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10 CHAPTER 2 Discussion of I/D Impacts on Project Factors Cost The additive alternate bid item was designed to capture and compensate the contractor for the acceleration costs associated It is assumed that acceleration associated with I/Ds increases with completing the projects in one construction season. In project cost. To what degree costs are increased is a function of both cases, the alternate bid item for acceleration costs did unique project features and the level of acceleration requested not change the order of the bidders nor does it appear that by the STA. The majority of responses to the Phase I e-mail Kansas DOT was charged a premium for accelerating the interview form indicate that the STAs perceive the increased projects (Tables 4 and 5). cost to be 10% or less. Phase I in-depth ranking forms concur There is a valid argument that the contractors included an with this perception (Figure 4). On average, interviewees acceleration premium in their base bid because they anticipated felt that the impact of I/D provisions on costs was neutral. A Kansas DOT's desire to complete the project in one season and comparison of A+B projects and non-I/D projects of similar that they did not want to expose their estimated acceleration scope in Minnesota showed that the A+B projects had an costs to other competitors. It is the research team's informed initial bid price increase of 7.5% when compared with similar opinion that if any of the acceleration costs required to complete non-I/D projects (16). these projects in one season was passed on to Kansas DOT, it was minimal. This conclusion is based on the fact that one member of the research team was formerly employed as Market Influences the chief estimator for one of the unsuccessful bidders on the Phase II research results revealed that contractors agreed Harvey County project, and the base bid prices reflected con- that under the low bid system used by STAs, influences from tractor bid prices that were very competitive (acceleration costs market conditions (number of bidders, backlog, and avail- were offset by lower profit margins). It should be noted that ability of future work) are a primary factor in determining the both projects were completed within one construction season. cost associated with the use of I/D provisions (Figure 5). These two Kansas DOT examples are presented as an illus- Understanding that market conditions influence bid prices tration of how market influences often trump acceleration as much as or more than acceleration costs has an impact on costs. Note that the difference between the low bidder and the effectiveness of I/D provisions. The need for a competitive the average bid on the first project was 12% and was 16% market environment is especially important for the effec- on the second example. Because these projects required the tive use of I/D provisions. One contractor's comment from the contractors to provide a lump sum bid for acceleration costs, Phase II research effectively captures this point: "The STA must they provide a unique picture of the contractors' approach to make the decision about the level of importance or priority for acceleration costs that are not visible in the bidding process early or accelerated completion of a project, then let the market for other types of I/D projects. In the research team's experi- decide what that priority is worth." ence estimating and bidding on over 40 I/D projects, market Further evidence that market influence can trump accelera- conditions are the primary influence on the final cost paid tion costs comes from two projects bid by the Kansas Depart- by STAs. This applies to all types of I/D projects. STAs must ment of Transportation (Kansas DOT). These two projects understand that for a given I/D project the cost that they required the bidders to provide an alternate lump sum bid price ultimately pay for acceleration and the level of acceleration that for accelerating the projects. The base bid for the projects was they receive is highly dependent upon the market conditions based on completing the projects in two construction seasons. at the time the project is bid. Not only are acceleration costs
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11 In what manner and to what degree do time-related I/D provisions impact PROJECT COST? 5.0 significant beneficial impact upper quartile average considerable beneficial impact 4.0 lower quartile 3.0 moderate beneficial impact 2.0 1.7 slight beneficial impact 1.0 1.0 1.0 0.5 0.0 neutral 0.2 0.8 0.7 1.0 1.1 1.0 1.3 2.0 slight detrimental impact 2.0 3.0 moderate detrimental impact 3.0 3.0 3.0 3.1 4.0 considerable detrimental impact 5.0 significant detrimental impact all agency admin. agency field contractor admin. contractor field Figure 4. Agency and contractor Phase I on-site interview ranking of I/D impacts on project cost. strongly agree Level of Agreement agree not sure disagree strongly disagree 1 2 3 4 5 6 Contractor Responses Contractor Perspective Median (All Contractors) Figure 5. Contractor perspectives on market influences and cost. Table 4. Kansas DOT Harvey County accelerated bid results (I-135, October 1999). Base Bid: Alternate Bid: Complete Acceleration Cost Total Bid in to to Bidder Two Seasons Complete in One Season Complete in One Season Bidder 1 $18,482,549 $1 $18,482,550 Bidder 2 $20,636,141 $812,270 $21,448,411 Bidder 3 $21,035,433 $1,202,000 $22,237,433
