A + B bidding
Cost plus time bidding (also known as A + B bidding) 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.
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, MnDOT specifies a maximum incentive.
When to use A + B bidding
A + B can be an effective technique to reduce delays for critical projects on busy roads. A + B bidding should focus on projects with significant impacts to motorists and businesses.
- Contractor's schedule must minimize construction time and delays
- Contractor must coordinate with subcontractors to meet time constraints
- 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