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Fuel Usage Factors in Highway and Bridge Construction (2013)

Chapter: Appendix A - Recommended Practice and Model Specification

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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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Suggested Citation:"Appendix A - Recommended Practice and Model Specification." National Academies of Sciences, Engineering, and Medicine. 2013. Fuel Usage Factors in Highway and Bridge Construction. Washington, DC: The National Academies Press. doi: 10.17226/22629.
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112 A.1 Purpose and Scope The purpose of this document is to set forth revised fuel usage factors and procedures for development and use of fuel price adjustment contract provisions. These provisions minimize the cost effects of price uncertainty for fuel used in highway construction. This document also presents information on criteria for application of the fuel usage factors, sample wording successfully used in specifications by various states, and example calculations and worksheets. A.2 Background Price volatility of construction materials and supplies such as asphalt, fuel, cement, and steel can result in significant problems for contractors in preparing realistic bids. In many cases, prospective bidders cannot obtain firm price quotes from material suppliers for the duration of the project. This leads to price speculation and inflated bid prices to protect against possible price increases. This document will provide contracting authorities with information for development and application of fuel usage factors and price adjustment provisions for fuel usage to respond to this price volatility for fuel by transferring a portion of the risk to the contracting agency, resulting in lower bids. A.3 Sponsors, Participating Organizations, and Study Methodology The National Cooperative Highway Research Program (NCHRP) is a major research program within the Transportation Research Board (TRB) of the National Academy of Sciences. The NCHRP is sponsored by the American Association of State Highway and Transportation Officials (AASHTO) in cooperation with the Federal Highway Administration (FHWA). The NCHRP was the sponsor of this project effort, which was designated as NCHRP Project 10-81. Participants included an NCHRP project officer and a technical review panel. The FHWA also contributed one of its employees to serve as a liaison between the NCHRP and the FHWA. State DOTs have also participated in this study. In the first phase of the project, the project team contacted all 50 state DOTs and acquired information on their price adjustment programs, perceptions of fuel intensity, and the features that they would like included in the research products of this project effort. This project has benefitted from the support of several industry organizations. The American Road & Transportation Builders Association (ARTBA), the Associated General Contractors of America (AGC), the National Asphalt Pavement Association (NAPA), and the American Concrete A p p e n d i x A Recommended Practice and Model Specification

Recommended practice and Model Specification 113 Pavement Association (ACPA) each agreed to cooperate with the project team and aid in survey review and dissemination. This project in general, and the survey aspect in particular, depended on the participation of highway construction contractors. The project team attempted to contact over 10,000 contractors through email, industry organizations’ newsletters, and direct phone calls. This study also utilized fuel consumption information provided by the National Ready Mixed Concrete Association (NRMCA). In total, this study utilized information provided by 270 contractors who provided over 500 individual data points regarding fuel consumption. The work plan for this effort proposed a three-pronged methodology to investigate the research problem. As was the case for the original fuel factors, the research team surveyed the contracting community. The survey effort, conducted using both an Excel spreadsheet survey and several iterations of surveys created using SurveyMonkey, asked contractors to provide both biographical information and fuel usage for specific work items. In addition, the research team proposed to conduct both an engineering study and a statistical analysis. The engineering study relied on an expert panel of engineers and estimators to calculate fuel usage for a variety of construction work items. In this effort, the expert panel selected the neces- sary equipment for each task, calculated the fuel used by that equipment, calculated the time needed to complete each activity, and ultimately calculated the fuel use per unit of measure for an average project under each work item. For the statistical analysis, the research team studied the relationship between bid prices and diesel fuel index prices. Unfortunately, this effort did not yield meaningful results due to the complexity of the relationship and a number of confounding variables. A.4 Definitions This section defines terms that are used in this guide and throughout the NCHRP Project 10-81 study. Fuel Usage Factor The gallons of fuel required to perform a specified unit of construction. For example, this study has calculated that the fuel usage factor necessary to lay one linear foot of large pipe is 4.338 gallons. The fuel usage factor is a numerical input to price adjustment formulas. Price Adjustment Clause A clause that may be added to contract agreements between procuring agencies, such as state departments of transportation (DOTs) and construction contractors. A price adjustment clause, or PAC, allows for contractors to be compensated in the case of fluctuating commodity prices. Price Index A historical time series that displays an index of relative prices compared to a base year price for a particular good or commodity in a specific area. A price index is a frequent input to price adjustment clauses. Trigger The percentage change in price of a commodity in relation to an established base price that initiates the payment of a price adjustment. A trigger value is often included in price adjustment

114 Fuel Usage Factors in Highway and Bridge Construction clauses and typically ranges between zero percent and 20 percent change in base price in either direction. Exceeding the contractually established trigger value will lead to either contractor reimbursement by their DOT or the return of contractor funds to the DOT, depending on the direction of the price fluctuation. Indexed Item per Unit Method The predominant method for conducting a PAC program. The method of measurement for this PAC method relates directly to the quantity of work performed on the specific bid items outlined in the specifications. For fuel, this is related to specific bid items that are assigned a fuel usage factor assigned to those items. Total Fuel Requirement Method An alternative PAC method. In this method, the state DOT will set an amount of a commodity to be used on a project. An allocation schedule is then created that details the estimated amount of the commodity used at each point of the construction process. The percent of the commodity used to date is then applied to the total commodity amount needed after the completion of each increment of work. This method is not currently used by any DOTs. Bid Item Method An alternative PAC program method. This method is used by creating a bid item for commodity cost for the project and the bidder enters a value from zero up to the maximum amount designated by the owner. Percent of Cost Method An alternative PAC program method that is used by several states. Under this model, the percent of contract dollars that will be used on a commodity is specified. The method of measurement of this method involves multiplying the current pay estimate value by the predetermined percent of cost. This value is then compared to the index values of the commodity. A.5 Reference Documents This section presents selected publications and projects that have informed the research team in this present effort. The presented sources include previous federal research efforts, relevant efforts by the current research team, and academic sources. Highway Research Board Circular 158 The original research on fuel usage factors includes Highway Research Circular Number 158 by the Highway Research Board (now the Transportation Research Board) in July 1974. A mailed survey of 3,000 highway contractors netted 400 responses, and the FHWA compiled and analyzed the data. Factors were computed for construction activities such as excavation, aggregate and asphalt production, and structure construction. Each of these activities received a high, low, and average factor. Both diesel and gasoline were included. The team did not fully investigate the effects of different terrain and did not account for contingencies such as high altitude.

