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Use of Incentive/Disincentive Contracting to Mitigate Work-Zone Traffic Impacts

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Use of Incentive/Disincentive Contracting to Mitigate Work-Zone Traffic Impacts Use of Incentive/Disincentive Contracting to Mitigate Work-Zone Traffic Impacts Final Report November 2012 Sponsored by Smart Work Zone Deployment Initiative (TPF-5(081)) Federal Highway Administration (InTrans Project 06-277) About SWZDI Iowa, Kansas, Missouri, and Nebraska created the Midwest States Smart Work Zone Deployment Initiative (SWZDI) in 1999 and Wisconsin joined in 2001. Through this pooled-fund study, researchers investigate better ways of controlling traffic through work zones. Their goal is to im- prove the safety and efficiency of traffic operations and highway work. About InTrans The mission of the Institute for Transportation (InTrans) at Iowa State University is to develop and implement innovative methods, materials, and technologies for improving transportation efficiency, safety, reliability, and sustainability while improving the learning environment of students, faculty, and staff in transportation-related fields. Disclaimer Notice The contents of this report reflect the views of the authors, who are responsible for the facts and the accuracy of the information presented herein. The opinions, findings and conclusions expressed in this publication are those of the authors and not necessarily those of the sponsors. The sponsors assume no liability for the contents or use of the information contained in this document. This report does not constitute a standard, specification, or regulation. The sponsors do not endorse products or manufacturers. Trademarks or manufacturers’ names appear in this report only because they are considered essential to the objective of the document. Non-Discrimination Statement Iowa State University does not discriminate on the basis of race, color, age, religion, national origin, sexual orientation, gender identity, genetic information, sex, marital status, disability, or status as a U.S. veteran. Inquiries can be directed to the Director of Equal Opportunity and Compliance, 3280 Beardshear Hall, (515) 294-7612. Iowa Department of Transportation Statements Federal and state laws prohibit employment and/or public accommodation discrimination on the basis of age, color, creed, disability, gender identity, national origin, pregnancy, race, religion, sex, sexual orientation or veteran’s status. If you believe you have been discriminated against, please contact the Iowa Civil Rights Commission at 800-457-4416 or the Iowa Department of Transportation affirmative action officer. If you need accommodations because of a disability to access the Iowa Department of Transportation’s services, contact the agency’s affirmative action officer at 800-262-0003. The preparation of this report was financed in part through funds provided by the Iowa Department of Transportation through its “Second Revised Agreement for the Management of Research Conducted by Iowa State University for the Iowa Department of Transportation” and its amendments. The opinions, findings, and conclusions expressed in this publication are those of the authors and not necessarily those of the Iowa Department of Transportation or the U.S. Department of Transportation Federal Highway Administration. Technical Report Documentation Page 1. Report No. 2. Government Accession No. 3. Recipient’s Catalog No. InTrans Project 06-277 4. Title and Subtitle 5. Report Date Use of Incentive/Disincentive Contracting to Mitigate Work Zone Traffic Impacts November 2012 6. Performing Organization Code 7. Author(s) 8. Performing Organization Report No. Sun, C., Edara, P., and Mackley, A. 9. Performing Organization Name and Address 10. Work Unit No. (TRAIS) University of Missouri-Columbia E 2509 Lafferre Hall, Department of Civil Engineering 11. Contract or Grant No. Columbia, MO 65211 13091 12. Sponsoring Organization Name and Address 13. Type of Report and Period Covered Midwest Smart Work Zone Deployment Federal Highway Administration Final Report Initiative U.S. Department of Transportation 14. Sponsoring Agency Code Iowa Department of Transportation 1200 New Jersey Avenue SE TPF-5(081) 800 Lincoln Way Washington, DC 20590 Ames, Iowa 50010 15. Supplementary Notes Visit www.intrans.iastate.edu/smartwz for color pdfs of this and other research reports. 