A method to determine minimum contract bids for incentive highway projects
Abstract An increasing number of state highway agencies (SHAs) are using Incentive/Disincentive (I/D) bidding for highway construction. The I/D bidding concept is designed to shorten the total contract time by allowing the contractor to obtain incentives for early completion and pay disincentives for late completion of a project. Contractors are then presented with the problem of determining a better strategy to develop their bid estimate, including construction cost, construction time, and I/D. This research offers a quantifying model to determine an optimum low bid to submit for both linear I/D and escalating I/D type projects. A functional relationship between the construction cost and time duration is developed from the Florida Department of Transportation (FDOT) projects. The equation is then combined with the I/D to determine the optimum low bid price and time. Finally, several projects completed by the FDOT will be utilized to illustrate the validity of this model.
The Complexity and Simulation of Revenue Sharing Negotiation Based on Construction Stakeholders
This paper focuses on the complexity characteristics of a stakeholder’s revenue sharing for time compression in construction projects, such as adopting a life cycle perspective, the preferences of stakeholders, and the adaptability behaviors in the negotiation process. We build an agent-based model on revenue sharing negotiation. Considering that the agents who are in a weak position not only care about their own benefits but also compare their benefits to others, we design an experimental scenario where a contractor has fairness preference based on China’s reality. According to different sympathy and envy coefficients, we can divide the inequity aversion preference into three typical types, and we research how a contractor’s different types of inequity aversion preferences impact revenue sharing coefficient of agreements, results of successful negotiations, and efficiency in negotiations. Results are as follows: it is advantageous for a contractor to maintain a modest inequity aversion for their own earnings and the degree of sympathy preference in inequity aversion has an important impact on the time to reach consensus while the degree of jealousy preference has no obvious effect. If contractors’ sympathy preference is maintained within a moderate range, it will achieve a higher success rate of negotiations in the negotiation process; the success rate of negotiation is affected largely by the agents’ sympathy preference, though it is also influenced by the jealousy preference, but it is not very sensitive.
INNOVATIVE CONTRACTING PRACTICES - THE NEW WAY TO UNDERTAKE PUBLIC WORKS PROJECTS
This article discusses the application of some new and old concepts and principles to produce innovation in public works contracting practices. These concepts are based on the work of the Transportation Research Board Task Force on Innovative Contracting Practices. It is noted that within the traditional concepts of "lowest responsible bidder," certain modifications can be advanced with a fairly high degree of probability that they will improve the public works contracting process. The rationale for the lowest bidder concept is discsussed. The importance of specifications is discussed, and it is pointed out that in innovative contracting there may be considerable modifications of risk assignments and therefore the roles played by both the public and private sectors in the process. The time is money concept is discussed, as well as the use of warranties and guarantees. The use of contractor responsibility determinations is also discussed. World Bank experiences with innovative bidding are described. The need for identifying and rewarding good performance is noted. Other areas discussed include the use of end result specifications, the design concept, and the use of privatization. Comments are also made on the disputed work processes, the no claims clauses and exculpatory contract language, and negotiated competitive bidding.