Recommended practice and Model Specification 115 FHWA Technical Advisory T5080.3 The Federal Highway Administration (FHWA) incorporated the Circular 158 factors in Technical Advisory T5080.3, originally released in 1980. The FHWA website provides the updated version of this advisory. It contains methods for developing price adjustment provisions such as downward and upward contract provisions, using an average of quotes to avoid manipulation, triggers based on a 5 percent change in fuel price indices, and ad hoc adjustments on fuel usage factors in cases of extreme elevation, rough terrain, etc. It also provides the original fuel usage factors as well as additional fuel usage factors developed by the states. AASHTO Price Adjustment Clause Survey The Contract Administration Section of AASHTO’s Highway Subcommittee on Construction (AASHTO SOC) maintains a spreadsheet that summarizes the current use of price adjustment clauses for fuel, asphalt, cement, steel, and other highway materials. The 2009 version of a summary spreadsheet includes general information regarding trigger values, indices, Web references, general comments, and state DOT contacts. This set of literature also includes the individual state policies for which the spreadsheet provides Web references. NCHRP Project 10-81 This Specifications Guide and Recommended Practice effort is part of the larger NCHRP Project 10-81. The objectives of this study are to (1) identify present highway construction contract activities that are major consumers of fuel; (2) prepare fuel usage factors for these activities, including those items of work presented in Attachment 1 of FHWA Technical Advisory T5080.3, for base year 2012; and (3) develop a recommended practice for state DOTs to implement use of fuel adjustment factors and adjust them for both state-specific conditions and changes in construction costs, methods, and equipment. The selected research organization designed a three-pronged research plan to achieve the above objectives. A survey approach allowed the project team to determine the prevalence of price adjustment clauses and fuel usage factors among state DOTs as well as to determine con- tractor fuel usage by work category and pay item. A statistical analysis modeled the relationship between fuel prices and construction bid prices. An engineering software analysis identified construction activities that are high in fuel use as well as the relative cost of fuel compared to the overall costs of construction activities. In addition to this guidance, there are several research products for this project. A final report synthesizes the total research effort. An Excel-based spreadsheet tool allows users to quickly calculate fuel adjustments and modify their project parameters. A webinar con- ducted by the research team presented the project efforts to interested parties from around the country. NCHRP Project 20-07, Task 274 The research team conducted an examination of the use of price adjustment clauses in con- struction contracting for NCHRP Project 20-07. When market prices of cement, steel, asphalt, fuel, or other commodities used in transportation infrastructure construction are increasing, DOTs face demands to incorporate price indexing or cost escalation clauses into construction contracts. Agency decisionmakers seek guidance for judging if indexing and escalation clauses are warranted, whether the benefits an agency may gain using such clauses outweigh the costs, and how best to implement indexing. This is a particularly important issue in recent years.

116 Fuel Usage Factors in Highway and Bridge Construction Fluctuating petroleum prices have led to increases and decreases in the costs of fuel and asphalt products. Rising demand from China and other developing countries drove up prices for steel and other building materials. The worldwide recession then led to drops in prices for many commodities. Price indexing and cost escalation clauses shift business risk (and potential rewards from falling commodity prices) from the contractor to the DOT. While this shifting of risk may benefit the agency through contractors’ willingness to submit lower bids, the agency faces greater uncertainty in budgeting and managing the final costs of a project. There is little information available on how agencies’ use of such clauses may affect construction-market competition or commodity prices within a regional market. There is also little information on how the effectiveness of these clauses vary based on their design such as the trigger point for the index, the relative project size, the type of commodity or bid item, and the presence of opt-in or opt-out clauses. Data on the administrative costs of these clauses is also lacking. The objectives of this research were to • Describe the current state of DOT practice in using price indexing or cost escalation clauses in construction contracts; • Collect data on the experience with escalation clauses from state DOTs, highway construction contractors, and other industries; • Conduct a quantitative analysis of the effectiveness of the clauses using highway construction bid item data; and • Provide guidance for DOT staff making decisions about whether and how they should use such clauses. The research team compiled a final report detailing their efforts in January 2011. The final report includes a survey of current PAC practices, an evaluation of their costs and benefits, and final guidance for state DOTs regarding their use. National Highway Construction Cost Index The research team aided FHWA with the development of the new National Highway Con- struction Cost Index (NHCCI). For the study, the research team assisted in the development of the methodology, provided highway construction bid data by pay item for 48 states, carried out custom programming to extract the data for the index, and developed recommendations for future improvements and research. “Evaluation of Fuel Usage Factors in Highway Construction in Oregon” Several academic papers examine fuel usage factors. Perhaps the most relevant is “Evaluation of Fuel Usage Factors in Highway Construction in Oregon” by Ken Casavant, Professor at Washington State University with co-authors Eric Jessup and Mark Holmgren. This analysis compiles infor- mation regarding how other states address the issue of inflation in fuel factors and develops an approach to updating the estimation of fuel factors used for various types of structures. The authors present three major errors with the current fuel adjustment system. The first is the effects of inflation on construction costs exacerbated by the failure to correct for inflation on the 1980 fuel adjustment factors for structures and miscellaneous costs. The second is improvements in construction practices and fuel efficiency. Lastly, fuel preferences have shifted, with the change from diesel to natural gas in asphalt plants being the most notable. The study proceeds with an overview of state practices for formulating fuel adjustments and a survey of state DOTs, which found that most consider their current fuel adjustments to be fair despite contractor complaints and recently implemented or planned changes in many of their fuel adjustments. Two primary

