PERFORMANCE-BASED CONTRACTING FOR THE HIGHWAY CONSTRUCTION INDUSTRY: AN EVALUATION OF THE USE OF INNOVATIVE CONTRACTING AND PERFORMANCE SPECIFICATION IN HIGHWAY CONSTRUCTION

Abstract

This project synthesizes information on the shortcomings and limitations of traditional methods of highway construction and maintenance contracting, and identifies new and innovative alternatives. The findings are based on a literature review and a survey of officials of the state departments of transportation, representatives from the highway construction industry and experts in highway construction management. Various contractor methods for highway construction projects are discussed, including traditional design-bid-build as well as innovative methods. Specifications for highway construction, relationships between specifications and contracting methods, and current practices by state departments of transportation are presented. Case studies were used to illustrate the impacts of innovative contracting on project cost, time and quality. Findings suggest that any contracting approach that departs from the traditional design-bid-build approach results in construction time reductions, lower costs, and comparable or better quality. Short warranties are the most common form of innovative contract for highway construction projects. It was concluded that performance-based specifications are easier to implement with innovative contracting approaches in which the risks of ensuring a high quality product are shifted to the contractor. Recommendations to encourage the use of innovative contracting approaches are provided.