Click for next page ( 28


The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 27
27 CHAPTER 4 Guidelines for the Effective Use of I/D Provisions Objectives for Considering I/D Use teria and also be justified by RUC. I/D provisions should not on a Specific Project be considered for contracts that cannot be justified through reduced RUC. When a STA considers the use of an I/D provision for a FHWA has identified five characteristics that can be used project, perhaps the first question is what is the STA trying to to evaluate the appropriate use of time-related I/Ds (28): accomplish through the use of an I/D provision? The answer to this question may be simple or complex, depending on 1. Projects on high traffic volume facilities, generally in urban the project specifics. I/D provisions are commonly used to areas. accomplish one or all of the following objectives: 2. Projects that will complete a gap in a significant highway system. 1. Reduce contract duration to minimize overall exposure 3. Major reconstruction or rehabilitation on an existing and the impacts of construction. facility that will severely disrupt traffic. 2. Complete for a special event or winter conditions. 4. Major bridges out of service. 3. Limit capacity impacts of high traffic flows during 5. Projects with lengthy detours. construction. STAs that have written guidance on the use of I/Ds identify While these are the most common objectives, they are not additional factors for using an I/D provision: all inclusive. Each project may have unique conditions that warrant the use of I/D provisions. STAs must determine if the use of an I/D provision is appropriate on a project-by- 6. Construction requires temporary traffic barrier on both project basis. sides of a lane and/or a lack of shoulder area (especially A clear distinction needs to be made between the reason(s) critical through a winter season) (29). for using an I/D provision (objective) and the criteria used 7. Special events (school openings, holiday, etc.)(29). for determining if an I/D provision is appropriate. It may be 8. Environmental or political commitment requiring work desirable to complete a project or milestone before winter to be completed (29). weather impacts work and traffic conditions, but unless the 9. Agreements requiring completion within a given time ends are justified by quantifiable benefits (RUC), use of an I/D frame (29). provision is inappropriate. Similar to the previous distinction 10. Disruption of emergency services (6, 30). made between objectives and criteria, there are benefits to using 11. Adjacent neighborhoods or businesses would be impacted I/D provisions such as reduced impact on local businesses, significantly (6, 30). improved contractor management, and innovation that are desirable but not always justified. E-mail interview responses show that STAs consider RUCs as the most important factor for determining if a project warrants the use of an I/D provision. On average, STA Criteria for Using I/D Provisions respondents felt that RUCs were approximately 60% more Whatever the objective for using an I/D provision, there important than special events, anticipated feedback, and are criteria for determining if an I/D provision is warranted. public/political input as a decision making factor for the use Regardless of the motivation, projects should meet these cri- of I/D provisions (Figure 16).

OCR for page 27
28 Most Important 4.0 upper quartile average lower quartile 3.0 3.0 2.2 2.0 2.0 2.0 2.0 1.4 1.3 1.2 1.0 0.0 Least Important user cost special events anticipated feedback public/political input Figure 16. Relative importance of factors affecting the use of I/D provisions: average, upper quartile, and lower quartile (STA responses to e-mail interview form [n = 32]). Many STA documents used for internal guidance (6, 7, 30, 31) determined by the contracting agency through the payment include additional criteria and descriptions of project features of an addition to the contract amount for early completion or that can be used for identifying whether an I/D specification the assessment of a contract deduction for late completion is suitable for a given project. However, assessing the suitability (2). Calculation of the final incentive or disincentive is the of a project for an I/D provision is separate from justifying the product of a daily rate established by the contracting agency need for an I/D provision. In other words, the need for an I/D multiplied by the number of days of early or late completion. must be justified by RUC and/or safety considerations before any consideration is given to what type of provision is most Calendar Day. Every day listed on the calendar, regard- suitable to a project. less of whether work is accomplished or allowed by other specifications. Types of I/D Provisions Working Day. Any day on which work is planned and Because there is a diversity of time-related I/D provi- could be performed; weekends and holidays are frequently sion nomenclature among STAs, the definitions provided omitted from a working day contract. in the Terms and the Glossary sections in the Summary are repeated here. I/D (complete-by-date) I/D provisions can be categorized into two groups: A + B and I/D. The primary distinction between these two types is The contracting agency establishes a fixed date for comple- that the contractor determines the contract duration for an tion and calculation of the incentive or disincentive instead of A + B contract while the STA specifies the contract time for quantifying the number of days allowed for completion. an I/D contract. Cost Plus Time Bidding (Generic A + B) I/D Provisions Determination of the low (successful) bidder is based on I/D (calendar or working day) the sum of cost (A) and time (B). Contractors are motivated to complete a project and/or A Portion = Traditional contract cost; the sum of extended critical items of work (milestones) within the number of days unit prices multiplied by contract quantities (3).

