Innovative Contracting Practices
I-65 Warren-Barren-Edmonson Counties Kentucky
Item Numbers 3-7.10 & 3-7.20
Purpose
The Kentucky Transportation Cabinet has been working for the last 2 years to incorporate various performance related specifications and enhanced QC/QA programs into the current specifications. It is anticipated that these changes will be cost effective and will enhance the performance of the projects on which they are used.
The next logical step in this process was to evaluate the feasibility of using warranties on projects. This provides the means to share the responsibility between the contractor and the Transportation Cabinet for constructing a quality product. The Transportation Cabinet also has recognized that there may be some situations wherein it may not be feasible to determine the best pavement type for the project. This is especially a concern during the development of rehabilitation projects for urban interstates and freeways.
The project constructed on I 275 in northern Kentucky (MP 1.05 to MP 7.15) illustrated the concepts of "A+B-C" bidding. Features included in the I 275 project included alternate pavement types, pavement warranties, and the option for implementing an extended pavement warranty. During the development of this project, many of the concerns identified during the I-275 project were again identified. The goal of this project is to build on experience gained on I-275 in Boone/Kenton counties by allowing two competing industries to bid on this project.
An attempt was made in April 2001 to place a mandatory 10-year warranty on the pavement. Bids received were such that the project could not be awarded. Following the rejection of the bids received on April 27, 2001, a re-evaluation of the pavement design considerations was initiated. After much discussion, it was the consensus of Transportation Cabinet staff and FHWA staff that re-bidding the project with alternate pavement types and a variable term warranty was necessary to validate or invalidate the experiences of the I 275 project. A similar attempt was made in June 2001 with a project on I-64 in Jefferson County. That project was bid with alternate pavements, a pavement warranty and an "A+B" concept for bid comparisons. However, this project also could not be awarded with alternate bids and as such was re-bid with asphalt pavement as the selected pavement type. and no warranty on the pavement.
Each pavement type has been designed to meet the same structural requirements over a 40-year analysis period. Therefore, the two alternative designs can be considered structurally equivalent. The introduction of this warranty provides a potential means to show functional equivalence between the alternatives during the warranty period. This is accomplished by developing performance levels and requirements in the warranty specifications that result in the same level of functional performance during the life of the warranty. In addition, it allows the contractor to utilize innovative concepts to modify various aspects of the construction process to meet the performance requirements established. This process will also assist in maintaining a consistent level of service and workmanship for the project throughout the warranty period.
It is anticipated that constructing a warrantied pavement structure would:
- Improve pavement performance,
- Encourage more competition,
- Permit contractor innovation,
- Potentially reduce the overall project life-cycle-cost.
To encourage contractor innovation with regard to construction techniques and work zone traffic control, the contractor will be permitted to completely close the interstate in each direction during specified times identified in the contract.
Background and History
Kentucky has historically selected successful bidders in the traditional manner of:
- Total Labor and Materials - "A " type bidding
- Owner Specifications - "Method Specifications"
- Contract Time - Working Days or Fixed Completion Date
In recent years Kentucky has evolved into to an "A + B" type of bidding concept of:
- Total Labor and Materials - "A"
- Owner Specifications - "Method Specifications"
- Contract Time - Owner assigns a value of working day and the Contractor bids the number of working days to completion at an owner assigned rate - "B"
- Low Bid is evaluated on the Basis of "A + B"
Kentucky also has awarded a construction a project utilizing an "A + B -C" concept, with the "C" component representing the value of the warranty provided by the contractor.
- Total Labor and Materials - "A"
- Incorporation of selected Performance Related Specifications
- Contract Time - Owner assigns a value of working day and the Contractor bids the number of working days to completion at an owner assigned rate - "B"
- The owner assigns a value for each year of warranty from 5 - 10 years.
- Low bid is evaluated on the basis of "A + B - C "
The value of the warranty was determined based on the anticipated user delays cost determined from FHWA DP-115 "Probabilistic Life-Cycle-Cost Analysis" procedures.
Scope of This Project
This project will utilize an "A-C" procedure for determination of the successful bidder. This project will not have the "B" component, but rather will be bid with a fixed completion date that includes a disincentive for late completion and an incentive for early completion. The contractor will be required to maintain at least two lanes of traffic in each direction for the duration of construction for this project. The attached Special Note for Incentive Pay and Disincentive Fees, "A-C" November 14, 2001 and Special Note for Warrantied Pavement, November 14, 2001 illustrate the concepts proposed for this project.
