Impact of I/D Contracts Used for Expediting Michigan’s Road Construction

Abstract

The Michigan DOT (MDOT) has been using monetary incentive/disincentive (I/D) payments/penalties to accelerate highway construction work. This paper examines whether the I/D for expediting construction captures the true cost (user delay savings versus actual I/D dollars) and identifies its impacts on the long-term pavement performance for projects that have been expedited. Data were collected and analyzed on projects built through acceleration techniques and similar projects, constructed under standard contract means from 1998 to 2012. The analyzed data statistically supports an improvement in the long-term project performance for incentive projects and suggests a trend that incentive clauses accelerate project schedules. Additionally, data analysis statistically supports the concept that incentive clauses increase project cost yet further analysis finds that the avoided user delay was higher than the additional paid cost for some incentive clauses. The analysis results highlight the effectiveness of accepted for traffic and interim completion incentive/disincentive clauses; they also debate the effectiveness of the lane rental incentive/disincentive clauses, in accelerating project schedules, and reducing user delay cost for MDOT. In summary, the explicit contribution to the body of knowledge that this paper claims is to propose a research procedure that could be used to examine the impact of I/D contracts for expediting road construction work. Additionally, the paper sheds some lights on Michigan I/D practices and their impact that could motivate other practitioners to evaluate their own I/D practices.