OCR for page 27
29 B Portion = Time bid; the product of number of days rental charges are drawn against that contract item, and if determined by the contractor multiplied by the daily rate there is any unused lane rental budget remaining at the end determined by the contracting agency (4). of the contract, it is paid to the contractor. The net cost to the contractor and STA is the same for both types. However, the first approach distorts the bid prices, and both approaches A + B without I/D distort the bonding amount and the contract value. The bidder determines the contract duration (B). Used Lane rental specifications do not necessarily accelerate the only for the determination of the successful bidder, contract work. They are designed to minimize RUC and safety concerns award is made to the bidder that has the lowest combined associated with lane closures on a project. Minimizing the total of cost (A) and time (B). No incentive is offered for early impact on the public requires work to be performed at night completion, nor is any disincentive assessed for late completion or during short disconnected time periods. Construction other than normally specified liquidated damages. Standard efficiency is reduced (overall durations increase) when the specifications are applicable for the determination of actual continuity of the work is disrupted, work is performed at contract time used. night, or both. If lane rental is used in conjunction with other I/D provisions, STAs should pay particular attention to avoid using the same RUC for lane rental and I/D rates during the A + B with I/D same time period. Contractors should not be subject to Contract duration is determined by the bidder. Award is incentive or disincentive charges that in effect double dip on made to the bidder that has the lowest combined total of cost the same RUC. When I/D and lane rental durations overlap, (A) and time (B). Incentive is paid for early completion or both should be based on RUC that are completely independent disincentive is charged for late completion. Actual contract of each other. time may be determined by standard specification or by other methods according to special provision(s) of the contract. Liquidated Savings Although rarely used, liquidated savings have been included A + B1 + B2 + Bn in other publications as a form of I/D provision. FDOT has Multiple time values (B1, B2, Bn) represent critical mile- used liquidated savings on a limited basis in the past. Because stones for which the bidder determines the contract duration the incentive rate is equal to liquidated damages and only and the agency determines the daily rate that is applicable to considers the STA's daily engineering cost for time savings, it each milestone. Individual incentives or disincentives are does not meet the definition of an I/D based on RUC. applied to the actual completion of milestones. Discussion of I/D Variables Lane Rental Determination of Contract Time Charges for closing a lane to traffic during construction Who determines the contract duration? Two options exist: are established by the contracting agency. These charges are the contractor or the STA. Lane rental and A + B are the two based on a rate of dollars per day, dollars per hour, or dollars I/D provision types in which the contractor determines the per fraction of an hour (3). Bidders determine the amount contract time. The STA specifies the contract duration in all of lane rental (lane closure x closure rate) needed for comple- other types of I/D provisions. tion of the project. In the case where the cost of lane rental is included in other items of work, the contractor is paid for the Unit of Time estimated lane rental and then actual lane rental is deducted from contract revenues, resulting in an incentive or disincentive When some form of time-related I/D is associated with a for completing the project within the estimated lane rental. given project, how will the STA determine if the contractor When lane rental is included as a contract pay item, any has earned an incentive or will be assessed a disincentive? underrun in the total lane