Valuing the Warranty Ceiling Clause on New Mexico Highway 44 Using a Binomial Lattice Model

In 1998 the New Mexico State Highway and Transportation Department (NMSHTD) agreed to pay $60 million for a 20-year pavement warranty on their Route 44 project (NM 44, now US 550). The warranty includes a ceiling clause that caps total expenditures at $110 million. As the first long-term highway warranty in the United States, the transaction set a controversial precedent that parties interested in innovative highway contracting, including other state department of transportations (DOTs), the USDOT, sureties, and contractors, view as a test case for evaluating pricing and cost-effectiveness. An interim audit report published by the State of New Mexico [Abbey (2004). Rep. to the Legislative Finance Committee, State Highway and Transportation Department, Santa Fe, N.M.] provides invaluable fiscal projections and challenges the cost effectiveness of the $60 million expenditure. This paper presents an independent analysis of the effectiveness of the warranty clauses. Based upon NMSHTD data, the analysis contends that $60 million was a fair cost of the 20-year pavement warranty at the time of acceptance if the expenditure ceiling is not considered. Furthermore, this paper argues that the ceiling on expenditure can be valuable. Using the real options approach, the paper evaluates the warranty ceiling clause on NM 44 and some policy suggestions are discussed.     

Guidelines for Warranty Contracting for Highway Construction

This paper presents guidelines for implementing the construction warranty contracting method in the highway construction industry. A logical, step-by-step method for effectively applying the warranty contracting program for use in the highway construction industry is developed. Relevant issues that may present obstacles to the implementation are addressed, while the best practices, compiled from an evaluation of the current industry’s state-of-the-art practices, will assist an interested state highway agency in creating a warranty specification. In performing this research, the current use of warranty specifications among state highway agencies was examined, and an in-depth case study of the Wisconsin Department of Transportation’s warranty program was conducted.     

Evaluation of an Emerging Market in Subsurface Utility Engineering

Subsurface utility engineering (SUE) is a fast growing industry segment in the civil engineering arena. Subsurface utility engineering is gaining credibility as a significant tool to reduce the risk from informational uncertainty associated with underground facilities in a construction project. Subsurface utility engineering can minimize the risk primarily through mapping existing underground utility facilities, utilizing surface geophysical technologies, surveying and data management systems. This paper presents a comprehensive evaluation of SUE to facilitate a better understanding of this emerging industry by the many in the construction domain that are relatively unfamiliar with it. Topics investigated include quality levels in SUE, incorporation of SUE strategy at different stages in the construction project, and cost–benefit analysis of SUE based on 71 actual construction projects where SUE was employed. In addition, the results obtained from questionnaire surveys of State Departments of Transportation (DOTs) and the SUE industry are analyzed, which reveal the trend of state DOTs in the use of SUE and various aspects of SUE business in private sectors.     

Warranting Quality of Steel Bridge Coating

Civil infrastructure systems, particularly the highway and bridge systems, have become a focal point of attention both nationally and among researchers. Because many of the nation's bridges have been identified by the Federal Highway Administration as deficient, more attention needs to be given to the quality of bridge coatings, which act as inhibitors of bridge deterioration. This paper represents an extended study by the authors to establish and implement contract warranties for steel bridge coatings. First, the earlier activities in warranting the quality of bridge coatings are reviewed. Next, the writers focus on the basic categories of a steel bridge coating warranty, especially the warranty period and defects for which the contractor is held responsible. The paper further illustrates the functioning of a hybrid model for nondestructive quality assessment of steel bridge coatings. The model provides objective and quantitative analysis to improve the coating quality assessment process. This approach prevents potential conflicts that might arise between the state Department of Transportation and the bridge-coating contractors during the warranty implementation.     

Environmental Considerations for a Proposed Tolled Highway Project

As federal dollars available for highway projects are tightened and as demand for more highway capacity continues to increase, transportation officials seek more innovative financing methods. One of the more common methods has been to toll new highway projects. Recently, tollways also have been considered for existing, free-access roadways, i.e., nontolled, infrastructure segments. Transportation planners must consider that this so-called “innovative” financing technique, i.e., the decision to toll existing and new roadways, is subject to provisions of the National Environmental Protection Act (NEPA). This renewed interest in tolling mandates that transportation planners revisit the requirements of NEPA, and in this context, its applicability to decisions to toll roads for financing of highway projects. NEPA requires that, prior to construction of a bridge or highway, the head of the federal agency that is committing funds to the project must evaluate the effect of the project on the human environment; the effect of the project on the habitat of an endangered species, which implicates provisions of the Endangered Species Act; the effect of the project on any historic properties in the vicinity of the project, which implicates provisions of the National Historic Preservation Act, and the effect of the project on minority or low-income-populations, called environmental justice, which implicates Title VI of the Civil Rights Act of 1964. In this paper, we analyze the requirements of NEPA as they relate to Title VI of the Civil Rights Act of 1964. The interrelation of the two acts now mandates that the transportation planner consider an environmental justice concept in planning for highway and bridge projects. The intent of this paper is to provide some guidance to transportation planners in light of the environmental justice issues implicated by Title VI of the Civil Rights Act of 1964 as they begin the planning stages for highway and bridge projects.     

