# Presentation: 069625

## Determining Innovative Contracting Methods to Reduce User Costs

- Stuart Thompson
- Utah Technology Transfer Center

## FHWA Road User Survey

- 32% dissatisfied with work zones
- Travelers rated highway improvements that would most help overcome delays. Of more than 20, the top 3 relate to work zones and how we build roads

## FHWA Road User Survey

- Growth in reconstruction
- Growth in congestion
- Growth in crashes

## Innovative Contracting

- The primary goal of Innovative Contracting is to provide timely delivery of a quality project or facility with limited User & Social Impacts.
- User & Social Impacts- Costs incurred by the road user or public that are not directly accounted for in Traditional Contracts.

## Road User Impacts

- High Accident Rates
- Travel Delay Costs
- Additional Fuel Consumption

## Product Quality

- Smoothness
- Extended Service Life
- Maintenance Objectives
- Improved Serviceability

## Contracting Procedures

- Traditional Contract (Design-Bid-Build)
- Design-Build
- A+B Bidding
- Lane Rental
- Warranty

## Traditional Contracts

- Projects with Third Party Conflicts
- Cookie Cutter Projects
- Projects with Negligible Impacts to the Road User, Public, & Environment
- Projects with Potential Risks

## Design-Build

- Decrease Time (Emergency/Event)
- Complex Design
- Complex Construction
- Technical Integration
- Limited In-house Resources
- Projects Procured Just-In-Time

## Design/Build Questionnaire Results

## A+B Bidding

- Decrease Time (Emergency/Event)
- Potential for High Road User Cost
- Potential Impact to Local Businesses
- Public Perception
- Vital Corridor

## A+B Bidding

- Definition:  A cost plus time bidding procedure that selects the low bidder based on a monetary combination of the contract bid items (A) and the time (B) needed to complete the critical portion of the project.

## Benefits of A+B Bidding

- A+B Bidding is used to motivate the contractor to minimize the delivery time for high priority and highly trafficked roadways.  This encourages contractors to finish early by:
- Offering bonuses for early completion.
- Assessing disincentives for late completion.

## Criteria for Selection of A+B Bidding as a Contracting Procedure

- Traffic restrictions, lane closures, or detours result in high road user costs.
- Safety concerns, or significant impacts to the local community or economy during construction warrant expediting the project.
- Traffic control phasing can be structured to maximize a contractor’s ability to reduce the duration of construction.
- The project is relatively free of third party conflicts.
- It is in the public interest to complete the project as soon as possible.

## States Using A+B Bidding

- Maryland
- Colorado
- California
- Virginia
- Texas
- North Carolina
- Wisconsin
- Washington

- New York
- North Dakota
- Iowa
- New Jersey
- Missouri
- Idaho
- Indiana
- Kansas
- Maine

## Multi-Parameter Bidding (A + B) Questionnaire Results

## Lessons Learned – A + B

## New York’s A+B Bidding

- New York has completed 33 projects since 1994.
- Projects were completed an average of 19 days earlier than bid and an average of 87 days earlier than the engineer’s estimate.
- An average of 9 days were added for change orders.
- Only one project took more days to complete than engineer’s estimate and only two took more days than bid.
- An estimated 20.32 million dollars in road user costs were saved.
- 4.75 million dollars were paid for incentives.

## Lane Rental

- Decrease Time (Emergency/Event)
- Potential for High Road User Cost
- Potential Impact to Local Businesses
- No Alternative Routes
- High ADT

## Lane Rental

- Definition:  An innovative contracting technique by which a contractor is charged a fee for occupying lanes or shoulders to do the work.

## Why Pursue Lane Rental?

- Primary Objective
- To motivate the contractor to minimize the time that a lane, a shoulder, or a combination of lanes and shoulders are out of service so there is minimized traffic delay to highway users.

## Lane Rental Uses

- Lane Rental has been used for projects that contain one or more of the following:

## Lane Rental Uses

- Traffic restrictions or lane closures result in high road user costs.
- The use of alternate routes or off-site detours is impractical.
- The traffic control plan allows the contractor flexibility in scheduling work to minimize the impact of lane closures.

## Lane Rental Uses

- The agency seeks contractor expertise to minimize the time that lanes are out of service.
- The project is relatively free of third party conflicts (I.e. right-way issues, utilities, etc.).
- The benefit in terms of reduced impact to the highway user is greater than the additional cost to minimize lane closures.

## How are Lane Charges Calculated?

- Charges for lanes or shoulders can be on either an hourly or daily basis.
- Charges per lane can vary depending on time of day, amount of traffic, and other road user costs.

## Oregon Example

- Traditionally the State of Oregon specified times at which lane closures were not allowed.
- State law did not permit the use of road user costs in the determination of liquidated damage amounts.
- Therefore: no disincentive for closures or incentive to keep lanes open.

## Oregon DOT US 26 Reconstruction Lane Rental Project

- Major reconstruction of a 2.08 mile stretch of a primary commuter route from the west suburbs to downtown Portland.
- ADT ranges from about 100,000 to 130,000 vpd, with less than 2% trucks.
- Rates for every 15 minutes ranged from $0 to $21,000 for lane use.

## States Using Lane Rental

- Colorado
- New York
- North Carolina
- Utah
- Oklahoma
- Oregon
- Washington

## Lane RentalQuestionnaire Results

## Lessons Learned – Lane Rental

## New York’s Lane Rental

- New York has completed 6 projects since 1995.
- Total project costs were 3.6 million dollars below the engineer’s estimate.
- Three projects were above and three projects were below the engineer’s estimate.

## Warranty

- Projects in which Performance can be Measured
- Minimize Overall Life-Cycle Costs
- Project Conditions are Well-Defined
- Incorporation of New Technology in Materials, Equipment, and Construction Processes

## Warranty

- Definition:  “A guarantee of the integrity of a product and of the makers responsibility for the replacement or repair of deficiencies.”

## Advantages of Warranty Contracting

- Less owner risk.
- Eliminates cost of owner QA/QC by transferring this responsibility to the contractor.
- Creates an incentive for overall project quality.
- Assures acceptable level of service or performance for a work item and/or major project element.

## States Using Warranties

- Wisconsin
- Michigan
- North Carolina
- California
- Missouri
- Ohio
- Montana
- New Hampshire

## Warranty Questionnaire Results

## Lessons Learned - Warranty

## Innovative Contracting Methods – Selection Flow Chart

## Questions?