An evaluation of warranty contracting in the United States of America

Abstract

It is believed that warranty contracting would benefit state highway agencies by improving quality, saving money and time, and encouraging contractors' innovations. However, the challenges associated with warranties could be substantial, including higher costs, early failures, a reduction or even elimination of small contractors from the bidding process, and an increase in contract disputes and litigation. The actual impact of warranty provisions on state Department of Transportation (DOT) projects in the United States of America is still unclear because of limited industry experience. This paper provides a detailed discussion of warranty provisions and the benefits and problems associated with the subject matter. The advantages and disadvantages of warranty provisions are evaluated from the conflicting perspectives of state Departments of Transportation (DOTs), contractors, and surety companies. The future prospects of warranty provisions are established based on the findings of a recent study of warranty provisions and existing literature. Also, several options are proposed that have a strong potential to improve the application of warranties on DOT projects.Key words: warranties, highway construction, innovation, highway maintenance, contract administration, construction costs, construction inspection.