Systematic Procedures to Determine Incentive/Disincentive Dollar Amounts for Highway Transportation Construction Projects

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Systematic Procedures to Determine Incentive/Disincentive Dollar Amounts for Highway Transportation Construction Projects


The Federal Highway Administration has encouraged state transportation agencies to implement Incentive/Disincentive (I/D) contracting provisions for early project completion. Although general guidelines to determine the I/D dollar amount for a project are available, there is no systematic and practical tool in use to determine optimum I/D dollar amounts for I/D projects considering road user cost, agency cost, contractor’s acceleration cost, and contractor’s cost savings. Therefore, systematic procedures and models to assist project planners and engineers in determining an appropriate I/D dollar amount are essential to optimizing the use of I/D contracting techniques.

This research performed a literature review related to the determination of daily I/D dollar amounts. Caltrans I/D project data were then collected and evaluated. Project performance data were analyzed with regard to project outcomes in two key areas: project time and project cost. Statistical analyses were performed to identify the impact of I/D dollar amount on project time and cost performance. Using Construction Analysis for Pavement Rehabilitation Strategies (CA4PRS) software, Caltrans I/D projects were analyzed to introduce three different levels of CA4PRS implementations for the I/D dollar amounts calculation. Based on the results of the I/D project case studies, the systematic procedures to determine appropriate I/D dollar amounts were developed using the CA4PRS schedule-traffic-cost integration process for the new I-5 rehabilitation project in LA. The proposed procedures were applied to a typical highway pavement rehabilitation project using HMA (hot mix asphalt) materials. Further research is needed to apply the proposed model to other types of highway projects, with adjustment for the type of project.



Jae-Ho Pyeon, PhD, is an assistant professor in the Department of Civil and Environmental Engineering at San José State University. Dr. Pyeon received both his master’s and doctoral degrees in civil and coastal engineering from the University of Florida. Currently, Dr. Pyeon is a university representative on the Transportation Research Board and a member of the Construction Research Council, American Society of Civil Engineers. Dr. Pyeon conducts research in transportation construction engineering and management and teaches undergraduate and graduate courses in construction project management, construction information technology, construction scheduling and estimating, and heavy transportation construction equipment.

Dr. Pyeon has published 22 peer-reviewed journal or conference papers in the last five years. His research interests include seeking efficient ways to improve the highway construction planning and process, assessing uncertainty in construction, and developing decision support systems to assist project planners and managers. Specific research areas are transportation construction project delivery systems, work zone road user cost, transportation management plans, project risk management, and innovative contracting methods, such as Incentives/Disincentives, No-Excuse Bonus and A+B.

Dr. Pyeon has successfully performed several federal- and/or state-funded transportation construction research projects, including “Improving Transportation Construction Project Performance – Development of a Model to Support the Decision-Making Process for Incentive/Disincentive Construction Projects;” “Evaluation of Alternative Contracting Techniques on FDOT Construction Projects;” “Improving the Time Performance of Highway Construction Contracts;” “Development of Improved Procedures for Managing Pavement Markings During Highway Construction Projects;” and “Development of Procedures for Utilizing Pit Proctors in the Construction Process for Pavement Base Materials.” He also serves as an external reviewer of FHWA’s Work Zone Road User Cost research project and as an active reviewer of several major journals in the area of construction engineering and management.


Eul-Bum Lee, PhD, PE, PMP, has more than 20 years of experience in heavy construction, mainly in the varied disciplines of transportation projects, including design and engineering, project management and control, and academic research. Currently working as an associate researcher and co-principal investigator in the Institute of Transportation Studies at the University of California, Berkeley, Dr. Lee has focused on researching and implementing innovative methods for rehabilitating transportation infrastructure.

Dr. Lee earned ME and PhD degrees in the Engineering Project Management Program of the Department of Civil and Environmental Engineering at UC Berkeley. He earned his BS degree in civil engineering at Seoul National University. Before beginning his doctoral work, Dr. Lee spent 12 years with Hyundai Engineering and Construction, Inc., as a manager of international megaprojects in Asia, Europe, and North America. One of his greatest successes with the company was serving as the project coordinator for the engineer, contractor, and owner, for a long-span concrete, precast box girder bridge project (the Jamuna Multipurpose Bridge Project in Bangladesh), which was funded with $1.3 billion from the World Bridge Fund, as a turnkey (design-build) project.

Dr. Lee’s research led to the creation of Construction Analysis for Pavement Rehabilitation Strategies (CA4PRS) software, a scheduling and traffic analysis tool developed to help decision makers at transportation agencies select the most economical strategies for highway projects. The Technology Implementation Group (TIG) of the Association of American State Highway and Transportation Officials (AASHTO) has selected CA4PRS for nationwide promotion to its state members and is considering assigning the software as a product of AASHTOWare for marketing nationwide. The Federal Highway Administration (FHWA) formally endorsed CA4PRS as a “Priority, Market-Ready Technologies and Innovations Product” in 2008 for nationwide deployment. In addition, the FHWA is in the process of arranging free group licenses for all states to deploy the software nationally in the United States. CA4PRS won a 2007 Global Road Achievement Award granted by the International Road Federation. Recognized nationally for his contributions to the research and implementation of new industry practices, Dr. Lee has received a number of awards, including the California Department of Transportation’s 2005 Excellence in Transportation Awards (Innovation and Public Outreach).

Dr. Lee is actively involved in the academic and professional communities in construction/ project management and transportation engineering. Currently, he is serving as a committee member, expert group member, or journal reviewer for the American Society of Civil Engineers (ASCE), AASHTO, FHWA, and the Transportation Research Board (TRB). He has published approximately 23 peer-reviewed journal papers and 25 conference proceedings in a variety of professional civil engineering society and transportation journals.

June 2012
I/D dollar amount
Road user cost
Cost estimating



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