Recommended practice and Model Specification 117 recommendations are presented. The first is to cut the fuel usage factors for structures approximately in half, from 19 to 9 for cast-in-place structures and from 10 to 5 for pre-cast structures. A review and recalculation of fuel usage factors every 3 years is also suggested. A.6 Revised Fuel Factors This section presents the updated fuel factors developed during the course of this study. Exhibit A-1 presents these factors in a table. Exhibit A-1 contains four columns. From left to right, these columns are work category, work item, unit of measurement, and the fuel factor. For example, the “Clearing” work item, under the “Clearing and Removal” category, is estimated to consume 191.2 gallons per acre assuming normal project conditions. Exhibit A-1 is followed by brief descriptions of each work item. Clearing and Removal Items Clearing and removal activities may vary widely between projects. The general assumptions used to develop the equipment and production rates for these tasks relate to the density and type of materials to be removed from the site. Light clearing would consist of areas that have only a minimal growth of trees and brush. This would generally be related to projects that are widening or where existing roads are being reconstructed. In addition, light clearing areas would contain little or no general clearing items such as fence rows or other debris. Medium clearing would be in areas where the trees and brush are only moderately dense. An example of these areas would be in residential areas where trees and open areas are mixed. Heavy clearing would consist of areas that are densely populated with trees and brush and in more virgin area projects where there are no current roads. For removal items, the largest cost relates to the distance required to haul the debris. Removal items are not generally “production” type items and cycle times are not calculated in the same way grading items are calculated. The estimating panel assumed that the crew will include sufficient trucks to cycle within a 10-mile radius of the project site. Also note that the asphalt pavement removal item is separate from the milling item that is described later in this section. Technical Advisory T5080.3 did not include a specific category for clearing activities. By definition, these activities were included in the excavation activities. Separating the clearing activities from the grading activities allows for the development of a more accurate fuel factor in areas where the clearing is more or less intense than average. In addition, many projects include identifiable clearing and removal pay items, and the separation of these activities allows for the application of more specific fuel use factors. Grading Items The largest on-site consumers of fuel on highway projects are the grading items. These items are also the most variable from project to project and even within a project. The equipment utilized to perform the grading activities can also vary from contractor to contractor depending on the experience of the contractor and the equipment that is available. The grading activities have been separated into tasks that would require different equipment and production rates. Within a single project, one or more of these tasks will be used in the development of the excavation pay item.

118 Fuel Usage Factors in Highway and Bridge Construction Category Item of Work Units FUF 1980 FUF Clearing and Removal Clearing Gallons/Acre 191.200 200.000 Pipe Removal Gallons/L.F. 0.863 Pavement Removal – Asphalt Gallons/C.Y. 1.397 Pavement Removal – Concrete Gallons/C.Y. 0.562 Structure Demolition (House/Building) Gallons/Each 375.000 Structure Demolition (Bridge per S.F. of Deck) Gallons/S.F. 0.626 Excavation Excavation - Earth - Off Road - Long Haul Gallons/C.Y. 0.320 0.440 Excavation - Earth - Off Road - Short Haul Gallons/C.Y. 0.263 Excavation - Earth - On Road - Long Haul Gallons/C.Y. 0.687 Excavation - Earth - On Road - Short Haul Gallons/C.Y. 0.319 Excavation - Rock - Off Road - Long Haul Gallons/C.Y. 0.402 0.570 Excavation - Rock - Off Road - Short Haul Gallons/C.Y. 0.311 Excavation - Rock - On Road - Long Haul Gallons/C.Y. 0.740 Excavation - Rock - On Road - Short Haul Gallons/C.Y. 0.465 Strip Topsoil Gallons/C.Y. 0.167 Roadway Finishing Gallons/S.Y. 0.073 Base Stone Base Stone - Short Haul (Haul and Place) Gallons/Ton 0.406 0.510 Base Stone - Long Haul (Haul and Place) Gallons/Ton 0.558 0.810 Asphalt Asphalt Production (Diesel) Gallons/Ton 2.040 2.570 Asphalt Production (Natural Gas) Gallons (GGE)/Ton 2.144 Asphalt Production (Natural Gas) (Support Equipment) Gallons/Ton 0.090 Warm Mix Asphalt Production (Diesel) Gallons/Ton 1.632 Warm Mix Asphalt Production (Natural Gas) Gallons (GGE)/Ton 1.715 Warm Mix Asphalt Production (Natural Gas) (Support Eqp.) Gallons/Ton 0.072 Asphalt Hauling (0-5 miles) Gallons/Ton 0.183 0.770 Asphalt Hauling (6-15 miles) Gallons/Ton 0.293 Asphalt Hauling (>15 miles) Gallons/Ton 0.514 1.070 Asphalt Placement Gallons/Ton 0.273 0.280 Milling Milling - 0-1" (0-5 mile haul) Gallons/Ton 0.028 Milling - 0-1" (6-15 mile haul) Gallons/Ton 0.030 Milling - 0-1" (>15 mile haul) Gallons/Ton 0.038 Milling - 2-4" (0-5 mile haul) Gallons/Ton 0.062 Milling - 2-4" (6-15 mile haul) Gallons/Ton 0.071 Milling - 2-4" (>15 mile haul) Gallons/Ton 0.090 Structures Reinforcing Steel Gallons/Lbs. 0.004 Steel Beams Gallons/L.F. 0.180 Substructure Concrete Gallons/C.Y. 4.700 Superstructure Concrete Gallons/C.Y. 4.150 Bridges Gallons/Contract $ 5.200 41.000 Bridges (per S.F. of deck) Gallons/S.F. 0.616 Misc. Concrete Concrete Production (Support Equipment) Gallons/C.Y. 0.090 0.430 Concrete Hauling - Short Haul Gallons/C.Y. 0.600 1.000 Concrete Hauling - Long Haul Gallons/C.Y. 1.100 1.000 Concrete Placement Gallons/C.Y. 0.267 0.470 Concrete Curb/Gutter Gallons/L.F. 0.152 Concrete Sidewalk Gallons/S.F. 0.090 Retaining Wall (Cast in Place) Gallons/S.F. 0.646 Noise Wall (Pre-Cast) Gallons/S.F. 0.304 Concrete Median Barrier Gallons/L.F. 0.309 0.300 Drainage Pipe and Structures Large Pipe Crew Gallons/L.F. 4.338 Medium Pipe Crew Gallons/L.F. 1.481 Small Pipe Crew Gallons/L.F. 0.871 Drainage Structures Gallons/Each 26.175 Specialty Items Fence Gates Gallons/Each 4.200 Fencing Gallons/L.F. 0.043 Grassing (Hydro Seeding) Gallons/Acre 3.497 Grassing (Seedbed Preparation) Gallons/Acre 10.000 Sodding Gallons/S.Y. 0.017 Guardrail Posts Gallons/Each 0.042 Guardrail – Steel Gallons/L.F. 0.037 0.230 Guardrail - Wire/Cable Gallons/L.F. 0.105 Intersection Signalization (2 Lane) Gallons/Each 170.000 Intersection Signalization (4 Lane) Gallons/Each 304.000 Pavement Marking Gallons/L.M. 4.500 Exhibit A-1. Fuel usage factor summary table.

