Graduated Unit Price Payment Schedules

Abstract

This paper focuses on providing assistance to contractors in visualizing the effects of variations in quality of their work on the payment received under graduated unit price schedules. The methodology is developed by analyzing an example consisting of the graduated payment schedules applied by a state agency on the construction of asphaltic surface courses. The techniques developed should be applicable to many situations where graduated payment schedules are enforced. Simulation techniques are used to model a broad spectrum of realistic pavement qualities. The quality of a pavement is associated with how accurately the probability distribution function of quality parameters in the field targets design specified values for these parameters. The results provide a direct means to relate the quality of the pavement to the expected payment. For a contractor working under specifications that enforce graduated payment schedules, the results provide better tools to estimate the final payments and the “cost” of attaining the sought quality level, and they therefore contribute to reducing the contractor's risk.