Innovative Contracting Techniques

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Innovative Contracting Techniques

• Partnering with Industry to Create a Better
  Roadway
• Presented by
• Doyt Bolling
• Director Utah Technology Transfer Center

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Innovative Contracting Techniques

• Design-Build
• Lane Rental
• AB Bidding
• Warranty
• Job Order Contracting

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Premise for the Implementation of Innovative
Contracting Techniques

• Traditionally highway projects are designed, bid,
  and built with the contract awarded to the lowest
  bidder.
• Innovative contracting allows for other factors
  such as time, quality, and innovation to be
  considered, in addition to low bid.

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General Warrants and Objectives

• Projects suitable for any innovative contracting
  technique are
• Projects in which right-of-way, utility,
  environmental, and other socio-political issues
  have been resolved.
• Projects where the potential exists for
  increasing quality, decreasing costs, decreasing
  time, reducing administration costs, and reducing
  the possibility for legal claims and change
  orders.

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Design-Build

• Definition When a single entity provides both
  the design and construction through a single
  contract between the owner and the Design-Build
  firm.

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Why Pursue Design-Build

• Primary Objective
• Time Savings
• Other Objectives
• Singular responsibility.
• Reduce administrative costs.
• Allow for contractor innovation and flexibility.
• Provide additional expertise not available in
  house.
• Allow contractor to pursue new technologies and
  approaches that will facilitate design,
  construction, and improve final product quality.

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Framework of Design-Build

• There are three principal project categories for
  which Design-Build procurement has been
  effective
• Emergency repair and rehabilitation projects.
• Specialty type projects (I.e. ITS, Ferry Boats,
  and etc.).
• Mega-reconstruction projects.

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Emergency Repair and Rehabilitation Projects

• Design-Build is used for these projects to
  decrease project delivery time and road user
  costs.

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Specialty Type Projects

• Design-Build is used because there is
• Limited expertise in house.
• Opportunity for innovation, alternative designs,
  and innovative construction approaches.

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Mega-Reconstruction Projects

• Design-Build is used to
• Shorten delivery time for the project by allowing
  construction to proceed before design is
  completed.
• Allow for contractor innovation and flexibility
  to be incorporated in the design and construction
  of the project.
• Save time and reduce road user costs.
• Meet specific delivery dates.

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Utah Example Reasons for Pursuing Design-Build

• Time
• The Olympics and increasing traffic congestion
  called for early completion.
• For example- A project that under traditional
  methods would have taken10 years to complete will
  now take just 4.5 years to finish under
  Design-Build.
• Innovation
• The contractor can provide early insight to the
  design to facilitate construction.
• Administration and Legal Issues
• Single source responsibility for both design and
  construction reduces legal issues and facilitates
  administration of the project.

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States Using Design-Build

• Arizona
• Colorado
• California
• Florida
• Hawaii
• Kentucky
• Alaska
• Michigan
• Minnesota
• Missouri

• New Jersey
• Virginia
• North Carolina
• North Dakota
• New Mexico
• Ohio
• Pennsylvania
• South Carolina
• Utah
• Maine
• Oregon

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AB Bidding

• Definition A cost plus time bidding procedure
  that selects the low bidder based on a monetary
  combination of the contract bid items (A) and the
  time (B) needed to complete the critical portion
  of the project.

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Benefits of AB Bidding

• AB Bidding is used to motivate the contractor to
  minimize the delivery time for high priority and
  highly trafficked roadways. This encourages
  contractors to finish early by
• Offering bonuses for early completion.
• Assessing disincentives for late completion.

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Criteria for Selection of AB Bidding as a
Contracting Procedure

• Traffic restrictions, lane closures, or detours
  result in high road user costs.
• Safety concerns, or significant impacts to the
  local community or economy during construction
  warrant expediting the project.
• Traffic control phasing can be structured to
  maximize a contractors ability to reduce the
  duration of construction.
• The project is relatively free of third party
  conflicts.
• It is in the public interest to complete the
  project as soon as possible.

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States Using AB Bidding

• Maryland
• Colorado
• California
• Virginia
• Texas
• North Carolina
• Wisconsin
• Washington

• New York
• North Dakota
• Iowa
• New Jersey
• Missouri
• Idaho
• Indiana
• Kansas
• Maine

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New Yorks AB Bidding

• New York has completed 33 projects since 1994.
• Projects were completed an average of 19 days
  earlier than bid and an average of 87 days
  earlier than the engineers estimate.
• An average of 9 days were added for change
  orders.
• Only one project took more days to complete than
  engineers estimate and only two took more days
  than bid.
• An estimated 20.32 million dollars in road user
  costs were saved.
• 4.75 million dollars were paid for incentives.

