Framework Model for Determining Incentive and Disincentive Amounts

To create schedule focus during construction of public highways, monetary incentives and disincentives (I/Ds) are often offered to highway contractors. An appropriate I/D amount meets two conditions. First, the I/D amount needs to be greater than or equal to the contractor’s cost of acceleration (CA) plus appropriate profit, the lower bound. Second, the I/D amount must be less than or equal to the road user cost (RUC) of the construction delay, the upper bound. RUCs are commonly calculated by most departments of transportation. Less understood is calculation of the lower bound; no practical methodology has emerged in previous studies. To determine a lower bound, a component analysis of the contractor’s costs for the focus portion of work is necessary. The effect of acceleration may then be summed to establish the raw CA and then increased with appropriate incentive profit and compared against RUCs. Contractor pricing details are hidden and vary widely, so a methodology for estimating such details would be helpful. A method is proposed for establishing the I/D lower bound that is practical, repeatable, and auditable, and that may be customized for each project. Further, a framework is established for future refinement of factors affecting contractor pricing.

• Record URL:
  • https://doi.org/10.3141/2040-02
• 
• Summary URL:
  • http://scholar.google.com/scholar_lookup?title=Framework+Model+for+Determining+Incentive+and+Disincentive+Amounts&author=D.+Sillars&author=J.+Riedl&publication_year=2007
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/isbn/9780309113045
• Authors:
  • Sillars, David N
  • Riedl, John
• Publication Date: 2007

Language

• English

Media Info

• Media Type: Print
• Features: Figures; References; Tables;
• Pagination: pp 11-18
• Monograph Title: Construction 2007
• Serial:
  • Transportation Research Record: Journal of the Transportation Research Board
  • Issue Number: 2040
  • Publisher: Transportation Research Board
  • ISSN: 0361-1981

Subject/Index Terms

• TRT Terms: Contractors; Disincentives; Incentives; Pricing; Profits; Road construction
• Uncontrolled Terms: Accelerated construction; Construction costs; Construction delays; Road user costs
• Subject Areas: Construction; Highways; I50: Construction and Supervision of Construction;

Filing Info

• Accession Number: 01045600
• Record Type: Publication
• ISBN: 9780309113045
• Files: TRIS, TRB, ATRI
• Created Date: Apr 4 2007 11:14AM