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NATIONAL
NCHRP REPORT 561
COOPERATIVE
HIGHWAY
RESEARCH
PROGRAM
Best-Value Procurement
Methods for Highway
Construction Projects
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TRANSPORTATION RESEARCH BOARD 2006 EXECUTIVE COMMITTEE
(Membership as of June 2006)
OFFICERS
CHAIR: Michael D. Meyer, Professor, School of Civil and Environmental Engineering, Georgia Institute of Technology
VICE CHAIR: Linda S. Watson, Executive Director, LYNX--Central Florida Regional Transportation Authority
EXECUTIVE DIRECTOR: Robert E. Skinner, Jr., Transportation Research Board
MEMBERS
Michael W. Behrens, Executive Director, Texas DOT
Allen D. Biehler, Secretary, Pennsylvania DOT
John D. Bowe, Regional President, APL Americas, Oakland, CA
Larry L. Brown, Sr., Executive Director, Mississippi DOT
Deborah H. Butler, Vice President, Customer Service, Norfolk Southern Corporation and Subsidiaries, Atlanta, GA
Anne P. Canby, President, Surface Transportation Policy Project, Washington, DC
Douglas G. Duncan, President and CEO, FedEx Freight, Memphis, TN
Nicholas J. Garber, Henry L. Kinnier Professor, Department of Civil Engineering, University of Virginia, Charlottesville
Angela Gittens, Vice President, Airport Business Services, HNTB Corporation, Miami, FL
Genevieve Giuliano, Professor and Senior Associate Dean of Research and Technology, School of Policy, Planning, and Development,
and Director, METRANS National Center for Metropolitan Transportation Research, USC, Los Angeles
Susan Hanson, Landry University Professor of Geography, Graduate School of Geography, Clark University
James R. Hertwig, President, CSX Intermodal, Jacksonville, FL
Gloria J. Jeff, General Manager, City of Los Angeles DOT
Adib K. Kanafani, Cahill Professor of Civil Engineering, University of California, Berkeley
Harold E. Linnenkohl, Commissioner, Georgia DOT
Sue McNeil, Professor, Department of Civil and Environmental Engineering, University of Delaware
Debra L. Miller, Secretary, Kansas DOT
Michael R. Morris, Director of Transportation, North Central Texas Council of Governments
Carol A. Murray, Commissioner, New Hampshire DOT
John R. Njord, Executive Director, Utah DOT
Sandra Rosenbloom, Professor of Planning, University of Arizona, Tucson
Henry Gerard Schwartz, Jr., Senior Professor, Washington University
Michael S. Townes, President and CEO, Hampton Roads Transit, Hampton, VA
C. Michael Walton, Ernest H. Cockrell Centennial Chair in Engineering, University of Texas at Austin
Thad Allen (Adm., U.S. Coast Guard), Commandant, U.S. Coast Guard (ex officio)
Thomas J. Barrett (Vice Adm., U.S. Coast Guard, ret.), Pipeline and Hazardous Materials Safety Administrator, U.S.DOT (ex officio)
Marion C. Blakey, Federal Aviation Administrator, U.S.DOT (ex officio)
Joseph H. Boardman, Federal Railroad Administrator, U.S.DOT (ex officio)
Rebecca M. Brewster, President and COO, American Transportation Research Institute, Smyrna, GA (ex officio)
George Bugliarello, Chancellor, Polytechnic University of New York, and Foreign Secretary, National Academy of Engineering (ex officio)
Sandra K. Bushue, Deputy Administrator, Federal Transit Administration, U.S.DOT (ex officio)
J. Richard Capka, Federal Highway Administrator, U.S.DOT (ex officio)
Edward R. Hamberger, President and CEO, Association of American Railroads (ex officio)
John C. Horsley, Executive Director, American Association of State Highway and Transportation Officials (ex officio)
David H. Hugel, Acting Administrator, Federal Motor Carrier Safety Administration, U.S.DOT (ex officio)
J. Edward Johnson, Director, Applied Science Directorate, National Aeronautics and Space Administration (ex officio)
Ashok G. Kaveeshwar, Research and Innovative Technology Administrator, U.S.DOT (ex officio)
William W. Millar, President, American Public Transportation Association (ex officio)
Nicole R. Nason, National Highway Traffic Safety Administrator, U.S.DOT (ex officio)
Julie A. Nelson, Acting Deputy Administrator, Maritime Administration, U.S.DOT (ex officio)
Jeffrey N. Shane, Under Secretary for Policy, U.S.DOT (ex officio)
Carl A. Strock (Maj. Gen., U.S. Army), Chief of Engineers and Commanding General, U.S. Army Corps of Engineers (ex officio)
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NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM
NCHRP REPORT 561
Best-Value Procurement
Methods for Highway
Construction Projects
Sidney Scott, III
TRAUNER CONSULTING SERVICES, INC.
