Contracting Strategies
In traditional highway construction contracting (design-bid-build), cost is generally the one criterion that determines the winning bid. As State and local agencies strive to meet customer needs, factors such as quality, delivery time, social and economic impact, safety, public perception, and life-cycle costs have gained in importance. Since the 1990s, FHWA has been supporting the use of innovative contracting methods to help achieve these goals. This page includes information on several innovative contracting strategies, as well as overall contracting and contract administration techniques:
Alternative/Innovative Contracting
A + B Bidding
- Example: A+B Bidding Reduces Construction Time in Iowa - Article in the October 2008 issue of Innovator that discusses how the Iowa DOT used A+B Bidding, in combination with other strategies, to reduce construction time on the 24th Street Bridge replacement project in Council Bluffs from 2 years to 1 year.
Accelerated Construction
- Example: North Dakota DOT Highway 22 - The use of an early completion incentive allowed the North Dakota DOT to repair the extensive landslide damage done to Highway 22 more than a month ahead of schedule, saving motorists from an additional six weeks of long detours and $2.5 million in road user costs.
- Systematic Procedures to Determine Incentive/Disincentive Dollar Amounts for Highway Transportation Construction Projects (PDF, 2.7MB) - Presents results of research on procedures to determine of daily incentive/disincentive dollar amounts for contracting provisions for early project completion.
- NCHRP Synthesis 379: Selection and Evaluation of Alternative Contracting Methods to Accelerate Project Completion (PDF, 3.16MB) - Explores the process and factors to consider for selecting a type of alternative contracting method to accelerate project completion.
- NCHRP Scan 07-02: 2009 Domestic Scan of Accelerated Construction Practices (PDF, 19.1MB) - Describes accelerated construction best practices and case studies in the areas of partnering, design, planning, and contracting strategies.
Design-Build
- Example: Nevada I-15 Bridge Construction - As part of a design-build project, the Nevada Department of Transportation (NDOT) used accelerated bridge construction to move a bridge 60 feet across I-15 in Mesquite in approximately six hours without closing the road. This effort was part of the West Mesquite Interchange project to widen Falcon Ridge Parkway in Mesquite, Nevada, and increase capacity for future traffic demand. NDOT wrote the request for proposals for the project knowing that there could be significant closures and impacts on I-15. In addition, NDOT assumed the rebuilt interchange would need to be placed in a new location, which would add to the cost. The winning contractor proposed a plan that used ABC to construct the bridge off-site and move it into place, allowing the bridge to be kept it in its existing location, and reducing the original project estimate of $25 million to less than $15 million and the duration of traffic disruptions from months to days.
- Design Innovation: Quick Replacement - article in August 2012 issue of Roads & Bridges
- Time-Lapse Footage of I-15 Bridge Replacement
- Highway Projects: Some Federal and State Practices to Expedite Project Completion Show Promise - GAO report indicates that 79% of States surveyed agree that design-build contracting allows for potential time savings in highway construction projects. The report also presents other initiatives for expediting the completion of highway projects.
- Example: Massachusetts Cedar Street Bridge Replacement - The use of design-build project delivery, along with accelerated bridge construction and incentive/disincentive contracting allowed the Massachusetts DOT to replace a bridge over a busy stretch of Route 9 in Wellesley in 62 hours, making it the state's fastest bridge replacement ever.
- MassDOT Replaces Community Bridge in Record Time - Article in June 22, 2012 issue of the AASHTO Journal
- Moving the Cedar Street Bridge Down Route 9 - project video
- Construction Quality Assurance for Design-Build Highway Projects (PDF, 237KB) - Clarifies the roles, responsibilities, and activities related to construction quality assurance on design-build highway projects.
- NCHRP Synthesis 376: Quality Assurance in Design-Build Projects (PDF, 3.76MB) - Examines how state transportation agencies have successfully approached quality assurance for design-build, including in procurement, design, construction, and post-construction operations and maintenance.
- The Impacts of Design-Build on the Public Workforce (PDF, 407KB) - Explores the impact of design-build project delivery on a state department of transportation's professional workforce. The findings indicate that implementing design-build contracting by a DOT that is new to the delivery method will not have a negative effect on its public engineering workforce. When applied to the appropriate projects, design-build can be more efficient than the traditional design-bid-build method.
- Example: Massachusetts FAST 14 Project - Using the design-build project delivery method helped Massachusetts DOT and its contractor shrink a four-year $98 million bridge project to just one summer on the "Fast 14" project to replace 14 deteriorated bridge superstructures along I-93.
- Massachusetts "Fast 14" Project Replaces Bridges in One Summer - Article in September/October 2011 issue of FHWA Innovator.
- FAST 14 Project Web Site
- Example: I-85 Interchange Design-Build Project Using Prefabricated Bridge Elements in West Point, Georgia - Describes Georgia's first project to use design-build contracting and prefabricated substructure elements. An economic analysis including construction costs and user costs shows that the project saved about $1.98 million (about 45 percent) over traditional contracting and construction methods.
Performance Contracting
- Performance Contracting for Construction (PDF 1.6MB) - A Guide to Using Performance Goals and Measures to Improve Project Delivery - FHWA guide on performance contracting for reconstruction/rehabilitation projects. Includes recommended processes for project selection, performance goals, measurement methodology and associated incentive/disincentive fee structure, sample enhanced low bid and best value awards, SEP-14 applications, and lessons learned and sample materials from a pilot project done by Michigan DOT.
- Video on Performance Contracting (WMV, 29MB) - Overview of performance contracting developed by the FHWA Highways for LIFE program.
