A
Term Paper
ON
VARIOUS
WAYS OF AWARDING HIGHWAY CONTRACT
BY
AKINDOLIRE
IDOWU OPEYEMI
QSV/12/0248
QUANTITY
SURVEYING DEPARTMENT
QSV304
SUBMITTED
TO
Quantity
surveying department, FUTA
Lecturer-in-charge
MR.
IJIGHA
MARCH,
2015.
Abstracts:
It’s
expedient to know that there are several ways of awarding highway contract as
discussed in these term paper compiled by me and all information were sourced
online and thoroughly scrutinized by comparing facts to facts, events to
events, challenges to challenges, solutions other solutions incurred by various
clients and contracted companies and personnel and a little delve into the
historical methods that birthed the ongoing trends now as well as some future
predictions.
All
highway contracts are usually and always Government projects and therefore the
most adopted method is as that of the selective tendering as it is widely
adopted with varying names and application pending on the region to which it is
applied.
Highway
contracts are usually awarded to known contractors in a particular nation and
region as binding to their general applications and known reputation to perform
due time stipulation as stated in nitty-gritty of the contracts document. The
following terms cannot be undermined when highway contracts are been fostered
as methods and factors guiding the clients and contractors;
·
Competitive bidding.
·
Warranties.
·
Quality control.
·
Multi parameters.
·
Reviews of constructabilities.
·
Quality-based Contractor
Prequalification.
·
Design build.
·
Future applications; Electronic
biddings.
·
Innovations, challenges, solutions
incurred and other interventions.
The
ever changing world in vast models, software, and materials is making the
awarding of highway contracts ever competitive.
Methodology:
The
information is as referenced below and were carried out by me; via online
researches through internet surfing and compilation to meet suits the topic
demands.
Introduction:
There
are several methods for awarding contracts for highway project construction. Transportation
construction is a large industry—particularly highway construction, on which
more than $50 billion is spent annually. Small improvements can result in
significant savings in time and cost, as well as better quality and fewer
disputes. In recent years, many innovations have occurred in highway
construction. The atmosphere within the industry is highly charged with
optimism, uncertainty, and debate. Contracting methods for highway construction
work are no exception to these developments.
This
is the way used during a procurement in order to evaluate the proposals (tender
offers) taking part and award the relevant contract. At this stage, eligibility
of proposals has been concluded and by so doing choosing the most preferable
among the proposed.
Highway Construction (Engineering):
This
scope covers a wide range of engineering works and scope which includes
planning, design, construction, operation and maintenance of roads and tunnels;
which ensures safe and effective transportation of people and goods. They
consider future traffic flows, design of highway intersections/interchanges,
geometric alignment and design, highway pavement materials and design, structural
design of pavement thickness, and pavement maintenance. (wikipedia,
2015)
Planning/Development:
This involves the estimation of current and future traffic volumes on a road
network. They try to predict and analyze its effect and adverse effects on the
environment, such as noise pollution, and other ecological impacts.
Financing;
most countries are always faced with high maintenance cost of aging
transportation highways. Multi-purpose characteristics of highways, economic
environment, and the advances in highway pricing technology are constantly
changing as well.
Highway
construction is usually preceded by detailed surveys and subgrade preparation.
The methods and technology for constructing highways has evolved overtime and
become increasingly sophisticated and thus has raised the level of skill sets
required to manage such construction.
We’re considering factors such as the project’s complexity and nature,
the contrasts between new construction and reconstruction, and differences
between urban region and rural region projects. Contractors are required to be
vast in the below and of admirable success of such or similar works.
·
Materials to be used.
·
Material quality.
·
Installation techniques.
·
Traffic.
·
Environmental aspects.
·
Managerial and maintenance skills.
·
Political aspects.
·
Legal and public concern.
The old method of contracting highway
construction: The traditional approach to contracting
for highway construction projects has been design–bid–build. Under this
approach, projects are awarded to the qualified bidder with the lowest total
price, pay items are established on a unit price basis, the specifications for
highway projects are strict method specifications, and the role of the owner or
agent is to inspect.
