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PERFORMANCE-BASED (INNOVATIVE)
CONTRACTING FOR THE HIGHWAY SECTOR
TRIMESTER-3
By:-
SAGAR SINGH GUPTA ACM 22 (Roll no:- 221060)
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PERFORMANCE-BASED (INNOVATIVE)
CONTRACTING FOR THE HIGHWAY SECTOR
Introduction:
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innovative contracting methods. In general terms, any contracting method
that deviates from the traditional, prescriptive method can be considered
innovative. Four innovative contracting methods mainly have emerged as the
primary alternatives to the traditional contracting methods (main methods):
warranty, design-build, cost-plus-time bidding (A+B, multi-parameter bidding),
and lane rental.
The main thrust of these approaches is to minimize construction time and cost,
improve quality by either providing specifications for quality control and
inspection or warranties, and most importantly, transfer some risk from the
public agency to the contractor. Contractors have been hesitant to assume this
risk in a traditional contracting setting in which the client gives the contractor
detailed specifications about method and materials. Performance-based
specifications addresses the issues of risk transfer and contractor liability in
highway construction contracts. In such contracts the client specifies the criteria
for performance while providing the contractors with more freedom and
responsibility to meet the criteria.
Background:
The genesis for the FHWA's SEP-14(began in 1988, with the establishment of
a Transportation Research Board (TRB) task force to evaluate Innovative
Contracting Practices. The task force consisted of 23 representatives from
State highway agencies in U.S.A, all segments of the industry, and others.
• Assess how current practices affect quality, progress, and cost; and
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The task force investigated four major areas:
• Bidding procedures
• Materials control
• Quality considerations
• Insurance and surety issues.
Recommendations were made by TRB for each of the four major topic areas.
Some of the more significant recommendations included:
Innovative Approaches:
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• Cost-plus-time bidding
• Lane rental
• Design-build contracting
• Warranty clauses.
Initially, various concerns on the part of some members of the highway industry
round the world prompted FHWA to proceed cautiously in allowing countries to
experiment with the Design-build concept. However, in recent years, FHWA
has witnessed an increased interest from the countries like Australia, Canada,
Canada, England, Estonia, and USA in the design-build concept. As a result of
this interest, FHWA continues to allow the use of the design-build concept on
an experimental basis. Other innovative contracting techniques have also been
used by a select number of countries like Finland, The Netherlands, New
Zealand, Norway, and Sweden.
1) Cost-plus-time bidding:
Description:
The number of ‘B’ days is multiplied by the road user cost furnished by the
owner and added to the ‘A’ component to obtain the total bid.
This formula only determines the lowest bid for award, not the payment to the
contractor.
Benefits:
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Drawbacks:
1) Contract changes are magnified; too many changes nullify the advantages of
A+B.
2) Acceleration techniques may require more resources for contract
administration.
3) More hours and over-time budget required from contractor.
4) Negotiations for additional work are more intense since time being a bigger
issue.
2) Lane Rental:
Description:
Lane Rental should NOT be used to reduce overall contract time but to focus
on the time that roadway users are impacted by construction traffic.
Benefits
Drawbacks
3) Design-Build:
Description:
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process is complete (or nearly complete) and right-of-way is in the process of
being secured.
Benefits
Drawbacks
4) Warranties:
Description:
Benefits
Quality and durability of selected work items guaranteed for a specific time.
Longer timeframe for acceptance means agency can ensure contractor is
performing high-quality work.
Decreased inspection level on warranty projects allows states to allocate
resources elsewhere.
Drawbacks
Owner must ensure that warranty guidelines are reasonable and enforceable.
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Warranty may not be collectable if guidelines are too restrictive or place undue
burden on contractor.
Requires additional staffing to monitor the warranty after construction.
Suitability:
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Methodology and Nature of study:
From this thesis work we are going to show how innovative contracting will
affect the quality, delivery time, social and economic impact, safety, public
perceptions, and life-cycle costs of the highway projects which are executing in
India.
References:
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Mónica altamirano, Delft University of technology, faculty of technology,
policy and management
E-References:
www.ic.usu.edu
www.fhwa.dot.gov
www.sha.state.md.us
www.dot.state.mn.us
Acronym List:
NHAI – National Highway Authority of India
AASHTO – American Association of State Highway Transportation Officials
DBOM – design-build-operate-maintain
DOT – Department of Transportation
FHWA – Federal Highway Administration
I/D – Incentive/Disincentive
ITS – Intelligent Transportation Systems
LCC – life-cycle costs
NCHRP – National Cooperative Highway Research Program
QA/QC – quality assurance/quality control
RFP – request for proposal
ROI – return on investment
RUC – road-user cost
SHA – state highway agency
SOO – statement of objectives
SOW – statement of work
TRB – Transportation Research Board
SEP – Special Experiment Project
A.D.B – Asian Development Bank
W.B – World Bank
C.P.M – Critical Path Method
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