rental incurred may or may not be I/D milestones can be evaluated based on calendar days where paid to the contractor depending on the specification language. every day is counted toward the milestone deadline. A modified There are two basic types of lane rental provisions. In the first calendar day approach does not count certain specified days, type, the contractor estimates how much lane rental will be these "no-count" days could include Sundays, holidays, holiday incurred to complete the project and that amount is included weekends, weather days, weather days in excess of normal in other items of work. For the second type of lane rental adverse weather, winter shutdown periods, and so forth. provision, the contract has a line item for lane rental. Lane Working days may also be specified as the unit of time that is

OCR for page 27
30 used. The definition of a working day varies by STA. The I/D the contractors had taken extensive efforts to accelerate the specification must be explicit regarding the unit of time that is project but missed the lump sum milestone date by only a specified. One other item to consider is what constitutes a day. few days. The STA recognized that it received nearly all of the For example, if a contractor meets the milestone at 12:02 a.m., benefit of the accelerated schedule yet the contractor did not is the contractor charged a full day? This is an extreme example, receive any compensation for the acceleration. In another but daily incentive rates of $25,000 are not uncommon. Some instance, the contractor came to the conclusion that the lump I/D provisions state that a day begins at 12:00 a.m., and any sum milestone could not be met when the project was approx- portion of a day used is considered a full day. imately 60% complete. Consequently, the contractor stopped all efforts at acceleration and concentrated on mitigating the I/D Amount disincentive by documenting delay and disruption claims. The STA acknowledged the inequity and regretted the ineffective- How much is early or late completion worth? I/D amounts ness of these outcomes from the use of lump sum I/Ds. As a should be stated in the specification. The STAs detailed cal- result, the STA will rarely if ever use lump sum I/Ds on future culation of I/Ds need not be explicit in the specification. But, projects. The use of lump sum I/Ds is not considered a best the basis for the I/Ds (e.g., RUC) should be referenced. There practice. must be a quantifiable benefit for early completion or quan- tifiable damages for late completion (27). A note about incentive capping. Some of the contractors interviewed questioned the practice of incentive capping. I/D Accrual and Capping From the STA perspective, there are two issues to consider. Is the total I/D amount based on a lump sum or a daily rate? First, there is an optimum combination of cost and schedule. I/Ds are normally calculated on a daily rate. It is also common STAs want the project to be accelerated, and they are willing for the incentive to be capped at a maximum amount, while to pay an incentive for acceleration, to a degree at least. The disincentives are not normally capped. Lump sum I/Ds can relationship between cost and acceleration, though unique be used as well. for every project, is definitely not linear (Figure 17). Almost all highway construction projects have characteristics that A note about lump sum I/Ds. The equity and effectiveness practically limit how much they can be accelerated at a reason- of lump sum I/Ds was an issue raised by numerous parties able cost. In other words, acceleration costs associated with during the in-depth Q&A sessions. In certain circumstances, overcoming the limiting characteristics of a project would not $2,000,000 $50,000 $1,800,000 $45,000 $1,600,000 $40,000 Marginal Rate ($/day saved) $1,400,000 $35,000 Acceleration Costs ($) $1,200,000 $30,000 $1,000,000 $25,000 $800,000 $20,000 $600,000 $15,000 $400,000 $10,000 $200,000 $5,000 $0 $0 0 10 20 30 40 50 60 70 80 90 100 110 120 Days Saved acceleration costs marginal rate ($/day saved) Figure 17. Hypothetical project acceleration cost curve.