Stochastic Modeling for Pavement Warranty Cost Estimation

This paper presents a cost estimation model for long-term pavement warranties with multiple distress indicators. One application area for such warranties involves performance-based specifications (PBSs). In contrast to traditional approaches, PBS gives contractors the flexibility to select construction methods, materials, and even design. However, the contractors then must warrant the performance of their work for a specified period of time. Therefore, an accurate estimation of the risks associated with the warranty is a significant cost issue for any contractor to cover potential risks while still being competitive in bidding. Quantitative evaluation of the cost of risk incurred by the warranty has several difficulties. The deterioration of a highway project is a complex process, which is affected by pavement structure, material, traffic load, and weather conditions. Based on a probabilistic risk analysis of failures of performance indicators, the resulting model can estimate the warranty cost at a detailed level. The application of the model has been demonstrated via a numerical case study using long-term pavement performance data.     

Legal Environment for Warranty Contracting

Due to the public expectation of better road performance accompanied by economic development and population growth over the past decades, state highway agencies have been under intense pressure for continuous improvement in the quality and cost efficiency of transportation projects. To meet these challenges, state highway agencies must seek innovative approaches to deliver highway projects, including outsourcing some of the agency’s functions and shifting maintenance responsibilities to contractors. Many states have implemented alternative contracting methods in project programming and execution to provide lasting and functional roadways at the optimum life-cycle cost to the public. The performance warranty is one of the innovative practices that has been declared operational by the Federal Highway Administration since 1996. Use of warranties in some states has required changes to state legislation and agency regulations. This paper discusses the laws and regulations needed to successfully incorporate performance warranties into current contracting practices and avoid litigation. The state of Alabama is used as an example of a state considering the use of performance warranties. Proposals for laws and regulations will be outlined.     

Longitudinal Study of Innovative Contracting Practices in State Departments of Transportation

Gathering content expertise both from published sources and from recognized highway construction professionals, a questionnaire was created to determine the use of 16 innovative contracting practices in the highway construction industry. The major practices include: build-own-operate-transfer, contractor prequalification, design/build, dispute resolution, guarantee/warranty, partnering, value engineering, among others. Using the questionnaire, a 10-year longitudinal study gathered information from U.S. Departments of Transportation in 1996, and then again in 2007. Statistical analysis of the 43 state responses found that 10 of these practices have seen significant increase, but the perceived benefits have increased very little, and one practice has seen a significant decrease in perceived benefit.     

Impact of Federal Environmental Requirements on Proposed Highway or Bridge Project

Prior to construction of a bridge or highway, the National Environmental Protection Act (NEPA) requires an evaluation of the effect of the project on the human environment. The purpose of NEPA is to require the head of the federal agency that is committing funds to the project to consider its actions before deciding to proceed with the project. This paper will analyze the general provisions of NEPA to remove some of the mystery related to the environmental concerns raised by bridge or highway projects and to emphasize to transportation planners that these concerns must be addressed prior to beginning a major bridge or highway project. The intent of this paper is to provide some guidance to transportation planners in light of these statutes as they begin the planning stages for highway and bridge projects.     

Rating and Reliability of Existing Bridges in a Network

Currently, the load rating is the method used by State DOTs for evaluating the safety and serviceability of existing bridges in the United States. In general, load rating of a bridge is evaluated when a maintenance, improvement work, change in strength of members, or addition of dead load alters the condition or capacity of the structure. The AASHTO LRFD specifications provide code provisions for prescribing an acceptable and uniform safety level for the design of bridge components. Once a bridge is designed and placed in service, the AASHTO Manual for Condition Evaluation of Bridges provides provisions for determination of the safety and serviceability of existing bridge components. Rating for the bridge system is taken as the minimum of the component ratings. If viewed from a broad perspective, methods used in the state-of-the-practice condition evaluation of bridges at discrete time intervals and in the state-of-the-art probability-based life prediction share common goals and principles. This paper briefly describes a study conducted on the rating and system reliability-based lifetime evaluation of a number of existing bridges within a bridge network, including prestressed concrete, reinforced concrete, steel rolled beam, and steel plate girder bridges. The approach is explained using a representative prestressed concrete girder bridge. Emphasis is placed on the interaction between rating and reliability results in order to relate the developed approach to current practice in bridge rating and evaluation. The results presented provide a sound basis for further improvement of bridge management systems based on system performance requirements.     

