New road contracts are built for speed

December 10, 2011

A bidding method being used more often by the state is likely to reduce misery for motorists and merchants in the path of a highway project.

Project completion time is now a major consideration in reviewing road-work bids that were traditionally evaluated almost entirely on cost. It remains to be seen whether contractors will find the new method as lucrative.

road contracts Preparatory work is under way along northbound Allisonville Road at Interstate 465, where the bridge spanning the interstate will be replaced next year. (IBJ Photo/ Eric Learned)

At issue is the Indiana Department of Transportation’s “A+B” bidding. The first part of the bid represents the bidder’s price; the second, the cost of time involved.

Whichever contractor has the lower sum of A+B wins the bid.

“We’re exploring this more frequently,” said INDOT spokesman Will Wingfield.

INDOT touted the technique earlier this year when awarding a contract to Chicago-based Walsh Construction to reconstruct the Allisonville Road bridge over Interstate 465 and to reconfigure the interchange’s ramps.

Walsh proposes finishing the bridge in 110 days versus the more than 200 days INDOT engineers had previously estimated it would take.

INDOT’s use of the technique came after Castleton merchants complained a long-term closure of Allisonville Road could devastate their sales.

But the Allisonville Road project wasn’t the first use of the bidding method and isn’t likely to be the last.

INDOT dusted off the idea from previous years and used it recently when bidding a contract to widen I-65 between I-865 and Lebanon. The agency was taking heat from businesses and developers involved in the Anson commercial-residential development, near Whitestown, who worried about ramp closures.

The project, completed last year, reduced entrance/exit ramp closures at State Road 267 to two days from the 21 days estimated previously. For speeding up that and other parts of the project, Indianapolis-based Milestone Contractors received $110,000 in incentive payments.

What it cost Milestone to expedite the project is unclear; company President Ted Lucas did not return phone calls.

One typical way to speed up completion time is, “You work more overtime,” said Alvin Evans, chief operating officer of JH Rudolph & Co. in Evansville and board president of the Asphalt Paving Association of Indiana.

Evans said the asphalt association generally is supportive of INDOT’s bidding method. Besides, he added: “The attitude of the traveling public has changed. They want you to get in and get out quicker.”

That sentiment is especially true regarding the busy Allisonville interchange at I-465, which is a key artery to Castleton Square Mall and to the endless shopping centers along East 82nd Street.

Walsh’s $19 million bid for the Allisonville project narrowly beat bids of roughly $20.8 million from Milestone Contractors and $20.1 million from Rieth-Riley Construction. Walsh underbid on the total that took into account the time cost factor as well.

INDOT’s bid proposal asked contractors to multiply the number of closure days required for certain portions of the project by the “average daily road benefit” expressed in a dollar amount.

road contracts chartFor the Allisonville Road portion itself, INDOT set the factor at $20,000 per day. The sum of the itemized daily road benefit costs per bidder was added to each contractor’s bid as a way of establishing the successful bidder.

Walsh has an incentive to complete the Allisonville project even sooner. According to the bid package, it could earn up to $800,000 in incentives for completing the project sooner than expected. Conversely, there are penalties of up to $10,000 per day for not hitting its completion target.

But the cost-plus-time bidding technique doesn’t always work as planned.

Rieth Riley won one of the handful of other such contracts awarded under this method in recent years—the I-465 interchange at Keystone Avenue. The contractor was able to reduce southbound ramp closures to one day from 14 as estimate by INDOT, but utility relocation issues that cropped up later caused INDOT to have to change phasing.

“This [bidding technique] might not be ideal for all INDOT projects that close a ramp or a road or a bridge,” Wingfield said.

In fact, so far, the I-65 paving project is the only such project completed in recent years for INDOT to evaluate, so the verdict is still out on how well and when such bidding should be used.

Other such projects include a daring replacement of the U.S. 421 Milton-Madison Bridge over the Ohio River.

Walsh Construction had initially figured on a one-year bridge closure to replace the existing structure, but slashed that to 10 days. It is building a new bridge on temporary piers and plans to slide it atop the existing piers next spring, in what is touted as the longest bridge slide in North America.

INDOT has also used the A+B method in a contract with Kentucky-based Hall Contracting to repair the I-64 Sherman Minton Bridge. If all goes well, the completion will take no more than 135 days versus the 210 days initially expected. The bridge is set to reopen in March.•


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