By
the 1970s, as a result of this approach, the industry had developed into a
highly litigious environment of owners, contractors, lawyers, and claims
consultants. In the 1980s, as the total quality management movement grew in the
United States, transportation agencies started to question whether these
traditional contracting methods were really cost effective and quality oriented.
As a result, many research projects addressing highway construction were
initiated. The traditional lowest-responsive-bidder system is well-understood
and accepted throughout the country. Most contractors are comfortable with the
procedure and understand its risks and rewards.
The
approach is also generally considered to be fair. However, it does have some
limitations. The system is slow and does not favor a life-cycle cost approach
to projects. Innovation is often stifled; some innovative ideas necessitate
changes in laws and regulations and are therefore difficult to implement. In
addition, there is little opportunity for contractor input into design, and
quality is often an issue of dispute. Moreover, the traditional system requires
that the highway department have a large staff to conduct all of its necessary
functions.
Current Highway Construction Practices:
The highway sector is perhaps the
most conservative segment of the construction industry. Although highway
contractors have implemented many new construction technologies, owner
contracting methods have until recently remained the same.
Rejuvenating
practices of awarding contracts:
Awarding Contracts ways:
The
method by which contracts are awarded is ordinarily regulated by statute or
constitutional provision, and the prescribed method must be followed. For
significant expenditures of public funds, government bodies usually must use a bidding
process. In the awarding or letting of public contracts such as a
highway project, the public body invites bids or makes "requests
for proposals" so that it can award the contract to the bidder who
qualifies under the terms of the governing statute. The submission of a bid in
response to an invitation is considered an offer, and although it may not be
freely withdrawn prior to acceptance, it does not become a contract unless and
until such time as it is accepted by the proper public authority. A bid that
does not respond to the terms contained in the invitation to bid is not within
statutory requirements but is considered to be a new proposition or a
counterproposal.
Warranties:
A warranty is an assurance that a product will serve its useful life and that
if it does not, the provider will replace the product or pay to return it to
its proper condition. The current warranty for almost all government-funded
projects is the performance bond. This bond provides assurance that the
materials and workmanship of the contractor will be good during the project and
up to 1 year after project completion and acceptance. The use of long-term
warranties is a common practice in Europe and other countries. The governments
of both Europe and America believe warranties motivate the contractor to do a
better job than would be done without such assurance. Warranties have a
perceived higher initial cost and in practice some believe the cost of a
warranted contract is comparable to that of a no warranted contract. The
warranty approach has, however, met with stiff resistance from contractors,
surety companies, and contracting agencies in countries like United States.
Many contractor organizations are opposed to warranties because small firms may
not be able to obtain bonding to cover Construction Management 3 warranty
projects, and may therefore be denied the ability to bid on such projects.
Large contractors, on the other hand, could see a reduced volume of contracts.
Surety companies are skeptical, but have backed some contractors bidding on highway
work that requires long-term warranties. Most of the work warranted to date has
involved asphalt paving, pavement striping, and bridge painting. (HANCHER)
Quality Control Transfer:
The transfer of quality control has for some time been a major requirement on
highway construction projects and the subject of many problems for highway
agencies. With increasing costs and shrinking staff resources, many agencies
are addressing these problems by specifying that contractors are responsible for
quality control, with only performing quality assurance tests to ensure
that the contractor is fulfilling its quality control responsibilities
properly.
This
approach allows the government agency to reduce its staff, which in turn
results in lower operating costs and, therefore, lower overhead costs.
The contractor can reduce project costs by having more control over materials
and workmanship, but this cost savings is lowered somewhat by the need to hire
more people to handle the quality control activities. To ensure that a project
meets those standards, government representatives spot-check some parts of the
project for quality assurance. The contractor is penalized if the project is
not meeting its requirements. Penalties can include being removed from the
contract if the project is of very poor quality. Contractors are also required
to submit and have approved a plan for carrying out the quality control
function.
