Alternative Payment and Progress Reporting Methods

In today’s contracting environment, construction owners are increasingly challenging themselves and contractors to expedite project delivery, without sacrificing the quality of construction. Alternative payment methods can be an effective technique in aligning payment approaches with project and customer goals. Through a review of literature this paper provides a snapshot of the use of alternative payment strategies in the U.S., including lump sum and milestone payment, measurement by plan quantities, contractor invoicing, incentive/disincentives, alternative retainage, and contingency strategies. This paper contrasts these methods with the traditional payment system, summarizing how and where alternative payment methods are being applied. Also provided are examples from states where alternative payment strategies are being used. Additionally, the researchers identify advantages and disadvantages as perceived by state highway agencies and contractors, and how these methods affect data collection, work inspection, audits, adjustment of quantities or change orders, and prompt payment. Many state highway agencies have successfully incorporated the alternative payment mechanisms described. The owners discussed in this report have concluded that the advantages of using alternative payment methods clearly outweighed the disadvantages and the trend among highway agencies in the United States is towards greater use of alternative payment for selected projects.

Language

  • English

Media Info

  • Media Type: CD-ROM
  • Features: References; Tables;
  • Pagination: 20p
  • Monograph Title: TRB 86th Annual Meeting Compendium of Papers CD-ROM

Subject/Index Terms

Filing Info

  • Accession Number: 01045591
  • Record Type: Publication
  • Report/Paper Numbers: 07-1782
  • Files: TRIS, TRB
  • Created Date: Feb 8 2007 6:27PM