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12 Table 5. Kansas DOT Sedgwick County accelerated bid results (US-54, January 2003). Base Bid: Alternate Bid: Complete Acceleration Cost Total Bid in to to Bidder Two Seasons Complete in One Season Complete in One Season Bidder 1 $16,279,056 $0 $16,279,056 Bidder 2 $16,877,890 $5,000 $16,882,890 Bidder 3 $17,962,028 $1,000,000 $18,962,028 Bidder 4 $19,644,504 $1,250,000 $20,894,504 Bidder 5 $20,945,708 $472,271 $21,417,979 unique to each project, they are unique to each contractor as actual cost of construction. Examples of this include the well (Figure 6). The benefit for the STA of competition in the following: bidding process cannot be over stressed. · Improved management and scheduling can enhance resource use. Cost Components · Innovative methods and materials used to meet the schedule Even though market factors are the primary influence on demands of an I/D provision may result in cost savings. costs associated with the acceleration required by I/D provi- · When contractor resources and project conditions are such sions, it is useful for a STA to have a basic understanding of that multiple crews can work on an item simultaneously construction cost components and how they are impacted without interfering with each other (e.g., multiple cut/fill by acceleration. A typical unit price found in a contract for locations), cost impacts are not an issue. constructing a highway is the sum of four individual unit cost components: materials, labor, equipment, and overhead. Profit However, highly phased projects do not offer the same is added to the sum of these components. Table 6 contains a opportunity to add resources on the same work item. Extend- simplified list of cost components; from a contractor's per- ing hours and work weeks may be the only way to accelerate spective, these macro-components are further subdivided into construction because of limited work areas. Thus, acceleration multiple sub-components. Table 6 provides a brief description costs will be greater when the construction sequence and plans of acceleration impacts on each of the cost components. have limited areas of simultaneous work activities. Acceleration impacts on cost will also vary by the type of Contractors are acutely aware of their unit costs, and the vast work. For example, a unit of structural concrete will be impacted majority of successful contractors go to great efforts to track to a greater degree than a unit of paving, because the structural them. Contractors' bid prices rely heavily on past experience concrete has a larger labor component per unit than paving (historical costs); even with this detailed information, esti- (Figure 7). mating the impact of acceleration on unit costs is as much art Certain aspects of acceleration associated with the use of as it is science. This is one of the inherent risks that contractors time-related I/Ds may have minimal impact or reduce the face each day. Over time as more I/D projects are contracted, strongly agree Level of Agreement agree not sure disagree strongly disagree 1 2 3 4 5 6 Contractor Responses Contractor Perspective Median (All Contractors) Figure 6. Phase II contractor feedback about acceleration costs and project features.
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13 Table 6. Description of acceleration impacts on cost components. Cost Component Discussion of Acceleration Impacts Typically more affected by supply and demand issues (market factors) than by acceleration. Materials Projects that require a sustained high level of acceleration are an exception to this general rule. Some suppliers may not be able to meet the accelerated supply schedule, thus reducing competitive forces on material pricing. Typically the most affected cost component. Acceleration directly impacts labor rates through overtime and premium pay. Labor Production rates are typically lower during periods of extended working hours and for multiple shift scenarios. Production rates are typically lower during periods of extended working hours and for multiple shift scenarios, thus increasing unit costs. Equipment Additional equipment resources (lease/rent) may be required to meet accelerated schedule requirements resulting in higher costs. Home office overhead is a function of annual revenues. Assuming a contractor is not forced to forego other revenue opportunities due to the resource requirements of an Overhead accelerated project, home office overhead would be reduced. Project overhead rates are typically increased for an I/D project due to the need for additional management resources. Profit Market driven. a STA may develop a historical database that can assist in is an optimum minimum I/D amount that will motivate a estimating the cost impacts of the use of I/D provisions. From contractor to safely complete a highway construction project a STA's perspective, estimating the cost impact of acceleration within the time frame set by the STA. In other words, a STA should be based on a macro level. An overall cost adjustment would like to know: what is the minimum I/D amount that will factor should be applied that considers the estimated net effect ensure that schedule goals are met? of market influence and acceleration cost impacts. The answer to this question is complex and in almost every A primary concern of STAs is understanding the relationship case unquantifiable. It is impractical for a STA to pursue between I/D amounts, cost, and acceleration. For a STA, there models or algorithms that attempt to estimate the minimum 120% 111% 108% 100% 80% 60% overhead equipment labor 40% materials 20% 0% structural structural concrete concrete concrete concrete pavement pavement (normal) (accelerated) (normal) (accelerated) Figure 7. Example of acceleration cost impact.
