Time-Related Incentive and Disincentive Provisions in Highway Construction Contracts (2010)

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41 Metrics to Quantify I/D Performance The primary factor for determining whether a time-related I/D was indeed effective is whether the contractor was able to meet the I/D milestone and was paid an incentive for early completion. Beyond this analysis, STAs should implement a process for reviewing the effectiveness of I/D provisions. This “look back” process should at a minimum provide unbiased feedback on the following items that have the greatest potential to erode the effectiveness of I/D provisions: • Tabulation of the frequency and impact of excusable delays that were actually encountered on the project. • An analysis of overrun and underrun quantities that actually occurred on the project. Review the final quantities and hypothetical total contract cost for all contractors that originally bid on the project. • A summary report should be prepared by the STA’s project engineer providing lessons learned that can be implemented in future project designs and specifications. Post construction meetings held with both agency and contractor personnel have been very beneficial as an approach for capturing these lessons learned. Every highway construction project provides unique sit- uations that make quantitative comparisons between them very difficult, if not impossible. However, qualitative assess- ments can be made that enable the STA to refine its use of I/D provisions, ultimately leading to more effective use of time-related I/Ds. Future Research Needs Future research efforts related to time-related I/D provi- sions should focus on three areas. First, the enforceability of no-excuse and modified no-excuse clauses should be charac- terized. Many projects have been completed using no-excuse provisions, yet there are no publicized precedents of these clauses being challenged in court. This lack of legal precedent leads one to believe that claims related to no-excuse clauses have been strategically settled to avoid setting any precedent. Second, further research should be undertaken to investigate the construction industry’s ability to cope with issues related to performing more work at night and under multiple shift scenarios. As STAs continue to move toward a strategy that places a higher value on satisfying road user demands, it seems logical that an increasing amount of work will be performed at night and under multiple shift schedules. The guidance contained in this report suggests that multiple shifts should only be scheduled under extreme circumstances. Contractors and STAs need to have a clear understanding of the impacts on human resources (fatigue, changing work hours between different projects, safety, etc.) before proceeding with an increased use of night work and multiple shift schedules. Finally, innovative risk sharing strategies should be imple- mented and evaluated. C H A P T E R 5 Evaluating I/D Effectiveness