The National Academies

NCHRP 10-54 [Completed]

Quality-Based Performance Rating of Contractors for Prequalification and Bidding Purposes

  Project Data
Funds: $199,829
Research Agency: Pennsylvania Transportation Institute
Principal Investigator: Gary R. Smith and Robert E. Minchin, Jr.
Effective Date: 3/1/1997
Completion Date: 5/11/2001

Construction contracting for highway facilities is changing. Although the low-bid concept remains the basis for selecting contractors, transportation agencies are increasingly experimenting with innovations to improve the process and the quality of the finished product. However, the complexity of the construction process increases. Environmental regulations, safety concerns of contractor personnel and the public, and adherence to project schedules to minimize impacts to businesses, the traveling public, and adjacent communities are some of the complications. On the other hand, transportation agencies are under pressure to reduce personnel, thus reducing the ability to provide close project oversight without degrading the quality of the construction process and the final product.

As transportation agencies move toward improved quality assurance and performance-based specifications under 23 CFR 637.205, contractors, either by necessity or mandate, are taking on more responsibility for quality control. A fair, consistent, easily applied system to rate performance objectively is needed to determine if contractors are qualified to perform in this dynamic contracting environment.

Research is required to identify standards for rating the quality of contractors bidding on public works contracts. A quality-based performance rating (QBPR) system that can be used to prequalify contractors and be adaptable as a component in the bid-selection process must be developed to encourage and ensure quality without diminishing the integrity of the low-bid concept.

The objectives of this project are to (1) develop a quality-based system for performance-rating contractors for either prequalification or bid-selection and (2) prepare an implementation plan as a guide for transportation agencies and industry. To be successful, the QBPR system must contribute to continuous quality improvement in the highway construction industry.

Phase I: (1) Review the state of the practice on QBPR systems and their use in contractor-prequalification and in bidding processes. Domestic and international research and practice, documented and undocumented, in the transportation industry as well as in other industries shall be included. (2) Identify factors proposed to be used in a QBPR system. Consideration shall be given to, but not be limited to, such factors as safety, schedule adherence (timeliness), workmanship, cooperation, and compliance with specifications. Each recommended factor must be fully justified. (3) Propose a conceptual QBPR system for measuring each factor and developing a composite, overall rating of a contractor. The system must be fair, objective, simple, transferable, reproducible, flexible, and user-friendly and have potential for automation. The system should be sufficiently comprehensive to rate contractor quality effectively, but also be administratively simple to encourage use by transportation agencies and industry. (4) Submit an interim report, within 6 months, documenting Tasks 1 through 3. NCHRP review and approval of the interim report will be required before proceeding with work on the remaining tasks. The contractor should anticipate meeting with the Project Panel to discuss the interim report and subsequent tasks.

Phase II: (5) Develop the approved QBPR system and draft a procedures manual. (6) Validate the QBPR system and revise the system as necessary. (7) Prepare an implementation plan that will serve as a guide for transportation agencies to implement the QBPR system for prequalification and as a component in the bid-selection process. In addition, facilitate application of the QBPR system by contractors for self assessments or for evaluations of subcontractors or suppliers and by surety agencies. Specific issues to be addressed in the plan should include, but not be limited to: (a) integration into prequalification and bid-selection processes; (b) organizational and administrative considerations for administering the system; (c) contractor size and project size and type; (d) qualifications of the agency or individual doing the rating; (e) appeal process; (f) duration of disqualification; (g) new companies and mergers; (h) frequency of rating; (i) normalization within and among transportation agencies; (j) clearinghouse requirements and issues for sharing information; (k) impact on bonding of contractors; and (l) legal implications. (8) Submit the final report on the entire research effort. The development of the QBPR system shall be fully detailed. The QBPR-system procedures manual and the implementation plan shall be included as stand-alone appendixes.

Status: Research is complete. Research results include a summary of existing activity world-wide on the consideration of "quality" in prequalification and bidding. Procedures were developed that will assist state DOTs as owners to assess the quality of active construction contracts. Recommendations are made for the consideration of quality in prequalification and bidding, though the latter is a more difficult and challenging to implement.

Product Availability: The research has been published as NCHRP Web Document 38.

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