Construction Program Guide
Cost-plus-Time (A+B) Bidding
Cost-plus-time bidding, more commonly referred to as the A+B method, involves time, with an associated cost, in the low bid determination. Under the A+B method, each bid submitted consists of two components:
- The "A" component is the traditional bid for the contract items and is the dollar amount for all work to be performed under the contract.
- The "B" component is a "bid" of the total number of calendar days required to complete the project, as estimated by the bidder (Calendar days are used to avoid any potential for controversy which may arise if work days were used).
The bid for award consideration is based on a combination of the bid for the contract items and the associated cost of the time, according to the formula:
(A) + (B x Road User Cost / Day)
This formula is only used to determine the lowest bid for award and is not used to determine payment to the contractor.
A disincentive provision, that assesses road user costs, is incorporated into the contract to discourage the contractor from overrunning the time "bid" for the project. In addition, an incentive provision should be included to reward the contractor if the work is completed earlier than the time bid.
For critical projects that have high road user delay impacts, the A+B Method can be an effective technique to significantly reduce these impacts. A significant number of States have chosen to use and evaluate this innovative method of contracting. After a five-year evaluation period, A+B bidding was declared operational on May 4, 1995 and is no longer considered to be experimental.
- 23 USC 112 Letting of Contracts (2015)
- 23 USC 502 Surface transportation research, development, and technology (2012)
- Innovative Contracting Practices Initiative and Special Experimental Project No. 14 (02/13/1990)
- Section III.B.8.c.iv.b) 1) of the FHWA Contract Administration Core Curriculum Manual summarizes the FHWA's policies and provides general guidance on the use of Cost-Plus-Time Bidding
- Transportation Research Circular 386, "Innovative Contracting Practices" (1991)
- AASHTO Primer on Contracting for the Twentyâ€“First Century, Fifth Edition, 2006