Philadelphia, PA
Keith R. Molenaar
UNIVERSITY OF COLORADO
Boulder, CO
Douglas D. Gransberg
UNIVERSITY OF OKLAHOMA
Norman, OK
Nancy C. Smith
NOSSAMAN GUTHNER KNOX ELLIOTT LLP
Los Angeles, CA
Subject Areas
Transportation Law · Highway and Facility Design · Materials and Construction
Research sponsored by the American Association of State Highway
and Transportation Officials in cooperation with the Federal Highway Administration
TRANSPORTATION RESEARCH BOARD
WASHINGTON, D.C.
2006
www.TRB.org
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NATIONAL COOPERATIVE HIGHWAY NCHRP REPORT 561
RESEARCH PROGRAM
Systematic, well-designed research provides the most effective Price $45.00
approach to the solution of many problems facing highway
Project 10-61
administrators and engineers. Often, highway problems are of local ISSN 0077-5614
interest and can best be studied by highway departments individually ISBN: 0-309-09858-0
or in cooperation with their state universities and others. However, the Library of Congress Control Number 2006929074
accelerating growth of highway transportation develops increasingly
© 2006 Transportation Research Board
complex problems of wide interest to highway authorities. These
problems are best studied through a coordinated program of
cooperative research.
In recognition of these needs, the highway administrators of the COPYRIGHT PERMISSION
American Association of State Highway and Transportation Officials Authors herein are responsible for the authenticity of their materials and for obtaining
written permissions from publishers or persons who own the copyright to any previously
initiated in 1962 an objective national highway research program
published or copyrighted material used herein.
employing modern scientific techniques. This program is supported on
Cooperative Research Programs (CRP) grants permission to reproduce material in this
a continuing basis by funds from participating member states of the publication for classroom and not-for-profit purposes. Permission is given with the
Association and it receives the full cooperation and support of the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA,
Federal Highway Administration, United States Department of FMCSA, FTA, or Transit Development Corporation endorsement of a particular product,
method, or practice. It is expected that those reproducing the material in this document for
Transportation. educational and not-for-profit uses will give appropriate acknowledgment of the source of
The Transportation Research Board of the National Academies was any reprinted or reproduced material. For other uses of the material, request permission
requested by the Association to administer the research program from CRP.
because of the Board's recognized objectivity and understanding of
modern research practices. The Board is uniquely suited for this
purpose as it maintains an extensive committee structure from which NOTICE
authorities on any highway transportation subject may be drawn; it The project that is the subject of this report was a part of the National Cooperative Highway
possesses avenues of communications and cooperation with federal, Research Program conducted by the Transportation Research Board with the approval of
the Governing Board of the National Research Council. Such approval reflects the
state and local governmental agencies, universities, and industry; its
Governing Board's judgment that the program concerned is of national importance and
relationship to the National Research Council is an insurance of appropriate with respect to both the purposes and resources of the National Research
objectivity; it maintains a full-time research correlation staff of Council.
specialists in highway transportation matters to bring the findings of The members of the technical committee selected to monitor this project and to review this
research directly to those who are in a position to use them. report were chosen for recognized scholarly competence and with due consideration for the
balance of disciplines appropriate to the project. The opinions and conclusions expressed
The program is developed on the basis of research needs identified or implied are those of the research agency that performed the research, and, while they have
by chief administrators of the highway and transportation departments been accepted as appropriate by the technical committee, they are not necessarily those of
and by committees of AASHTO. Each year, specific areas of research the Transportation Research Board, the National Research Council, the American
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contributions to the solution of highway transportation problems of
mutual concern to many responsible groups. The program, however, is
intended to complement rather than to substitute for or duplicate other
highway research programs.
