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Innovative Contracting - A + B Bidding
Description, benefits and drawbacks of A + B bidding;  specifications and projects

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A + B Bidding

Description
Cost plus time bidding, more commonly referred to as A + B, factors time plus cost to determine the low bid.

Under the A +B method, each submitted bid has two components

  • A - dollar amount for contract items
  • B - days required to complete project

Bid days are multiplied by a road user cost, furnished by the owner, and added to the A component to obtain the total bid:

A + (B x road user cost per day) = total bid

The formula only determines the lowest bid for award and not the payment to the contractor.  A + B can be an effective technique to reduce delays for critical projects with high road use.

Contracts incorporate a disincentive provision assessing road user costs to discourage contractors from exceeding the time bid.  Contracts may include an incentive provision to reward contractors if work is completed in fewer days than bid.  Generally, Mn/DOT specifies a maximum incentive.

Benefits

  • Contractor's schedule must minimize construction time and delays
  • Contractor must coordinate with subcontractors to meet time constraints

Drawbacks

  • Contractor must take time to develop a reliable schedule
  • Contract changes are magnified;  too many changes nullify advantages of A + B
  • More resources may be required for contract administration
  • More intense negotiations for additional work because timeliness is critical

 

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