U.S. Department of Transportation
Federal Highway Administration
1200 New Jersey Avenue, SE
Washington, DC 20590
Federal Highway Administration Research and Technology
Coordinating, Developing, and Delivering Highway Transportation Innovations
|Project Name:||Quantification of Cost, Benefits, and Risk Associated With Different Quality and Project Delivery Systems|
|Start Date:||October 31, 2013|
|End Date:||October 31, 2015|
|Office:||Office of Infrastructure Research and Development|
|Team:||Infrastructure Analysis and Construction Team [HRDI-20]|
|Program:||Innovative Pavement Research and Deployment|
|Roadmap/Focus area(s):||Infrastructure Research and Technology Strategic Plan and Roadmap|
|Project Description:||This study investigates and compares the costs, benefits, and risks associated with the Design-Bid-Build, Design-Build, and Construction Manager/General Contractor project delivery systems, as well as those related to use of early completion incentives/disincentives (I/D). The scope of the study covers various types, sizes, and scopes of transportation projects delivered by State highway agencies. The study involves collecting, organizing, and analyzing data from various highway agencies. The research product is guidance for State highway agencies to assist them in determining when to use each of the various project delivery systems to realize maximum benefit with regards to cost, benefits, and risk, as well as to determine appropriate incentive/disincentive levels for completion time.|
The key project objectives are:
(1) Document the benefits, costs, and risks associated with projects delivered under Design-Bid-Build, Design-Build, and Construction Manager/General Contractor systems.
(2) Quantify the cost, schedule, and quality consequences of using alternative delivery systems on appropriate projects.
(3) Document the benefits, costs, and risks associated with use of completion time incentives/disincentives (I/D).
(4) Provide State highway agencies with guidance on determining when to use each of the project delivery systems to realize maximum benefits with regards to project type, size, and complexity.
(5) Provide State highway agencies with a sound, systematic process for determining incentive/disincentive amounts and times.
|Background Information:||A majority of State Departments of Transportation (DOT) are using alternative project delivery methods such as Design-Build, and several are using Construction Manager/General Contractor, in place of the traditional Design-Bid-Build method on certain transportation projects. Some of the reasons for this trend include a desire to deliver projects more quickly, a need to deliver an increased number of projects during short-term periods of expanded funding (such as the recent American Recovery and Reinvestment Act), and to take advantage of documented benefits such as improved constructability, less cost growth, early cost certainty and contractor innovation. National Cooperative Highway Research Program (NCHRP) Synthesis 402, “Construction Manager-at-Risk Project Delivery for Highway Programs” states that there is a need to provide agencies with a better understanding of these project delivery methods, so as to be able to make an informed decision as to the potential benefits of each. National Cooperative Highway Research Program (NCHRP) 20-7, Task 172, “Recommended AASHTO Design-Build Procurement Guide” recognizes that Design-Build is not appropriate for all projects, and should only be used on projects where the benefits will outweigh the additional costs. Many Departments of Transportation (DOT) reserve these alternative methods for large, complex projects, but some agencies are beginning to use Design-Build and/or Construction Manager/General Contractor on smaller, less complex projects. Historically, DOTs have been able to deliver certain types of projects, such as asphalt overlays, mill and inlays, inplace recycling, small bridges, etc., efficiently using Design-Bid-Build. Moving to Design-Build or Construction Manager/General Contractor on these projects may be subjective and could result in higher life-cycle costs. Therefore, agencies would benefit from improved guidance on when to use these alternative delivery methods. Quantifying the costs, benefits, and risks associated with these project delivery methods is an important step in assisting agencies in their decisionmaking process. In addition, agencies are using various contracting methods to reduce user delays, such as A + B bidding, lane rental, and completion time incentives/disincentives (I/D). Early completion incentives have been shown to be an effective way to motivate contractors to use innovative methods to complete projects early (Jaraiedi, M., R. W. Plummer, and M. S. Aber, 1995, Incentive/Disincentive Guidelines for Highway Construction Contracts, Journal of Construction Engineering and Management, ASCE). However, the incentive/disincentive amounts are not always determined using sound methods. The approach varies from designating a percentage of the construction cost to that based on comprehensive consideration of user benefits; however, it rarely considers what it would take the contractor, in terms of additional resources and associated costs, to achieve those incentives. Ideally, the I/D amounts should not only be factored on what it is worth to the agency, in terms of reduced user costs, but also what it takes the contractor to achieve it. Critical information needed to determine the agency benefits and additional contractor resource requirements and associated cost is the accurate estimation of optimized production rate. The Constructability Analysis for Pavement Rehabilitation Strategies (CA4PRS) software developed in a collaborative effort by the University of California at Berkeley Pavement Research Center and the Federal Highway Administration (FHWA), under a Transportation Pooled Fund (TPF) State Planning and Research (SPR)-3(098) program, has been shown to be reasonable in predicting optimum pavement construction production using actual construction projects. It can also be a tool to backanalyze historical I/D projects to determine their effectiveness and lessons learned where improvements can be made. There is a need to develop systematic procedures to determine the I/D amount that not only balances the agency cost and user benefits, but also accounts for the additional resources that the contractor utilizes to achieve them.|
|Test Methodology:||Cost/benefit analysis|
|Expected Benefits:||The expected benefit is guidance for State highway agencies to assist them in determining when to use each of the various project delivery systems to realize maximum benefit with regards to cost, benefits, and risk, as well as to determine appropriate incentive/disincentive levels for completion time.|
|Deliverables:||The deliverable is a report identifying the costs, benefits, and risks associated with project delivery systems, and the costs and benefits of early completion incentives/disincentives.|
|FHWA Topics:||Roads and Bridges--Construction and Project Management|
|TRT Terms:||Project Management
Design Build Construction
|FHWA Disciplines:||Construction and Project Management