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14 I/D rate that will affect acceleration. The primary factor that of an I/D provision and an incentive will be earned, the bid makes such models/algorithms impractical is the impact of can be reduced by the amount of the estimated incentive. Thus, market influences on contractor bid prices and scheduling. incentives are treated like regular contract revenues that replace It is sufficient to state that market factors can have a greater portions of contract profits (in some cases, cost as well). This influence on the final cost paid by a STA than any other factor. does not negate the earlier discussion of market factors, but That is to say that the competitive bid environment can trump draws focus to the fact that markets are predominantly more cost impacts created by I/D provisions (almost always to the competitive than they are flush with available work. Contractors STA's advantage). This does not mean that STAs should not that responded during Phase II were unanimous in their agree- concern themselves with optimizing the I/D rate. Rather, it ment that this practice is not only prevalent, but that it is emphasizes the necessity of STAs to gain a more thorough advantageous to the STA and to the contractor. The compet- understanding of the impacts of I/D provisions and the inter- itive low bid system used by STAs results in 75% or more of dependent nature of many I/D factors. One comment was I/Ds being incorporated into the bid. This practice provides received from contractors related directly to this issue of what an advantage to the best qualified contractor while achieving minimum I/D rate will motivate acceleration: "Five to seven the STA's schedule goals at minimal cost (Figure 8). percent of the contract value should be the floor for I/D. This is the amount that it takes to get the contractor's attention and makes Unbalanced Bids the endeavor worthwhile." Targeting the maximum incentive at a given percentage of the total contract value may be desirable The practice of adjusting unit priced bid items for anticipated from a policy standpoint, but will fail to yield effective results underruns and overruns (unbalanced bids) is amplified by from I/D provisions. Incentives and disincentives should be the use of I/D provisions. In the case of an A+B contract where adjusted based on the project conditions, market influences, and the contractor determines the contract time, it is common the level of acceleration required to meet schedule objectives. practice for contractors to move some amount of money from the B portion (time) to the A portion (traditional bid items). Consider the example shown in Figure 9. Other Cost Considerations This same scenario holds true for an I/D project where time Incentives Serve as Alternative Revenue is determined by the STA as well. When the incentive is bid into for Contractors the project (passed on to the STA because of market factors) unit prices must be adjusted to affect this bid reduction. At a The low bid system used by STAs creates a highly compet- minimum, the prudent contractor will reduce items that are itive bidding environment. Rarely does construction demand anticipated to underrun. It is likely that the contractor will stretch the resources available in the contracting industry. arrive at the final bid (reduced total/unbalanced bid) by adjust- As a result, competition dictates that the majority of I/Ds are ing both underrun and overrun items. While not unanimous, passed through to the STA. This practice gives the best qualified the Phase II research results agree with the research team's contractor for a specific project an advantage at the bidding experience that unbalanced bids are amplified by the use of table. Anticipated incentive earnings are treated like contract I/D provisions (Figure 10). revenues; which mean I/D provisions create acceleration at This practice of unbalancing bids is not wrong or unethical minimal cost to the STA. In effect, when a contractor is con- unless it is carried to the extreme, which may lead to dis- fident that his/her available resources will meet the objective qualification of the bid. Unbalancing is inherent to unit price strongly agree Level of Agreement agree not sure disagree strongly disagree 1 2 3 4 5 6 Contractor Responses Contractor Perspective Median (All Contractors) Figure 8. I/D treated as alternative contract revenue.
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15 Balanced Bid Unbalanced Bid A Subtotal = $50,000,000 * A Subtotal = $51,000,000 *** B Subtotal = $10,000,000 B Subtotal = $9,000,000 *where Unclassified Excavation = ***where Unclassified Excavation = $2,500,000 (500,000 CY @ $5.00) $3,500,000 (500,000 CY @ $7.00) Total Bid = $60,000,000 Total Bid = $60,000,000 Final Contrac t Amount Paid by STA = $50,500,000 ** Final Contrac t Amount Paid by STA = $51,700,000 **** **Unclassified Excavation overrun = ****Unclassified Excavation overrun = $500,000 (100,000 CY @ $5.00) $700,000 (100,000 CY @ $7.00) STA Cost Increase from Unbalanced Bid = $1,200,000 Figure 9. Unbalanced bid example. contracts and has been an accepted buyer's risk borne by STAs ipated by the contractor. In simplest terms, if the contractor for decades. STAs should be aware that I/D provisions amplify anticipates that negotiable time delays will occur, they will be this practice, as one contractor stated in the feedback to Phase II more likely to unbalance a bid by reducing the B portion or research: "Contractors often perceive STAs as being hesitant to anticipating incentive payments. pay the incentives the STA has contracted to pay in contracts containing significant I/D provisions. While the STA may have Risk Allocation Between Contract Parties made the decision that there is value in paying these incentives, Contractor experiences often indicate this commitment breaks I/D provisions normally change the way risks are allo- down when the due date for paying these incentive approaches. cated between contract parties. Most contractors are capa- As a result, Contractors often budget this incentive in the cost of ble of estimating their costs and their schedule. When I/D their products; meaning the STA is paying the incentive with provisions shift risk for certain time impacts (weather, util- each product delivered and the contractor's scheduled completion ities, quantities, etc.) to the contractor, the cost to the STA date may actually be later than the STA realizes. Negotiating increases. This increase in cost to the STA is directly related to end days of damages versus starting days of incentive favors to two factors: (1) Is the risk quantifiable (how well can the the Contractor most often." Another contractor expressed the contractor estimate the impact)? and (2) Is the risk beyond following: "Typically, only the savvy Contractor can/will un- the control of the contractor (can the contractor do any- balance a bid. Is that a bad thing; I think not." thing to mitigate the risk)? Thus, STAs should take extra care when estimating plan An example of changing risk allocation is a no-excuse clause quantities on projects that will include a time-related I/D which requires the contractor to complete the project within provision. The degree to which unbalancing occurs as a result a given time frame regardless of impacts that are encountered of I/D provisions is related to how the I/D provision addresses on a project. Without debating whether these clauses are fair adjustments to time during execution of the contract (no-excuse or not, it is safe to say that they impact the final cost paid by or day-for-day) and the extent to which time impacts are antic- the STA. In the case of a no-excuse clause, the contractor has strongly agree Level of Agreement agree not sure disagree strongly disagree 1 2 3 4 5 6 Contractor Responses Contractor Perspective Median (All Contractors) Figure 10. Contractor feedback about unbalanced bid practices on I/D projects.
