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Innovative Contracting Techniques

Explore the history, legal issues, and best practices of innovative contracting techniques for improved quality, performance, and cost-effectiveness in construction projects. Learn about various types of innovative contracting methods and their impact on contractual parties.

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Innovative Contracting Techniques

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  1. Innovative Contracting Techniques HISTORY OF INNOVATIVE CONTRACTING AND INNOVATIVE FINANCING Cordell M. Parvin

  2. Innovative Contracting Techniques Legal Issues • It is Clear that Disputes and Litigation Follow Any Type of Change or Innovation. • In the case of Innovative Contracting Disputes Will Arise Because They Affect Opportunities for Contractors • Innovative Contracting Techniques Affect Liabilities of Contractors • Contractors Generally Resist Change

  3. Innovative Contracting Techniques Legal Issues • Types • Is the Innovative Techniques Legally Permissible? • Disputes Over Award; Factors Other Than Low Bid • Disputes Over New Standards

  4. Innovative Contracting Techniques TRB Task Force Studied: • Bidding Procedures • Materials Control • Quality Considerations • Insurance and Surety Issues

  5. Innovative Contracting Techniques TRB Task Force • September 1989 Workshop • Two Days • Industry Participants

  6. Innovative Contracting Techniques TRB Task Force • Recommendations • Cost-Plus Time Bidding • Warranties • Constructibility • Performance Specifications • National Center • Value Engineering

  7. Innovative Contracting Techniques SEP-14 • Initiated February 1990 • No Longer Experimental • A+B Bidding • Lane Rental • Warranties

  8. Innovative Contracting Techniques FHWA Report Objective: Investigate Innovative Contract Practices to: • Determine Effects of Various Contract Management Methods on: • Construction Quality • Pavement and Bridge Performance • Costs • Risk to Contractual Parties

  9. Innovative Contracting Techniques FHWA Report Objective: Investigate Innovative Contract Practices to: • Recommend Contract Management Methods With Greatest Potential to Improve Quality and Performance and Can Be Promoted for Implementation in a Quality-Oriented Contracting System

  10. Innovative Contracting Techniques FHWA Report Objective: Investigate Innovative Contract Practices to: • Develop Instructional Guide or Guides to Select and Implement the Chosen Contracting Approaches and to Educate the Highway Construction Community

  11. Innovative Contracting Techniques FHWA Report Innovative Contracting Practices Studied • Quality Based • Quality Assurances (QA) Specifications • Performance-Related Specifications (PRS) • Construction Warranties

  12. Innovative Contracting Techniques FHWA Report Innovative Contracting Practices Studied • Time Based • Incentive/Disincentive (I/D) Provisions • Cost-Plus-Time or (A+B) Bidding • Lane Rental • Design-Build • Indefinite Delivery/Job Order Contracting (JOC)

  13. Innovative Contracting Techniques FHWA Report Innovative Contracting Practices Studied • Multiple Bases (Quality, Cost, Time) • Value Engineering (VE) for Design and Construction • Partnering • Alternate Bids (Design Alternatives) • Privatization/Build-Operate-Transfer (BOT)/Build-Transfer-Operate (BTO)

  14. Innovative Contracting Techniques FHWA Report Other Innovative Practices • Design-Build Warranty • A+B Bidding + Warranty • A+B+C Bidding

  15. Innovative Contracting Techniques FHWA Report Legal Points • Incentive/Disincentive • No Legal Barrier • Road User Costs May Be Included in Liquidated Damages

  16. Innovative Contracting Techniques FHWA Report Legal Points • A+B Bidding and Lane Rental • No Longer Experimental • Conforms to Lowest “Responsible” Bid • No FHWA Restriction on Lane Rental

  17. Innovative Contracting Techniques FHWA Report Legal Points • Design-Build • Legal Barriers Limit Use • Brooks Act - Type Procurement of Design • Lowest Responsible Bidder • 1996 FHWA Chief Counsel Office Opinion

  18. Innovative Contracting Techniques FHWA Report Legal Points • Quality-Based • QA - Used in Almost All States for Procurement • Performance Specifications - Not Discussed • Warranties - Have Been Restricted Because of Opposition and Bonding Issues

  19. Innovative Contracting Techniques FHWA Report Legal Points • Quality-Based - GOA Report Barriers • Difficulties in Attributing Responsibility for Failures • External Factors Beyond the Contractor’s Control • Reluctance by Sureties to Bond Long-Term Warranties Except for Larger Well-Financed Firms

  20. Innovative Contracting Techniques FHWA Report Legal Points • GAO Recommendations • Relatively Short Warranty Periods • Target or Restrict Warranties • Use End-Result or Performance Specifications • Develop Model Warranty Language and Terms for Specific Project Types

  21. Innovative Contracting Techniques Innovative Financing Pre-TEA-21 Consisted of Various Programs in Title 23, ISTEA and National Highway Designation Act

  22. Innovative Contracting Techniques TEA-21 Innovative Financing • Financing Includes • Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA)

  23. Innovative Contracting Techniques TEA-21 Design-Build • Specifically Authorizes Design-Build • Greater Than $5,000,000 for ITS • Greater Than $50,000,000 for Others • Regulations Within 3 years • Effective in 3 Years • SEP-14 Continues Until Then

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