Alleman, D and Lee, E B (2020) Mitigating the legal challenges of imposing disincentives on nonperforming transportation projects. Engineering, Construction and Architectural Management, 27(10), pp. 2859-2891. ISSN 0969-9988
Abstract
Purpose: The publication presents an analysis of the cost and schedule performance of incentive/disincentive projects and case studies toward developing a systematic disincentive valuation process, with Construction Analysis for Pavement Rehabilitation Strategies (CA4PRS) software integration that aids agencies in minimizing the likelihood of court challenges of disincentives. Design/methodology/approach: From a California transportation database, the authors performed cost and schedule analyses of 43 incentive/disincentive (I/D) projects and case studies on four of those I/D projects. Interviewees included subject matter experts from transportation organizations to ensure applicability and maximum value-adding, and the process was implemented on ten California transportation projects and monitored for performance. Findings: The presented process mitigates the contractor's ability to claim disincentives as penalties in a court of law through the following: (1) all calculations are performed using project-specific bases, backed by estimations of actual incurred costs; (2) the CA4PRS software allows for estimation transparency and (3) the clarity of cost inclusions reduces any chances of “double-dipping” between disincentives and liquidated damages. Practical implications: Transportation agencies have historically faced legal challenges to their enforcements of disincentives. As agencies continue to apply disincentives on more megaprojects, contractors will likely attempt to pursue legal challenges more frequently. The presented process mitigates the likelihood of these challenges going to court and increases the accuracy and efficiency of disincentives. Originality/value: While there have been publications that discuss the legal challenges of imposing disincentives, they mainly provide guidelines and lack applicable processes. Existing literature that does present incentive/disincentive valuation process focuses on incentive valuations and neglects the disincentives' legal challenges. The following publication fills this gap by presenting an applicable disincentive valuation process for transportation projects which incorporates the guidelines for legal mitigation.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction planning; incentive/disincentive; information and communication technology applications; liquidated damages; risk management; road user costs; scheduling |
| Index terms: | risk management, enforcement, transparency, construction planning, efficiency, case study, transportation agency, estimation, database, methodology, integration, mitigation, agency, megaproject, publication, penalty, scheduling, schedule performance, information and communication technology, strategy, transportation project, liquidated damages, accuracy |
| Subjects: | risk assessment, research dissemination and communication, data collection methods, computing systems, operations research, construction planning, strategic project management, financial and cost management, management, performance management, research methods, contractual remedy, health safety and environment, financial risk, professional development, project controls, data management, organizational analysis, sociology, infrastructure and transport systems, regulatory law, transportation engineering |
| Topics: | Business Strategy, Cost Management, Health and Safety, Research Practice, Project Management, Information Management, Engineering Principles, Risk Management, Legal Issues, Digital Applications, Quality Management, Contract Administration, Time Control, Site Management, Organizational Design |
| Descriptive scope: | 4 PCTE |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here