OCR for page 27
31 be incremental; they may be exponential. As shown in the determined by the contractor or the STA, a no-excuse clause hypothetical example in Figure 17, the marginal rate of in effect creates a complete-by date for milestone completion. acceleration ($/day) increases dramatically at approximately Other I/D provisions treat time extensions in exactly the same 70 days; requesting additional acceleration beyond this point manner as any other contract with the STA; standard spec- would not be cost effective. Incentive capping not only pro- ifications are used to evaluate requests for time extensions vides the STAs with a predictable budget, it also puts them in a (additional time is allowed for all excusable delays). position to buy an accelerated project at a lower marginal rate, In between the two extremes of the no-excuse clause and thus reducing the STAs' risk of overspending for acceleration. the day-for-day excusable delay approaches is where things get complicated. Weather is one variable that is handled in Disincentive different ways. Some STAs transfer all the weather risk to the contractor, others share the risk by allowing time extensions for How much will the contractor be charged for failing to abnormal weather, and yet other STAs absorb all the weather meet the milestone date? When daily rates are used, the total risk through work day contracts. Other excusable delays such disincentive is equal to the product of the daily disincentive as plan errors, third party conflicts, and unforeseen conditions rate days of late completion. Lump sum disincentives are are treated in a variety of ways. There are I/D provisions that applied when the contractor fails to meet the specified mile- treat time extensions differently with respect to the incentive stone. The disincentive amount is the same whether the con- and disincentive. In these cases, time extensions may not tractor finishes 1 day late or 1 month late. be considered for the incentive milestone date but they will be considered for the disincentive milestone event. Incentive A note about no-excuse clauses. FDOT has been a leader If the contractor finishes early, will he/she earn an incentive? in the implementation of innovative contracting methods. Its If so, what amount will be earned? The incentive portion of a approach to no-excuse clauses has evolved. FDOT has what it contract is not always used. Some STAs use a disincentive refers to informally as an "excusable no-excuse" clause. Under provision only. For daily incentives, the amount earned is equal this specification, excusable delays that have a total impact to the product of the daily incentive rate multiplied by the days greater than 15% of the time remaining are considered for a of early completion. Lump sum incentives are applied when time extension. This is a compromise that recognizes a con- the contractor completes the specified milestone early. The tractor may still earn an incentive even though the contractor incentive amount is the same whether the contractor finishes was delayed due to circumstances beyond contractor control. 1 day early or 1 month early. However, this approach does not recognize the cumulative effect of multiple small delays, or what is commonly referred Substantial Completion to as disruption delays. Best practices for I/D provisions should What determines when the I/D milestone is completed? include a shared risk approach to no-excuse clauses, contractors Very specific criteria regarding the definition of substantial should not be unduly penalized for circumstances beyond completion of the I/D milestone should be provided in the their control and they should be rewarded for overcoming specification. It does not matter if the I/D milestone is an delays and still meeting milestone criteria. interim completion item such as opening a ramp to traffic or A note about specifying minimum and/or maximum if it is the total project completion. Examples of substantial B values. Specifying a not-to-exceed B value and/or a mini- completion include the following: mum B value is not a suggested best practice. For A + B proj- ects, some STAs specify that a contractor may not bid less than All pay items are completed. or more than a specified number of days for B. Specifying a Traffic is in its final configuration and no work requiring maximum or not-to-exceed B value is seen as a method to pro- lane and/or shoulder closures is required. tect the STA from overpaying for an incentive in a non- The ramp is open to traffic and all traffic signals are competitive market or forcing a completion date to meet the operational. STA's objectives. Similarly, specifying that contractors may not bid less than a minimum B value is seen as a way to protect the Time Adjustments STA from excessive bid manipulation, which may inhibit the Under what circumstances will the I/D milestone date be use of innovative materials and/or processes. In short, A + B is adjusted? This is one of the most complicated issues associated best applied when there are adequate market forces to influence with time-related I/D provisions. There are I/D specifications accelerated construction and when plans, specifications, and that use a "no-excuse" clause. In its purest form, a no-excuse project conditions are such that the potential for bid manipula- clause states that no time extensions will be considered in the tion is mitigated. When these conditions exist, the need for a calculation of a time-related I/D. Whether the contract time is STA to specify minimum or maximum B limits is negated.

