U.S. Department of Transportation
Federal Highway Administration
1200 New Jersey Avenue, SE
Washington, DC 20590
Traditional methods of contract administration have remained virtually unchanged in the U.S. public highway industry for more than 50 years. The traditional system of contract administration involves public funding of highway projects in a "pay-as-you-go" manner in combination with a two-step process of procurement that clearly separates design from construction. Design, for the most part, has been done by the public highway agencies and construction has been procured from the private sector in a low-bid approach. The traditional method is time consuming because of the linear nature of the design and construction process. The separation of design and construction, in conjunction with the low-bid environment, has often led to a culture of claims and substantial cost increases. Although tested and familiar, the traditional method of construction administration in the U.S. highway industry is under increasing pressure to undergo changes to better meet increasing infrastructure needs.
In the past 10 to 15 years, public agencies have begun to employ a wider variety of contracting procedures as a result of increasing traffic, deteriorating infrastructure, and diminishing staff. The growing interest in alternatives is evidenced by the number of participants in the FHWA Special Experimental Project - No. 14, the Federal Transit Administration's (FTA) turnkey program and in the American Road and Transportation Builder's Association (ARTBA) committees on public-private ventures. Even with the most generous estimates, however, only a very small percentage of current U.S. contracts fall into the alternative contracting category. Recognizing that European countries have significantly more experience in the use of alternative contracting procedures, a team of Federal, State, private-sector and academic researchers was organized to observe and document those contract administration processes that might have value to the U.S. industry.
The purpose of the scan trip was to observe and document alternative contracting practices in Europe in order to transfer best practices and lessons learned to the U.S. highway industry. The American highway community has a high level of interest in improving contracting procedures and practices throughout the United States. The widespread experience gained by European countries offers the United States valuable insight into the problems and solutions associated with using these innovative techniques. Because of sufficient similarities between Europe and the United States, many concepts should be transferable.
In some sense, this scanning tour was a followup to the 1994 Contract Administration Techniques for Quality Enhancement Study Tour (CATQUEST) and to asphalt and concrete paving scans in the early 1990s. Because such a large number of the findings from the CATQUEST study are being employed in the United States, the FHWA/ AASHTO/NCHRP consortium on international programs saw value in exploring the subject further. The 2001 contract administration tour was formed in part to see what subsequent lessons the Europeans had learned on the topics identified in the 1994 CATQUEST visit and in part to seek new, related topics that could impact the U.S. highway industry in a similar manner as those discovered 7 to 10 years ago.
The scope of study involved traveling to European host countries with the most activity in the areas of interest, to research and document best practices that might benefit U.S. practitioners. The specific areas of interest included innovative financing, alternative contracting techniques, design-build, concessions, performance contracting, and asset management. Upon returning to the United States, the team was charged with disseminating the results and implementing those findings with the greatest potential to improve the industry.
Given the limited time afforded to the study team during the visits to the host countries, it is important to note that this report does not include all of the contract administration techniques used in the countries visited. Instead, this report intentionally focuses on programs and techniques that the study team believes have the greatest potential benefit for further consideration and implementation in the United States.
The contract administration scan was selected by the Transportation Research Board's (TRB) NCHRP Panel 20-36 from a number of competing proposals for the 2001 funding cycle. Upon acceptance of the proposal, two co-chairs were named as representatives for the funding agencies: David Cox, Oregon Division Administrator for the FHWA, and Ron Williams, State Construction Engineer of the Arizona DOT for AASHTO. They in turn chose representatives from the public and private sectors to represent a cross-section of the industry, as follows:
David O. Cox (Co-Chair)
James J. Ernzen
Arizona State University
Charlie Franklin (Frank) Gee
Gregory G. Henk (Representing ARTBA)
HGB Flatirons, Inc.
Jeff W. Kolb
FHWA, California Division
Tanya C. Matthews
TMG Construction Corp.
Keith R. Molenaar (Report Facilitator)
University of Colorado
North Carolina DOT
Nancy C. Smith
Nossaman, Guthner, Knox & Elliott, LLP
Gary C. Whited
Ronald C. Williams (Co-Chair)
John W. Wight (Representing ARTBA)
The next step was to conduct a "desk scan" to select the most appropriate countries to visit. The objective of the study was to maximize the time spent by the panel in reviewing topics of interest. This desk scan employed a three-tier methodology of literature review, expert interviews, and synthesis. This methodology provided for data collection from government agencies, professional organizations, and experts abroad who are most advanced in the selected topics. The desk scan was very useful. For instance, none of the team members had suggested Portugal as a country to visit, nor had any of the previous scans visited Portugal. Because of its innovative and extensive concession program, funded in part by the European Investment Bank (EIB), Portugal was revealed to be one of the European countries most active in the contract administration topics of interest. For a copy of the 2001 Contract Administration Desk Scan, please contact the Office of International Programs with the FHWA (www.international.fhwa.dot.gov).
After the host countries were selected through the desk scan, the team finalized a "panel overview" document. The panel overview was sent ahead to the host countries to prepare them for the U.S. delegation. The panel overview explained the background of the study, the scope of the study, the sponsorship, team composition, topics of interest, and the tentative itinerary.
Prior to conducting the scan tour, the team prepared a comprehensive list of amplifying questions to further define the panel overview and also sent those questions ahead to the host countries. The process of assembling the final list of questions took several iterations, with a final team meeting 8 months prior to the scanning tour. Some of the host countries responded to these questions in writing prior to the scanning tour while others used the questions to organize their presentations. An attempt was made to craft the questions precisely enough that the team would not miss any information that it anticipated, yet open-ended enough that new ideas—not envisioned by the U.S. scan team—could be brought to light by the host countries. The team was successful in its assembly of the questions, as seen by the answers to all of the questions and new topics added as documented throughout this report. Appendix C contains a copy of the amplifying questions that were sent to the host countries.
The delegation traveled to Europe from June 6-24, 2001. The visit consisted of meetings with highways agencies and practitioners as well as site visits. The scan team visited:
The report combines definitions and illustrative case study examples of contracting techniques in Europe with critical analysis of the applicability of these techniques to U.S. contracting. Whenever possible, U.S. parallel examples are provided to amplify those techniques that are directly applicable. The report is organized in the areas of alternative financing, contracting techniques, design-build, concessions, performance contracting, and asset management, as shown in the figure below.
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