Competitive
Bidding
For
major government expenditures, such as construction highways roads, government
bodies require competitive bidding, which is a well-defined public process of
letting a contract. Competitive bidding is a means of preventing
political graft and corruption because the public nature of the process
discourages favoritism and fraud. The integrity of the process is a central
goal of competitive bidding. If a public official or employee is later found to
have had an interest in a public contract, the agreement is void and
unenforceable, and the interested parties may be subject to criminal
prosecution. To provide bidders with an opportunity to bid competitively on the
same work, the appropriate public authorities must adopt plans and
specifications that definitely set the extent and type of the work to be done
and the materials to be furnished. The public entity itself must prepare these
plans and specifications, and it must provide all prospective bidders with the
same specifications from which to prepare their bids. The specifications must
not be drafted so as to restrict bidding to a single bidder unless it is
clearly essential to the public interest to do so.
Multi-parameter
Bidding
Cost plus time (or X + Y) bidding is a contracting procedure that still
involves looking at the lowest initial cost, but also factors into the
selection process the added cost of time to complete the project. The time cost
for bidding is calculated by multiplying the estimated time of the project by a
set daily user cost. The bid for award consideration is based on a formula
comprising the traditional price bid by the contractor (X) and the amount of
time allowed for the project (Y). The award formula is as follows: award bid =
(X) + (Y t road user cost/day). This formula is used only to determine the
lowest effective bid for award, and not to determine payment to the contractor.
By
incorporating a quality element into the bid, the contractor is promising to
perform at a set level, or to receive a disincentive for failing to do so.
Reviews of Constructability
Constructability
reviews involve a formal process of allowing contractors to provide input on
the design of a project. The contractor reviews the design to determine the
level of difficulty of construction, and to suggest design revisions that could
enhance the construction process while resulting in possible cost and time
savings and fewer disputes. Such reviews result in greater potential for a
better-quality final product. Constructability review is most effective when
contractor input is sought during the preliminary design phase, not just before
the bidding process begins. It is much easier to implement changes in
philosophy early in the design process, instead of waiting until the design
effort is nearly complete. One reason for the failure of value engineering on
highway projects was the animosity that occurred among designers when
contractors expressed criticism of nearly completed designs. Value engineering
input is now sought only for minor changes after a project has been awarded.
Public
contribution has been always been successfully, and constructability input has
been improving overtime.
Design–Build
Design–build
is probably the most discussed and controversial issue in transportation
construction today. A popular contracting method in the private sector for many
years, it has not seen significant use in the public sector. Under the
design–build approach, design and building of a project are performed by a
single company or a joint venture of companies. This approach provides the
government with one source of responsibility for the project. The design–build
group shares information throughout the project, beginning with the design
phase. The responsibility for all problems is centralized in the design– build
firm. Design–build does face legal barriers in some states where the process is
not allowed. Because of federal statutes regarding design and construction
contracts, considers such contracts to be experimental.
The
most visible example of design–build is the rehabilitation
of Interstate 15 in Salt Lake City, Utah. This project involves the complete
renovation of 16 Construction Management 5 miles of roadway and 137 bridges in
preparation for the 2002 winter Olympics, at an estimated cost of $1.36
billion. Three bidders pursued this historic project, and the two that were not
selected received a complimentary stipend to cover their costs for the
preliminary bidding. A 10-year maintenance warranty is also included in the bid
to ensure that the contractor will complete the project as expected. Attitudes
about design–build are beginning to change. A major benefit is reduced time for
the total project and better design for complex projects as a result of the
designer–builder interaction that occurs from the outset. There is, however, a
great deal of resistance from the design community, which fears that cost will
dominate decision making and result in lower-quality designs.
Quality-based
Contractor Prequalification
Prequalification
of contractors has been used for years to screen out firms that represent a
risk of inot adhering to state highway project specifications. Although many
standards are set with which interested contractors must comply for
prequalification, essentially all that is required is the ability to secure a
bid or performance bond for a project. One of the major qualification criteria
is the quality of prior work performed, but this criterion has generally been
discussed and not enforced. The emphasis on quality performance, however, is
now becoming a major factor in evaluation. The Ontario Ministry of
Transportation has begun using a highly innovative approach to contractor
prequalification to improve the quality of performance and reduce infractions
on its projects. This approach involves evaluating the contractor in four
areas: quality, safety, timeliness, and contract execution. Each area is given
a different weight in the determination of a contractor’s performance index:
quality counts for 60 percent of the contractor’s rating; safety and timeliness
each account for 15 percent, and contract execution for the remaining 10 percent.
