Practices for Establishing Contract Completion Dates for Highway Projects (2017)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

PRACTICES FOR ESTABLISHING CONTRACT COMPLETION DATES FOR HIGHWAY PROJECTS Establishing contract time is an important part of the highway project development process as con- tract time plays a significant role in determining the overall construction cost of a project with more aggressive completion deadlines tending to increase construction costs. In the project development process, state transportation agencies receive direct feedback on project costs through construction procurement as cost estimates are compared with contractor bids. Less feedback is provided on project duration estimates through project procurement and execution because many highway construction projects are heavily managed toward budget performance. However, setting contract time goes beyond project-specific monetary considerations. Setting accurate contract time contributes to the credibility of the state transportation agency. Do we do what we say we will do? Do we finish projects when we say we will? Can we accurately tell the traveling public how long they will be inconvenienced? Beyond a single project, state transportation agencies manage a portfolio of projects and problems on a single project can affect other projects in the port- folio. If a project takes longer than planned, state and contractor resources are not available to fully allocate to following projects. Projects that are more efficiently executed in terms of cost and time allow a state transportation agency to increase the number of projects completed within their portfolio. Accelerating project delivery is typically viewed in light of accelerating a specific project through the use of increased resources. However, accurately setting contract time can accelerate the delivery of projects across a state transportation agency portfolio through improved efficiencies with both state and contractor resources. FHWA requires states to have a formal procedure for estimating contract time for highway con- struction projects and provides some recommendations for how contract times should be estimated. However, the effectiveness of these procedures has not been extensively examined. In addition, the effectiveness of the existing tools, developed for use with traditional design-bid-build procure- ment methods, is not well understood in estimating contract time for projects with alternative proj- ect delivery methods (e.g., design-build, construction manager/general contractor, and best value procurement). This synthesis examines the use of contract time estimation methodologies currently in use at state transportation agencies. The state of the practice was examined through a review of the literature related to setting contract time for state transportation agencies, an online survey of state transporta- tion agencies, and case examples describing contract time estimation procedures at selected state agencies. Forty-one (41) of 50 state transportation agencies responded to the online survey (82% response rate), and information gathered from the literature review and the survey was used to select states to be showcased in the case example chapter. The key findings of the synthesis are as follows: • Most of the contract time estimation methods in use at state transportation agencies are custom developed, state-specific systems that utilize generic job logic and production rates (68%). • Fifty-five percent of the responding state transportation agencies do not formally evaluate the effectiveness of their contract time estimation procedure and 33% are unsure about the accuracy of their system. • States in which contract time was estimated in the construction division reported greater accu- racy in contract time estimates than states that estimate contract time within the design division. SUMMARY

2 • According to the Design-Build Institute of America, 92% of state transportation agencies have some level of authorization to use design-build for project delivery, whereas 31% of the respon- dents to the synthesis survey report having a specific contract time estimation procedure for design-build delivery methods. According to the Associated General Contractors of America, 74% of states are authorized to use some form of construction manager/general contractor delivery method, whereas 5% reported having a contract time estimation procedure. • Three states have developed contract time estimation methods using regression models rather than production rates and precedence logic, and one state reported that the regression method was more accurate and easier to use than its previous contract time estimation method that used production rates and generic precedence logic. • The single greatest area for improvement identified in existing systems was the need for increased feedback and coordination between design and construction divisions in setting contract time. • This synthesis identified gaps in knowledge that could be addressed through future research including: – A framework for strategically applying various contract time estimate techniques and proce- dures according to project characteristics and risks; – Methods for the evaluation and improvement of the accuracy of contract time estimate tech- niques and the inclusion of a feedback loop from construction to design regarding the accuracy and/or lessons learned of the contract time estimates after project completion; and – Techniques for estimating contract time for alternative project delivery methods.