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16 assumed all risk associated with weather, site conditions, and dealing with the prosecution of contract changes. The use of an so forth. There is no accurate way to estimate the schedule I/D provision does not normally modify any of these contract impact of these types of risks. In most cases like this, contractors change processes. What is changed by the use of an I/D provi- will be more reluctant to pass any potential incentive earnings sion though is the value of time. back to the STA, because the potential incentive earnings are When a STA uses an I/D provision, they are placing an so dependent on factors that cannot be accurately quantified. increased emphasis on time. This emphasis is expressed by Contractors responding to the Phase II research agreed that placing a monetary value on early completion. This value of STAs will incur higher costs in the long term as more risks are time is almost always based on RUC. Except in rare cases such shifted to the contractor (Figure 11). as emergency projects, there is a practical limit both to the value One contractor offered the following comment regarding of early completion and to the amount that a project can the issue of risk allocation and long-term costs to the STA: be accelerated. Thus, the practice of capping the maximum "Yes, if the contract provision begins to look too much like a amount of early completion incentive that can be earned is gamble to the Contractor, the Contractor will acknowledge the warranted and would be considered a best practice for STAs potential damages by budgeting to incur these. The likelihood to implement with I/D provisions. that the STA then pays for the potential damages, but then never If an I/D provision caps the maximum incentive that can recoups the damages tends to favor the Contractor." be earned for early completion, time savings should be a The manner in which a contractor estimates the impacts non-negotiable issue when a contractor proposes an innovative of these types of factors is unique to each contractor. One method. By capping the incentive, the STA has limited their common thread between contractors is the tendency to err on potential to overpay for early completion. Under the capped the side of caution when faced with estimating factors that are incentive scenario, contractors should not be required to difficult to quantify or are beyond their control. As a result, negotiate a new schedule simply because the innovation will STAs need to understand that transferring risk to the contrac- save time and they will earn incentive. Requiring contract time tor, especially risks that are beyond the contractors' control reductions when innovative methods or materials are proposed or those that cannot be quantified will increase the STAs costs defeats the motivation for innovation and the associated early in the long run. Methods of risk sharing between the STA and completion. Quite often the incentive earned is used to offset contractor are a critical need that should be addressed by all additional costs that are connected to the innovative method contract parties. or material. Phase II research shows that contractors are in harmony on this issue, with four of the five contractors strongly agreeing Innovation that approval of innovative proposals should be independent During the Phase I interviews, contractors and STAs agreed of the time savings associated with the innovative proposal that time-related I/D provisions drive innovation. They also (Figure 12). agreed that innovation was a positive by-product of I/D pro- Contractors offered the following comments supporting visions. However, some of the contractors voiced a concern that their perspective on this issue: STAs were not always open to the proposed innovation or that the STA expected to negotiate time as a part of the approval · "The STA also realizes cost & time savings--their own inspec- process for the innovative method. Contracts are changed in tion staff, QA or QC staff, Management overhead and or many different manners. Each STA has detailed specifications Consultant inspection fees." strongly agree Level of Agreement agree not sure disagree strongly disagree 1 2 3 4 5 6 Contractor Responses Contractor Perspective Median (All Contractors) Figure 11. Long-term cost impacts of shifting risk to contractors.