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Lane Rental

• Definition An innovative contracting technique
  by which a contractor is charged a fee for
  occupying lanes or shoulders to do the work.

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Why Pursue Lane Rental?

• Primary Objective
• To motivate the contractor to minimize the time
  that a lane, a shoulder, or a combination of
  lanes and shoulders are out of service so there
  is minimized traffic delay to highway users.

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Lane Rental Uses

• Lane Rental has been used for projects that
  contain one or more of the following

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• Traffic restrictions or lane closures result in
  high road user costs.
• The use of alternate routes or off-site detours
  is impractical.
• The traffic control plan allows the contractor
  flexibility in scheduling work to minimize the
  impact of lane closures.
• The agency seeks contractor expertise to minimize
  the time that lanes are out of service.
• The project is relatively free of third party
  conflicts (I.e. right-way issues, utilities,
  etc.).
• The benefit in terms of reduced impact to the
  highway user is greater than the additional cost
  to minimize lane closures.

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How are Lane Charges Calculated?

• Charges for lanes or shoulders can be on either
  an hourly or daily basis.
• Charges per lane can vary depending on time of
  day, amount of traffic, and other road user costs.

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Oregon Example

• Traditionally the State of Oregon specified times
  at which lane closures were not allowed.
• State law did not permit the use of road user
  costs in the determination of liquidated damage
  amounts.
• Therefore no disincentive for closures or
  incentive to keep lanes open.

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Oregon DOT US 26 Reconstruction Lane Rental
Project

• Major reconstruction of a 2.08 mile stretch of a
  primary commuter route from the west suburbs to
  downtown Portland.
• ADT ranges from about 100,000 to 130,000 vpd,
  with less than 2 trucks.
• Rates for every 15 minutes ranged from 0 to
  21,000 for lane use.

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States Using Lane Rental

• Colorado
• New York
• North Carolina
• Utah
• Oklahoma
• Oregon
• Washington

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New Yorks Lane Rental

• New York has completed 6 projects since 1995.
• Total project costs were 3.6 million dollars
  below the engineers estimate.
• Three projects were above and three projects were
  below the engineers estimate.

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Warranty

• Definition A guarantee of the integrity of a
  product and of the makers responsibility for the
  replacement or repair of deficiencies.

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Advantages of Warranty Contracting

• Less owner risk.
• Eliminates cost of owner QA/QC by transferring
  this responsibility to the contractor.
• Creates an incentive for overall project quality.
• Assures acceptable level of service or
  performance for a work item and/or major project
  element.

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States Using Warranties

• Wisconsin
• Michigan
• North Carolina
• California
• Missouri
• Ohio
• Montana
• New Hampshire

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Job Order Contracting/Indefinite Delivery

• Definition The combining of like projects into
  one contract that is administered by the
  owner/agency.
• These projects are competitively bid with
  indefinite quantity and indefinite delivery at
  fixed unit construction prices.

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How is Job Order Contracting Different from
Traditional Contracts?

• Two Ways
• Job Order Contracts cover a variety of similar
  types of construction including maintenance,
  repair, renovation, and traffic control projects
  that are combined under a single contract at
  fixed unit prices.
• The contracts are in place before the owner
  identifies where and when the work is to be done.
  These contracts are based on a minimum yearly
  amount of work as long as the contractor performs
  acceptable work.

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Advantages of Job Order Contracting

• Lower costs
• Quantities are larger by combining similar
  projects, therefore resulting in lower unit bid
  prices.
• Incentives for quality
• The contractor is motivated by the fact that they
  will continue to receive work so long as their
  performance is satisfactory.
• Less owner time and administration cost required
• Several projects can be accomplished under one
  contract.
• Opportunities for small disadvantaged businesses
• Small firms that cant compete for larger
  construction projects can provide services
  required by individual job orders.

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States Using JOC

• Armed Forces
• Illinois
• California

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Innovative Contracting Website Access

• Accessing WebSite
• Connect to www.utaht2.usu.edu
• Click on the Innovative Contracting Link.
• Or
• Go directly to the Innovative Contracting Page by
  entering http//www.utaht2.usu.edu/IC/Default.html
  
• Viewing Documents
• Click on the Link Search for Innovative
  Contracting Documents.
• Then use the pull-down menus to select a state
  and a contracting procedure.
• NOTE to view all leave the pull-down menus
  blank.
• Click Run Query
• After the query loads click on the title of the
  document you wish to view.
• A full description of the document will load.
• Click on View Full Document at the bottom of
  the page.
• If you have Adobe Acrobat Reader the document
  will load.
• Or
• If you do not have Adobe Acrobat Reader, click on
  the icon, or visit www.adobe.com/prodindex/acrobat
  /readstep.html to download a free copy.

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Questions?