Recommended practice and Model Specification 119 Based on each estimator’s experience and background, they each developed different equipment lists and production rates to accomplish each task. The end result, however, was that the fuel consumption rate for each activity was very consistent for each activity. Technical Advisory T5080.3 had three categories of excavation: Earth, Rock and Other. In addition, other activities such as clearing and grubbing are included in the fuel use factors. This study expands on the number of activities within the excavation category as well as breaking out any activities not specifically related to excavation. This allows for the development of a more accurate fuel use factor based on the specific geographic and topographic area. In Exhibit A-1, the grading items were presented in a manner that displayed various combinations of short and long hauling distances and whether or not the haul was on or off road. Exhibit A-2 presents a number of additional combinations. Base Stone The base stone category will have a more standard crew compared to clearing and grading items. The largest variable in the base stone task is the haul distance from the quarry to the project site which can vary widely from project to project and state to state. In this study, the estimating panel assumed a moderate haul distance of 10 to 15 miles. The equipment used for placing and compacting the stone is much more consistent from project to project. Technical Advisory T5080.3 listed a category for aggregates. This category has been replaced by the base stone category. This category includes the hauling, placing, and compacting of roadway base material but can also be applied to other stone activities such as shoulder widening and rip rap. The production of the material is typically covered by a fixed price purchase order and fuel price changes would not apply. Accordingly, the fuel consumption for the production activities is not included in this category. Asphalt The equipment list for the asphalt category is relatively standard from contractor to contractor. The specific types of pavers, rollers, and other support equipment vary from contractor to contractor, but the overall fuel consumption would change little. The two main variables in asphalt activities relate to the project conditions and the haul distance from the plant to the project site. The primary project conditions that can affect production rates for lay-down operations are traffic conditions, pavement depth, pavement width, lengths of runs. In this exercise we assumed “general” conditions for each of these factors. Projects with long uninterrupted runs will exceed the listed production rates and projects with high traffic interference and many intersections will fall short of the listed production rates. Item of Work Units Fuel Use Factor Grading - Short Haul Gallons/C.Y. 0.537 Grading - Long Haul Gallons/C.Y. 0.340 Grading - Dirt Gallons/C.Y. 0.397 Grading - Rock Gallons/C.Y. 0.480 Grading - Off Road Gallons/C.Y. 0.324 Grading - On Road Gallons/C.Y. 0.553 Excavation (Unclassified - Dirt and Rock) Excavation (All Haul Distances) Excavation (Unclassified - All Haul Distances) Exhibit A-2. Alternative grading combinations summary table.

120 Fuel Usage Factors in Highway and Bridge Construction The most variable cost of asphalt operations is the haul distance from the plant to the project. In order to minimize this effect on fuel use, we have broken each of the three main asphalt activities (structural, surface, and leveling courses) into three haul distance ranges. Each of the three haul distances (0 to 5 miles, 5 to 15 miles, and more than 15 miles) increases the number of trucks required to service the lay-down crew and increases the amount of fuel consumed. Technical Advisory T5080.3 lists similar activities for the production, hauling, and placement of asphalt materials. Since the original study, the heating and drying operations for the production of asphalt have shifted from using diesel fuel to natural gas. This study adds additional factors for the production of asphalt to include natural gas as the heating and drying fuel. Milling Unlike many other categories, the milling category will have the most standard crew among the examined work categories. Although there are different sizes of milling machines and the production rates can vary based on the material being milled, all the equipment lists and production rates were similar across all estimators. The largest variable in calculating the production rate for a milling item is the haul distance from the project site to the disposal site. As mentioned previously, these distances can vary dramatically from project to project and state to state. In this study, the estimating panel assumed a moderate haul distance of 10 to 15 miles. The equipment used for milling and hauling is consistent from project to project. Other factors that affect the production rates for milling activities relate to specific project conditions related to length of runs, number of turnouts, width of pavement, and traffic conditions. This exercise assumed an average of all these factors. Technical Advisory T5080.3 does not list any fuel use factors for milling activities. Structures Activities related to structures vary widely from project to project and state to state. In this exercise, the estimating panel identified four main activities that are common to many structures. Each estimator then identified the equipment needed to perform each activity. The equipment lists were fairly consistent among the estimators. The largest difference in equipment is the size of the crane that each estimator used in the calculation. There is also a large variance in the cranes that would be used by different contractors. The largest variance in the estimates is the production rates for each item. This is consistent with the idea that each structure on each project would also be unique to that project. There are many factors that can have an impact on the productivity for each of these work items. These factors include location, size, design, height, width, span, and type. The production rates used are also average productivity across the duration of the task. The concrete structure items are based on the cubic yards of concrete poured. Although the actual pouring of the concrete takes place relatively quickly, the production rate accounts for the preparation, forming, pouring, wrecking, and finishing of the concrete. Technical Advisory T5080.3 only included fuel use factors based on the number of gallons per $1,000 of contract value. As prices rise over time, the fuel use factor will necessarily decrease. This study develops factors for the major activities included in bridge construction (reinforcing steel, beams, substructure concrete, and superstructure concrete) to create a more price-insensitive fuel use factor.

Recommended practice and Model Specification 121 Miscellaneous Concrete, Concrete Pavement, and Retaining Wall The items within this section are relatively standard and all the estimators calculated similar equipment lists and production rates. Although concrete curb specifications can vary from state to state, the equipment required and production rates are relatively consistent. Another factor that can have an impact on the equipment used, as well as the production rate, is the ability to use a machine to slip-form the item. Some projects can have unique circumstances that require hand forming and pouring of the concrete instead of using a paver. For this exercise, the estimating panel assumed the use of pavers to perform the majority of the work. Technical Advisory T5080.3 lists similar activities for the production, hauling, and placement of concrete pavement. Storm Drainage, Water, and Sewer Pipe crews are generally consistent from project to project and generally vary by pipe size and depth. The estimators developed consistent equipment lists and production rates. In this exercise, the estimating panel generally assumed standard open conditions with standard specification depths for pipe. These production rates would not be for urban areas where site conditions limit the work area and for unusual depth requirements. Technical Advisory T5080.3 does not list any fuel use factors for pipe laying activities. Specialty Items The equipment lists for most of the specialty items are much less than for many of the previous items. Labor and material costs make up a much larger percentage of the cost for these items. In addition, most of these items are performed by companies that specialize in the items listed and are not performed by the average highway contractor. Although the equipment lists are generally used, the production rates for many of these items can vary for each subcontractor depending on a number of project-specific factors. For example, signalization installations can vary from one intersection to the next within the same project. The estimating team relied on information from specialty subcontractors for much of the information in this section. Technical Advisory T5080.3 does not list any fuel use factors for specialty activities. A.7 Criteria for Application Procuring agencies should carefully evaluate when and how to employ fuel use factors and price adjustment clauses. The following provides discussion regarding several features that should be considered: • Procuring agencies should consider whether the history of fuel prices compared to current prices reveals unpredictable, uncontrollable shifts away from normal price trends over the longer term. Agencies should attempt to determine the primary cause for the indicated price variance and assess whether they expect that condition to exist for the likely term of typical projects and contracts. • Procuring agencies should consider whether contractors could obtain firm price quotations from fuel suppliers for the likely term of typical projects and contracts. Agencies should attempt to verify that suppliers are not withholding quotes in hopes that agencies will provide fuel price adjustments. • Agencies should not incorporate fuel price adjustment provisions into standard specifications for permanent application to all projects. If included in standard specifications, the price

