Companion Guide to Video May 2016

www.fhwa.dot.gov/federal-aidessentials

Most transportation project construction is 

delivered by contractors. Transportation 

agencies are responsible for supervising the 

work and ensuring it is performed as agreed 

under the contract. But how might your role 

change if your project unearths contaminated 

soil that requires specialized disposal? Or what 

if your project begins to pose a significant 

environmental risk to a waterway? 

In situations like these, where the scope of 

work changes due to field conditions or to 

mitigate unforeseen risks, agencies may 

recognize that the contractor has insufficient 

information to agree on unit prices and 

quantities. 

They may choose, as a last resort, to get the 

project completed, to expand their traditional 

role of oversight to include task management of 

a contractor’s work. 

Using this approach to contract management, 

called contractor force account, agency 

personnel direct the use of a contractor’s 

resources and pay the contractor for time and 

material—the actual cost of labor, equipment, 

and materials furnished. 

Project Construction and Contract Administration

Contract Administration

Contractor Force Account

Directing contractor work and tracking labor, material, and 

equipment expenses
Federal-aid Essentials for Local Public Agencies

Contractor force account can provide a practical 

resolution to problems encountered in the field. 

However, prior to its use, agencies working on 

federally funded transportation projects must 

develop an independent scope, schedule, and 

estimate of the work and obtain advance 

approval from the oversight agency. 

Furthermore, prior to making progress 

payments, agencies must also track the project 

activity and verify that it aligns with the 

contractor’s accounting record. As we’ll see, 

tracking does require additional time and effort. 

Let’s look at a small project to signalize an 

intersection. This example will illustrate the 

appropriate use of the contractor force account 

when developing the plans, specifications and 

estimate package, called PS&Es, and when 

developing change orders, as well as the 

method of tracking contractor activity. 

First, when developing the PS&E, agency 

personnel find they could not accurately 

estimate the project-specific needs for erosion 

and sediment control because other nearby 

projects will affect these needs. To account for 

the likelihood of additional erosion and 

sediment control costs during construction, the 

agency personnel develop an independent cost 

estimate to hold funds outside the contract and 

create an item of work that will be paid for as 

“contractor force account.” In this case, the 

work is not a contract bid item, but payment 

will be made in accordance with the contract 

specifications for “Force Account Work.”

Then as excavation progresses, the contractor 

exposes a leaking underground fuel storage 

tank and requests a change order to remove it. 

Because the agency and contractor do not know 

the extent of contaminated soil, they cannot 

negotiate the cost of removal. Therefore, as a 

final option, the agency and the contractor 

agree to use contractor force account methods 

for this change order work. 

Our project to signalize an intersection now has 

two incidents of contractor force account, one 

for erosion and sediment control and the other 

to remove an underground storage tank. 
Federal-aid Essentials for Local Public Agencies

Contractor force account activity must be 

tracked in addition to the required quality 

assurance project inspection activity and 

material testing. 

To assist with the tracking, agency personnel 

use a contractor force account tracking sheet 

that is developed by their State department of 

transportation, or State DOT. 

The tracking sheet provides space to record 

• Labor, 

• Equipment

• Material quantities

Using the tracking sheet, agency personnel 

record the names of workers, the type of work 

each performed, and actual hours they worked. 

They also record the make, model, and size of 

equipment and materials used. 

Prior to paying the contractor for the work, 

agency personnel compare the contractor’s 

invoice with the data on the tracking sheet and 

verify that the labor and material surcharges 

are reasonable. 

The Federal Highway Administration, the 

FHWA, requires that Federal-aid project 

administration include methods to track and 

verify records for contractor force account 

activity. As you can see from our example, 

when using the force account payment method, 

your agency can expect additional time and 

effort to fulfill this contract administration 

responsibility. 

Your State DOT’s construction manual provides 

details on the appropriate use of contractor 

force account, including proper tracking 

methods. Review the construction manual to 

ensure you properly account for directed work 

on Federal-aid projects.
Federal-aid Essentials for Local Public Agencies

The content of this 

document is not a 

substitute for 

information obtained 

from State departments 

of transportation, 

appropriate FHWA 

Division Offices, and 

applicable laws. 

Scenarios have been 

simplified for emphasis 

and do not necessarily 

reflect the actual range 

of requirements 

applicable to the 

scenario or this topic. 

This document was 

created under contract 

number DTFH63-11-F00066 by the Federal 

Highway Administration, 

U.S. Department of 

Transportation, and is 

offered to the public to 

heighten and focus 

awareness of Federal-aid 

requirements within the 

local public agencies 

community and 

reinforces the 

importance of these 

necessary policies, 

procedures, and 

practices.

This Companion 

Resource is the script 

content for the video 

production of the same 

name. 

Additional Resources

• Federal-aid regulation 23CFR635.123 requires documentation of all pay quantities

https://www.law.cornell.edu/cfr/text/23/635.123

• Example contractor force account procedures in the Washington State DOT 

Construction Manual; See Chapter 1 pages 136-145. Direct links to the WSDOT 

standard specifications are included.

http://www.wsdot.wa.gov/publications/manuals/fulltext/M41-

01/Construction.pdf

• Example procedure with links to state specific forms for extra work out of the 

Oregon DOT construction manual. See chapter 12-G pages 1-19.

http://www.oregon.gov/ODOT/HWY/CONSTRUCTION/pages/cm.aspx