U.S. Department of Transportation
Federal Highway Administration
1200 New Jersey Avenue, SE
Washington, DC 20590
2023664000
Federal Highway Administration Research and Technology
Coordinating, Developing, and Delivering Highway Transportation Innovations
This report is an archived publication and may contain dated technical, contact, and link information 

Publication Number: FHWARD98155 Date: FEBRUARY 1999 
Introduction 

When developing a PRS for use in the field, the agency must make some important pay adjustmentrelated decisions. One of these decisions involves deciding whether to use Level 1 or Level 2 pay adjustment procedures. If the agency chooses to accept asconstructed pavement using Level 1 pay adjustment procedures, an appropriate lot composite pay factor (CPF) equation must be determined. Finally, the agency must determine how pay factors are to be limited when making final contractor pay adjustments. This chapter is designed to provide the agency with the information required to make these decisions.
Selecting a Pay Adjustment Procedure (Level 1 or Level 2) 

The current revised PRS prototype specification allows the agency to choose from two different pay adjustment procedures (representing the two different PRS implementation levels). Level 1 is offered as a simplified (and, therefore, more immediately implementable) method of estimating the results obtained from Level 2. Table 9 reiterates some of the main differences between the two PRS implementation levels.
Table 9. Key differences between PRS Level 1 and Level 2 pay adjustment procedures.
Characteristic 
Level 1 
Level 2 

Primary Method of Acceptance Testing 
Current acceptance tests used by the agency. 
In situ acceptance testing is recommended. 
Included Acceptance AQC's 
Only those AQC's (of the available five) historically measured by the agency for acceptance. 
Any or all of the five AQC's available for inclusion in the PRS. 
Preconstruction Output 
Individual pay factor charts for each AQC. Each is developed assuming that the other AQC's are held constant at their target values. 
One simulated overall asdesigned lot LCC (reflecting the interactions between AQC's). 
Overall Lot Pay Factor Method 
Determined as a simple mathematical function of the individual AQC pay factors (CPF equation). This CPF estimates the pay factor obtained from the Level 2 direct simulation. 
Determined directly through simulation of all AQC's. The closest simulation of actual field conditions. 
It is strongly recommended that an agency gain experience with the current PRS approach using Level 1. Although the Level 1 pay factor is only an estimate of the computed Level 2 pay factor, at this time, the Level 1 approach is by far the most practical of the two approaches as it provides important preconstruction output desired by both the agency and the contractor. After gaining experience with the Level 1 approach, an agency may begin using the Level 2 approach or a combination of Level 1 and Level 2.
Defining a Level 1 Composite Pay Factor Equation
It is recommended that the governing CPF equation be a
simple mathematical relationship of the independently determined AQC pay factors. A
number of different simple equation forms are currently used by agencies to determine CPF
equations. These same concepts may be used to determine CPF's using the Level 1
PRS approach. Four specific CPF equation forms are discussed in more detail in the
following sections.
Weighted Average
The weighted average CPF method involves multiplying
each calculated individual AQC pay factor by agencychosen AQC weighting factors.
Each of the AQC weighting factors is "determined through empirical observation or
other engineering considerations," as stated in the AASHTO Implementation Manual
for Quality Assurance.^{(28)} Using this method, the resulting lot CPF is determined using
equation 18.
CPF_{LOT} = å(PF_{n}*W_{n}) / å(W_{n}) (18)
where
CPF_{LOT} = Calculated Level 1 lot CPF.
n = Total number of AQC's included in the Level 1 specification (e.g., if the agency chooses to only include concrete strength and slab thickness, then n =2).
PF_{n} = Independently determined Level 1 pay factors for each of the n AQC's included in the Level 1 specification.
W_{n} = Respective weighting factors for each of the n AQC's included in the Level 1 specification.
An example illustrating the weighted average method is as follows:
CPF_{LOT} = [å(PF_{n}*_{ }W_{n}) / å(W_{n})]
= [543.5 / 5.3]
= 102.5 percent
Table 10. Example calculations demonstrating the weighted average CPF method.
AQC 
AQC number (n) 
Individual AQC PF (PF_{n}) 
AQC PF Weighting Factor (W_{n}) 
PF_{n}* W_{n} 