OCR for page 27
32 Types of Time-Related I/D Provisions and cult to understand and could potentially lead to misappli- Suggested Combinations of Variables cation of I/D provisions. Instead, a matrix that identifies the suggested combinations of I/D types and variables is A list of all the variations of time-related I/D provisions provided in Table 8. used by U.S. STAs would be impractical to compile. The It is also important to determine what type of project is local modifications are so numerous that it would be diffi- compatible with a time-related I/D provision. Because there Table 8. Matrix of I/D types and suggested variables. A+B1+B 2+B n I/D I/D I/D A+B (interim A+B with Lane Calendar Working Complete- without milestone(s) I/D Rental Day Day by-Date I/D and/or total duration) I/D Provision Variables Determination of Contract Time Owner Contractor Unit of Time Calendar Day hourly or Modified Calendar Day daily Work Day Disincentive Accrual & Capping D a ily C a p p e d n /a n /a D a ily U n c a p p e d n /a n /a Lum p Sum n /a n /a Incentive Accrual & Capping D a ily C a p p e d n /a n /a D a ily U n c a p p e d n /a n /a Lum p Sum n /a n /a Substantial Completion All pay items n/a Partial completion n/a Time Adjustments No-excuse n/a Excusable delays n/a Modified no-excuse n/a Time Adjustments Applied To D is in c e n tiv e O n ly n /a n /a In c e n tiv e a n d D is in c e n tiv e n /a n /a Use of this variable is acceptable Use this variable with caution Do not use this variable

OCR for page 27
33 are so many types of highway construction projects, and all For the given example, Table 10 shows that, without accel- types have the potential to be accelerated, perhaps the better eration, this 300-working-day project would take approxi- way to view this issue is to discuss what types of projects should mately 483 calendar days to complete. When alternative not use a time-related I/D provision. Projects that have un- work schedules are used, the approximate calendar days to knowns such as utility conflicts, right-of-way conflicts, sizable complete this hypothetical 300 working day project varies excavation where the material type(s) have not been identified, from 386 to 217 calendar days. The conversion from work- and innovative materials and/or techniques are being specified ing days to calendar days includes an adjustment for antic- for the first time are not good candidates for time-related ipated weather impacts. Quite often acceleration can be I/D provisions. The primary reason is that the occurrence of achieved by improved resource use and improved project excusable delays erodes the effectiveness of I/D provisions. management, shown in the second row of Table 10. This Contractors have a distinct advantage when negotiating the example is a simplified way to look at the approximate level time impact of an excusable delay. Implementing a no-excuse of acceleration that can be achieved through various work clause to compensate for this potential erosion of I/D effec- week schedules. In reality, acceleration is achieved through tiveness is not an equitable solution nor is it a cost effective one. a combination of increased working hours per week and Although the risk of unknowns is passed to the contractor; improved resource use. when it reaches a certain level, it is returned to the STA through Many STAs have standard specifications that do not allow increased costs. As one of the contractors that participated work on Sundays or holidays, some even limit Saturday work. in the Phase II research stated, " . . . if the contract provision Limiting the work week and hours conflicts with the desire to begins to look too much like a gamble to the Contractor, the accelerate a project, which is inherent in the use of an I/D pro- Contractor will acknowledge the potential damages by bud- vision. Rather than specifying a work schedule (number of days geting to incur these. The likelihood that the STA then pays per week) on an I/D project, STAs should specify that time will for the potential damages, but then never recoups the damages be measured by the calendar day and allow the contractor to ad- tends to favor the Contractor." just working hours as necessary to meet its schedule. Table 9 contains general guidance on I/D provision type When specifying calendar days is not an available option and project type. for an I/D project, care should be taken when using I/D pro- Another way to look at the applicability of I/D provisions visions other than A+B. Figure 18 shows the applicability of is provided in the following example: I/D provision types by specified work week schedule, as well as Assume a suburban interstate reconstruction project that the approximate time savings that can be realized by adjusting under normal circumstances would require 300 working the work week and hours. days to complete. The approximate number of days saved by changing the working schedule from a 5-day work week to A note about multiple shifts. Specifying multiple shifts other alternatives is shown in Table 10. should be limited to extreme circumstances. Human resources Table 9. I/D provisions and appropriate projects. I/D Provision Appropriate Projects Projects where the primary concern is minimizing the disruption of traffic and the nature of work items results in predictable lane closure durations Overlay Full depth patching Lane Rental Dowel bar retrofit Diamond Grinding Full depth reclamation Cold recycle All types of projects except for emergency projects where competition is limited or projects that must be completed by a certain date (e.g., special event) A+B Use whenever the STA does not have the expertise to accurately estimate the project (all variations) duration and the level of acceleration that is reasonable based on the incentive offered Projects that have adequate competition to assure B durations are aggressive Emergency projects where competition may be limited Projects that must be completed by a certain date (e.g., special event) I/D Use only if the STA has the expertise or is able to obtain the expertise to accurately estimate the project duration and the amount of acceleration that is reasonable to expect based on the incentive offered

