Methods for Identifying Best-Value Bid for Performance-based Maintenance Contracts

Abstract

Performance-based contracting (PBC) for roadway maintenance is relatively new among various alternative contracting options available at present and is increasingly drawing more attention from state Departments of Transportation (DOTs) and the contracting community. Because performance-based maintenance contracts extend over multiple years (typically 5-7 years) and shift performance risk to contractors, it is critical that contractors be selected based on a form of best-value method rather than on the conventional low-bid method. Currently, highway agencies use various methods for determining the best-value bid based on cost and technical scores. Five best-value bid identification methods that are already in practice by the state transportation agencies in Florida, Virginia, North Carolina, United Kingdom, and New Zealand were used as case studies for this research. These five methods were evaluated in terms of the agency’s willingness to pay for quality and the neutrality of these methods with respect to lowest bid and highest quality. To understand and describe the bid evaluation method, the agency can develop a willingness to pay (WTP) curve. This curve should represent the agency’s needs and budget, reflect their project characteristics, and accommodate associated performance risks. An Excel macro based software tool has been developed that automates these five best-value bid identification methods and also helps customize anyone of these options for any agency.