Probabilistic procedure for analyzing construction pay adjustment systems

Sofia M. Vidalis, Peter A. Kopac, Fazil T. Najafi

Research output: Chapter in Book/Report/Conference proceedingConference contribution

2 Scopus citations

Abstract

Statistical quality assurance specifications containing pay adjustment provisions for quality let the contractor decide what levels of quality to target during construction. A procedure and accompanying computer program have been developed to address the optimization of target quality levels. This dual-purpose procedure will help contractors intelligently set target quality levels and help highway agencies validate their quality assurance specifications and pay adjustment provisions. By using the proposed procedure, a contractor can answer the question, "What target quality levels will lead to maximum profit in my specific situation?" The informal procedure contractors currently use does not consider probability and risk. Also, by following the same proposed procedure by using its own data, an agency can answer the question, "What quality levels are the specifications forcing our contractors to deliver?" This important question must be properly answered for the agency to determine the impact of its pay adjustment provisions on contractors. An exercise is presented to compare the current and proposed procedures. The two procedures may identify different optimal target values, leading to sizeable differences in a contractor's profit.

Original languageEnglish (US)
Title of host publicationConstruction 2006
PublisherNational Research Council
Pages55-62
Number of pages8
Edition1946
ISBN (Print)0309099544, 9780309099547
DOIs
StatePublished - Jan 1 2006

Publication series

NameTransportation Research Record
Number1946
ISSN (Print)0361-1981

All Science Journal Classification (ASJC) codes

  • Civil and Structural Engineering
  • Mechanical Engineering

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    Vidalis, S. M., Kopac, P. A., & Najafi, F. T. (2006). Probabilistic procedure for analyzing construction pay adjustment systems. In Construction 2006 (1946 ed., pp. 55-62). (Transportation Research Record; No. 1946). National Research Council. https://doi.org/10.3141/1946-07