The Concept of Timely Completion of Work
The contractual term “Time is of the essence” is a cornerstone to every ODOT project. Without this term, there would be no enforceability to completing a project. A completion date is needed within the body of the contract language to enable the “Time is of the essence” clause.
Significant in I/D contracting is the establishment of the amount of the incentive (and disincentive). Previously published articles recommend that the incentive be set more than the “lower boundary” of contractor’s cost of the acceleration (plus a reasonable profit), but less than the “upper boundary” of the cost of the delay to the public. This latter “upper boundary” value is usually established through the calculation of Road User Costs (RUCs), which calculation is commonly performed by DOTs, including ODOT. The research discovered, however, that there is a lack of working-level techniques to establish the “lower boundary” of the contractor’s cost of acceleration plus reasonable profit.
ODOT research has lead to the development of an economic analysis in determining the contractor’s costs for acceleration. A model is developed that establishes the “lower boundary” and “upper boundary” parameters based on evaluations of contractors’ costs and Road User Cost (RUC) cost techniques.
These boundaries in turn provide a range within which incentive amounts would be effective. The model is demonstrated in Microsoft Excel or the calculation methodology could also be performed on a standard form, calculator or a different spread sheet program. The standardization of the process through defined methods and/or program templates provides a formal method and basis for determining effective values for incentives – leading to consistency and auditability.
The rational for use of I/D contracting is based on best practices for design and construction of transportation projects. The list of benefits include; Reduced mobility impacts, Shortened project durations, Improved public relations, Reduce overall project costs and Increased overall project delivery.
Back to ID Home