16. Abstract Incentive/disincentive clauses (I/D) are designed to award payments to contractors if they complete work ahead of schedule and to deduct payments if they exceed the completion time. A previously unanswered question is, “Did the costs of the actual work zone impacts that were avoided justify the incentives paid?” This report answers that question affirmatively based on an evaluation of 20 I/D projects in Missouri from 2008 to 2011. Road user costs (RUC) were used to quantify work zone impacts and included travel delays, vehicle operating costs, and crash costs. These were computed using work zone traffic conditions for partial-closure projects and detour volumes and routes for full-closure projects. Conditions during construction were compared to after construction. Crash costs were computed using Highway Safety Manual methodology. Safety Performance Functions produced annual crash frequencies that were translated into crash cost savings. In considering an average project, the percentage of RUC savings was around 13% of the total contract amount, or $444,389 of $3,464,620. The net RUC savings produced was around $7.2 million after subtracting the approximately $1.7 million paid in incentives. In other words, for every dollar paid in incentives, approximately 5.3 dollars of RUC savings resulted. I/D provisions were very successful in saving RUC for projects with full-closure, projects in urban areas, and emergency projects. Rural, non-emergency projects successfully saved RUC but not at the same level as other projects. The I/D contracts were also compared to all Missouri Department of Transportation contracts for the same time period. The results show that I/D projects had a higher on-time completion percentage and a higher number of bids per call than average projects. But I/D projects resulted in 4.52% higher deviation from programmed costs and possibly more changes made after the award. A survey of state transportation departments and contractors showed that both agreed to the same issues that affect the success of I/D contracts. Legal analysis suggests that liquidated damages is preferred to disincentives, since enforceability of disincentives may be an issue. Overall, in terms of work zone impact mitigation, I/D contracts are very effective at a relatively low cost. 17. Key Words 18. Distribution Statement contract acceleration—incentive/disincentive—road user costs—work zones No restrictions. 19. Security Classification (of this 20. Security Classification (of this 21. No. of Pages 22. Price report) page) Unclassified. Unclassified. 72 NA Form DOT F 1700.7 (8-72) Reproduction of completed page authorized USE OF INCENTIVE/DISINCENTIVE CONTRACTING TO MITIGATE WORK ZONE TRAFFIC IMPACTS Final Report November 2012 Carlos Sun, Ph.D., P.E., J.D., Associate Professor Praveen Edara, Ph.D., P.E., Assistant Professor Andrew Mackley, Graduate Research Assistant E 2509 Lafferre Hall University of Missouri-Columbia [email protected] (573) 884-6330 Sponsored by the Midwest Smart Work Zone Deployment Initiative and the Federal Highway Administration (FHWA) Pooled Fund Study TPF-5(081): Iowa (lead state), Iowa, Kansas, Missouri, Nebraska, Wisconsin Preparation of this report was financed in part through funds provided by the Iowa Department of Transportation through its Research Management Agreement with the Institute for Transportation (InTrans Project 06-277) TABLE OF CONTENTS ACKNOWLEDGMENTS ............................................................................................................. ix EXECUTIVE SUMMARY ........................................................................................................... xi 1. INTRODUCTION .................................................................................................................. 1 1.1. Research Objectives ...........................................................................................................2 1.2. Contribution to the State of the Art ...................................................................................3 2. LITERATURE REVIEW OF I/D PROJECT EVALUATIONS ............................................ 4 3. BACKGROUND OF I/D CONTRACTING .......................................................................... 6 3.1. Project Selection ................................................................................................................6 3.2. Establishing Contract Time ...............................................................................................6 3.3. RUC and I/D ......................................................................................................................6 3.4. Setting Maximum I/D Amounts ........................................................................................7 3.5. Considering Contractor Acceleration Costs ......................................................................9 3.6. MoDOT’s use of I/D Contracting ......................................................................................9 4. DATA COLLECTION ......................................................................................................... 11 5. WORK ZONE IMPACT METHODOLOGY ...................................................................... 15 5.1. Travel Delay Costs ...........................................................................................................15
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