The performance index covers the past 3 years and is weighted to give the most
recent projects more influence. Contractors are allowed to appeal and attempt
to improve their rating.
The
performance index is used to either increase or decrease the amount of work a
contractor can be 
given on the basis of the
prequalification limit.
given on the basis of the
prequalification limit.
Note:
DOT- Department of Transportation.
Electronic Bidding
Most
contractor bids are prepared and updated using laptop computers and
spreadsheets, but a paper copy must still be submitted to the DOT at a set
time. This requirement can cause a hardship for contractors who live at a great
distance from the DOT’s main office and for those that receive subcontractor
prices at the last minute. Moreover, the rushed nature of the process results
in a greater chance of errors. Allowing electronic bidding can alleviate these
problems. Electronic bidding is not limited to accepting bids from contractors.
Announcement of the invitation to bid and the bidding documents, along with the
relevant plans and specifications, can be placed on a DOT’s website for the
review of interested contractors. Contractors can send their bids either by
submitting a disk, by using electronic mail, or by uploading the bid to the DOT
website. The DOT can also list the bid reports on its website. Transportation
in the Millennium 6 The use of electronic bidding should benefit both
contractors and DOTs. The major concern with electronic bidding, however, is
security. How can the DOT and contractors be certain that the files they send
or receive have not been tampered with and have been sent by the correct
person? Software exists for ensuring the privacy of transmission on the
Internet; however, DOTs have not yet developed such in-house systems for
handling full electronic bidding processes. (HANCHER)
Winning Contracts and evaluating
tenders is essential to the continuing viability of any contractor / client. It
involves an understanding of the issues and requirements of the procurement stage
but also the skills and ability to structure the tender not just to be
successful but to increase profits as well.
The
department offers work through a tender process and various construction and
maintenance contract arrangements. In general, tenders will only be considered
for Transport and Main Roads' major works using the road construction contract
(RCC) document if the tenderer is currently prequalified. The prequalification
level of the tenderer must be equal to or greater than the advertised project
level for the works. Tenders Transport and Main Roads generally calls for
tenders for its construction projects. A number of projects, however, are
delivered under sole invitee arrangements with local governments or with. Transport
and Main Roads' own commercial units.
Challenges of the Future
Innovations in Highway Contracting
They
are just beginning to be implemented. After years of stagnation, many
innovations are now being implemented in several states, while many others are
under review for possible implementation. in addition to innovative contracting
construction management 7 practices, there will continue to be a demand for
enhanced technologies, such as construction equipment automation, new
construction materials, improved design methods, and improved construction
operations.
There
will be much support for further study and evaluation of these innovative
practices and technologies, and many will result in formal research projects
conducted by dots, consultants, and university researchers.
Conclusion
It
is clearly expressed that there are various forms to which a tenderers would be
awarded a highway construction project by the clients and with several intrepid
personnel that help cut down excesses and companies overheads to which the
contracts are awarded.
Recommendation
Research
ought to be carried out in various countries by contractors on how they can
maximize the natural resources available, rather than employ and import their
materials and contractors from other countries by so doing beating cost. If
more indigenous contractors were trained by their government by sending to
other countries and contractors that has successfully undergone such projects,
then the cost incurred by awarding the contracts to foreign contractors would
be reduced, providing more jobs to indigenous contracting firms. I.e. Most
Nigeria’s contracts for highway and roads generally are awarded to foreign
companies such as Julius Berger, RCC etc. Information says the country still
owes companies as Berger which could be curtailed if locals were trained and
undertake such projects to cut down this big companies costs and overhead of
importing and running the operations.
Reference
HANCHER, D. E. (n.d.). Contracting Methods for
Highway Construction. pp. 1-8.
wikipedia. (2015, june 15). highway engineering.
Retrieved july 24, 2015, from en.wikipedia.org:
https://en.wikipedia.org/wiki/Highway_engineering
