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Technical Memorandum on Innovative Contracting Methods Implementation Studies


Research Report

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Suggested Citation:
Choi, Kunhee and Eul-Bum (E.B.) Lee (2008) Technical Memorandum on Innovative Contracting Methods Implementation Studies. Institute of Transportation Studies, University of California, Davis, Research Report UCD-ITS-RR-08-53

The main objective of this study is to determine the effectiveness of alternative contracting strategies on aspects of project performance such as schedule and cost, in order to promote ways to apply the strategies effectively. A quantitative analysis that draws on 1,372 infrastructure improvement projects recently completed in California from 2000 to 2008 was conducted to achieve the objective. According to the analysis, alternative projects contracted with I/D and A+B represented 7% of all project establishments and 23% of all project allotment costs. The results of one way ANOVA analyses show that I/D projects held a decisive schedule-saving advantage over A+B and conventional projects, but that I/D also increased project costs significantly more than the others because of a higher frequency of contract change orders. The results of statistical analyses reveal a severe effectiveness problem with use of the A+B contracting strategy. When compared with conventional projects, A+B not only included extreme severe schedule overruns, but it also increased project costs far above the levels seen in conventional projects; both of these resulted from inaccuracies created by allowing contractors to bid on contract time. According to the analysis, the additional cost growth for utilizing I/D was recouped by reduced construction time, but this tradeoff was not seen in A+B projects.

Keywords: alternative contracting, effectiveness, schedule performance, cost growth, change orders, hypothesis testing, decision-support model