U.S. Department of Transportation
Federal Highway Administration
1200 New Jersey Avenue, SE
Washington, DC 20590
202-366-4000


Skip to content U.S. Department of Transportation/Federal Highway AdministrationU.S. Department of Transportation/Federal Highway Administration

Federal Highway Administration Research and Technology
Coordinating, Developing, and Delivering Highway Transportation Innovations

Overview

 

Research and Development (R&D) Project Sites

[Printer friendly]

 

Project Information
Project ID:   FHWA-PROJ-11-0035
Project Name:   Performance-Based Contractor Prequalification as an Alternative to Performance Bonds
Project Status:   Active
Start Date:  April 27, 2011
End Date:  May 1, 2013
Contact Information
Last Name:  Bradbury
First Name:  Richard
Telephone:  202-493-3365
E-mail:  Richard.Duval@dot.gov
Office:   Office of Infrastructure Research and Development
Team:   Infrastructure Analysis and Construction Team [HRDI-20]
Program:   Innovative Pavement Research and Deployment
Project detail
Roadmap/Focus area(s):   Infrastructure Research and Technology Strategic Plan and Roadmap
Project Description:   This study investigates the costs and benefits of performance bonding versus replacing performance bonding, to various degrees, with performance-based contractor prequalification. The scope of the study covers all types of contracts for all types of work that are awarded by State highway agencies. The research involves the collection, organization, and analysis of data and information from State highway agencies, contractors, and sureties. The research product is a recommendation on the cost effectiveness of performance bonds, and if applicable, guidance for State highway agencies that wish to develop and transition to a performance-based contractor prequalification system and recommendations for how such systems can best be implemented.
Goals:  
Below are the key project objectives:
 
(1) Document the benefits and cost of the current system of performance bonding in highway construction.
(2) Quantify the benefits of replacing currently required performance bonds on some highway construction projects with a rigorous performance-based contractor prequalification system. 
(3) Provide State highway agencies with guidance on the development and implementation of the prequalification system.
Background Information:   National Cooperative Highway Research Program (NCHRP) Synthesis 390, Performance-Based Construction Contractor Prequalification, reported that under the current system of performance bonding, “a contractor with a marginal track record but the same level of financial assets will receive the same bonding capacity, and hence the same opportunity to bid, as another contractor with a record of exemplary performance. This creates a situation in which the agency is subsidizing marginal performance, which in turn reduces the incentive for top performers to continue to superior performance.  Therefore, a contractor prequalification system that directly rewards good past performance and encourages poor performers to improve is needed to rectify this unintended consequence.”
Product Type:   Other
Promotional materials
Research report
Techbrief
Test Methodology:   Data collection and analysis
Expected Benefits:   The results of the research under this contract may make a case for replacing performance bonds with contractor prequalification, or in some other way recommend changes to derive greater benefits from using performance bonds or alternate methods of financial assurance.
Deliverables:   The TechBrief shall include the recommended performance-based contractor prequalification model program and provide guidance for its implementation.
FHWA Topics:   Roads and Bridges--Construction and Project Management
TRT Terms:   Performance Based Specifications
Contractors
Prequalifications
Data Collection
Infrastructure
Research
Construction
FHWA Disciplines:   Construction and Project Management
Generalist
Subject Areas:   Construction
Highways

 

Federal Highway Administration | 1200 New Jersey Avenue, SE | Washington, DC 20590 | 202-366-4000
Turner-Fairbank Highway Research Center | 6300 Georgetown Pike | McLean, VA | 22101