OCR for page 27
34 Table 10. Conversion of working day schedule to calendar days for different work schedules (using a 300-working- day project with normal production rates, normal resource allocation, and normal management techniques). Second Shift Weather Adjusted Efficiency Factor Calendar Days Suggested Suggested (adjust for (adjust for Estimated Time Accelerated Contract estimated actual Net Working Calendar Calendar Weather estimated actual Reduction Schedule Calendar Work Schedule conditions) Days per Week Weeks Days Factor conditions) (%) Multiplier Days Normal 5-day week n /a 5 60 420 1.15 483 n/ a n/ a n/a 5-day week with additional resources and/or improved n/ a 6 50 350 1.15 403 17% 0.90 to 0.80 435 to 386 management techniques 6-day week n/ a 6 50 350 1.15 403 17% 0.90 to 0.80 435 to 386 7-day week n/ a 7 43 300 1.15 345 29% 0.75 to 0.65 362 to 314 *5-day week with 2 shifts 0.6 8 38 263 1.15 302 38% n/ a n /a *6-day week with 2 shifts 0.6 9.6 31 219 1.15 252 48% n/ a n /a 7-day week with 2 shifts 0.6 11.2 27 188 1.15 216 55% 0.50 to 0.45 242 to 217 *Shown for illustration only, specifying 5- or 6-day weeks with 2 shifts is impractical. If conditions require the contractor to utilize 2 shifts, the contractor will likely work 7 days per week to accelerate as much as possible, with the aim of returning to normal working hours more quickly. are a valuable commodity to contractors. Requiring multiple be identified and evaluated. Activities directly related to the shifts may severely hamper a contractors' ability to manage their use of I/D provisions include the following: portfolios of work or prevent them from acquiring backlog Preliminary cost estimates that could be addressed if human resources were freed up from Preliminary time estimates a multiple shift scenario. Assessment of project impacts on the public I/D Decision Process Guide Project Design The decision to incorporate an I/D provision into a contract should be considered from the onset of project planning. The Activities and decisions regarding I/D provisions should following project development framework is used as a template progress through the design phase of project development. As for the I/D decision making process. project designs are developed and refined, I/D provision types Project Development Phases and variables should be identified that are compatible with the project details. The project design development phase is 1. Scoping and Environmental Approval broken down into these three activities: 2. Project Design 30% design 3. Plans, Specifications, and Estimates (PS&E) 60% design 4. Contract Award 90% design 5. Construction Multiple activities related to the proper implementation of Plans, Specifications, and Estimates (PS&E) I/D provisions occur within each of these project develop- The final phase of project development includes the follow- ment phases. Guidance is provided for the effective use of I/D ing activities directly related to the use of I/D provisions: provisions within each of the project development phases. Final plans Final specifications Scoping and Environmental Approval Final cost estimate The initial phase of project development establishes the Final time estimate objectives of the project. Project needs and conditions must be characterized. Environmental approval documents must This is the final opportunity to coordinate plans, specifica- be prepared and submitted. Feasible alternatives should also tions, and time-related I/D objectives. A thorough review of

OCR for page 27
35 60% 50% Approximate Time Savings 40% 30% 20% 10% Lane Rental 5 days/week 6 days/week 7 days/week 7 days/week *Specified Work with increased with increased with increased with multiple Schedule: resources resources resources shifts Applicable I/D Provision Type: A+B: I/D Working Day: I/D Calendar Day: I/D Complete-by-Date: *Specified work schedule dictates how contract time is measured. Contractors may elect to utilize a different work schedule to construct the project. Figure 18. Approximate time savings by scheduled work week/hours. all contract documents should be accomplished to identify and Construction correct any conflicts between the documents. Also, a pre-bid meeting should be conducted to clearly communicate the I/D Contract time charges and field changes should be thor- provision objectives and to receive feedback from contractors. oughly documented for equitable calculation and assessment Any revisions made to the project during the PS&E phase of any earned I/Ds. should trigger a thorough review to ensure that the I/D provi- sion is still compatible with the revised project plans and speci- Time-Related I/D Checklist fications and that no conflicts have been created by the revisions. Gauge the level of competition for bidding on the project; apply the appropriate I/D type for the estimated level of Contract Award competition and offer I/D rates that will motivate accelerated Before award is made, bids should be reviewed for obvious construction. unbalancing, which may be attributable to the use of an I/D Increase the pool of available bidders by allowing flexibility provision. between the bid award and start of construction.

