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CHAPTER 1
Project Background, Objectives,
and Research Approach
Problem Statement Appendix A for individuals and agencies needing an in-depth
perspective on incentive-based contracting methods that goes
STAs are under increasing pressure to reduce the duration beyond the scope of this research.
of highway construction projects. This pressure stems from Next, information on the use of time-related I/D provisions
the desire to reduce traffic delays and other inconveniences to was sought from 50 U.S. STAs, the District of Columbia, and
the traveling public. To reduce the duration of construction Canadian provinces. This effort involved an initial telephone
projects, many STAs use time-related I/D contract provisions. call to identify the appropriate contact in each STA. This call
There is a need to better understand the use of time-related was followed by an e-mail that provided the STA contacts with
I/Ds in highway construction contracts. The following issues a brief overview of the research project.
were addressed in this project: The final step for the STA information and data collection
task was prepared by the research team as follows:
· The type of time-related I/D contract provisions used in
highway construction contracts and the extent to which · Develop an e-mail interview form to address the project
they are used. team's questions about the use of time-related I/D provisions
· The success of time-related I/D contract provisions. by STAs.
· Criteria used to determine when time-related I/D contract · Meet with the Oklahoma DOT to review the draft e-mail
provisions are appropriate and criteria to select the most interview form for clarity and applicability to STA personnel
appropriate provisions. who would be responding to the request for information.
· Methods used to determine the dollar amount of the time- · Revise the e-mail interview form based on feedback from
related I/Ds. Oklahoma DOT.
· The effects of time-related I/Ds on projects. · Beta test the e-mail interview form with Oklahoma DOT.
· Telephone all the STA contacts and follow up with the e-mail
Research Objective containing the interview form.
The objective of this research was to develop recommen- This step of the research yielded 32 completed interview
dations for the effective use of time-related I/D provisions in forms (Figure 1).
highway construction contracts. Multiple criteria were used to identify the key sources of
information to target for the in-depth follow-up investiga-
tions. First was the level of experience that the STAs had with
Research Approach
time-related I/D provisions. This level was determined using
The initial step of this research effort was a comprehensive the responses to the e-mail interview form (each STA pro-
review of published literature related to the use of time-related vided the number of I/D projects over the last 2 fiscal years)
I/D provisions. More than 375 articles, research reports, and (Figure 2).
other publications related to time-based I/D contract provi- The STAs were grouped by level of experience (Table 1).
sions were identified. After a thorough review, 164 published Results of the literature search were also used as a factor
documents were deemed pertinent to this research. A bib- to determine which states would be chosen for in-depth
liography containing most of these documents is included as investigations. Florida, Ohio, and New York had published
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STA Interview Responses
Figure 1. Province and states responding to the time-related I/D e-mail interview.
120
100
100
80
Number of Projects
65
60 56
53
50 50
43
40 39
40
24 24
20 20
20 16 15
13
10
7 7 7 6 6 5 4 3 3 3 2 2 1
0
FL SC OH NY CA VA MO TN OK IN MI NE UT AR MN VT PA DE GA LA IA MD ND OR CO KS NV ID ME RI TX ON
State Transportation Agency
Figure 2. Number of I/D projects by STA (last 2 fiscal years).
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Table 1. I/D experience level by group. with the STA in-depth investigations would provide an avenue
to compare and contrast contractor and STA experiences
Experience Level
on the same project or similar projects under the same I/D
Number of I/D Projects
(last 2 fiscal years) States provision.
60 to 100 FL & SC Based on responses to the e-mail interview form, it was
40 to 60 OH, NY, CA, VA, MO & TN evident that the opportunities to obtain meaningful quantita-
20 to 40 OK, IN, MI, NE & UT tive data such as project duration, relative cost comparisons,
I/Ds paid or charged from the STAs would be limited. A review
of the documents obtained in the literature search provided
in-house documentation and guidance on their use of time- access to limited quantitative analyses. It was also known that
related I/D provisions (5, 6, 7, respectively). This weighed a few of the STAs were tracking time-related I/D metrics.
heavily for their inclusion as interviewees for the in-depth Therefore, the research team decided to execute the in-depth
investigations. The fact that each of these STAs had established follow-up investigations with the following strategy:
guidance about their use of I/D provisions could mean that
these STAs had recent experiences or insight valuable to the · In-depth interviews would be conducted with three distinct
results of this project. There were also numerous published groups in each state (1) STA headquarters staff, (2) STA field
articles on California's use of time-related I/D provisions office staff, and (3) a contractor recommended by the STA.