122 Fuel Usage Factors in Highway and Bridge Construction adjustment should apply only when provided for in the bidding proposal for a specific project. Agencies should assess the need to include price adjustment provisions on a project-by- project basis. • Agencies should apply price adjustment provisions only where fuel costs represent a signifi- cant portion of project costs? For example, fuel costs would probably have a significant effect on major items of a grade and drain project, but not on a traffic signal installation project. • Whenever price adjustment provisions are adopted, they should be continually evaluated for need, effectiveness, and fairness. Administrative problems may indicate the need for incorporating revisions to the clauses. A system for feedback from contractors and industry groups is desirable. A.8 Development of Contract Provisions Procuring agencies should consider the following points when developing contract provisions for calculation and payment of fuel price adjustments. Upward and Downward Movement of Prices Price adjustments normally apply for both upward and downward movement of prices. An option is for the agency to deduct for decreased cost only to the extent of any increased compensation previously paid. Ceiling on Upward Adjustment Price adjustment provisions sometimes include a limit on upward or downward adjustments, preferably in percentage form rather than in absolute dollars. Georgia has a maximum percentage above the price at letting of 125 percent. Maryland caps adjustments at 5 percent of total contact amount. Index or Other Economic Barometer Procuring agencies should base price adjustments on actual fuel prices, a fuel price index, or another economic barometer that is not susceptible to manipulation by contractors and suppliers acting singly or as a group. The contracting agency should develop the index or use other government price data. Procuring agencies can develop indices from statewide or areawide data secured on the same date each period. The Procuring agency should include in the contact provi- sions the basis for establishing the indices used in making price adjustments. Many state DOTs have developed internal indices for fuel and other commodities. If this step has not been undertaken, the following sources have been successfully used for price indexing. These sources of price information are not meant to be exclusive of any other agency, organization, or publication which now provides, or may provide in the future, the type of price information which may be useful. • Producer Price Index: Number Two Diesel Fuel. Bureau of Labor Statistics. http://data.bls.gov/ timeseries/WPU057303?data_tool=XGtable • “Petroleum and Other Liquids” Indices. U.S. Energy Information Administration. http://www. eia.gov/petroleum/gasdiesel/ • AAA National Average Fuel Price. http://fuelgaugereport.aaa.com/?redirectto=http://fuelgauge report.opisnet.com/index.asp • Platts Oilgram Report. http://www.platts.com/Products/oilgrampricereport

Recommended practice and Model Specification 123 • Engineering News-Record. http://enr.construction.com/ • Oil Daily. http://www.energyintel.com/pages/about_tod.aspx Trigger Value The lower the trigger value, the more effective the index is for stabilizing the market as well as the increased likelihood of reduced bid prices. The drawback of a low trigger value is increased administrative burdens. Most states believe that price adjustments should be “triggered” only by a significant change in the index rather than being responsive to minor fluctuations in price. The original guidance by AASHTO suggested a 5 percent trigger level in its publication titled “Suggestions and Guidelines for Combating Shortages and Minimizing the Effects of Price Uncertainties for Materials and Fuel in Construction,” published in 1974. As of 2009, seven states had a trigger between zero and 3 percent, 19 had a trigger between 5 and 7.5 percent and 13 had a trigger of 10 percent or more. Specified Interval for Computation Agencies should perform price adjustment computations at specified intervals rather than as each change in price occurs. Most agencies compute price adjustments on a monthly basis. Option to Accept or Reject Price Adjustment Provision Some states allow the contractor an option to accept or reject price adjustment provisions in the contract. As of 2009, 12 states had an opt-in policy for fuel while 28 did not. For example, Alabama allows the contractor to not bid the construction fuel item by including fuel costs in other pay items. Utah allows the contractor to invoke the clause at any time during the contact and it is retroactive to the beginning of the project. Virginia requires contractors to opt in or out within 21 days of bid opening. The contract’s additional payment or any credit due the state for decreased prices should not depend on whether the contractor chooses to claim the difference. The agency should automatically incorporate adjustment calculations and payments or credits into the normal estimate payment process. Use of the Invoice Method Provisions for payment of actual cost increases based on receipted invoices or other docu- mentation submitted by the contractor are not recommended. This is because of the additional administrative and audit requirements imposed on states and contractors. There is also the potential for manipulation and fraud. Price Adjustment Provisions and Completion Incentive Price adjustment provisions should provide an incentive for the contractor to complete the contract within the allotted time specified. States should limit any upward price adjustment, at maximum, to the price or price index in force at the end of the contract. States may also require completion of the project at the original fuel price at letting without any adjustment during any unapproved time overrun. Application to Individual Contacts and Bid Items Many procuring agencies limit the applicability of fuel price adjustments in some manner. Some agencies offer the clause only on projects over certain durations. This is because contacts with short durations will experience less price volatility. Similarly, some agencies only include

124 Fuel Usage Factors in Highway and Bridge Construction fuel use factors for specific items or impose minimum quantities. This is because certain items or smaller quantities result in low levels of fuel use and, as a result, the adjustment would be small in comparison to administrative cost. Structures A typical contract between a state DOT and a construction contractor for the building of a bridge or other structure includes a large variety of tasks, materials, and quantities. Quantities of materials are purchased utilizing many different units of measure. These units of measure include lump sum, cubic yards of concrete (substructure and superstructure), linear feet of beam, square feet or square yards of deck, linear feet of barrier, and pounds of steel. This variety of units provided some challenges in creating fuel usage factors for these items. In order to develop a fuel usage factor that can be implemented across many different contracting methods, this specification contains a fuel usage factor that was developed using both gallons of fuel used per square foot of bridge deck and gallons of fuel used per $1,000 of contract amount. The advantage of utilizing a fuel usage factor on a square foot of bridge deck is that it does not rely on input prices. Implementing a fuel usage factor based on contract value will fluctuate based on prices and will eventually become skewed due to the effects of inflation. A list of tasks associated with the demolition and construction of a standard bridge was developed for this specification. The assumptions regarding bridge dimensions include the following: • Two travel lanes (12′ width); • 100′ bridge length; • 6′ shoulders; • Three footers (left, right, center); • Dry land span; • 3,600 S.F. deck area; and • 10″ deck thickness. Accompanying the above assumptions is the development of a list of tasks associated with the demolition and construction of the structure. The results are then divided by the deck square footage to create fuel usage factors. The tasks included in the analysis are as follows: • Substructure demolition, • Superstructure demolition, • Load/haul debris, • Drive piling, • Excavation, • Form footings, • Form substructure, • Place and tie rebar (substructure), • Pour footings, • Pour substructure, • Form deck, • Place and tie rebar (superstructure), • Pour and finish deck, • Place and tie rebar (barrier wall), and • Pour barrier wall. Based on the above tasks, the total fuel consumed to demolish and/or construct a bridge was calculated to be Demolition: 2,554.865 Gallons = 0.626 Gallons/Square Foot Construction: 2,219.375 Gallons = 0.616 Gallons/Square Foot

