State Pre-award Procedures

Section III.A

p. 95-134
 State Pre-Award Procedures

1. Standard Specifications and

Standard Plans
2. Engineer’s Estimate
3. Method of Construction
4. Value Engineering
5. Life-Cycle Cost Analysis
6. Contract Time
7. Road User Cost
 Pre-award Procedures
(Continued)
8. Time-related I/D Clauses
9. Quality – Price Adjustment Clauses
10. Commodity Price Adjustment Clauses
11. Bonding and Prequalification
12. Advertising for Bids
13. Bid Opening and Tabulation
14. Bid Analysis and Award of Contract
1. Standard Specifications
and Standard Plans
 23 CFR 630B
 Applies to all NHS FA highway
construction projects
 NOT required by FHWA
 Simplifies development of the Contact
 NHI Course # 13401 – “Principles of
Writing Highway Construction
Specifications”

p. 95-96
 2. Engineer’s Estimate

 23 CFR 630B
 Policy applicable to all NHS FA
highway construction projects
 “Guidelines on Preparing
Engineer's Estimate, Bid
Reviews and Evaluation” (page A-
87)
Replaces TA 5080.4 & 5080.6 p. 96-99
You “ underestimated ” the job
by 48%!!!!!!!
 Engineer’s Estimate

 Essential to FHWA project approval

 Why is the EE Important?
 Estimate of financial obligation.
 Evaluation of bids for unbalancing.
 Comparison basis for award.
 Engineer’s Estimate

 3 basic estimating methods

Historic data
Actual cost
Combination
 Engineer’s Estimate

 Estimate confidentiality
No formal policy
Discourage disclosure
If disclose, then “range” an option
 Estimate accuracy
 EE +/- 10% of low bid 50% of time
2001 FHWA Survey Regarding Disclosure of
the Engineer’s Estimate

Disclose the EE with

advertisement
Publish a range

Never Disclose

Disclose upon award

 Engineer’s Estimate
40
35
30
25 # of States within
10% of EE for more
20 than 50% of projects
15 # of States within
10 10% of EE for 45-50%
of projects
5
0
1998 1999 2000 2001 2002 2003 2004

Accuracy of State DOT Engineer’s Estimate

3. Method of Construction
 23 USC 112(a) & 112(b)
 23 CFR 635.104
 23 CFR 635 Subpart B
 All Federal-aid construction projects
 Competitive bidding the key tenet
 Exceptions:
Force Account Work
Emergency Work
SEP-14
p. 99-101
 Force Account

 Cost effectiveness must be proven

 Special community concerns a basis
 Utility/Railroad adjustments by
agency/permitted by CFR
 Emergency Work

 Time is of the essence and

there is an immediate
action needed to:
• Minimize Damage
• Protect Adjacent Facilities
• Restore Essential Traffic

p. 100-101
 4. Value Engineering

 23 USC 106(e) & 106(g); 23 CFR 627

 Systematic Review Process:
 Analyze a Project's Design and
 Recommend Design Improvements and/or Cost
Reductions.
 Any Project on the FA system  $25 Million
 Environmental studies
 Preliminary Engineering
 Final Design
 Construction
p. 101-103
 Value Engineering
 Effective and proven method
for improving quality
 Fosters innovation
 Reduces project costs
 Eliminates unnecessary and
costly design elements
 Value Engineering

 SAFETEA-LU, §1904(a)(1) requires

states to conduct VE on FA system
projects ≥ $25M
 On FA System bridge projects >
$20M
 FHWA may require more than one
study for a project ≥ $500M
 FHWA may require VE on other FA
Highway system projects at their
discretion
 VE Leaders (FY 2005 - # of studies / $ value of
recommendations)
CO - 90 / $787 M MI – 44 / $168 M

OR – 26 / $28.3 M

CA – 125/$341 M

VA - 187/$184 M

GA 154 $210 M

FL 143 / $247 M

National 1,794 / $3.04 Billion

 VECP Leaders (FY 2000 - # of studies
recommended / accepted / $ value of savings)
MN – 19/18/ $2.8 M IA – 30/28/ $2.4 M
MT – 5/4/ $4.4 M PA – 11/6/ $3,2 M

OR – 17/17/ $0.4 M

OH – 5/5/ $2.0 M

FL – 16/11/ $5.0 M

National 310/255/ $40.1 Million

 Value Engineering

 Question: Can a VECP provision be

used to pay a contractor extra
for a concept that reduces the time
it takes to complete a project, but
does not result in direct contract
costs saving?
 Value Engineering