(8, 9, 10, 11). Again, it was evident from these documents that · Each group would be interviewed separately to avoid with-
California had been through a fairly thorough self examina- holding information as a result of a perceived influence
tion on the use of time-related I/D provisions. Florida, Ohio, from superiors or the perception that an agency-contractor
New York, and California were chosen for in-depth investi- relationship could be negatively impacted.
gations based on their level of experience with I/D provisions · For each interview group, a standard form was completed
and existing documentation of their practices. by each participant. These forms were developed so the
Oklahoma and Utah were the final two states chosen for "experts" could rank/rate their perceptions about time-
in-depth interviews. Oklahoma was included because its related I/D provisions and their impacts on quality, cost,
experience level was consistent with the goal of having diversity safety, innovation, contract administration, and staffing.
within the in-depth group. But the primary factor that led to The results of these ranking forms provided the opportunity
Oklahoma's inclusion was its willingness to provide feedback to compare and contrast the impacts of I/D provisions
and assist in the development of the in-depth investigation between the groups.
materials. Its cooperation assisted dramatically in the devel- · Interview participants were allowed to offer detailed answers
opment of in-depth investigation techniques used for the during a question and answer (Q&A) session. Each Q&A
remaining STAs. Finally, Utah was included based on the session was initially guided by a standard list of questions
goal of having diverse experience levels and geographical and that generated discussion among the participants. The goals
climatological diversity in the follow-up investigation task of the Q&A session were to
(Table 2). Obtain an understanding of how I/D provisions are used
Time-related I/D information was gathered from contractors by a specific STA.
in the six states corresponding to the STA in-depth interviews. Offer the experts an opportunity to relate their experiences
The research team believed a blanket solicitation for informa- with I/D provisions.
tion to contractors across the country would be unproductive Gather more detailed information about responses to
and would likely yield biased responses. It was determined that the ranking form.
on-site interviews with contractors would be coordinated Anecdotally document "lessons learned" on I/D projects.
with the STA in-depth investigations. Matching contractor Capture best practices related to the use of time-related
experiences and perspectives about time-related I/D provisions I/D provisions.
Table 2. SHRP-LTPP environmental zones and in-depth
investigation states.
SHRP-LTPP Environmental Zone In-Depth Investigation States
Wet-Freeze Ohio and New York
Wet-Nonfreeze California, Florida and Oklahoma
Dry-Freeze California and Utah
Dry-Nonfreeze California and Oklahoma
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Request copies of current I/D provisions used by the reviewed to complete this list. All practical means were used
STA, quantitative measures that the STA uses for track- to make this list comprehensive; however, it is possible that
ing time-related I/D projects, and internal unpublished some STAs have used I/D provisions that were not discovered
reports related to time-related I/D projects. in this effort. Connecticut, Massachusetts, New Hampshire,
and West Virginia were the only U.S. STAs the research team
During Phase I, contractors from the six states were inter- could not document as using time-related I/D provisions on
viewed about I/D impacts. Although a great deal of beneficial at least one project.
information was gathered during those interviews, there is The following notes provide further insight into STA
such a diversity in the way that time-related I/D provisions perceptions about I/D provisions. These notes were either
are implemented by STAs that it was difficult to compile a provided by the STA in its response to the e-mail interview or
consensus of time-related I/D impacts from the contractors' they were transcribed from telephone conversations between
perspective. Because of this limitation, the research team STA contacts and a member of the research team.
received direction from the NCHRP Project 10-58(01) panel
during Phase II. The panel's request was to better capture · Utah--"We have found that time related incentives do not
contractor perspective on time-related I/D provisions. To do add costs to our project, plus they are a good method of
so, the research team decided that a different approach would defining a realistic contract time since the contractor is
be most effective. Thus, a position paper was prepared that usually involved in deciding how much time he needs to do
synthesized the contractor research results from Phase I with the work. On the other hand, incentives can increase the
the research team members' knowledge of I/D impacts on the "tension" between client and contractor because the con-
highway contracting industry. This position paper allowed tractor is more inclined to try and get every time extension
contractors to provide anonymous feedback on how accurately he feels he deserves to protect earning the incentive. This
the position paper captured the contractors' perspective on can create conflicts."
