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A+B Bidding

Introduction

Project Selection

Pre-Bid Procedures

Background Information
     

Introduction


A+B bidding is a method of rewarding a contractor for completing a project as quickly as possible. By providing a cost for each working day, the contract combines the cost to perform the work (A component) with the cost of the impact to the public (B component) to provide the lowest cost to the public.

A+B bidding is a cost-plus-time bidding procedure. The low bidder is selected based on a combination of the traditional contract unit price items based bid (A) and the time component proposed by the bidder to complete the project or a critical portion of the project (B). The time to complete the project (B) is assigned a monetary value and combined with the contract items based bid (A) to select the contractor. The bidder with the lowest overall combined bid (A+B) is awarded the contract. In the actual contract, the contractor will only be reimbursed for unit items (A). The time allowed to complete the project is set at the bidders time component (B).

Contractor

Bid Amount

No. Days

Road User Cost

Combined

A

$4,300,000

130

$12,000

$5,860,000

 

B

$4,900,000

110

$12,000

$6,220,000

 

C

$4,450,000

115

$12,000

$5,830,000

Combined Low

In the example above, Contractor C had the lowest combined total. A contract of $4,450,000 would be awarded to Contractor C with 115 working days. WSDOT is willing to pay a higher premium to Contractor C for a lower overall public impact.

On certain projects there may be a faster way to perform the work that has a slightly higher cost increment. Under the traditional bidding mechanisms, the contractor cannot plan to use this method during the bid procedures and remain competitive.

Under the A+B method of contracting, WSDOT contractually recognizes that there is a monetary value for each working day that can be eliminated from the contract. Further, a contractor who can work faster, at a higher cost, may provide the best value to the public.

A+B bidding should not be used on all contracts. When the allowable traffic restrictions are such that there is only one way to perform the project, WSDOT designers should simply state the allowable contract time. Examples of projects that could be considered for A+B bidding include:

  • Widening projects where permanent traffic control is to be set up for an extended period of time.
  • Projects which have multiple activities occurring which don't necessarily have to be done sequentially.
  • Projects where the contractors presence/activities will impact traffic regardless of whether traffic control is set up.
  • Projects which allow alternate solutions where one solution may take significantly less time to construct but designers are hesitant to specify a proprietary solution.
  • Projects in which innovative solutions by the contractor are sought (specialty work) which may be beyond WSDOT designer's expertise.

Incentive/disincentive (I/D) provisions may also be used to ensure early completion and discourage unbalanced bidding.
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Project Selection Criteria for A + B Bidding



The following is a list of potential criteria that should be considered prior to a designer choosing an A+B selection mechanism for a project.

  • Traffic restrictions, lane closures, or detours are likely to result in significant user costs. The contractual incentive of the "B" component cannot be readily apparent if the value is too low. On lower volume roads, with acceptable detours, user impacts are not likely to be high enough to justify selecting a higher priced project.
  • Significant impacts to the local community or economy during construction warrant expediting the total length of the project. Some projects, despite their location on lower volume roadways, will have significant impacts on the local economy. In these cases a designer may decide that the potential to minimize the economic impacts justify the additional cost of acceleration.
  • Traffic control staging, using specialized equipment or methods, can be structured to maximize a contractor's ability to reduce the time for completion at a reasonable increase in cost. This potential staging should be one that designers are hesitant to specify as it may reduce competition. For example, one competitor has an established plant adjacent to the project which could make access to the workzone more efficient and thereby potentially shorten the work window. Specifying the use of a sole-source in this instance would likely not provide a competitive price.
  • The project is relatively free of utility conflicts, design uncertainties, right-of-way conflicts, or other issues, that may impact the award date or critical project scheduling, but remain outside of the contractor's control. Items that are outside of the contractors control but may impact the overall project delivery could make it exceedingly risky for a contractor to guarantee an early delivery.
  • WSDOT seeks contractor expertise to facilitate an early completion. In some cases expertise within the contracting community may be able to provide a more efficient solution to a problem. Specialized work and mechanical/electrical projects could potentially fall within this category. 