OCR for page 27
36 Preliminary Cost Estimates Objective: Determine the cost of the project Project length Number of structures Key items for consideration: Magnitude of excavation and embankment Right of way acquisition Utility relocation Historical data--cost per mile (and feature) for comparable Methods: project scope Contingency costs for perceived unknowns Output related to the use of Project budget I/D provisions: Preliminary Time Estimates Establish the schedule for project development phases Objective: Determine the approximate construction duration of the project Project length Number of structures Magnitude of excavation and embankment Key items for consideration: Existing conditions and maintenance of traffic requirements that will dictate multiple phases Right of way conflicts during construction Coordination of utility relocation For STAs in regions where climate conditions prevent performance of work throughout the year, a determination of whether the project can be completed in one construction season or whether it will require multiple construction seasons Methods: Measured mile techniques based on historical performance for similar projects Bar chart scheduling by major phase Time contingencies for unique project features and unknown conditions Project development schedule milestones including proposed bid opening year and month (The schedule should include Output related to the use of allowing flexibility between the bid letting and the start date to I/D provisions: increase competition. This can save significant cost for the STA.) Estimated project duration for construction activities (calendar days) Assessment of Project Impacts on the Public Objective: Characterize the impact the project will have on the public AADT and preliminary RUC estimate Traffic mix--commercial traffic vs. commuter/leisure traffic Key items for consideration: Detour alternatives Special events Construction noise, dust, and construction traffic on local roads Analysis of traffic data Methods: Public meeting(s) to obtain community feedback Brief report summarizing the project's impact on the public, Output related to the use of indicating whether the use of an I/D provision would be effective I/D provisions: at reducing that impact and the degree to which an I/D provision would likely be justified by RUC (low, medium, or high)

OCR for page 27
37 30% Design Id entify project specific details that could become Objective: potential barriers to the successful use of an I/D provision Id entify and characterize the potential for project unknowns (low, medium, or high) that may result in compensable delays during construction o Unstable/unsuitable soils and other geotechnical issues o Utilities o Unique design and construction features Key items for consideration: o Right-of-way conflicts o Third party conflicts Evaluation of detour alternatives vs. accelerated construction during full closure that would dictate the use of an I/D provision Maintenance of traffic requirements Refinement of the time estimate Initial RUC estimate Geotechnical site investigation Utility location survey and relocation of utilities before the project start where possible Internal review by experienced personnel assessing Methods: the status of project unknowns and their potential for contributing to compensable delays Critical path method scheduling using project phases and major work items as the activities Summary document listing potential barriers to the successful use of an I/D provision that should be fully evaluated during the 60% design stage RUC estimate Output related to the use of Maintenance of traffic criteria that will dictate I/D provisions: project design details and construction activities (e.g., maintain 2 through lanes at all times, one lane may be closed only between 7:30 pm and 5:30 am, Ramp A may be closed for a maximum of 14 days between March 1 and April 30)

OCR for page 27
38 60% Design Final determination of whether an I/D provision is Objective: appropriate for a specific project and, if so, which type(s) of I/D provisions should be considered Compatibility of the design with the maintenance of traffic criteria developed in the 30% stage Design details and refinement of the design assumptions made during the 30% stage that affect the following items: o Unstable/unsuitable soils and other geotechnical issues o Utilities o Unique design and construction features Key items for consideration: o Right-of-way conflicts o Third party conflicts o Other items that may result in a excusable delay during construction Refinement of the time estimate Refinement of the RUC estimate Appropriate I/D provision types and variables o Level of acceleration necessary o Project budget and reasonable I/D rates that will achieve the acceleration requested Internal review by experienced