Determining Minimum Contract Time for Highway Projects

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Determining Minimum Contract Time for Highway Projects

Shr, Jin-Fang / Thompson, Benjamin P. / Russell, Jeffrey S. / Ran, Bin / Tserng, H. Ping

An increasing number of state highway agencies (SHAs) are using A (cost) + B (time cost) bidding ( A + B bidding) for highway construction. The A + B bidding concept is designed to shorten the total contract time by allowing each contractor to bid the number of days in which the work can be accomplished, in addition to the traditional cost bid. The SHA is then presented with the problem of determining a reasonable range of contract time submitted by the bidders. Most SHAs do not currently restrict the range of B. However, several problems may arise from an unrestricted range of B. First, if no minimum is set for B, a bidder may inflate the cost bid and submit an unreasonably low B, using the excess cost bid to cover the disincentives charged for exceeding the time bid. Second, if no maximum is set for B, then a bidder with a high B and a low-cost bid may be awarded the job and make an unreasonable amount of money from incentive payments. This study develops a quantified model of the price-time bidding contract. A construction cost-versus-time curve is developed from Florida Department of Transportation (DOT) data. The contractor’s price-versus-time curve is then combined with the road-user cost to determine the optimum lower limit to be set on B. Finally, several projects completed by the Florida DOT will be used to illustrate this model.