- Example: Performance Contracting for Construction on in Michigan - As part of a Highways for LIFE Demonstration Project, Michigan DOT (MDOT) used performance contracting for construction (PCfC) on M-115, a two-lane rural highway in Clare County. Through the use of PCfC, the project was completed with minimal disruption to the traveling public, and provided MDOT with a safer, smoother pavement with a 5-year warranty and lower life-cycle costs.
- Highways for LIFE Report - Michigan Demonstration Project: Performance Contracting for Construction on M-115 in Clare County, MI
- Performance Contracting: A New Way of Doing Business - Article in September 2008 issue of FHWA Focus.
Other Resources
- Work Zone Road User Costs - Concepts and Applications (HTML, PDF 2.9MB) - Provides information on performing work zone road user cost (RUC) analysis, including possible RUC components that agencies can select depending on work zone scenario being analyzed, step by step RUC computation instructions, and applications in Maintenance of Traffic alternative analysis, project delivery/contracting strategies, and benefit-cost analysis.
- FHWA Alternative Contracting Community of Practice - Provides FHWA, state, and local agency staff with a forum for sharing alternative contracting methods, processes, and experiences that may aid in project delivery nationwide.
- Evaluation of Alternative Contracting Techniques on FDOT Construction Projects (PDF, 1.3MB) - Explores the performance of various Florida DOT roadway construction projects delivered with alternative contracting techniques. Project performance was evaluated with regard to time, cost, contractor performance, and value.
- Ohio DOT Innovative Contracting Manual - 2010 Edition (PDF, 268KB) - Describes ways to select innovative contracting methods and contains a matrix that shows what innovative methods would be appropriate for various typical project types.
- Performance Effectiveness of Design-build, Lane Rental, and A+B Contracting Techniques (PDF, 436KB) - Minnesota DOT report that compares the effectiveness of different innovative contracting methods. This study resulted in 15 recommendations for improving the use of innovative contracting for transportation projects.
- Example: Incentives Speed Construction in Arizona - Article in the December 2007 issue of Innovator that describes how innovative contracting methods, extra safety measures, and careful construction sequencing accelerated work and made it safer for drivers and workers on a $50 million highway reconstruction project in Arizona.
Project Delivery
- 1/3/13 Road Safety at Work Zones (PDF 1.3MB) - Report, developed by the European Transport Safety Council, that discusses improving safety for motorists and workers in work zones. Section 2.2 of the report discusses how using safety related performance goals in contracting can help generate more focus on safety.
- Use of Advance Construction in Financing Transportation Projects (PDF 2.4MB) - Advance Construction (AC) is a Federal-aid fund management tool designed to provide States with greater flexibility in managing Federal-aid highway funds. This AASHTO paper explores historical trends in AC usage, identifies current practices, benefits, and challenges, and includes State-specific examples.
- NCHRP Synthesis 413: Techniques for Effective Highway Construction Projects in Congested Urban Areas (PDF 5.1MB) - Identifies strategies and successful practices used by transportation agencies to deal effectively with the challenges and impacts of construction projects in congested urban corridors.
- AASHTO Domestic Scan of Best Practices in Project Delivery Management - Final Scan Report (PDF 10.5MB) - Identifies strategies and project-delivery applications that enable a state to successfully deliver projects. The findings and recommendations in the report are divided into four focus areas - project management, performance measures, innovative contracting practices, and community involvement activities.
- Journal of the Transportation Research Board No. 2151: Construction 2010, Volume 1 - Includes 12 papers that explore topics such as correlating bid price with the number of bidders, sliding-scale contingency for project development process, effects of project cost reduction methods, and coordination of design contract with construction manager-at-risk preconstruction service contract.
- NCHRP Synthesis 402: Construction Manager-at-Risk Project Delivery for Highway Programs (PDF, 4.5MB) - Explores how state DOTs and other public engineering agencies are applying construction manager-at-risk (CMR) project delivery to their construction projects to help control schedule and budget and ensure quality.
- Conference on Transportation Construction Management, February 10-12, 2009 - Conference to discuss new challenges and solutions in successful transportation project delivery.
Contract and Contract Administration Resources
- Construction Project Administration and Management for Mitigating Work Zone Crashes and Fatalities: An Integrated Risk Management Model (PDF 1.4MB) - Examines ways to mitigate the risk of highway accidents and fatalities in work zones and presents a formal risk management model that can be used to identify, assess, and respond to risks across all stages of a project.
- NCHRP Report 652: Time-Related Incentive and Disincentive Provisions in Highway Construction Contracts (PDF, 2.62MB) - Explores best practices of time-related incentive and disincentive contract provisions and their effect on staffing levels, productivity, project cost, quality, contract administration, and the contractor's operations and innovation. The report also examines a decision process guide as a template for incentive and disincentive provisions in a highway construction contract.
- Evaluation of Fuel Usage Factors in Highway Construction in Oregon (PDF, 1.3MB) - Oregon DOT report that presents the results and recommendations from a study done to evaluate the impact of inflation on current fuel usage factors on highway construction projects.
- NCHRP Report 561: Best-Value Procurement Methods for Highway Construction Projects - Examines procurement methods, award algorithms, and rating systems for use in awarding best-value highway construction contracts. The report also explores screening criteria for selecting projects for application of best-value procurement, implementation strategies, and a model best-value specification.
- AASHTO Primer on Contracting for the 21st Century (PDF, 1.4MB) - Describes various contracting and contract administration techniques that are currently being used by agencies in their transportation programs and provides contacts within these agencies for obtaining additional information.
- FHWA Contract Administration Web Site - Provides a number of contract administration resources, including forms, reference manuals, and regulations.
- Helping Roadway Contractors Fulfill Public Expectations - Article in the March/April 2006 issue of FHWA Public Roads.
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