00618791

Component

https://onlinepubs.trb.or...trcircular/386/386-001.pdf

This paper discusses worldwide trends in contracting for civil engineering construction work. It points out the growing awareness of the need to refine the basic documents on which contracting practice rests--the bidding documents and the contract itself--to ensure that the facility owner gets the work on time, to specification, and within budget; and the contractor realizes his expectation of profit, which is the primary reason for his being in business. Two areas that have been particularly subject to close scrutiny in recent years are discussed: the definition of risk, and the optimizing of incentives. The following conclusions are reached: The quality of bidding and contract documents is critical to the successful implementation of the project. Risks must be properly defined, and the remedies associated with those risks spelled out, in a way that enables the contractor to put his best bid forward. The owner must also be protected against irresponsibly low bids that later result in an excess of claims and controversy. Apart from insisting on clarity of the contract terms, the owner should also carry out a close scrutiny of the bidder's credentials and the responsiveness of his bid. There is a considerable resource of unused capacity and skill among contractors, which is available to assist owners in the management of contracts. When charting the course of a new development, new approaches should be considered by owners as valid options, together with the more traditional methods of bidding on the basis of existing designs and specifications.

This paper appears in Transportation Research Circular No. 386, Innovative Contracting Practices. Distribution, posting, or copying of this PDF is strictly prohibited without written permission of the Transportation Research Board of the National Academy of Sciences. Unless otherwise indicated, all materials in this PDF are copyrighted by the National Academy of Sciences. Copyright © National Academy of Sciences. All rights reserved.

p. 49-55

1991-12

Transportation Research Circular

Digital/other

Bids; Civil engineering; Construction industry; Contracting; Hazards; Incentives; Innovation; Optimization; Risk assessment; Trend (Statistics)

Administration and Management; Construction; Highways; Safety and Human Factors; I10: Economics and Administration; I50: Construction and Supervision of Construction

TRIS, TRB

Jan 31 1992 12:00AM

• AN OVERVIEW OF INCENTIVES AND DISINCENTIVES
• HISTORICAL BACKGROUND - LOW BID CONCEPT
• INNOVATIVE CONTRACTING PRACTICES