personnel Constructability review by industry Evaluate and update the summary document produced in the 30% stage; specifically address the status of the potential barriers to I/D implementation (resolved or unresolved) based on the 60% design Methods: details Critical path method scheduling using project phases and major work items as the activities; durations based on average production rates and design quantities Recommended I/D provision types and variables (Figure 18 and Tables 8 and 9) Recommendation of whether or not an I/D provision is appropriate for the project o Indicate what type of I/D provision is most suitable and which I/D variables should be used o List critical milestone events which will be Output related to the use of subject to I/Ds (e.g., re-opening of a ramp, I/D provisions: completion of a detour, substantial completion of Phase I) List potential barriers to the successful implementation of an I/D provision that need to be resolved in the 90% design stage

OCR for page 27
39 90% Design A project design that is compatible with accelerated Objective: construction, the maintenance of traffic criteria, and I/D provisions Compatibility of the design with the maintenance of traffic criteria developed in the 30% and 60% stages Design details and refinement of the design assumptions made during the 60% stage that affect the following items: o Unstable/unsuitable soils and other geotechnical issues o Utilities Key items for consideration: o Unique design and construction features o Right-of-way conflicts o Third party conflicts o Other items that may result in a excusable delay during construction Baseline time estimate Accelerated time estimate Final RUC estimate and proposed I/D rates Internal review by experienced personnel Resolution of potential barriers to I/D implementation that still remain after the 60% design stage Critical path method scheduling; activities and durations should be based on project quantities, average production rates, and a normal work Methods: calendar Accelerated time estimate; based on a conservative reduction in construction time based on the desired work schedule (Table 10) Final recommendation of I/D provision type and variables (Figure 18 and Tables 8 and 9) Revise and refine the recommendation of whether or not an I/D provision is appropriate for the project o Indicate what type of I/D provision is most suitable and which I/D variables should be used o List critical milestone events which will be Output related to the use of subject to I/Ds (e.g., re-opening of a ramp, I/D provisions: completion of a detour, substantial completion of Phase I) Indicate that all potential barriers to the successful implementation of an I/D provision have been considered and are either fully resolved or present a level of risk that can be tolerated

OCR for page 27
40 Avoid overloading the market with I/D projects. 3. Use an A + B I/D provision if the STA is not capable of Clearly define the I/D milestone(s) and the method for accurately estimating the construction duration and the resolving excusable delays. Clearly state when time charges level of acceleration that is reasonable based on the incentive begin, when they cease, and under what conditions they offered. may be adjusted. 4. Cap incentives as a means to limit the STA's exposure to For non-A + B I/D projects, evaluate whether schedule overpaying for acceleration. milestones can be reasonably achieved. 5. Because a capped incentive is the product of the specified Perform a comprehensive site investigation and plan review daily I/D rate and the maximum number of days that the to minimize the potential for excusable delays and unit STA is willing to pay for early completion, set the daily I/D price manipulation. rate at a level that will motivate the contractor and also Coordinate plans, construction sequencing, and I/D pro- allow the greatest number of days that incentive will be paid. Offering 100 days of incentive at $10,000 per day will vision language with constraints imposed by local ordinances likely produce earlier completion than offering 50 days of (noise, work hours, etc.). incentive at $20,000 per day. 6. Use calendar days to measure time. Using working days or modified calendar days introduces ambiguity that may lead Guidelines for Maximizing the to an inequitable assessment of incentive or disincentive. Effectiveness of I/D Provisions 7. Base I/D rates on an RUC estimating procedure that is uniformly applied for all projects. The percentage of RUC 1. If a competitive market exists, use an A + B I/D provision. that is used as the I/D rate should be a function of available 2. Increase the pool of available bidders by allowing flexibility budget, market conditions, and the level of acceleration between the bid award and start of construction. desired.