Published reports of the
NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM
are available from:
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Business Office
500 Fifth Street, NW
Washington, DC 20001
and can be ordered through the Internet at:
http://www.national-academies.org/trb/bookstore
Printed in the United States of America
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COOPERATIVE RESEARCH PROGRAMS
CRP STAFF FOR NCHRP REPORT 561
Robert J. Reilly, Director, Cooperative Research Programs
Crawford F. Jencks, NCHRP Manager
Timothy G. Hess, Senior Program Officer
Eileen P. Delaney, Director of Publications
Kami Cabral, Editor
NCHRP PROJECT 10-61 PANEL
Field of Materials and Construction--Area of Specifications, Procedures,
and Practices
Steven D. DeWitt, North Carolina DOT (Chair)
Elizabeth Boswell, Texas DOT
Kevin J. Dayton, Washington State DOT
Phillip S. Dunston, Purdue University
Scott Jarvis, California DOT
Robert Latham, Associated Pennsylvania Constructors
Steve Massie, Jack L. Massie Contractors, Inc., Williamsburg, VA
Donald J. Miller, Wisconsin DOT
Kevin B. O'Buckley, New York State DOT
James M. Winford, Jr., Louisiana Road and Bridge Company, Inc.
Gerald Yakowenko, FHWA Liaison
Frederick Hejl, TRB Liaison
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FOREWORD
By Timothy G. Hess
Staff Officer
Transportation Research Board
This report contains tools for use in awarding best-value highway construction contracts.
This report will be of immediate interest to professionals involved in the procurement of high-
way construction contracts.
Legislative requirements in most states require that highway construction contracts be
awarded using a low-bid system. Under a low-bid system, contractors submit bids based on
plans and specifications prepared by the highway agency or a private engineering firm hired
by the agency, and, except under extraordinary circumstances, the contractor submitting
the lowest bid is awarded the construction contract. In all but a few cases, experience levels
of the contractor, quality issues, and other criteria are not taken into consideration in
awarding these contracts.
Best-value procurement methods allow various elements to be considered in selecting a
contractor on the basis of performance. Objective elements include contractor experience
with similar projects, completion within schedule, compliance with material and workman-
ship requirements, timeliness and accuracy of submittals, and record of safety. Subjective
elements include effective management of subcontractors, proactive measures to mitigate
impacts to adjacent properties and businesses, training and employee development pro-
grams, corporate commitment to achieving customer satisfaction, and client relations.
These elements not only affect the ultimate performance and overall cost of the completed
facility, but also contribute to the efficient execution of the work. Efficiency is very impor-
tant to contracting authorities that are interested in a high level of public acceptance. It is
also recognized that, because of constrained staffing and budgets, it is not possible for state
agencies to "inspect" quality into the work. Therefore, a procurement process is needed that
considers value-related elements in awarding contracts.
Under a "best-value" selection process, the low-bid concept can be modified by adding
quality issues to the bid evaluation process. The low-bid concept is still a part of this selection
process, but it is weighted with other elements to determine a best value that reflects quality,
as well as cost issues. Several governmental organizations, including the Army Corps of
Engineers, have used the best-value concept to award construction contracts. Public-sector
organizations using the low-bid procurement process face constant pressure for improved
quality, faster turnaround, and reduced overhead costs associated with project delivery. At the
same time, private-sector organizations are recognizing the need for improved quality in their
products to remain competitive. A best-value bid award system can provide a means for
both public- and private-sector organizations to achieve common objectives and to include
quality in the competitive procurement process. These provisions would be of interest to all
organizations in the highway industry that are committed to providing a quality product.
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Under NCHRP Project 10-61, "Best-Value Procurement Methods for Highway Con-
struction Projects," Trauner Consulting Services, Inc., developed procurement methods,
award algorithms, and rating systems for use in awarding best-value highway construction
contracts. Screening criteria for selecting projects for application of best-value procure-
ment, implementation strategies, and a model best-value specification were also developed.
