actual maintenance costs on a pavement. However, APAM agreed this project should proceed per the current LCCA process. Exhibit 2 contains the minutes from this meeting.

I-69 Bid Evaluation
MDOT did not receive any bids from HMA contractors for the I-69 DBF project. We believe that an HMA pavement structure may have been cost prohibitive due to the additional earthwork required to construct the project with an HMA pavement.

The final bids received were under the final engineer's estimate. The low bid was $38,325,355. It is difficult to evaluate the effect of the alternate pavement component since only one paving industry submitted bids on the project, and the financial component of the project may have impacted the number of potential bidders.

MDOT does not believe the alternate pavement component of the project added any significant cost to the development of the I-69 DBF contract. Additional internal costs to develop the alternate pavement bidding component were minimal because the project utilized design build procurement. The procedures used on I-69 to determine the pavement sections are also performed on typical projects with pavement costs over $1,000,000. Therefore, the costs to develop the alternate pavement component would be similar to the costs needed to determine the final pavement on a traditional project.

Evaluation of the I-69 Alternative Pavement Project

I-69 Interim Evaluation
The I-69 project allowed the contractor to complete the temporary traffic cross-overs in 2008, and the remainder of the project is designed and currently under construction. At this time there are no known issues associated with the project's alternate pavement component.

The design build contractor has proposed several changes on the project related to the paving. The original contract specified HMA temporary cross-overs and an HMA overlay at a rest area. The contractor proposed to use concrete temporary cross-overs and to whitetop the rest area.

MDOT has accepted both of these proposed changes. The contractor has also proposed to change the transverse dowel bar spacing on the project. MDOT is currently reviewing this proposed change.

On February 9, 2009, MDOT held a post-award meeting with Michigan's contracting industries to discuss the I-69 DBF project, including the alternate pavement component. Contractors indicated that the method used to evaluate the concrete and HMA paving alternatives were clear. Industry did not offer any explanation or insight as to why only concrete paving contractors bid on the project.

During the development of this project the MCPA did not voice concerns with MDOT's alternate pavement bidding process, and supported the process on future alternate Pavement Project pavement bid pilot projects. The APAM, at various meetings with MDOT, has reiterated their belief that the 26 year evaluation period currently used in MDOT's LCCA process should be a longer duration in order to adequately assess the actual maintenance costs on a pavement. MDOT is reviewing APAM's concern.

MDOT will continue to meet with industry on future alternative pavement projects

Update on Other Alternate Pavement Bidding Projects

MDOT let an alternate pavement bid project on US-31 in Berrien County on April 9, 2009. The contract was awarded on April 28, 2009. The contractor will use HMA for the pavement.

A project on I-96 in Ingham County was originally selected to be an alternate pavement pilot project. This project was removed from consideration when the engineer's estimate showed a cost difference of approximately $12 million between the two pavement alternatives. MDOT contacted MITA, APAM and MCPA with this finding, and the project will be designed and let with only the concrete pavement option designed per MDOT's typical pavement selection procedures.

MDOT will provide additional reports on each alternative pavement project once additional projects are completed, or as requested by the FHWA. MDOT expects to gather a better understanding of the effects of the alternate pavement component as more projects are placed under contract. These findings will be detailed in future reports.

Exhibit 1

I-69 –Design Build Finance Project (Control Section 77024 Job No. 74766A)
Pre-bid Information Provided to MDOT's Contracting Industry



State of Michigan Logo Crest

March 28, 2008

Mr. Glenn J. Bukoski, P.E.
Michigan Infrastructure & Transportation Association
P.O. Box 1640
Okemos, Michigan 48805-1640

Dear Mr. Bukoski:

I-69 in St. Clair County, Alternate Pavement Bidding Project
CS 44044 & 77024 JN 74766A

The Michigan Department of Transportation (MDOT) plans to advertise a Design/Build/Finance project for I-69 in Lapeer and St. Clair Counties that will include an alternate pavement bidding component. The project will be advertised in June 2008 and let in August 2008.

MDOT has calculated and established equations to determine the Equivalent Uniform Annual Cost (EUAC) for each pavement type. These equations will be used to assist in determining the contractor for this project. A copy of the methodology used to determine the EUAC values and the cross section anticipated to be proposed for each pavement design is enclosed.

The equations are as follows:

Hot Mix Asphalt Pavement
EUAC = (Contract Work Items + Lane Rental + $1,401,702.72) x 0.054658622075

Concrete Pavement
EUAC = (Contract Work Items + Lane Rental + $843,774.80) x 0.054658622075

MDOT is requesting your input on the methodology used in developing the equations that have been established for this alternate pavement bidding project. A meeting is scheduled on Thursday, April 10, 2008, at Noon, Sleeping Bear Conference Room, MDOT's Van Wagoner Building in Lansing to discuss industry's comments on this component.

In order for MDOT personnel to review and evaluate comments and concerns, and allow for the meeting to be as productive as possible, we are asking that all comments be provided in writing, on or before April 8, 2008. Comments may be mailed, faxed 517-241-2567, or e-mailed to my attention at friendj@michigan.gov.

If you have any questions, please feel free to contact me at 517-335-1697.


John C. Friend
Engineer of Delivery


www.michigan.gov • (517) 373-2090

LH-LAN-0 (01/03)


I-69: Design/Build/Finance/Alternative Pavement Bidding
CS 44044 & 77024 - JN 74766

EquivalentUniform Annual Cost (EUAC) = Sigma Symbol Net Present Value NPV End of Equation: times i times (1 + i)n squared over (1 +i) n squared - 1

i = 2.8%


n years

Sigma Symbol NPV = ContractWork Items +User Delay Cost +Future Maintenance Cost

Contract Work Items = Cost of All Bidding Items in the advertised proposal (Including Design work) except Lane Rental Items

User Delay Cost = Lane Rental

Contract Work Items + User Delay Cost = Total Contractor Bid for the Project

I-69 Single Lane Closure = Equation: $8972.33 x 5 days + $12221.84 x 2 days / 7 days = $9900.76 per day / 24 hours $412.53 per hour

Single Ramp Closure = calculated the same as above, with values as follows:

EB Off-Ramp: $440.49 per hour
EB On-Ramp:
$752.04 per hour
WB Off-Ramp:
$861.95 per hour
WB On-Ramp:
$510.45 per hour

LaneRental = Bid Hours of I−69 Single Lane Closure × $412.53 per hour +
+ Sigma Symbol Bid Hours of Respective Ramp Closure × Respective $ per hour

Future MaintenanceCost = $63,713.76 per lane mile for HMA*
= $38,353.40 per lane mile for Concrete *

*Based on values from MDOT's Pavement Design and Selection Manual

Multiply Future Maintenance Cost by the # of total lane miles to bring into common units.

# of total lane miles = 5.500 miles × 4 lanes = 22.000 lane miles

Future Maintenance Cost = $63,713.76× 22.000 = $1,401,702.72 for HMA
= $38,353.40× 22.000 = $843,774.80 for Concrete

For the HMA Bidder:
EUAC = (ContractWork Items + Lane Rental + $1,401,702.72 ) × 0.0546586220705

For the Concrete Bidder:
EUAC = (ContractWork Items + Lane Rental + $843,774.80) × 0.054658622075

Updated: 02/25/2015
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