It is anticipated that initially this bidding concept will be used on this specific project. The proposed alternate pavement types for this project include.
I-65, Warren, Barren, Edmonson County, Kentucky
2-lanes in each direction
MP 35.26-40.52
Original Construction 1969
10" Jointed Reinforced Concrete Pavement over 6" of Dense-Graded Aggregate Base
42,000 AADT (2000) 38.0% Trucks
40,417,000 20-year Design ESALs
Rehabilitation Strategies:
- Rubblization of the existing PCC Pavement, 11" AC Overlay or
- 10" Unbonded PCC Overlay (with 1" Bondbreaker)
Life-cycle-cost analysis comparing the asphalt and PCC alternatives have been evaluated based on a 40-year analysis period. The results of this analysis did not differentiate between the two alternatives. Other factors associated with pavement type selection identified in the AASHTO Guide for Design of Pavement Structures-Appendix B do not clearly indicate the selection of one pavement type over another pavement type. Based on this analysis and other considerations, no clear-cut alternative could be selected by the Department.
Proposed Bidding Procedure
The procedure for evaluation of bids on this project involves an "A-C" concept. This is described in more detail in the attached Special Note for Incentive Pay and Disincentive Fees, "A -C" November 14, 2001 and Special Note For Warrantied Pavement, November 14, 2001.
The "A" component of the bid involves the dollar amount for all work to be performed under the contract.
The Fixed Completion date for this project will be September 30, 2003. An incentive of $10,000 a day will be paid for each calendar day in advance of September 30, 2003 that construction is complete with a maximum of $1,200,000 (120 days). A disincentive of $10,000 per calendar day will be charged for each day after September 30, 2003 that construction is not complete.
The "C" component involves the warranty component of the project. This project will have a variable warranty period ranging from 5 to 10 years. A 5-year warranty is mandatory for this project. The value of the bid credit for the warranty at 5 years is zero. Thereafter, the contractor will have the option of bidding additional periods of time for the warranty. The value of the bid credit for the warranty for each year will be as follows:
- 6-Year Warranty-- $ 250,000
- 7-Year Warranty-- $ 800,000
- 8-Year Warranty-- $1,500,000
- 9-Year Warranty-- $2,150,000
- 10-Year Warranty--$3,350,000
The best bid will be the bid with the lowest sum of "A-C."
Schedule
The following is the anticipated timeline for the project
- Advertisement for Bids November 23, 2001
- Bid Letting December 14, 2001
- Contract Award January 1, 2002
- Completion of Project October 1, 2003
- Warranty Period 10 years from date of completion
- Initial Report December 1, 2003
- Final Report End of the Warranty Period
Measures
The evaluation of the innovative contracting procedures will be grouped into two distinct areas.
The first area will consist of an evaluation of the number of bids and their components. This evaluation will consist of evaluating each bid and its relationship to the engineer's estimated cost for the project. In addition, the contract time component will be evaluated with respect to the engineer's estimate and to the actual time necessary to complete the project. Projected traffic delays will be monitored and documented to compare to those utilized in establishing the user costs used in the analysis of this project.
The second component of the evaluation will be that of the performance of the pavement structure with respect to the thresholds set forth in the warranty. For example, actual rutting and roughness measurements will be compared to those established in the warranty documents.
Contractor innovation will also be documented, such as types of materials, QC/QA results, construction techniques, and etc.
The amount of warranty work required will be monitored and documented. User delays will also monitored during work required for warranty activities. In addition, the results of the amount of warranty work required will also assist in establishing the actual LCC of the pavement.
Reporting
An initial report will be issued once construction of the project has been completed. This report will document the results of the bidding process, how this innovation may have affected the contract award, and provide a documentation of construction activities associated with this contract.
The reactions of the paving industry in Kentucky have been mixed. The long-term issues associated with the performance of the pavement and the warranty will only be addressed over a long period of time. The project on I 275 apparently did stimulate competition and resulted in unit costs that were lower than expected.
This project will provide additional information regarding the reaction of the highway construction industry. Additional information will be obtained regarding the feasibility of this type of procedure being utilized on future projects. The advantages and disadvantages of this type of bidding process from both the Department's and Industry points of view will be evaluated further. An interim report may be issued at some point during the warranty period, if conditions of the pavement indicate that warranty repairs are necessary.
A final report will be issued at the end of the warranty period documenting the entire process.
It is anticipated that the documentation and reporting of this project would be conducted by the Kentucky Transportation Center at the University of Kentucky.