Long‐Range Forecasting Highway Construction Costs

In the process of decision making for design and execution of highway construction projects, long‐range cost forecasting is one of the most significant and complicated problems. This paper describes the development of a model that enables the user to make long‐range cost projections, taking into consideration general characteristics of the highway construction industry, as well as pertinent local conditions. The model presented uses conventional statistical methods to represent the main categories of typical jobs in the highway construction industry. From these categories, a composite model is created by assigning different weights to the input elements costs and then choosing a series of indicators to predict price trends for each separate element of the composite model. Use of this model reveals that bid volume in a certain area is a factor that has significant influence upon cost forecasts. This paper is accompanied by a case study based on actual data from highway construction projects performed for the Florida Department of Transportation in the years 1968–1981.     

Environmental Mandates for a Proposed Highway or Bridge Project When the Habitat of an Endangered Species and/or Historical Properties Are in the Vicinity

Prior to beginning a major highway or bridge project, the transportation planner must address requirements set out in the National Environmental Protection Act (NEPA). NEPA requires a specific evaluation of the effect a major highway or bridge project will have on the environment. This evaluation must include consideration of the effect the project may have on the habitat of an endangered species, which implicates provisions of the Endangered Species Act (ESA) and on historical properties in the vicinity of the project, which implicates provisions of the National Historic Preservation Act (NHPA). This paper presents requisites of NEPA that integrate the requirements of ESA and NHPA into the initial evaluation of the impact on the human environment of a major highway or bridge project. The intent of this paper is to provide guidance to transportation planners in light of NEPA, ESA, and NHPA statutes as they begin the planning stages for highway and bridge projects.     

Compliance Guide for a Proposed Highway Project to Meet National Environment Protection Act Requirements

The National Environmental Protection Act (NEPA) requires that, prior to construction of a highway, the head of the federal agency that is committing funds to the project must evaluate the effect of the project on the human environment; the effect of the project on the habitat of an endangered species, which implicates provisions of the Endangered Species Act, the effect of the project on any historic properties in the vicinity of the project, which implicates provisions of the National Historic Preservation Act, and the effect of the project on minority or low-income populations, called environmental justice, which implicates Title VI of the Civil Rights Act of 1964. In this paper, we provide an example guide for transportation planners to follow as they comply with NEPA and the related acts in the beginning planning stages for a highway project.     

Current Design and Construction Practices of Bridge Pile Foundations with Emphasis on Implementation of LRFD

The Federal Highway Administration (FHWA) mandated the use of the load and resistance factor design (LRFD) approach in the U.S. for all new bridges initiated after September 2007. This paper presents the bridge deep foundation practices established through a nationwide survey of more than 30 DOTs in 2008. Highlighted by this study are the benefits of the LRFD as well as how the flexibility of its usage is being exploited in design practice. The study collected information on current foundation practice, pile analysis and design, pile drivability, pile design verification, and quality control. Since this is the first nationwide study conducted on the LRFD topic following the FHWA mandate, the status on the implementation of LRFD for bridge foundation design was also examined. The study found that: (1) more than 50% of the responded DOTs are using the LRFD for pile design, while 30% are still in transition to the LRFD; and (2) about 30% of the DOTs, who use the LRFD for pile foundations, are using regionally calibrated resistance factors to reduce the foundation costs.     

Experimental Assessment of Dynamic Responses Induced in Concrete Bridges by Permit Vehicles

Results from experimental testing of three permit vehicles are presented in the paper. The selected heavy vehicles, which require permits from state DOTs, included two tractor-trailer systems and a midsize crane. The vehicles were experimentally tested on popular existing speed bumps and on a representative highway bridge. The selected bridge was a reinforced-concrete structure constructed in 1999, located on the U.S. 90 in Northwest Florida. The bridge approach depression, combined with a distinct joint gap between the asphalt pavement and the concrete deck, triggered significant dynamic responses of the vehicle-bridge system. Similar dynamic vibrations were observed and recorded when the permit vehicles were driven over the speed bumps. Time histories of relative displacements, accelerations, and strains for selected locations on the vehicle-bridge system were recorded. The analysis of experimental data allowed for assessment of actual dynamic interactions between the vehicles and the speed bumps as well as dynamic load allowance factors for the selected bridge.     