Recommended practice and Model Specification 125 To calculate the number of gallons per $1,000 of contract value, it was necessary to calculate the historical averages for concrete and steel then multiply the average bid price by the quantities calculated for constructing the average structure. The result is an average contract value of the bridge items. The number of gallons to construct a bridge was divided by the contract value to get a fuel use factor based on the contract value, as follows: Construction Cost: 2,219.375 Gallons/$54,131 = 0.041 × 1000 = 41.000 Gallons/$1,000 Creating Specialized Fuel Usage Factors The process of creating a fuel usage factor consists of three initial data collection steps and one step to calculate the fuel consumption rate. The first three steps are to 1. Determine the equipment requirements that will be utilized in the crew that will perform the work. This can vary from project to project and contractor to contractor. Many contractors will base the equipment requirements as much on available equipment as on optimal equipment. 2. Determine the crew production rate in units per hour. 3. Determine the hourly fuel consumption rate for “average working conditions” in gallons per hour. Once the data collection effort is completed, the computation of the equipment rate is a relatively simple mathematical exercise that consists of two steps. These steps are to 1. Sum up the hourly fuel consumption rates per hour for the needed equipment 2. Divide the total by the crew production rate per hour The resulting value is the fuel consumption rate calculated in gallons per unit of measure. Sample Calculation: Task: Lay 18″ concrete pipe (linear feet) Equipment requirements: Backhoe (5.0 Gallons/Hour) Dozer (small) (2.2 Gallons/Hour) Loader (4.0 Gallons/Hour) Trench compactor (1.5 Gallons/Hour) Crew truck (3.5 Gallons/Hour) Production Rate: 24 L.F./Hour Rate computation: 5.0 + 2.2 + 4.0 + 1.5 +3.5 = 16.2 Gallons/Hour 16.2 G.P.H./24 L.F./Hour = 0.675 Gallons/L.F. Time of Year Adjustments to fuel consumption factors for time of year or season are problematic for sev- eral reasons. First, at the time the contract documents containing the fuel use factors are drafted, the time the contract will be let as well as the time the work will be performed is not known. Therefore, adjusting the factors in the contract is not feasible. This could be overcome by including provisions in the formulation of the specifications to adjust the fuel factors based on when the work is completed. This would add complexity to the process of calculating the fuel consumption to be used in the price adjustment clause of the contract. The final and most compelling reason is that the variance in fuel consumption per unit of measure is very small from season to season. Although productivity will vary from peak to off-peak seasons, the amount of work accomplished in off-peak seasons will vary as well. The methodology for calculating the fuel usage factors should be based

126 Fuel Usage Factors in Highway and Bridge Construction on average conditions using average equipment. No two projects are the same and there are many specific conditions that will impact the ultimate fuel consumed on a task. Creating a fuel usage factor that addresses an average condition is the most sensible approach to satisfying the purpose of the fuel usage factor: minimizing (not eliminating) the risk associated with fuel price changes. Risk Sharing between DOTs and Contractors The basis of implementing fuel factors and a price adjustment clause within a contract is for the mitigation of the risk associated with fuel price changes. It is not possible to develop a perfect fuel usage factor for all circumstances due to the many variables associated with constructing a project. Contracting methods, productivity, and project-specific variables all contribute to changes in fuel used from project to project and from day to day. Creating an average fuel factor that is based on average conditions will mitigate, but not eliminate, these risks. Historically, prices have risen over time, but there have been periods where prices have decreased. Therefore, creating a system where both parties are protected from price changes reduces the overall risk from fuel price changes. Lump Sum Contracts Lump sum projects present a challenge when attempting to implement fuel use factors and price adjustment clauses. This is because lump sum contracts do not break out fuel consumption for each particular task. Some contracting authorities are increasingly utilizing this type of contract, especially for overlay projects. Without the ability of the owner to establish quantities during the construction phase, other options should be considered when attempting to implement fuel usage factors. One alternative would be to have the contract documents include the fuel usage factors in the specifications for those items that will be performed in the contract and for those items where the quantities can be verifiably measured. One example would be the tons of asphalt placed for a project, because delivery tickets can be collected by the owner’s representatives. Utilizing the quantities as reported, the same methodology for calculating price adjustments can be used as in a unit price contract. ID/IQ Projects There are two methods of properly utilizing fuel usage factors for indefinite delivery/indefinite quantity (ID/IQ) contracts. At the time of the initial contract award, unit prices and fuel usage factors for appropriate items may be included as elements of the contract’s price adjustment clause. Additionally, the contracting parties may include unit prices and fuel usage factors for individual contract tasks as they are ordered. A.9 Description of Model Specifications and Sample Calculations This section describes the formulation and features of the model specifications created for this effort. It contains three sections: an introduction to the model specifications, a listing of state specifications that informed the research team during the specification drafting process, and several sample calculations for the end user. Model Specifications Two model specifications have been constructed for this effort. The first model specification (Annex 1) is designed to be used by states that calculate price adjustments through the use of

