Influence of Highway Project Characteristics on Contract Type Selection: Empirical Assessment

Abstract

The selection of appropriate type of contract for a highway maintenance project can be influenced by project attributes such as the expected cost and duration. However, the expected project cost and planned duration depend on other project attributes and also depend on each other. These simultaneous relationships complicate the identification of the appropriate contract for a highway maintenance project. While previous research has provided insight into the factors that affect project cost and duration, the validity of the findings may have been stymied by a lack of explicit consideration of the simultaneous relationships between project duration and cost. In this paper, we develop a framework based on a three-stage least-squares model to identify the most appropriate type of contract given the project’s attributes while explicitly accounting for the simultaneity between project cost and duration. The framework can also be used to estimate the expected contract duration and cost on the basis of the project type, constituent work activities, physical size (length) of the project, and contract type. The results suggest that the choice of the appropriate contract type for a highway maintenance project is influenced by characteristics such as the number of constituent maintenance activities in the contract, the expected or specified contract characteristics (contract duration, cost, and length), and the type of highway asset in question.