Impact of Rainfall on the Productivity of Highway Construction

Heavy rainfall often leads to complete suspension of highway construction due to saturated and unworkable soil conditions. Therefore, quantifying the impact of rainfall on the productivity of highway construction is essential in preparing realistic schedules and cost estimates for the preconstruction stage and in analyzing weather-related claims for the postconstruction stage. This paper presents a decision support system for quantifying the impact of rainfall on productivity and duration of common highway construction operations, namely: earthmoving, construction of base courses, construction of drainage layers, and paving operations. The system incorporates a knowledgebase and a database. The knowledgebase includes if∕then type rules, acquired from experts in highway construction operations, and the database contains hourly records of weather parameters from the closest weather station to the construction site. The system, named WEATHER, is a software system that provides user-friendly interface, including menus, dialog boxes, and graphical capabilities to facilitate data input and output.     

Cost-Effectiveness Evaluation of Warranty Pavement Projects

Warranty contracts are expected to enhance product quality and service life at lower life-cycle cost. Recognizing that such benefits could be offset by the generally higher costs of warranties, an assessment of the relative cost-effectiveness of warranty contracts compared to their traditional counterparts is currently of great interest. Using pavement data from Indiana, this paper evaluates the costs, effectiveness, and cost-effectiveness of warranty and traditional contracts. Effectiveness was measured in terms of pavement condition and treatment service life. The paper determined that the warranty contracts generally had higher agency costs but produced pavements with superior condition and service life, and lower construction periods and work-zone user costs, compared to their traditional counterparts. Over a 5-year period, the warranty contracts were found to be 27–30% less cost-effective than their traditional counterparts. Over the long term, the warranty contracts were found to be 70–90% more cost-effective on the basis of service life and 58–65% more cost-effective on the basis of both service life and pavement condition. The study results suggest that the higher long-term cost-effectiveness of warranty contracts is more perceptible when both cost and effectiveness are viewed over the entire life of the pavement treatment and when both agency and user cost are used in the cost analysis. The paper discusses certain aspects of such comparative evaluation studies that could lead to biased inferences and calls for careful screening of warranty and traditional contracts for such studies.     

Computer Simulation Model: Construction Analysis for Pavement Rehabilitation Strategies

Most state highways in the United States were built during the 1960s and 1970s with an infrastructure investment of more than $1 trillion. They now exceed their 20?year design lives and are seriously deteriorated. The consequences are high maintenance and road user costs because of degraded road surfaces and construction work zone delays. Efficient planning of highway rehabilitation closures is critical. This paper presents a simulation model, Construction Analysis for Pavement Rehabilitation Strategies (CA4PRS), which estimates the maximum amount of highway rehabilitation/reconstruction during various closure timeframes. The model balances project constraints such as scheduling interfaces, pavement materials and design, contractor logistics and resources, and traffic operations. It has been successfully used on several urban freeway rehabilitation projects with high traffic volume, including projects on I-10 and I-710. The CA4PRS helps agencies and contractors plan highway rehabilitation strategies by taking into account long-life pavement performance, construction productivity, traffic delay, and total cost.     

Forecasting Construction Staffing for Transportation Agencies

When the volume of construction projects let to contract increases significantly, state departments of transportation must critically examine internal construction project management staffing capabilities and accurately forecast the manpower required to execute future projects. This paper describes the development of a model or process to forecast manpower requirements as a function of project type and cost for selected employee classifications. Using data from 130 recently completed highway construction projects and over 11,000 employee payroll entries, regression analysis plots were generated to predict overall manpower requirements for projects of a given type and cost. These overall requirements were then adjusted to predict manpower requirements for individual employee classifications using typical task allocation percentages obtained from questionnaire data. The output from the model serves as input into commercially available critical path method scheduling software to facilitate manpower planning and resource leveling.     

In-Service Evaluation of Cable-Stayed Bridges, Overview of Available Methods and Findings

This paper discusses advances in evaluation and health monitoring of cable-stayed bridges and available methods. Bridge engineers and highway administrators in the United States are gradually becoming more comfortable with cable-stayed bridges, and the past few years have seen a significant increase in construction of these elegant bridges in many parts of this great nation. In the last decade, several investigations have been directed to condition assessment of cable-stayed bridges and contributed extensively to advances in construction, design, and health monitoring of this type of structures. Results of these investigations have helped toward formation of a unified approach for in-service evaluation and problem solving of these aesthetic structures. This paper describes this approach with reference to sources for more detailed information. Additionally, discussed in this paper are a series of methods developed or tailored for evaluation of these unique structures. The paper also reviews the typical problems observed in the course of field evaluations for in-service cable-stayed bridges.