Time-related contract clauses are primarily designed to encourage contractors through incentives and disincentives to complete construction projects on or ahead of schedule. Highway agencies have gained extensive experience with the application of incentives and disincentives. Agencies typically use work zone road user costs (WZRUCs) as an economic and legal basis to establish incentives and disincentives. It is common practice to estimate the value of incentives or disincentives by applying a multiplier or discount factor to a sum of the estimated WZRUCs and other owner costs. There is adequate literature available on how to estimate WZRUCs and establish incentives and disincentives; however, there is little guidance on the selection of discount factors. In addition to reemphasizing the importance of adequately compensating the contractor for accelerating construction through incentive mechanisms, this paper presents a conceptual framework for effective schedule management that incorporates the costs of construction acceleration and more-objectively estimated discount factors. This study proposes a more objective way of estimating discount factors, such as a project economics—related return on investment assessment, the project work zone disruption risk, the WZRUCs, and the owner and contractor construction engineering costs.
Publisher: Transportation Research Board
Publication Date: 2017
Full Text URL: Link to URL
Publication Types: Books, Reports, Papers, and Research Articles
Topics: Construction Management; Costs; Disincentives; Incentives; Work Zones