The publication presents an analysis of the cost and schedule performance of incentive/disincentive projects and case studies toward developing a systematic disincentive valuation process, with Construction Analysis for Pavement Rehabilitation Strategies (CA4PRS) software integration that aids agencies in minimizing the likelihood of court challenges of disincentives.,From a California transportation database, the authors performed cost and schedule analyses of 43 incentive/disincentive (I/D) projects and case studies on four of those I/D projects. Interviewees included subject matter experts from transportation organizations to ensure applicability and maximum value-adding, and the process was implemented on ten California transportation projects and monitored for performance.,The presented process mitigates the contractor's ability to claim disincentives as penalties in a court of law through the following: (1) all calculations are performed using project-specific bases, backed by estimations of actual incurred costs; (2) the CA4PRS software allows for estimation transparency and (3) the clarity of cost inclusions reduces any chances of “double-dipping” between disincentives and liquidated damages.,Transportation agencies have historically faced legal challenges to their enforcements of disincentives. As agencies continue to apply disincentives on more megaprojects, contractors will likely attempt to pursue legal challenges more frequently. The presented process mitigates the likelihood of these challenges going to court and increases the accuracy and efficiency of disincentives.,While there have been publications that discuss the legal challenges of imposing disincentives, they mainly provide guidelines and lack applicable processes. Existing literature that does present incentive/disincentive valuation process focuses on incentive valuations and neglects the disincentives' legal challenges. The following publication fills this gap by presenting an applicable disincentive valuation process for transportation projects which incorporates the guidelines for legal mitigation.

Mitigating the legal challenges of imposing disincentives on nonperforming transportation projects

Guidelines for Developing Performance-Related Specifications for Rigid Pavement Preservation Treatments: Diamond Grinding

A Core List of Materials Testing and Construction Inspection Items for Indiana Department of Transportation

Guidelines for Developing Performance-Related Specifications for Flexible Pavement Preservation Treatments: Microsurfacing

PurposeThis paper introduces a novel quality measure, the percent-within-distribution, or PWD, for acceptance and payment in a quality control/quality assurance (QC/QA) performance specification (PS).Design/methodology/approachThe new quality measure takes any sample size or distribution and uses a Bayesian updating process to re-estimate parameters of a design distribution as sample observations are fed through the algorithm. This methodology can be employed in a wide range of applications, but the authors demonstrate the use of the measure for a QC/QA PS with upper and lower bounds on 28-day compressive strength of in-place concrete for bridge decks.FindingsThe authors demonstrate the use of this new quality measure to illustrate how it addresses the shortcomings of the percent-within-limits (PWL), which is the current industry standard quality measure. The authors then use the PWD to develop initial pay factors through simulation regimes. The PWD is shown to function better than the PWL with realistic sample lots simulated to represent a variety of industry responses to a new QC/QA PS.Originality/valueThe analytical contribution of this work is the introduction of the new quality measure. However, the practical and managerial contributions of this work are of equal significance.

A new quality measure for acceptance and payment with a QC/QA performance specification using Bayesian updating

Purpose




The ability to measure and assess “quality” is essential in building and maintaining a safe and effective transportation system. Attaining acceptable quality outcomes in transportation projects has been a reoccurring problem at both the federal and state levels, at least partially, as a result of poorly developed, inefficient or nonexistent quality assurance/quality control (QA/QC) processes. The purpose of this paper is to develop and implement a new QA/QC process that focuses on a novel double-bounded performance-related specification (PRS) and corresponding pay factor policy that includes both lower and upper quality acceptance and payment reward boundaries for bridge concrete.




Design/methodology/approach




The authors use historical data to design different payment scenarios illustrating likely industry responses to the new PRS, and select the single scenario that best balances risk between the agency and industry. The authors then convert that payment scenario to a pay factor schedule using a search heuristic and determine statistical compliance with the PRS using percent-within-limits (PWL).




Findings




The methodology offers an innovative approach for developing an initial set of pay factors when lifecycle cost data are lacking and the PRS are new or modified. An important finding is that, with a double-bounded PRS, it is not possible to represent pay factors using the simplified table PWL currently employed in practice because each PWL value occupies two separate positions in the payment structure – one above the design target and one below it. Therefore, a more detailed set of pay factors must be employed which explicitly specify the mean sample value and the design target. The approach is demonstrated in practice for the Agency of Transportation in state of Vermont.




Research limitations/implications




The authors demonstrate a novel approach for developing a double-bounded PRS and introduce a payment incentive/disincentive policy with the goal of improving total product quality. The new pay factor policy includes both a payment penalty below the contracted price for failing to meet a specified performance criterion as well as a payment premium above the contracted price that increases as the sample product specification approaches an “ideal” design value. The PRS includes both an upper and lower acceptance boundary for the finished product as opposed to only a lower tail acceptance boundary, which is the traditional approach.




Practical implications




The authors illustrate a research collaboration between academia and a state agency that highlights the role academic research can play in advancing quality management practices. The study involves the use of actual product performance data and is operational as opposed to conceptual in nature. Finally, the authors offer important practical insights and guidance by demonstrating how a new PRS and pay factor policy can be developed without the use of site-specific historical lifecycle cost (LCC) data that include detailed manufacturing, producing and placement cost data, as data related to product performance over time. This is an important contribution, as the development and implementation of pay factor policies typically involve the use of historical LCC data. However, in many cases, these data are not available or may be incomplete.




Social implications




With the new PRS and pay factor schedule, the Agency expects shrinkage and cracking on bridge decks to decrease along with overall maintenance and rehabilitation costs. A major focus the new PRS is to actively involve industry partners in quality improvement efforts.




Originality/value




The authors focus on a major modification to an existing QA/QC process that involves the development of a new PRS and an associated pay factor policy undertaken by the Vermont Agency of Transportation. The authors use empirical data to develop a novel double bounded PRS and payment schedule for concrete and offer unique operational/practical insight and guidance by demonstrating how a new PRS and pay factor policy can be developed without the use of site-specific historical LCC. Typically, PRS for in-place concrete have only a lower tail acceptance boundary.

Jeremy Reed

Papers

Performance-related specification and payment modifiers in highway construction projects