The research results, documented in NCHRP Report 561, will significantly enhance the
capabilities of highway agencies in using best-value procurement methods in awarding
highway construction contracts.
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CONTENTS
S-1 Summary
1 Chapter 1 Introduction and Research Approach
1 1.1 Background: Problem Statement and Research Objective
1 1.2 Best-Value Contracting Definitions
2 1.3 Scope of Study
2 1.4 Research Approach
4 1.5 Results and Products
6 Chapter 2 Findings
6 2.1 State of Practice
6 2.2 Legislative and Regulatory Trends
8 2.3 Best-Value Contracting Concepts
11 2.4 Analysis of Best-Value Concepts
33 2.5 National Transportation Agency Survey Results
35 2.6 Baseline Project Performance Results
44 2.7 Expert Interviews
46 2.8 Summary of Findings
47 Chapter 3 Interpretation, Applications,
and Recommendations for Implementation
47 3.1 Development of Best-Value Procurement Methods
49 3.2 Proposed Best-Value Award Algorithms and Rating Systems
56 3.3 Summary of Proposed Best-Value Procurement Framework
57 3.4 Implementing the Proposed Best-Value Procurement Method
62 3.5 Screening Criteria for Best-Value Procurement
66 3.6 Implementation Strategies
73 3.7 Model Best-Value Specification
77 3.8 Summary
78 Chapter 4 Conclusions and Suggested Research
78 4.1 Conclusions
78 4.2 Suggested Research
80 Bibliography
A-1 Appendix A Literature Review
B-1 Appendix B List of State Laws Allowing Use of Best-Value
by Departments of Transportation; Excerpts from the Model
Procurement Code, FAR, and State Statutes
C-1 Appendix C Questionnaires
D-1 Appendix D Best-Value Case Studies
E-1 Appendix E Advisory Board Survey
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F-1 Appendix F Best-Value Project Screening Decision
Flowchart and Selection Tool
G-1 Appendix G Barriers and Solutions to Implementation of
Best-Value Process
H-1 Appendix H Training Tool
AUTHOR ACKNOWLEDGMENTS
This research was performed under NCHRP Project 10-61 by Trauner Consulting Services, Inc., the
prime contractor, in association with the University of Colorado (CU), University of Oklahoma (OU),
and Nossaman Guthner Knox Elliott LLP. Sidney Scott III, P.E. (Trauner) was the principal investigator,
with co-principal investigators Dr. Keith R. Molenaar (CU) and Dr. Douglas D. Gransberg (OU); Nancy
C. Smith, Esq. (Nossaman) was the legal advisor.
This work could not have been accomplished without assistance and feedback from our research advisory
panel: Robert Burns, Oregon DOT; Jeffery Carpenter, Alternate Project Delivery Manager, Washington
DOT; David Cox, Division Administrator, FHWA; Ron Williams, State Construction Engineer (retired),
Arizona DOT; Ernest Drott, Chief of Construction Operations, USCOE; Frank Gee, formerly of Virginia
DOT; Len Sanderson, State Highway Administrator, NCDOT; Gary Whited, Deputy Administrator, Wis-
consin DOT; Gregory Henk, formerly of Flatiron Structures Company, LLC, and currently with Carter
Burgess; Steve Vance, President, Broce Construction; Jon Wight, Past Chairman, ARTBA; Ralph Ellis,
Associate Professor, University of Florida, and James Ernzen, Associate Professor, Arizona State Univer-
sity. Additionally, Alfonso Bastias and Sangjoo Lee, graduate research assistants at CU, and James E.
Brown, graduate research assistant at OU, contributed to this research effort.
FHWA's International Programs contributed funds to incorporate findings from the 2004 Construc-
tion Management Scan and additional international data collections. The authors wish to acknowledge
the efforts of the Construction Management Scan team and the international agencies that contributed to
this effort. The authors also wish to express their appreciation to all those who responded to question-
naires and provided feedback and case study information. We understand that their time was valuable,
and we could not have accomplished this work without their input.
Finally, we would like to thank the NCHRP technical panel and Senior Program Officer, Mr. Timothy
G. Hess, for their timely input, excellent comments, and helpful suggestions as this research project
proceeded.