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17 strongly agree Level of Agreement agree not sure disagree strongly disagree 1 2 3 4 5 6 Contractor Responses Contractor Perspective Median (All Contractors) Figure 12. Contractor agreement on the treatment of contract time coupled with innovative proposals. · "The STA must be unequivocal within its own management The treatment of contract time charges varies widely across and engineering staff that contractor proposals that save time STAs. Climate variation and local statutes are the primary may result in added profit for the Contractor, and this is the reasons that STAs have different methods for determining how intent of the contract provision--to provide both a financial time is measured for highway construction projects. Because incentive to the Contractor to minimize the construction of these regional differences, there is not a single optimum duration." solution for time measurement. Implementing I/D provisions · "It is important for the STAs to understand that each idea or may require a STA to modify its standard specification for dollar is considered an off-set to each other. Put another way time measurement (prosecution and progress). The following a dollar can only be saved against a specific idea. The next idea items highlight the primary areas that should be considered is considered a separate negotiation. Money can only be saved when developing or modifying a specification for measurement one time; against one idea. Agreement to the first idea for of time on an I/D project: money savings does not carry on for the life of the job. It is a 1 to 1 type concept." · For an I/D contract, the preferred method of measuring time is the calendar day. The use of working days or modified This issue should not be viewed as contractor posturing. calendar days (6 day week, no holidays, credit for abnormal When dealt with properly by capping the incentive at an weather, etc.) can introduce ambiguity into the schedule. amount that will motivate the contractor to meet the STAs · Contractors should be required to submit a baseline schedule desired duration for completion, a win-win scenario is created. for approval. Once approved, this baseline schedule should The STA and public receive an accelerated project at a price that be used to evaluate all contract changes. they pre-determined is desirable to them and the contractor · The process for evaluating the impact of excusable delays is motivated to pursue innovative methods and materials that must be clearly defined. will improve the odds of early completion. · Schedule impacts should be evaluated and agreed to in a timely manner. Once agreed to, the changes should be reflected in an updated baseline schedule. Contract Administration · The occurrence of excusable delays erodes the effectiveness In contrast to typical highway construction contracts of I/Ds. Plans and specifications for I/D projects should be that use liquidated damage clauses, an I/D provision estab- carefully reviewed for potential schedule impacts arising lishes a sizable pool of money for early completion. The from project unknowns and plan errors. adage stating that "time is money" is appropriate. I/Ds def- initely alter the contract administration landscape. When The effective use of I/D provisions entails some transfer of schedule impacts begin to threaten either party's claim to risk to the contractor. Otherwise, the STA is left vulnerable to the pool of money set aside for early completion, the poten- paying an incentive for early completion when the project was tial for conflict will be elevated. Time-related I/D provi- not actually completed early. On the other hand, when too sions magnify the need for contract administration policies much risk is transferred to the contractor, a disincentive may that provide clear direction for determining how contract be charged to the contractor when he/she actually completed a time is charged and modified throughout the life of the project on time or early but encountered delays beyond his/her contract. control. Risk sharing strategies should be implemented that
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18 allow both parties to reasonably meet their objectives. Con- · Time-related overhead (TRO) has been used as a bid item tractors that participated in Phase II believed strongly about by the California Department of Transportation (Caltrans). this issue (Figure 13). By doing so, the contractor establishes the daily overhead One of the contractors added the following comment about rate during the bid process. This rate is used to compensate risk sharing and I/D provisions: "The STA must recognize and the contractor for the contract time used and for any excus- accept that a Contractor is not going to accept additional risk when able delays that occur. This type of specification applies negotiating change orders for a contract that contains significant market pressure to the overhead rates that would otherwise I/D provisions. This becomes acutely problematic when the be sole source negotiations between the STA and contractor. contract includes a significant damages clause associated with a "due-by" date that cannot be changed. If a change order is Staffing needed to add some small, but necessary, product to the contract and negotiations breakdown as to whether or not the duration Managing an I/D project presents unique challenges to required for delivering this product results in a project completion the STA and to the contractor. Extended work hours and after the due date, nobody wins." 6- or 7-day work weeks are not uncommon. The in-depth Some examples of risk sharing strategies that have been interviews conducted during Phase I with STAs and contrac- used by STAs were identified through the research project. tors revealed that both STAs and contractors acknowledge A brief description of these strategies follows: that staff fatigue and burn out occur on I/D projects. But, the in-depth interviews did not produce any results that would · In lieu of a strict no-excuse clause where the contractor point to effective management techniques for dealing with bears all of the risk for schedule delays, a modified no- staff fatigue and burn out. The use of consultants for project excuse clause should be considered. A modified no- management and inspection by STAs is becoming more excuse clause has been successfully used by FDOT. Under common according to a report by the General Accounting FDOT's modified no-excuse clause, contract time may Office (17). Using consultants on an I/D project adds a layer be adjusted when an excusable delay has a schedule impact of complexity for the STA and the contractor that does not greater than 15% of the remaining contract time when it solve the fatigue/burn-out issue; the burden just shifts to the occurs. This type of solution is a compromise that allows consultant's personnel. the contractor to potentially recoup some of its acceler- From the STAs' perspective, the use of consultants is a ation costs incurred while overcoming excusable project reality forced by the changing workforce at STAs and difficulties delays. in attracting and retaining staff with key skills (17). Proper · The VDOT has used a contractually binding decision consideration should be given to developing and implementing making matrix that defines the time frame for making performance measures and oversight for consultants that will project decisions. A time frame for either making a decision ensure that the STAs' and public's interest are being served. or elevating the issue up the chain of command is specified When consultants are used, STAs should structure the contract for the contractor and STA management hierarchy. Similar with the consultant in a manner that will equitably compensate arrangements are common to partnering agreements. the consultant for extended hours as well as protect the STA Incorporating such a decision timetable into the contract from changes due to the contractor's accelerated schedule. relieves some of the risk borne by a contractor under an Because timely decision making is critical on accelerated proj- I/D provision. ects, the STA needs to be sure there is clear understanding with strongly agree Level of Agreement agree not sure disagree strongly disagree 1 2 3 4 5 6 Contractor Responses Contractor Perspective Median (All Contractors) Figure 13. Contractor perspective on risk sharing.