Value Engineering Training Course

Contact Mr. Donald Jackson
(202)366-4630
Donald.Jackson@fhwa.dot.gov
http://www.fhwa.dot.gov/ve/index.htm
 5. Life Cycle Cost Analysis
 TEA-21 Section 1305(c) requires FHWA
to develop recommendations
 23 USC 106(e); 23 USC Sections 134(f)
(12), 135(c)(20)
 State analysis is voluntary

p. 103-104
 Life Cycle Cost Analysis

 References
 Interim Policy Statement – July 11, 1994
 NCHRP Synthesis Report 122, “LCCA of
Pavements”
 NCHRP SR 142, “Methods of Cost
Effectiveness Analysis for Highway
 AASHTO Guide for Design of Pavement
Structures”
 “Life-Cycle Cost Analysis in Pavement Design”
Workshop
 6. Contract Time
 23 CFR 635.121(a)
 “FHWA Guide for Construction Contract
Time Determination Procedures” (p. A-106)
 Applies to all NHS Federal-aid highway
construction projects
 “MAXIMUM AMOUNT OF TIME ALLOWED
TO COMPLETE THE PROJECT”

p. 104-105
 7. Road User Cost

 Costs associated with

 Travel time
 Vehicle Operation
 Accident
 Air quality
 Effort to quantify a transportation facility’s
impacts on the traveling public

p. 105-107
 Road User Cost
 Used in I/D clauses, A+B and lane rental
specifications, liquidated damages
 FHWA-RD97-087, Contract Management
Techniques for Improving
Construction Quality, Attachment C-1:
Guide for Calculation of Road User
Costs
 Road User Cost
 RUC Development
References
» p 101-102
Software
» QUEWZ
» MicroBENCOST
» QuickZone
» and others
 QuickZone V 2.0

•To purchase QuickZone 2.0, visit www-mctrans.ce.ufl.edu or

www.kutc.ku.edu/pctrans. Cost = $195. QuickZone 2.0 is available as
a free upgrade to those who purchased QuickZone 1.0.
 8. Time-related
Incentive/Disincentive Clauses
 23 CFR 635.127(d)
 FHWA TA 5080.10 (A-
98)
 Applies to NHS Projects
 Bonus for early project
completion

Pg. 107-112
 Time I/D Clauses

 Liquidated
Damages vs. I/D

 Road User Cost

 Heavy Traffic
 Considerations for
Contract Time I/D clauses

 Compatible with the plans, specs &

schedule
 Specific
 Coordinated
 I/D Clauses

 Encourage Contractor
 5% Cap ‘I’, No Cap ‘D’
 Costs
Inspection
Traffic Control and Maintenance
Detour Costs
RUC
Time For A Break
 9. Quality Price
Adjustment Clauses
 HQ memo 1/24/92 “Technical Guidance
on Price Adjustment Clauses for
Quality”
 Applies to all NHS projects
 Incentive – up to 5 % of unit bid price
 Adjustment based on degree of
compliance with specified requirements

Pg. 112-117
 10. Commodity Price
Adjustment Clauses
 FHWA TA 5080.3 “Development and Use of
Price Adjustment Contract Provisions
12/10/80 (p A-70 to A-86)
 HQ memo 8/21/90 “Price Adjustment
Contract Provisions” (p A-121)
 HQ memo 11/30/90 “Price Adjustment of
Existing Contracts” (p A-123)
 All Federal-Aid highway construction
projects
Pg. 117-121
 Price Adjustment Clauses

 OPEC
 Short Supply
 Regional
 Reduce Contractor’s Risk
 Price Adjustment Clauses

 BLS
 ENR
 Oil Related Publications
 Price Adjustment Clauses

 Fuel Intensive Work

A. Excavation
B. Hauling
C. Paving
 Price Adjustment Clauses

 Retroactive Price Adjustments

FHWA legally prohibited from
participation
STA can use 100% state funds
 State Sales Tax Increases
No FHWA participation
 11. Bonding & Prequalification

 23 USC 112
 23 CFR 635.110
 Applies to all Federal-Aid highway
construction projects

p. 120-123
 Bonding

 Classifications
Bid
Performance
Payment
Warranty
 Prequalification

 Predetermination of a firm’s:
 Job Experience,
 Capability,
 Work Capacity, and
 Performance
 Normally performed annually
 NOT a means of limiting competition
 Bonding & Prequalification

 FHWA does not dictate procedures or

requirements
Up to STAs to determine
 However, if a STA has procedures, they:
Must conform to FHWA competitive bidding
policy.
On NHS projects, must have advance
approval from Division Administrator
 Bonding & Pre-qualification

 Procedures & Requirements MUST NOT:

