|
A. Construction Contracts
1. A+B bidding and incentive/disincentive provisions. In contrast to traditional bidding procedures which require acceptance of only
the lowest responsive bid, "A+B" bidding involves time, with its associated
cost, in the low bid determination. Under this method, each bid submitted
consists of two components. The cost or "A" component is the traditional bid for
the contract items and is the dollar amount of all
work to be performed under the contract. The time or "B" component is a bid of
the total number of calendar days estimated by the contractor to complete the
project. In A+B bidding, the bid for award consideration is based on a combination of the
bid for the contract items and the associated cost of the time needed to
complete the work based upon the following formula: (A) + [(B) x (daily road
user cost + estimated contract administration liquidated damage rate)]. This
formula is used only for award determination; contract payments are based solely
upon the "A" component. If awarded, the days for project completion included in
a contractor’s proposal become a part of the contract entered into by the
contractor and department. Advantages of A+B bidding include:
- Consideration is provided for the time component of a construction contract.
- Favors contractor with most available resources to complete the project.
- Encourages contractors to seek ways to compress the construction schedule. The
potential for early project completion is therefore enhanced.
As required by Transportation Code, Section 223.012(a)(1), a disincentive
provision that assesses road user (travel delay) costs can be incorporated into
the contract to discourage the contractor from overrunning the time "bid" for
the project. In addition, an incentive provision could be included to reward the
contractor if the work is completed earlier than the time bid. A+B bidding and road-user cost liquidated damages are not applicable to all
projects. In some cases, calculation of travel delays do not generate values
justifying the use of higher road user costs. In addition, A+B projects are more
limited in application. When the benefits for early completion are outweighed by
the cost of construction, higher
road-user costs are not considered beneficial to the public. Also, before a
project can be considered for A+B bidding, all right of way must first be
acquired, and utilities adjusted or relocated. This is so that a contractor
can’t later claim that the department caused an inability to meet the contracted
time frame. Currently the department is working to train employees in all districts about
how to calculate road user costs. Additionally, contractual language is being
developed that can be utilized in construction contracts at the Commission’s
discretion. Once this language is approved by the department, it will be
available to be implemented state-wide. Status: A+B bidding has been used by TxDOT on a limited, trial-run basis.
Results from the trial have been encouraging. The department has implemented
policies and strategies for the greater use of incentive/disincentive on
projects. 2. Use of intermediate milestones. The A+B bidding and incentive/disincentive contracting strategies referred to
previously were discussed as being applied to a project as a whole. They may
also be applied to projects on a phase-by-phase basis or to only a critical
portion of a project. The contractual approach is to establish a completion
milestone to the phase or portion of the project which is deemed most important.
The allowable time to complete the work tied to the milestone is established by
the department or by the contractor if A+B bidding is used. If the contractor
fails to complete the intermediate milestone work, then the travel delay, or
road user costs associated with the work, are assessed on a day-by-day basis. An
incentive may also be included to credit the contractor for early completion. Intermediate milestones provide flexibility to address the specific areas of
projects that will have the most impact on the public. For instance, a contract
may provide for the reconstruction of a five-mile section of roadway, a
half-mile of which is through an urban area. An intermediate milestone could be
established in the contract to provide for the accelerated completion of the
urban section only. Other examples of where TxDOT has used intermediate
milestones include: Work areas affecting malls, specific intersections, portions
of a project to provide access to a university, and portions of a project to
extend a toll road. In the last example, the daily value of the
incentive/disincentive was based on an estimate of the daily tolls that would be
received. The same concerns cited in the previous section regarding outstanding
right-of-way acquisitions and utility relocation are also applicable to
intermediate milestones. Status: Intermediate milestones have been used by TxDOT successfully in the
past, and continue to be used. Department staff statewide is being made more
aware of the tool and how to utilize it in contracts. |