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19 Level of Agreement strongly agree agree not sure disagree strongly disagree 1 2 3 4 5 6 Contractor Responses Contractor Perspective Median (All Contractors) Figure 14. Contractor perspective on flex starts. the consultant on decision making authority so that the use of fied minimum quality requirements are independent of time- a consultant does not introduce another layer in the decision related I/D provisions. Results of the e-mail interview form making process and delay the contractor. generally agree with the in-depth Q&A responses, but do One technique that contractors were in favor of was a indicate that some quality deficiencies are related to I/D "flex start." When STAs allow the contractor to adjust the provisions (Figure 15). start of an I/D project into the contractor's portfolio of work An analysis of 477 projects finalized by a STA for fiscal year where it fits best, some staffing and resource issues are alleviated 2007 was performed by the research team. No statistically (Figure 14). significant difference between the quality of I/D and non-I/D Contractor feedback regarding flex starts was as follows: projects was found. A summary of the analyses performed and the conclusions drawn is as follows: · "If the STA can offer flexibility in when a project is scheduled, the cost to the STA will be lowered." · The population of 477 projects finalized for FY2007 included · "Consideration should be given of flex starts up to 180 days, 455 non-I/D projects and 22 I/D projects. not limited to 90 days." · Of the 477 projects, 157 of them had a quality adjustment made to the final contract revenues. Except when the completion of a project is tied to a critical · 19% of the non-I/D projects incurred a quality deduction date (school opening, special event, etc.), flex starts should be while 18% of the I/D projects incurred a quality deduction. allowed whenever possible to allow contractors the best oppor- · The net quality adjustment (sum of quality incentive and tunity to balance resources between projects. Doing so will disincentive) as a percentage of contract value was 0.39% minimize the cost associated with an I/D provision and should for non-I/D projects and 0.45% for I/D projects, thus the net contribute to maintaining acceptable quality levels. Given quality adjustment was higher for I/D projects, indicating materials that comply with specification, quality is most slightly higher quality. affected by the human resources used on a project. Many so- · An analysis of variance (ANOVA) was used to evaluate the lutions exist to add equipment and material resources to a net quality adjustment as a percent of contract value for project. However, it still takes people to operate the equip- ment and incorporate the materials; adding human resources while maintaining quality is a much more difficult task. Flex yes, 16% starts are a valuable tool for the contractor to manage staffing issues created by I/D provisions. yes Quality no Maintaining acceptable quality levels for work that is performed under a time-related I/D provision is an issue that should not be overlooked. In-depth interviews with STA and contractor personnel revealed that I/D provisions no, 84% have no impact on the quality of work. STA personnel were Figure 15. Quality deficiencies related to unanimous in their statements that enforcement of speci- I/D provisions.
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20 non-I/D projects and I/D projects; no statistically significant Safety difference was observed ( = 0.01). · This conclusion regarding no statistical difference between Time-related incentive provisions are normally used for the two data sets (non-I/D and I/D) was unchanged even one or more of the following objectives: after removing two contractors from the non-I/D data set · Shorten contract period to reduce overall exposure and that accounted for 20% of the non-I/D projects that were impact of construction. charged only negative quality adjustments. · Complete for special event or winter condition. · A third analysis evaluated the results for a single contractor · Limit capacity impacts during high traffic flows. that included 4 I/D projects and 3 non-I/D projects; again, no statistical difference existed for the net quality adjustment as The construction contract may contain one or more pro- a percent of contract value. visions to address the objectives of the STA as discussed in detail the Discussion of I/D Variables section in Chapter 4. It is important to realize that the quality adjustments Without repeating that discussion, it is important in this observed in the data set may or may not be impacted by section to consider how these strategies may impact safety. Each acceleration. For example, the majority of quality incentives project is unique and needs to be thought through carefully. are for pavement smoothness. Without knowing the details of Not only does the project itself need to be carefully planned every project, it is impossible to know if the paving activities but also one needs to anticipate how the project may impact the were actually accelerated by the I/D provision. Finally, it should transportation network in the area with potential secondary be noted that I/D provisions have been used extensively by impacts. many STAs. By all indications, these STAs intend to maintain A traffic demand mitigation strategy is commonly an their use of I/D provisions. Common sense dictates that if objective to reduce traffic volumes through a project. But, this quality was negatively impacted by the use of I/Ds, STAs would may result in unanticipated impacts on the parallel network. have discontinued their use by now. For example, when I-15 was shut down for reconstruction prior While it is comforting to know that time-related I/Ds have to Salt Lake City hosting the Olympic Games, an increase little or no perceived effect on quality, it would be remiss to in off system accidents was noted (18). In their report titled ignore the potential for quality issues to arise from acceleration "User Costs on the I-15 Design-Build Reconstruction," Martin of the work. Items that should be noted with respect to quality et al. note: "When the I-15 project began on April 15, 1997, and I/D provisions include the following: increased travel times, queues, congestion, and accidents became common driving experiences. Public support for · Conformance with specifications is independent of time- the project declined. News media reported that people were related issues; meeting schedule milestones should not concerned about increased accident numbers on streets influence a decision to accept failing or marginal work. surrounding I-15 reconstruction areas. On