Restrict Competition
Prevent Submission of a Bid
Prohibit Consideration of a Submitted Bid
Require a License Before Bid Submission or
Consideration of Bid Submission
 NCHRP Synthesis 190, Criteria for Qualifying Contractors
AK CO CT DE FL GA ID IL IN IA KS KY LA MA MD ME MI MN MO
PRE-QUALIFICATION X X X X X X X X X X X X X X
POST-QUALIFICATION
LICENSE X X X X
INCENTIVES X
CYCLICAL CONTR. PERF. RATING X
PAST PERFORMANCE B
PROCESS
Cooperation D D D D D D D D D D B D D
Equipment C C D D B C B B B B D D
Organization & Mgmt C D D B B B B B B D D
Schedule B D D D D D D D D B D D
Timely Submission of Reports D D D D D B D
Safety D D B
Job Cleanliness D D
Experience
Past Projects C C B C C B B C B C
On-going Projects C B C C C
Default C C C C C C
Pre-qualification in other states C
Product D D D D D D D D D D D
Finance C C C C C C C C C
Current Indexing system M X
X: Yes
M: Materials only
C:Contractor fills out self report
D: DOT evaluates contractor
B: Both
 NCHRP Synthesis 190, Criteria for Qualifying Contractors
MT NE NJ NY NC ND NV PA SC SD TX UT VT VA WA WV WI WY
PRE-QUALIFICATION X X X X X X X X X X X X X X X
POST-QUALIFICATION X
LICENSE X X X
INCENTIVES
CYCLICAL CONTR. PERF. RATING X X
PAST PERFORMANCE
PROCESS
Cooperation D C D D D D D D D D D D
Equipment D C D C C D B C D D C B D B B
Organization & Mgmt B C D B C D D D D B D D
Schedule D D D D D D D D D D D
Timely Submission of Reports D D D D D
Safety D D D
Job Cleanliness D
Experience
Past Projects C C C C C C B C D B C B C C
On-going Projects B C C C C C C
Default C C D C C C C C C C
Pre-qualification in other states C C C C
Product D B D D D D D D D
Finance B C C C C C C C C C C C C C C
Current Indexing system X X X X X
X: Yes
M: Materials only
C:Contractor fills out self report
D: DOT evaluates contractor
B: Both
 12. Advertising for Bids
23 USC 112 and 23 CFR 635.112
 All Federal-aid construction projects
Authorizes project for advertisement
Approves addenda
State-delegated Federal-aid projects, the
STA performs the above on behalf
of FHWA:
 Minimum 3 week advertisement
p. 123-125
 Advertising for Bids

 Assurances prior to advertisement:

PS&E approved
Clearances complete (Utility, R/W, R.R.) OR
proper coordination in contract
Relocations complete
Public hearing & environmental processes
complete
Other agency reviews complete
 Advertising for Bids

 Addenda to bidders
Assure that all potential bidders will
receive addenda
Major changes approved by Division
on full involvement projects prior to
issue
Inform Division of minor changes prior
to Concurrence in Award
 13. Bid Opening & Tabulation
 23 CFR 635.113
 All Federal-Aid construction projects
EXCEPT that STA does not need to
forward bid tabulations for non-NHS
projects.
 Bid openings shall be public and read
aloud

p. 125-130
 Responsible vs Responsive

 Responsive bid: meets the written

requirements of the bid solicitation
 Non-responsive: irregular
 Responsible bidder: demonstrates
the capability & capacity to do the
work
 Bid Tabulation

 Bid tabulations for NHS projects

Submit to Division
Certified by STA official
Details on 3 low bidders
Total amount on all bidders
 Bid price date

 Required for all contracts

 valued > $500,000 or
 improving highway safety; or
 for highway beautification
 May be submitted electronically
 FAPG G 6011.10 has additional
details
 Electronic Contracting
 Most State DOTs use it in some form
Plans and Proposals
Bidding documents
Bid submission
Bonds
Contract Administration
» Reports
» Diaries
» Quantities
» DBE p. 128-130
 Electronic Bidding
 Online bidding becoming popular
 36 states using Trns.port Expedite in
late 2004
Download bid documents from STA
Prepare bids
Alerts contractors to clerical bid errors
(not judgment errors)
 Bid submittal with Bid Express
Uses the Internet
22 states using in 2005
 11. Bid Analysis and
Award of Contract
 23 USC 112 and 23 CFR 635.114
 “Guidelines on Preparing Engineer's
Estimate, Bid Reviews and
Evaluation” (page A-87)
Replaces TA 5080.4 & 5080.6

p. 131-134
 Bid Analysis & Contract Award

 ALL FEDERAL-AID CONTRACTS SHALL

BE AWARDED TO THE LOWEST
RESPONSIVE/RESPONSIBLE BIDDER !!!
 Analysis
 Justify award or rejection
 Required evaluation
 Rely on an accurate engineers estimate
 Bid Analysis & Contract Award

 Mathematically unbalanced
Unit costs do not reflect actual cost to
perform work
 Materially unbalanced
Reasonable doubt that award would
result in lowest ultimate cost to STA
 Written justification for obvious
extreme variations or unbalance
 Concurrence in Award (NHS)
 Authorization to proceed with
construction
 Prerequisite for Federal-aid participation
 Written
 By STA for FHWA on delegated projects
 Rejecting the lowest bidder or all the bids
requires FHWA concurrence
 By STA for FHWA on delegated projects

p.134
Time For A Break