Pavement Type Selection –
Updated Guidance on Use of
Alternate Bidding
Virginia Concrete Conference
Richmond, VA
March 6, 2014
Session Outline
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• Background on FHWA Policy & Guidance on
Alternate Bidding for Pavement Type Selection
• State Usage
• FHWA Technical Advisory
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Background on FHWA
Policy & Guidance Information
Federal Register Oct 8, 1981 PTS Policy
If designs equivalent then alternate bidding
permitted
Federal Register Nov 9, 1981 Clarification
Discourages use of price adjustment clauses w/ AB
23 CFR, Part 626 Non-Regulatory Supplement
April 8, 1999
FHWA does not encourage use of AB for PTS due
to issue of equivalent pavement designs
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Background on FHWA
Policy & Guidance Information
FHWA Memo Nov 13, 2008
Clarifies & consolidates FHWA policy
AB is not encouraged
Use of commodity price adjustments should not
be used
SEP 14 approval needed if using price adjustments
NCHRP Report 703 – Guide for Pavement Type
Selection March 2011
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PTS Method #1
Identify feasible
alternatives
Perform LCCA
Consider subjective
factors:
constructability,
adjoining pavement,
competition,
traffic control,
budget, etc.
Make Decision
8 states
YES
Cost within
specified % of
lowest estimate
NO
Eliminate
alternative
PTS Method #2 (MI)
Identify feasible
alternatives
Perform LCCA
1 rigid, 1 flexible
YES
Make selection
decision
Alternate with
lowest LCC
NO
Eliminate
alternative
PTS Method #3
Identify feasible
alternatives
Perform LCCA
Submit to selection
committee. Committee
evaluates engineering
and economic factors
Committee
recommends a
decision
PTS Method #4
Identify feasible
alternatives
Both rigid and
flexible
alternatives are
feasible
NO
YES
Prepare LCC
Adjustment factor
Alternate Bids to
determine
pavement type
10-25 states
Perform LCCA
Eliminate
alternative
Overview of Pavement Type Selection
Components of Agency Processes
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Selection of alternatives
Structural design
Economic Analysis
Primary/Secondary Factors
Contractor-based processes
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Alternate Bidding
Design Build
Long Term Warranty
Other ( PPP, Value Engineering, BV Contracting, Contract
Maintenance)
State Usage
State has advertised at least 1 alternate bid job
State has not utilized alternate bidding
State did not reply to survey
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Technical Advisory
Use of Alternate Bidding for Pavement Type
Selection, T 5040.39 December 20, 2012
Elimination of SEP 14 approval for price
adjustments, November 8, 2012
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Question 1 Purpose of TA
Guidance on use of AB for PTS on Federal-aid
projects on NHS
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Question 2 Does TA Supersede other
Guidance
TA Supersedes:
– Federal Register FHWA PTS Policy Statement
11/9/81
– 23 CFR 626 NR Supplement issued 4/8/99
– HIPT Memorandum issued 11/13/08
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Question 3 Background on AB for PTS
Risk associated w/ material costs and
performance
23 CFR 626 NR Guidance did not encourage
use of AB
Limited use due to:
– lack of national guidance,
– consistent approach to AB and
– open competitive bidding environment
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Question 4 Scope/Applicability of TA
Recommended practice for use on FA projects
on NHS
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Question 5 FHWA Position
Suitable approach when,
– Engineering/economic analysis shows no clear
choice between different pavement designs
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Question 6 When is AB Appropriate
Equivalent Designs
– Similar level of service over same performance
period (use of ME Design software)
– Similar life-cycle costs
• Performance period should include min one major
rehab
• NPV < 10% of alternative
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Question 6 When is AB Appropriate
Discount Rate
– Guidance available in LCCA in Pavement Design –
Interim Tech Bulletin Sept 1981
– Recommend use of NPV for future costs
– Recommend use of Real Discount Rate consistent
w/ OMB Circular A-94
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Question 6 When is AB Appropriate
Consideration of Uncertainty
– Determine total LCC for each alternative
– Consider use of RealCost software
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Question 6 When is AB Appropriate
Maintenance and Rehab Strategy
– Should reflect realistic pavement management
practices
– Should utilize realistic timing and extent of M&R
activities
– Provide similar level of service over performance
period
– NCHRP Report 703 Section 3.5 has reasonable
approach
http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_70
3.pdf
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Question 6 When is AB Appropriate
Non-Economic Factors
– Agency may consider,
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Constructability
Continuity of adjacent pavements
Availability of local materials
Experience
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Question 6 When is AB Appropriate
Appropriate Application
– Only use when AB will likely influence
determination of lowest bid
– Projects w/ substantial quantities of different
pavement items not suited for AB
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Question 6 When is AB Appropriate
Work Zone User Delay Costs
– Not suited when user delay costs for initial
construction and M&R exceed 20%
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Question 7 Administration of AB
LCCA Bid Adjustment
– Should be used for all AB projects
– Compute NPV of all unique costs over performance
period
– Establish process w/ industry input
– Include LCCA bid adjustment in project specs
– Should not include non-agency costs
• User delay costs
• Vehicle operating costs
• Environmental costs. Etc
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Question 7 Administration of AB
Commodity Price Adjustment
– Not desirable
• Difficult to administer equal treatment
• May result in in different levels of material cost risk
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Question 7 Administration of AB
Quality Price Adjustments
– If used,
• Provide similar incentives/disincentives for all alternate
pavement types
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Question 7 Administration of AB
Material Quantities
– Pay items based on weight/mass may result in
cost overruns
– Recommend agency establish process to monitor
costs to prevent any systematic bias
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Question 7 Administration of AB
Approvals
– Title 23 U.S.C. 112 FA construction contracts
awarded based on lowest responsive bid
– SEP 14 Innovative Contracting
• Evaluated use of alternate pavement type bidding using
LCCA bid adjustments
– Approval of LCCA bid adjustments no longer
required per Nov 8, 2012 memo
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Question 7 Administration of AB
Change Orders
– Should not allow post-award change order for
pavement type
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Question 8 Program Effectiveness
Monitor number of bidders and unit cost of
projects
Solicit input from respective pavement
industry groups
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Question 9 Reference Materials
NCHRP Report 703 dated November 2011,
Guide for Pavement Type Selection
http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_703.
pdf
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Questions
Gary Crawford
Pavement Design and Analysis Team
Tele: (202) 366-1286
E-mail: gary.crawford@dot.gov
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