Concrete Strength 
1 
106.5 
1.3 
138.5 
Slab Thickness 
2 
102.3 
1.5 
153.5 
Entrained Air Content 
3 
98.5 
1.0 
98.5 
Initial Smoothness 
4 
102.0 
1.5 
153.0 
— 
— 
— 
å(W_{n}) = 5.3 
å(PF_{n}*W_{n}) = 543.5 
Simple Average Method
The simple average CPF method involves computing the
average of the calculated individual AQC pay factors. The resulting lot CPF equation
is computed using equation 19.
CPF_{LOT} = å(PF_{n}) / n (19)
where
CPF_{LOT} = Calculated Level 1 lot CPF.
n = Total number of AQC's included in the Level 1 specification.
PF_{n} = Independently determined Level 1 pay factors for each of the n AQC's included in the Level 1 specification.
An example illustrating the simple average method is as follows:
CPF_{LOT} = å(106.5 + 102.3 + 98.5 + 102.0) / 4
= (409.3) / 4
= 102.3 percent
Summation Method
The summation CPF method involves summing the
individual AQC pay adjustments (difference between the computed AQC pay factor and 100
percent). The resulting lot CPF equation is computed using equation 20.
CPF_{LOT} = å(PF_{n} – 100) + 100 (20)
where
CPF_{LOT} = Calculated Level 1 lot CPF.
n = Total number of AQC's included in the Level 1 specification.
PF_{n} = Independently determined Level 1 pay factors for each of the n AQC's included in the Level 1 specification.
An example illustrating the summation method is as follows:
CPF_{LOT} = å(PF_{n} – 100) + 100
= (106.5 – 100) + (102.3 – 100) + (98.5 –100) + (102.0 – 100) + 100
= 6.5 + 2.3 – 1.5 + 2.0 + 100
= 109.3 percent
Product Method
The product CPF method involves multiplying the
individual AQC pay factors (expressed as decimals, e.g., 103 percent = 1.03). The
resulting lot CPF equation is expressed in equation 21.
CPF_{LOT} = (PF_{1} * PF_{2}*_{ ………}*PF_{n}) /(100)^{n1} (21)
where
n = Total number of AQC's included in the Level 1 specification.
PF_{1} to PF_{n} = 1 to n independently determined Level 1 AQC pay factors.
An example illustrating the product method is as follows:
CPF_{LOT} = (PF_{1} * PF_{2}*_{ ………}*PF_{n}) /(100)^{n1}
= (106.5 * 102.3 * 98.5 * 102.0) /100^{3}
= 109.5 percent.
Selecting an Appropriate CPF Method
The goal is to determine the overall lot CPF that represents
the performance that actually occurs over time. The Level 2 PRS simulation gives the
best available estimate of the true pay factor. Of the four CPF methods presented in
this section, the product method has typically been found to most closely approximate this
Level 2 pay factor. However, agencies are encouraged to choose an appropriate CPF
method after conducting comparisons of the available CPF methods using the sensitivity
analysis portion of the PaveSpec 2.0 software.
Selecting Pay Factor Limits 

The CPF for the lot (without applying any pay factor limits) is calculated as the following, using equation 21:
CPF_{LOT} = (PF_{1} * PF_{2}*_{ ………}*PF_{n}) /(100)^{n1}
= (108.5 * 105.3 * 99.5 * 96.4 * 102.4) /100^{4}
= 112.2 percent
The following sections show the different methods by which this calculated CPF of 112.2
percent may be limited.
Limiting the Overall Lot CPF
The agency may choose to limit the overall lot pay factor to
an agencychosen subjective value. For our example, let's assume the agency
feels that it cannot pay more than 106 percent of the bid price due to budgetary limits.
Therefore, the calculated lot CPF of 112.2 percent would be limited to the
agencychosen 106percent value. For this case, the contractor would then receive a
6percent incentive payment for the project.
Limiting Individual AQC Pay Factors
Another approach for limiting pay factors for budgetary
purposes is to apply limits to the individual AQC pay factors. For our example,
let's assume that each of the individual AQC pay factors is limited to 103
percent. Table 11 shows a comparison of the individual AQC pay factors and resulting
overall lot CPF's for both cases of with and without applied AQC limits.
Table
11. Example of limiting individual AQC pay factors
(CPF calculated using the product
method).
AQC 
Individual AQC Pay Factors 


Without Limits 
All Limited to 103% 

Concrete Strength 
108.5 
103.0 
Slab Thickness 
105.3 
103.0 
Entrained Air Content 
99.5 
99.5 
Initial Smoothness 
96.4 
96.4 
Percent Consolidation 
102.4 
102.4 
Calculated Lot CPF 
112.2 
104.2 
Using the 103percent individual AQC limits, the overall lot CPF is then calculated to be 104.2 percent. For this case, the contractor would then receive a 4.2percent incentive payment for the project.