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.