January 7, 1998, a · Schedule milestones may influence contractors to use alter- Salt Lake Tribune article titled `Communities Seek Help With native methods and materials that would not otherwise be Traffic Trouble' stated that `30 percent of Interstate 15 traffic used on non-I/D projects. This does not imply that minimum [had] poured onto city streets,' that there was a `300 percent specifications will not be met. However, although many jump in automobile accidents,' and that `Police Department contractors perform work that exceeds minimum criteria, overtime expenses [had] jumped 87 percent.'" the STA may perceive a reduction in quality because the This is not to infer that the overall safety exposure to the finished product is of a lower quality than what the STA is public was greater by using this acceleration strategy, but to accustomed to, even though minimum acceptance criteria illustrate that other safety impacts on off system routes can were met. occur and that the planning for the project needs to anticipate · The potential to trade off quality for time exists whenever these potential tradeoffs. Martin et al. conclude that the design quality pay factor specifications are used in conjunction with build approach chosen by the Utah DOT was the safest of the time-related I/Ds. alternatives he analyzed. · Adequate lighting is a necessity for night work. Further complicating the decisions involved with accelerat- ing work activities is that there are often other tradeoffs involved While quality has not been an issue for the vast majority when minimizing impact to the traveling public through a of I/D projects completed, STAs and contractors should be construction project. Night work is increasingly used to give proactive about dealing with the potential for time/quality the contractor a sufficient window of non-peak traffic flow tradeoffs. to accomplish the work activities. Putting restrictions on the
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21 contractor that require night work results in construction The following four sections contain questions posed by activities being accomplished in a more challenging period of the NCHRP Project 10-58(01) panel and the research team's the day. However, this does not necessarily result in less safe responses. work zones compared with the alternatives. Several excellent resources are available to assist the STA in planning night Is there data available that construction activities, including NCHRP Report 475 and compare work zone accident rates NCHRP Report 476 (19, 20). NCHRP Report 475 presents for contracts that incorporate procedures to assist highway agencies in determining whether acceleration clauses and similar to perform nighttime construction or maintenance. NCHRP contracts that do not contain Report 476 contains guidelines for design and operation of acceleration clauses? nighttime traffic control. STAs in many locations are often balancing the tradeoff of The research team was not able to identify enough data to completing a project or phases of work before winter conditions directly answer this question. There may be several reasons occur to prevent work during adverse weather conditions. for that. Foremost is analyzing all the variations and factors Acceleration strategies that allow for a less restricted traffic flow that could affect the results so that a useful analysis would re- condition through the winter certainly have positive safety sult. Most construction projects where acceleration strategies benefits to the public. However, the reality is that construction are used are on higher traffic volume, larger projects that are work zones are inherently more dangerous than normal free very complex in nature. Traffic diversion, improvements flow traffic conditions. Narrow lanes, barriers, traffic merges, to the parallel network, special traffic enforcement, and the restricted ramp merges, fewer total lanes, distractions from the complexity that there may be several acceleration approaches construction activities and additional signage are all elements incorporated into an overall project are a few of the issues experienced in a work zone that make the environment more that make the matrix of variables large and result in a very difficult for the driver. This is especially important as one looks complicated analysis. No one the research team interviewed to the future with increasing traffic volumes on the systems was aware of any attempt to conduct such on analysis. Several that STAs are managing (21): interviewees indicated that, in their judgment, it is nearly impossible to conduct such a comparison. · Between 1982 and 2002, vehicle miles traveled increased by Even a pre and post construction accident rate analysis, 79%, while highway lane miles only increased 3%. without considering acceleration clauses that may have been · An estimated 3,110 work zones were present on the National incorporated in a project, is very complex. However, the Highway System (NHS) during the peak summer roadwork research team was able to identify one STA that has performed season of 2001. this type of analysis, the results of which are summarized as · Motorists encountered an active work zone 1 out of every follows: 100 miles driven on the NHS, representing over 12 billion The Ohio DOT (22) has conducted extensive analysis of hours of vehicle exposure to work zones during 2001. its construction work zones. While the data are not linked · Highway workers spent 246.4 million hours working on with the use of particular contract acceleration provisions, the NHS during the year 2001. the findings in general are excellent for identifying how to · In 2005, 1,074 fatalities resulted from motor vehicle crashes improve safety in work zones. The analysis of 2002 and in work zones. This has grown from 1,028 in 2003 (a 4% 2003 work zone crash data and free flow comparables indi- increase) and 693 in 1997 (a 55% increase). cated a 60% to 70% increase in accident rates during con- · More than 41,000 people were injured in 2003 as a result of struction compared with the post construction condition. motor vehicle crashes in work zones. This has grown from Ohio DOT analyzed hundreds of work zone crashes looking 36,000 in 1996, an increase of 14%. for abnormally high concentrations of crashes and identi- · 53% of work zones are designated as day work, 22% as fied the following areas of focus for improving safety during night work, and 18% are active all day or nearly all day construction: (18 or more hours). 1. Geometrics--Off ramp capacity, inadequate ramp merges, It is clear that the use of acceleration strategies will increase insufficient paved shoulders, and in the future. The challenge for transportation professionals is 2. Speed reduction. to minimize or eliminate any additional complexity by the use of acceleration strategies on projects and, if possible, to reduce Further analysis to determine whether the use of an acceler- overall safety impacts to the public and construction workers. ation clause on the contract had a positive or negative impact
