The use of incentives in highway construction to encourage higher standards of quality has been limited. "Just build it the way the plans and specifications show" has been the philosophical approach over the years. This is not necessarily a bad approach, but the old adage "if it isn't broke, don't fix it," is bothersome in this age of enlightened technology. Maybe there is a better way to encourage quality and workmanship.

Incentives are defined as -"...stimulating one to take action, work harder; encouraging, motivating."

Whereas, the concept of "bonus" as related to achieving excellence has been confused with incentives. Bonuses are anything given in addition to the customary or required. The difficulty with the use of bonuses is that something is being given without any value being received and that public funds cannot participate unless value is received. However, where incentives can be associated with "added value," then the public trust can be served.

In the late 1970's, serious discussions began among several State DOTs and the AASHTO Subcommittee on Construction about ride quality and incentives for quality violated the basic ideals of the competitive bidding process in the U.S.

Our competitive bidding system in its simplest definition is - "the contract is awarded to the lowest responsible bidder." This process applies, for the most part, when state and/or federal highway funds are used. Research of the Congressional record reveals a keen interest by Congress and state legislatures in obtaining a quality product. The word "responsible" was used to define the type of builder desired, which translates to a bidder who has the equipment, experienced personnel and know-how to build a quality product.

RESPONSIBLE=QUALITY

It is through the specifications that specifiers define what quality is desired, keeping in mind the competitive bidding process is designed so the "average bidder" can compete. It is important to note the system provides for maximum competition, not guaranteed awards. The competitive bidding system can be diagramed as follows:

LOWEST RESPONSIBLE BIDDER > MEETS SPECIFICATIONS > QUALITY PERFORMANCE

Until recent times there was no procedure for encouraging excellence or achieving higher standards than contained in the specifications. This is where the use of incentives can enhance quality. If it can be demonstrated that paying incentives for "added value" improves performance and that it is in the public interest, then incentives should be included In the specifications.

ADDED VALUE=IMPROVED PERFORMANCE

In support of this apparent paradigm shift towards the use of incentives that is underway, the following recent policy excerpts have been initiated by national associations and groups:

* Price incentives and disincentives for items affecting performance commensurate with the value delivered. (ACPA policy: 12/3/91).

* Promote the designing of highways for longer life and better performance. PASHTO-AGC-ARTBA Joint Committee; 9/1/92).

* Incentives that reward achievements and innovations in providing a demonstrated level of value - added quality. (National Policy on the Quality of Highways; 11/10/92).

These are only a few excerpts that indicate rewards for excellence (which add value and extend life) are being seriously considered by national leaders.

The trend today is toward specification related to performance. This concept fits nicely with the use of incentives tied to "added value." In the case of pcc pavements, the characteristics related to performance which the contractor can control are:

* Ride

* Thickness

* Water Cement Ratio

* Strength

Therefore, the PASHTO pavement design equations as prediction models, the following "added value" table can be developed:

The "added value" percentages shown reflect increased load carrying capacity. The current maximum limit on incentives for any one item suggested by the PASHTO Guide Specifications Is five percent (5%). This was established arbitrarily in 1979 as an experimental top limit. There is no research available to support this value or any other value. The ACPA will be recommending new incentive pay schedules in 1993, when an expanded technical bulletin will be available on this issue.

If we use the "added value" table In conjunction with the current limits on incentive pay, the following real example can be shown:

In this example, the load carrying capacity is more than doubled, and an additional 15% of the unit bid price would be paid to the contractor. As far as the public interest is concerned, this relates to a cost benefit of 8:1.This is a very significant return on investment and definitely in the public interest. Additional case studies of award winning projects will be reported in the pending technical bulletin. It can be concluded that using incentives to reward excellence is in harmony with the competitive bidding process.

By using incentives:

* The public interest is served.

* Pavement performance is enhanced.

* The competitive bidding process is maintained.

* Contractors are rewarded for excellence.

* A positive attitude toward quality is achieved.

* A project partnership is developed.

"YOU INSPIRE PERFORMANCE, YOU DON'T FORCE IT"

Yes, hard work, motivation and encouragement are elements of achieving excellence. This can be accomplished by using incentives - pride in workmanship through education and reward.

EDUCATION + REWARD= EXCELLENCE IN QUALITY

A well trained workforce, who are rewarded for excellence will produce far beyond the average requirements and they will protect the public trust. When the public interest is served, the competitive bidding process is never tarnished.

by Sanford LaHue, ACPA