Recommended practice and Model Specification 127 a price index. The second model specification (Annex 2) is designed to be used by states that perform price adjustments with the actual fuel prices. Each of the specifications contains the following sections and elements: • The source for historical commodity prices (entered by user), • The positive and negative trigger values that trigger a price adjustment (entered by user), • The letting date and base commodity prices (entered by user), • The relevant fuel factors (entered by user), • The price adjustment calculation formula, • Definitions for formula inputs, and • Sample calculations. Note that the model specification contains a chart of fuel factors to use in the payment adjustment. Exhibit A-1, provided earlier, offers fuel factors that states can enter into this chart, along with their state-specific bid pay item numbers. States may also supplement the fuel use factors provided in Exhibit A-1 with additional factors that they develop on their own. Sample Clauses from Selected States In creating these two draft specifications, the research team studied several state DOT price adjustment specifications. These state DOTs include • Tennessee, • Vermont, • Wisconsin, • South Carolina, • Washington, • Illinois, • Montana, • Ohio, and • Colorado. These specifications were helpful in determining which discussion items to include, the order in which they should be presented, and other factors. These specifications often contain many of the same elements and general order of discussion points. They may be useful to procuring agencies developing or revising their price adjustment clauses. Sample Calculations The remainder of this section includes sample calculations for the two model specifications. For Model A, begin with recording the following project data, which is presented as an example in Exhibit A-3. Assume that the index for the current month is 118, an 18 percent increase from the base index. If the trigger value is 5 percent, then the price adjustment will apply. The calculation is then carried out as indicated in Exhibit A-4. For Model B, begin by compiling the following data (as presented in Exhibit A-5, with sample quantities). Assume that the fuel price has increased to $4.05 in the current month, a 17.4 percent increase from the initial price of $3.45. If the trigger value is less than or equal to 17.4 percent, the price adjustment provision will take effect. Exhibit A-6 displays the four-step methodology to calculate the fuel price adjustment.

128 Fuel Usage Factors in Highway and Bridge Construction Exhibit A-6. Calculation of fuel price adjustment (Model B). Calculation for Unclassified Excavation (4.05 - 3.45) × (25,000 x 0.320) $4,800.00 Calculation for Base Stone (4.05 - 3.45) × (2,800 x 0.406) $682.08 Calculation for Asphalt Surface Course (4.05 - 3.45) × (4,300 x 0.566) $1,460.28 Summation/Total Adjustment for Period $6,942.36 Project Number Letting Date Base Index for this Contract Base Fuel Price for this Contract 123456 10/01/2011 100 3.50 Item Number Description of Work Fuel Use Factor (Gallons/Unit) Unit of Measure Current Units Placed 101-01 Unclassified Excavation 0.320 C.Y. 25,000 301-01 Base Stone 0.406 Ton 2,800 401-01 Asphalt Surface Course 0.566 Ton 4,300 Exhibit A-3. Sample data for Model A calculation. Calculation for Unclassified Excavation [(118÷100) – 1] × (25,000 x 0.320) x 3.50 $5,040.00 Calculation for Base Stone [(118÷100) – 1] × (2,800 x 0.406) x 3.50 $716.18 Calculation for Asphalt Surface Course [(118÷100) – 1] × (4,300 x 0.566) x 3.50 $1,533.29 Summation/Total Adjustment for Period $7,289.47 Exhibit A-4. Calculation of fuel price adjustment (Model A). Project Number Letting Date Base Fuel Price for this Contract 654321 10/01/2011 3.45 Item Number Description of Work Fuel Use Factor (Gallons/Unit) Unit of Measure Current Units Placed 101-01 Unclassified Excavation 0.320 C.Y. 25,000 301-01 Base Stone 0.406 TON 2,800 401-01 Asphalt Surface Course 0.566 TON 4,300 Exhibit A-5. Sample data for Model B calculation.

Recommended practice and Model Specification 129 General Description This specification covers the method of calculating the payment of price adjustments for fuel increases and decreases during the contracting period. This adjustment is designed to protect the agency and contractor(s) from the effects of volatility in the cost of fuel. Positive and Negative Adjustments Price adjustments may be either positive or negative. A positive adjustment will result in a payment to the contractor and a negative adjustment will result in a deduction. Price Index The index method of calculation for fuel price adjustments requires the use of a fuel price index. Information on the index or indices used is provided in Table A1-1. Trigger Values The price adjustment for any period will only be paid if the current index varies from the base index by more than the trigger value. If the trigger value threshold is not reached, there will be no payment on the current progress estimate. Fuel Use Factors The fuel usage factors, in gallons of fuel use per unit of work, are provided in Table A1-2. Price adjustments will be made only for those items listed in this specification. Minimum Quantities For some items or contracts, fuel adjustments will only be calculated for quantities above an established minimum amount. These minimum amounts are listed in the fifth column of Table A1-2. Annex 1 Fuel Price Adjustment Provision or Specification for Agencies Using Fuel Price Index State Fuel Price Adjustment Clause Summary Table State or Agency Provision or Section Number Effective Date of Provision or Specification Trigger Values Opt-In/Opt-Out Clause Present? Adjustment Frequency (Monthly, Weekly, Other) Index Name Organization Developing Index Index URL/Source Table A1-1.

130 Fuel Usage Factors in Highway and Bridge Construction Adjustment Frequency Calculations and payments are typically done on a monthly basis for contracts that include this provision. Method of Calculation The payment adjustment will be calculated using the following formula: PA Ic Ib Q Fuf Fb= ÷( ) −[ ]× ×( )[ ] ×∑1 where: PA = Payment adjustment (+/-) Ic = Index for current month Ib = Base index price for this contract Q = Quantity of work placed during the current pay period for each item Fuf = Fuel use factor for each item Fb = Base fuel price for this contract Expiration of Allocated Working Time Upon the expiration of the allocated working time, as set forth in the original contract or as extended by supplemental agreement, all payment adjustments for fuel will discontinue, except that when the current price indexes are less than the price index for bidding, payment adjustments will continue to be made. Final Payment Upon completion of the work under the contract, any difference between the estimated quantities and the final quantities will be determined. An average Ic, calculated by averaging the Ic for all months that fuel cost adjustment was applied, will be applied to the quantity differences. The average Ic shall be applied in accordance with the above formula.

Recommended practice and Model Specification 131 Fuel Use Factors to Use in the Calculation of the Payment Adjustment Bid or Pay Item Numbers Work Categories or Descriptions Fuel Use Factor (Gallons/Unit) Unit of Measure Quantity Threshold Note: There is no separate designation in the fuel use factors in the above table for gasoline or diesel fuel. The fuel use factors are estimated for all light fuel oils. Table A1-2.