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22 on safety is so complex that none of the STAs contacted were ations, smart work zone technology, drone radar, and aware of any conclusive studies that would provide insight on improved nighttime traffic control practices. I/D impacts on safety. · The use of cameras to enforce speed, if permitted by state law, is a good alternative to uniformed officers. In many states, it is much more difficult to hire officers than it was If data is not available or is 10 years ago. incomplete, what judgment and experience do transportation professionals offer relative to How do extended work hours impact the use of acceleration clauses construction worker safety? as it relates to safety? Research conducted in the field of occupational health The relationship between exposure time and work zone reveals that extended work hours (either per day or per week) accidents was discussed with all the traffic professionals inter- have a significant impact on the occurrence of work place viewed. The consensus was that, all other factors being equal, accidents (23). A summary of the findings from a study con- reducing construction time will reduce exposure time, which ducted from 1987 to 2000 by Dembe et al. reports the following: will correspond to fewer accidents overall. Acceleration strate- gies are normally used on higher traffic volume facilities, and · Working 60 hours per week or more increases the risk of all interviewees supported the concept of reducing the overall injury by 23%. work zone exposure time. · Working 12 hours per day or more increases the risk of injury by 37%. What strategies and considerations It should be noted that this study was not specific to the can a STA use to reduce risk to construction industry. More than 110,000 job records were the motoring public, pedestrians, analyzed across all types of occupations. Because construction and construction workers ranked in the top third of industry classifications for occur- on accelerated projects? rences of injuries, the actual increased risk due to extended During the interview process a number of helpful ideas hours is likely greater for construction than the overall com- were identified: bined rates reported. Although hard data are not available, there appears to be · Apply good traffic control principles applicable to all con- no safety related reason not to use appropriate strategies to struction work zones. Contracts containing acceleration accelerate construction contract completion. In fact, there is provisions are no exception. Ensure that traffic control likely a positive public safety benefit to completing a project requirements do not create a situation where the contrac- in the shortest possible time and having the improved facility tor can take short cuts on traffic control to gain speed of in use sooner. Each project needs to be planned so that the construction. This is largely a function of having good traf- traffic management requirements and the use of contract fic control standards and requirements that the contractor acceleration strategies are consistent. Project and network must follow. level reviews of anticipated traffic flows may be helpful in · Be aware of potential secondary impacts on the parallel identifying potential secondary impacts. The contractor should highway network around the project. Depending on travel be required to follow accepted standards for traffic control time and traffic flow condition restrictions resulting from even when work is being accelerated. the project activities, route diversion may occur. On many Acceleration strategies that rely strictly on extended work projects, some diversion is desirable to maintain acceptable hours pose an increased risk of work place injury. Contractors levels of service through the project. A network level analysis and STAs should be encouraged to use management tech- should be done so that appropriate countermeasures can niques that mitigate this risk. These techniques might include be taken on diversion routes. the following: · The actual safety impact becomes more complex on higher traffic routes. Carefully analyze the anticipated traffic · Multiple shifts volumes through the project work zone and match the · Replacement crews for alternating weekends available capacity to the acceleration boundary conditions. · When project conditions permit, use of additional equip- · Numerous technologies can be effective such as rumble ment and human resources to increase production instead strips, speed monitoring displays, facilitating merge oper- of extended hours
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23 Additional Comments Received frame that a contractor has to bid a project, it is impossible to from Contractors during Phase II look at all situations that may arise and the owner should bear some of the risk." Part of the Phase II research efforts involved soliciting · "The STA should realize that I/D provisions are "insurance" feedback from contractors regarding their perspectives on to protect contractor markups. These cost reimbursements are time-related I/Ds. Additional comments that have not been for the inefficiencies and unproductive nature of compressed included in the discussion of I/D impacts on project factors schedules. Incentives are not a bonus. STA should not under- are provided in the following list: estimate the impact of I/D provisions on their employees on the line. They work off peak hours without shift premium or · "Road user fees, increased accident rates in construction zones compensation while the contractor's employees may be com- and public perception are a value to STAs. Shorter construction pensated for the same time. They see the contractor receiving durations generally are viewed positively by the General Public an incentive while their work is not recognized or rewarded." which may lead to increased funding for roads and bridges. · "I/D provisions bring more focus to management, supervision, This benefits both the STA and the Contractor." and workers. Shortened durations for activities allow more · "In general I think A+B I/D projects are a good tool as long as focus for safety issues." parameters for things that are beyond the contractors control · "Any argument that a Contractor will lower their safety stan- are looked at for both the incentive and disincentive. In the time dards for an economic return is a weak argument."