Contract Payment Provisions and Project Performance: An Analysis of Municipal Water and Wastewater Facilities

Abstract

In a continued effort to provide water and wastewater facilities, owners have been using a variety of contract pricing methods for the construction of new facilities. Increasing use of cost-plus-fee with a guaranteed maximum price (GMP) contract payment provisions along with the more traditional lump sum contract payment provisions has created a need to measure the effectiveness of these contract pricing methods. Through a detailed survey of public water and wastewater facility owners, performance data were collected to compare project performance based on schedule and cost growth measures. The results of this study indicate that contracts using cost-plus-fee with a GMP contract pricing provisions are more likely to have no schedule or cost growth as compared to projects with lump-sum provisions. Overall, the results of this study provide new data for water and wastewater projects that can be used by owners to improve future project performance.

Keywords

contract payment provisions lump sum cost plus fee design—bid—build design—build water infrastructure

Get full access to this article

View all access options for this article.

References

American Bar Association. (2000). Model procurement code for state and local governments. Chicago: Author.

American Council of Engineering Companies. ( 2005). Project delivery systems owner’s manual. Washington, DC: Author.

Associated General Contractors . (2004). Project delivery systems for construction. Washington, DC: Author.

American Institute of Architects. (2005). Construction manager at-risk state statute compendium. Washington, DC: Author.

Beard, J. , Loulakis, M. , & Wundram, E. ( 2001). Design-build: Planning through development. New York: McGraw-Hill.

El Wardani, M.A. , Messner, J.I. , & Horman, M.J. ( 2006). Comparing procurement methods for design-build projects . Journal of Construction Engineering and Management , 132, 230-238.

Gransberg, D.D. , Badillo-Kwiatkowski, G.M. , & Molenaar, K.R. (2003, June). Project delivery comparison using performance metrics. 2003 Transactions , AACE, International, Orlando, FL, pp. DRM 02. 01-02. 06.

Hale, D.R. , Shrestha, P.P. , Gibson, G.E., Jr. , & Migliaccio, G. C. (2009). Empirical comparison of design/build and design/bid/build project delivery methods. Journal of Construction Engineering and Management, 135, 579-587.

Hinze, J. ( 2001). Construction contracts (2nd ed.). New York: McGraw-Hill.

10.

Konchar, M. , & Sanvido, V. ( 1998). Comparison of US project delivery systems. Journal of Construction and Management, 124 435-444.

11.

Ling, F.Y.Y. , Chan, S.L. , Chong, E. , & Ee, L.P. ( 2004). Predicting performance of design-build and design-bid-build projects. Journal of Construction Engineering and Management , 130, 75-83.

12.

Molenaar, K.R. , Bogus, S.M. , & Priestley, J.M. (2004). Design/build for water/wastewater facilities: State of the industry survey and three case studies. Journal of Management in Engineering, 20, 16-24.

13.

Rosner, J.W. , Thal, A.E. , & West, C.J. ( 2009). Analysis of the design-build delivery method in Air Force construction projects. Journal of Construction Engineering and Management, 135, 710-717.

14.

Trauner Consulting Services. (2007). Innovative procurement practices alternative procurement and contracting methods . California Department of Transportation Report No. 53A0104, Sacramento, CA.