BACKGROUND
State departments of transportation are under increasing pressure to reduce the duration of highway construction projects. This pressure stems from the desire to reduce traffic delays and other inconveniences to the traveling public. To reduce the duration of construction projects, many state highway agencies have turned to the use of time-related incentive and disincentive contract provisions. There is a need to better understand the use of time-related incentives and disincentives in highway construction contracts. Specifically, the following needs to be determined:
- The type of time-related incentive and disincentive contract provisions used in highway construction contracts and the extent to which they are used.
- The success of time-related incentive and disincentive contract provisions.
- Criteria used to determine when time-related incentive and disincentive contract provisions are appropriate and criteria to select the most appropriate provisions.
- Methods used to determine the dollar amount of the time-related incentives and disincentives.
- The effects of time-related incentives and disincentives on projects.
OBJECTIVE
The objective of this research is to develop recommendations for effective use of time-related incentive and disincentive provisions in highway construction contracts.
TASKS
Phase I
(1). Review domestic and international literature and collect information from highway agencies and construction contractors on the use and effectiveness of time-related incentive and disincentive provisions in highway construction contracts. Published as well as unpublished sources of information should be considered. (2). Based on Task 1, identify key sources of information and conduct follow-up investigations as needed to determine the current state of practice and lessons learned. 3. Critically evaluate the results of Tasks 1 and 2 and analyze the effectiveness of time-related incentive and disincentive provisions. Evaluate both effective and ineffective applications and discuss the underlying reasons for the levels of success. Identify and quantify, where possible, the impacts of time-related incentive and disincentive contract provisions on contractor and state agency staffing (levels and productivity), project cost, quality, contract administration, and contractor operations and innovations. (4). Submit an interim report documenting Tasks 1 through 3 for review and approval by the NCHRP panel. The interim report shall contain a detailed work plan for completing Phase II. Meet with the NCHRP panel to discuss the interim report and Phase II work plan.
Phase II
(5). Develop recommendations for the effective use of time-related incentive and disincentive contract provisions. The recommendations should include the following:
- The type(s) of projects for which incentive or disincentive contract provisions are appropriate.
- A decision tool for determining the most suitable type of incentive or disincentive contract provision.
- Tools for determining the dollar amount to be applied to the time-related completion incentives and disincentives and the conditions under which they are the most appropriate.
The recommendations shall identify best practices for mitigating any negative impacts of time-related incentive and disincentive contract provisions on contractor and state agency staffing (levels and productivity), project cost, quality, contract administration, and contractor operations and innovations. (6). Submit a final report that concisely documents Phases I and II of the research.
STATUS: The final report has been published as
NCHRP Report 652 entitled
Time-Related Incentive and Disincentive Provisions in Highway Construction Contracts.
