Construction Contracting Options

Construction contracting options are terms in a road construction contract that help shorten construction time, which reduces how long drivers deal with abnormal traffic. Contracting options also ensure that roads are properly maintained on a regular basis and reduce the cost of projects.

Contracting options include:

• Design-build.
• A+B bidding.
• Job order contracting.
• Incentive/disincentive.

Executive Summary

Design-Build
The design-build option uses a single contract for both the design and construction of a project. Design-build contracting benefits the owner agency because it simplifies coordination between design and construction activities, reducing the overall time of the design and construction process. This option suits medium to large projects that have high incentives to speed up construction.

A+B Bidding
The A+B bidding process includes both the contract bid items and the time needed for project completion multiplied by a daily cost estimate that drivers incur while the project is ongoing. This method encourages the contracting company to minimize the time needed on high-priority projects. The driver cost is estimated from the expected delay from lane and route closures. It differs from project to project.

Job Order Contracting
Job order contracting allows the governing agency (city officials or TxDOT) to provide the contractor with a negotiated and fixed price for the project. This option encourages contractors to bid based on the required labor, material, and purchasing costs. The contractor’s work orders include a specified completion date to help ensure that all tasks are finished on time and keep the project on schedule.

Incentive/Disincentive Clauses
Incentive/disincentive clauses used together with other contract options promote finishing the project early and keeping on schedule. These clauses can be used on the project as a whole, at specific milestones, or near completion. The schedules can also state when certain milestones or a majority of the project should be finished.

Congested Work Zone Areas or Important Projects
Contracting options suit projects that are critical to reducing current congestion levels in an entire area undergoing a number of projects. Projects staying on schedule and finishing in the shortest time minimizes the overall impacts to travelers. Traffic can return to normal or improved flow and reduce costs to the city, state, and driver.

 

• Minimizes construction congestion and reduces driver delay.
  The allotted time stated in the contract promotes compliance with the agreed-upon schedule. Incentive funds can replace additional construction funds that a contractor has available but cannot justify using because the project is a low-bid project. Contractors keep to the schedule receive rewards. Those that continually fail to meet the schedule suffer penalties.
• Encourages contractors to creatively mitigate congestion in work zones to reduce project time.

• Eliminates red tape that lengthens project times.
  Agencies can save time and money by agreeing to the project cost in the contract and using that as a fixed point rather than using the traditional bid method.

• Helps lower construction costs.
  In some cases, the governing agency has the right to end the agreement when the construction costs exceed the minimums in the contract. This saves costs by preventing the contractor from going over budget.

A+B Bidding
The A+B bidding process applies to projects with a large community and economic impact. This type of contracting works best with projects that have:

• Frequent lane closures.
• Detours that result in higher costs and delay.
• Safety concerns that impact the local community.
• Traffic control phasing to reduce construction time.
• Minimal utility disruptions, design uncertainties, or land management problems.

This option can also work well with incentive/disincentive and milestone/substantial completion options.

Design-Build
Design-build contracting is relatively new to the field of highway construction. Agencies who consider its use should spend time reviewing literature on the concept (see “For More Information”) and talk to agencies that have design-bid experience.

Job Order Contracting
Job order contracting awards long-term contracts for renovation, repair, and construction projects. The selected contractor provides on-call services that the owner agency assigns at preset prices. Individual jobs are not necessarily defined, but a maximum potential amount of work (and possibly a minimum) is established.

 

Implementation Issues

No major legal implementation issues prevent using contracting options. It is important that specific work restrictions such as the following be specified in bid documents:

• Non-work dates.
• Peak-hour lane closure restrictions.
• Nighttime noise or vibration limitations.
• Material hauling regulations.

To use a relatively new option (such as design-build), an agency needs guidelines to govern project oversight, bid, review, and award. The agency should also establish standards for estimating traveler costs, including the cost of delay.

 

Project Time Frame

Contracting options do not take long to start. The overseeing agency selects them and presents them to the bidding contractors. These options are applied immediately, but there is a required time frame to make sure that all parties involved are aware of and agree on the schedule and budget of the project. Deciding to speed up construction should be made early in the development process so that any issues that could disrupt the efforts (such as right-of-way acquisition, utility accommodations, or railroad agreements) can be minimized.

Who Is Responsible?

The contracting responsibility primarily falls on the agency in charge or the owner of the project. City governments control local city street construction, while state highway construction is under the local TxDOT office. The contractor and construction workers are responsible for completing the project on time and on budget, or as close as possible, and for disrupting traffic as little as possible.

Cost

Depending on the plan selected, the added cost of the construction contracting options (over a standard design-bid-build process) can range from minimal to a modest percentage of the project budget. Meanwhile, the costs felt by travelers, residents, and business owners are reduced.

Data Needs

Executing a construction contracting option requires very little information to evaluate. The data needed correspond to the basic timeline the project will follow. Also, traffic volumes, standard travel times, and delays on the stretch of roadway help forecast the effect on traffic during the construction period.