I/D impacts. Issues related to innovation, cost, market factors, · Delaware--"There are problems with time related I/Ds that
risk allocation, and safety were presented in the position paper. are done for political reasons, they are counter-productive.
Eight contractors were solicited to provide feedback on the Eventually other contractors want to be included. I don't
position paper. Five responses were obtained from different particularly endorse their use unless there are closures or
contractors than those used for the Phase I contractor research. very high AADTs involved. The problem created by these
The overall level of agreement with the research team's attempt incentives is that it becomes a hassle for the construction
to capture contractor perspectives was excellent (Figure 3). administrators. In order for I/Ds to work to everyone's
benefit, the plans and specs have to be near perfect."
· Nevada--"In general, I/D provisions have been successful
Use of I/D Provisions by
in Nevada. Typically incentives are capped and are less than
State Transportation Agencies
3 to 5% of the total project cost. Their use has been limited
A list of STAs that currently use or have used time-related to critical projects due to impacts on the infrastructure
I/D provisions is shown in Table 3. Along with the 32 STAs system (high traffic volumes) or critical items (e.g., school
that responded to the e-mail interview, additional sources were openings, impacts to tourist routes, special events, etc.)."
strongly agree
Level of Agreement
agree
not sure
disagree
strongly disagree
1 2 3 4 5 6
Contractor Responses
Median Response by Contractor (All 10 Issues) Median (All Contractors)
Figure 3. Median contractor response to "Contractor Perspective on
Time-Related Incentive and Disincentive Provisions for Highway
Construction" prepared by the research team.
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Table 3. States and province with documented use of time-related
I/D provisions (June 2007).
State/Province Source State/Province Source
Alabama in ternet search Nebraska e-mail in terview fo rm
Alaska telephone cont act Nevada e-mail in terview fo rm
Arizon a literature search (12) New Jersey literature search (13)
Arkansas e-mail in terview fo rm New Mexico literature search (13)
Califor ni a e-mail in terview fo rm New York e-mail in terview fo rm
Colorado e-mail in terview fo rm North Carolina literature search (13)
Delaware e-mail in terview fo rm North Dakota e-mail in terview fo rm
Florida e-mail in terview fo rm Ohio e-mail in terview fo rm
Georgia e-mail in terview fo rm Oklahoma e-mail in terview fo rm
Hawaii internet search Oregon e-mail in terview fo rm
Idaho e-mail in terview fo rm Pennsylvania e-mail in terview fo rm
Illinois literature search (13) Rhode Island e-mail interview fo rm
Indiana e-mail in terview fo rm South Carolina e-mail in terview fo rm
Iowa e-mail in terview fo rm South Dakota literature search (13)
Kansas e-mail in terview fo rm Tennessee e-mail in terview fo rm
Kentucky literature search (13) Texas e-mail in terview fo rm
Louisiana e-mail in terview fo rm Utah e-mail in terview fo rm
Maine e-mail in terview fo rm Vermo nt e-mail in terview fo rm
Maryland e-mail in terview fo rm Virg in ia e-mail in terview fo rm
Michigan e-mail in terview fo rm Washington literature search (14)
Minnesota e-mail in terview fo rm Wisconsin literature search (13)
Mississippi literature search (13) Wyom in g literature search (15)
Missouri e-mail in terview fo rm District of Columbia telephone cont act
Montana in ternet search Ontario, Canada e-mail in terview fo rm
· Ontario, Canada--"The Ministry of Transportation of · Kansas--"Don't use incentives much because payment
Ontario generally does not use incentive/disincentive for comes out of their general budget."
contract completion. Instead we rely almost exclusively on · Maryland--"Been using for years but often loopholes."
Liquidated Damage provisions both for working day and
completion date contracts. However, we do use incentive/ Further details of the findings from this research project
disincentive for many interim dates and time constraints, are provided throughout the report. Additionally, the I/D
occasionally with multiple incentive/disincentive within discussion and guidelines presented herein are the product of
the same contract. Example is attached; however we have synthesizing information from published literature, research
many for many different situations." findings, and the researcher team's expertise.
