Determination of Contract Time and Incentive and Disincentive Values of Highway Construction Projects

Abstract

Although ultimately bringing long term economic benefit, highway construction activities temporarily increase highway user costs and non-user costs, and affect highway safety and the environment. In order to minimize the negative effects of construction projects, state highway agencies have been using incentive/disincentive clauses in contracts to reward contractors for early completion of projects, and to recover the engineering and administrative costs incurred when contractors miss completion deadlines. Evaluation of excess user costs of traffic delays caused by the presence of work zones is essential for assessment of the impact of the work zones on the public. The estimated user costs provide highway engineers and construction managers with useful information for effective highway construction planning. For any highway construction project, there exists a construction time that would minimize the construction cost with given manpower and equipment. If the project is shortened or prolonged from this construction time, the construction cost will increase. This article shows that reasonable incentive and disincentive values can be determined by including a portion of the work zone user costs in the relationship between construction time and construction costs.