Incentive/disincentive provisions in highway contracts

The objective of the study reported in this paper is to compare contracts that include incentive/ disincentive (I/D) provisions against contracts that do not include I/D provisions, with regard to the consequences of these measures. The study involves both completed and ongoing highway and bridge renovation/rehabilitation projects undertaken by the Illinois Department of Transportation (IDOT). After a general overview of I/D implementation, the results of a study that covered 28 I/D contracts (contracts that included I/D provisions) and 29 non-I/D contracts undertaken by IDOT during the five-year period 1989-93 are presented. The major finding of this study is that the majority of the I/D contracts are completed on time or sooner, which supports the use of I/D provisions in these contracts. However, this saving in contract duration seems to be accompanied by increased project costs most of the time.