Understanding A+B bidding patterns and policy implications for ODOT project lettings [Research highlighter]

Abstract

Departments of Transportation (DOTs) are challenged with keeping the cost of construction low and ensuring timely project completion. A+B bidding is an innovative contracting design that allows contractors to propose an "A" bid for cost and a "B" bid for time, which has the potential to reduce construction time while preserving lower costs through the competitive, low-bid process. According to theory, as construction time increases, cost also increases. However, the net impact on cost is unclear. DOTs often use an incentive/disincentive (I/D) provision in A+B bidding to specify the time frame for critical pieces of work (milestones) or full completion, providing bonus (incentive) for each day work is completed before the stipulated target date, or alternatively, assessed a pay deduction (disincentive) for each day that work extends beyond the target date. Currently, the Oklahoma Department of Transportation (ODOT) uses size of project, duration and location to determine if A+B bidding is appropriate for a given project. This study conducted a state-of-the-practice assessment among DOTs and analyzed data related to the performance of this type of bidding to assist ODOT in evaluating the costs and benefits of the A+B with I/D procurement method and optimizing its application.