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Pre-Bid Procedures

Prior to bidding, WSDOT designers should investigate the feasibility of proposed construction procedures and identify any workable alternative approaches. Consider outreach to the contracting community, particularly when potential specialty work is being contemplated.

Identify potential third party (railroad, utilities, etc.) issues and take steps to mitigate any conflicts. Involvement and buy-in of the Project Construction Office is critical to the success of this process. Any potential time risks should be within the control of the contractor. Involve the Construction Project Engineer in any decision regarding contract time.

When specifying A+B bidding WSDOT designers should avoid the temptation to reduce the maximum allowable time component down to impossibly low threshold. It should be recognized that, by putting a value on time, the best value bid might provide a lower unit price but require additional time.

In order to maintain a level playing field for bidders, open meetings to all interested bidders. One way of doing this is to make an announcement in the weekly Notice to Contractors at least three weeks prior to the meeting. Contact Pre-Contract Administration in WSDOT Headquarters at (360) 705.7017. Items to be considered and discussed include:

  • Feasibility - The use of A + B bidding will allow WSDOT to realize the defined project goals effectively and within desired time constraints at an acceptable cost.
  • Alternative Approaches - Determine if alternative approaches can be used in the project. If only one approach is determined to be feasible, require it in the contract.
  • Third Party Conflict Resolution - The details of potential third party conflicts involving utilities, railroad agreements, environmental/archaeological issues, hazardous materials, public support issues, and other potential projects are addressed in a constructability review, and a plan worked out to mitigate the development of such conflicts.
  • Assessment of Risk - Before a decision is made, the construction project office should carefully review the PS&E to determine that there will be few, if any, changes in the contract. If a contract has a large number of change orders, it is likely that any premiums paid by WSDOT to the contractor will be lost through contract negotiations on changes.

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Background Information

Consideration for A+B Bidding

The considerations needed to determine if the project lends itself to A+B Bidding is the risk in using this type of tool is associated with changes and delays beyond the contractor's control. Contract time will have to be a consideration with regard to every change order. One way to reduce the chance of problems is to sort out the details of potential third party conflicts involving utilities, railroad agreements, environmental/archaeological issues, hazardous materials, biohazards, public support issues, and other potential problems. Address and mitigate these prior to construction.

Consider whether a contractor can accurately predict the durations of all activities for the project at the time of bid. Larger, more complex projects may not be appropriate.

A+B bidding potential for increase cost.

Potentially, A+B contracts can increase the construction cost. On a standard project, a contractor may see an opportunity to reduce the total impacts. A shorter duration solution may increase the primary item cost, but the reduction in impacts would reduce the overall traffic control cost. As the contractor does not share in the savings on traffic control, they are not likely to bid the shorter duration solution.

Designers should anticipate that there will be a cost for the reduction in days. Whether through acceleration, aggressive management of subcontractors, or specialty equipment, it is likely that the construction price will increase. In no case will the project cost increase greater than the incentive (road user benefit) being offered.

WSDOT construction engineering/inspection costs should be reduced due to the anticipated increase in multiple activities occurring at the same time coupled with the reduced amount of traffic control being used.


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Safety Impact

Safety cannot be allowed to be impacted. Enforcement of the approved Work Zone Traffic Control Plans will remain with the Project Office.

Number of days for contractor

The contractor may be given a minimum number of days. The maximum amount of road user benefit costs would be provided in the special provision.

Change orders (added and deleted work) can effect A+B contracts

Change Orders will have to address lane rental individually. If a change requires additional traffic impacts, the amount specified in the contract will have to be modified as well.

How Credit is used with A+B contracts

The A+B specification identified time units in terms of working days. These working days, are established in the contractor's initial bid. The lowest combination of the construction cost combined with the time units required establishes the winning bid.

Once the contract is awarded time credits are tracked much like working days. Should a contractor go over the amount bid, the working days will continue to be charged. The unit item "Working Days - Additional" is included in the contract and entries made based upon an established value. These units are deducted as a standard item.

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