132 Fuel Usage Factors in Highway and Bridge Construction Payment Adjustment for Fuel Worksheet Contract-Specific Information State or Agency Project or Contract Number Letting Date County or Location Period of Performance Price Adjustment Period Base Index Price for Contract (Ib) Current Price Index (Ic) Base Fuel Price (Fb) Adjustment Calculation Worksheet Bid or Pay Item Numbers Work Categories or Descriptions Unit of Measure Fuel Use Factor (Gallons/Unit) Quantity Used in PA Period Fuel Used x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = Total Sum of Fuel Used During Adjustment Period (Σ of Far Right Column) Fuel Price Adjustment (PA = [(Ic÷Ib) – 1] × [Σ (Q x Fuf)] x Fb)

Recommended practice and Model Specification 133 General Description This specification covers the method of calculating the payment of price adjustments for fuel increases and decreases during the contracting period. This adjustment is designed to protect the agency and contractor(s) from the effects of volatility in the cost of fuel. Positive and Negative Adjustments Price adjustments may be either positive or negative. A positive adjustment will result in a payment to the contractor and a negative adjustment will result in a deduction. Price Index The index method of calculation for fuel price adjustments requires the use of a fuel price index. Information on the index or indices used is provided in Table A2-1. Trigger Values The price adjustment for any period will only be paid if the current index varies from the base index by more than the trigger value. If the trigger value threshold is not reached, there will be no payment on the current progress estimate. Fuel Use Factors The fuel usage factors, in gallons of fuel use per unit of work, are provided in Table A2-2. Price adjustments will be made only those items listed in this specification. Minimum Quantities For some items or contracts, fuel adjustments will only be calculated for quantities above an established minimum amount. These minimum amounts are listed in the fifth column of Table A2-2. Adjustment Frequency Calculations and payments are typically done on a monthly basis for contracts that include this provision. Annex 2 Fuel Price Adjustment Provision or Specification for Agencies Using Fuel Prices State Fuel Price Adjustment Clause Summary Table State or Agency Provision or Section Number Effective Date of Provision or Specification Trigger Values Opt-In/Opt-Out Clause Present? Adjustment Frequency (Monthly, Weekly, Other) Table A2-1.

134 Fuel Usage Factors in Highway and Bridge Construction Method of Calculation PA Fc Fb Q Fuf= −( ) × ×( )[ ]∑ where: PA = Payment adjustment (+/-) Fc = Fuel price for current month Fb = Base fuel price for the contract Q = Quantity of work placed during the current pay period Fuf = Fuel use factor for each item Expiration of Allocated Working Time Upon the expiration of the allocated working time, as set forth in the original contract or as extended by supplemental agreement, all payment adjustments for fuel will discontinue, except that when the current price indexes are less than the price index for bidding, payment adjust- ments will continue to be made. Final Payment Upon completion of the work under the contract, any difference between the estimated quan- tities and the final quantities will be determined. An average Ic, calculated by averaging the Ic for all months that fuel cost adjustment was applied, will be applied to the quantity differences. The average Ic shall be applied in accordance with the above formula.

Recommended practice and Model Specification 135 Fuel Use Factors to Use in the Calculation of the Payment Adjustment Bid or Pay Item Numbers Work Categories or Descriptions Fuel Use Factor (Gallons/Unit) Unit of Measure Quantity Threshold Note: There is no separate designation in the fuel use factors in the above table for gasoline or diesel fuel. The fuel use factors are estimated for all light fuel oils. Table A2-2.

136 Fuel Usage Factors in Highway and Bridge Construction Payment Adjustment for Fuel Worksheet Contract-Specific Information State or Agency Project or Contract Number Letting Date County or Location Period of Performance Price Adjustment Period Base Fuel Price (Fb) Current Fuel Price (Fc) Adjustment Calculation Worksheet Bid or Pay Item Numbers Work Categories or Descriptions Unit of Measure Fuel Use Factor (Gallons/Unit) Quantity Used in PA Period Fuel Used x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = x = Total Sum of Fuel Used During Adjustment Period (Σ of Far Right Column) Fuel Price Adjustment (PA = (Fc - Fb) × [Σ (Q x Fuf)])

Abbreviations and acronyms used without definitions in TRB publications: A4A Airlines for America AAAE American Association of Airport Executives AASHO American Association of State Highway Officials AASHTO American Association of State Highway and Transportation Officials ACI–NA Airports Council International–North America ACRP Airport Cooperative Research Program ADA Americans with Disabilities Act APTA American Public Transportation Association ASCE American Society of Civil Engineers ASME American Society of Mechanical Engineers ASTM American Society for Testing and Materials ATA American Trucking Associations CTAA Community Transportation Association of America CTBSSP Commercial Truck and Bus Safety Synthesis Program DHS Department of Homeland Security DOE Department of Energy EPA Environmental Protection Agency FAA Federal Aviation Administration FHWA Federal Highway Administration FMCSA Federal Motor Carrier Safety Administration FRA Federal Railroad Administration FTA Federal Transit Administration HMCRP Hazardous Materials Cooperative Research Program IEEE Institute of Electrical and Electronics Engineers ISTEA Intermodal Surface Transportation Efficiency Act of 1991 ITE Institute of Transportation Engineers MAP-21 Moving Ahead for Progress in the 21st Century Act (2012) NASA National Aeronautics and Space Administration NASAO National Association of State Aviation Officials NCFRP National Cooperative Freight Research Program NCHRP National Cooperative Highway Research Program NHTSA National Highway Traffic Safety Administration NTSB National Transportation Safety Board PHMSA Pipeline and Hazardous Materials Safety Administration RITA Research and Innovative Technology Administration SAE Society of Automotive Engineers SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (2005) TCRP Transit Cooperative Research Program TEA-21 Transportation Equity Act for the 21st Century (1998) TRB Transportation Research Board TSA Transportation Security Administration U.S.DOT United States Department of Transportation

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TRB’s National Cooperative Highway Research Program (NCHRP) Report 744: Fuel Usage Factors in Highway and Bridge Construction includes fuel usage factors for work items in the construction and maintenance of highways and bridges. The report includes the Price Adjustment Calculator Tool, a Microsoft Excel® spreadsheet, designed to assist in the calculation of payment adjustments for construction projects using fuel price indices or fuel prices.

Appendixes B, C, and D were not includedin the print or PDF version of the report, however, they are downloadable from the following links:

Appendix B - Outreach Plan

Appendix C - Price Adjustment Calculator Tool, a Microsoft Excel® spreadsheet

Appendix D - News Brief

Spreadsheet Disclaimer - This software is offered as is, without warranty or promise of support of any kind either expressed or implied. Under no circumstance will the National Academy of Sciences or the Transportation Research Board (collectively "TRB") be liable for any loss or damage caused by the installation or operation of this product. TRB makes no representation or warranty of any kind, expressed or implied, in fact or in law, including without limitation, the warranty of merchantability or the warranty of fitness for a particular purpose, and shall not in any case be liable for any consequential or special damages.

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