Difference between revisions of "147.4 Fixed Price Variable Scope (FPVS) Contracting"
(Per DE, new article provides guidance for new contracting method, Fixed Price Variable Scope (FPVS) Contracting)
Latest revision as of 11:21, 25 March 2020
MoDOT uses a procurement process called Fixed Price Variable Scope contracting as a tool for projects where it would manage the amount of work completed within a set budget. In general, this type of contracting works best for repetitive type work which MoDOT would benefit from being completed in multiple locations. This type of procurement is currently an experimental contracting method and requires a Special Experimental Project-14 (SEP-14) approval from FHWA. Please work with your Design Liaison to assist in getting this approval.
147.4.1 FPVS Overview
A FPVS project will be set up with estimated quantities of work at specified locations which the contractor will complete in an established priority order until the budget has been exhausted. This procurement method will have the contractor bid a unit price for the estimated quantities for each item of work in the contract. The initial estimated quantities included in the contract represent the amount of work than can be completed for the budgeted amount. Once the project has been awarded, the MoDOT construction office would then manage the contract by adjusting the contract quantities to hit the budgeted amount.
FPVS projects will be sent through the normal bidding process as other projects and will be awarded to the lowest responsible bidder based on the established quantities in the project. Construction will manage the contract by using the standard change order process.
MoDOT will utilize pre-bid meetings or industry meetings with contractors to familiarize them with the FPVS process for new type of projects or projects that are new to a region of the state.
147.4.2 Project Set-up
A project using FPVS will need to be programmed in the STIP to cover all possible work locations that may be completed by the project. This would typically be done by using Various Routes and Various Counties within SIMS. Please note all locations included in the contract must have all clearances, such as environmental.
The project team will establish the estimated amount of work that can be completed within the project budget. The project team will then determine the locations that can be completed within those quantities. The project team will also determine additional locations to be completed if there is remaining budget in the contract. It is recommended the project team sets up the initial quantities based on 80-90% of the budget so that is likely the quantities are increased for the contractor instead of work being removed from the contractor if bids are higher than expected.
The project team will need to modify the Contract Liquidated Damages JSP and add the additional JSPs as shown in the FPVS Special Provisions. When FPVS is used, as with other projects' processes, it is desirable to give the contractor a window of time to complete the work. However, since it is not desirable to extend the contract completion date due to an increase in quantities, it is preferable to tell the contractor that an extension of time will not be granted.
147.4.3 FPVS Plan Development
This is flexible and up to the discretion of the project team. FPVS contracting opens the door for the project team to be creative in plan development. With FPVS contracting, less work can be done in the design of the project, but this may create more work for construction. It is important to have the full support of everyone on the project set up.
Plans may only include the design of the work included in the initial quantities or they may include design for both the initial quantities and the potential additional quantities that may be added. If the plans do not include designs for the potential additional quantities, it is important that the contractor can figure a good bid based on the information provided.
Things to keep in mind:
- 1. The better information provided with the plans and specifications will result in better bids, but also keep in mind there is a balance between level of effort in the design and how much it will actually affect the bid.
- 2. All locations in the project must be in the STIP and have all clearances prior to advertisement for bids.
- 3. Lump Sum items, including mobilization, can be used but the plans and JSPs should clearly state that they will not be adjusted based on a change in quantity. It is acceptable to include a JSP noting that mobilization will not be paid for on the project.
147.4.4 FPVS Contract Administration
The bidding documents will include set quantities for each pay item that the contractor will be required to bid. The award of the contract will be given to the lowest responsible bidder based on the set quantities and unit bid price. After the project is awarded to the lowest responsible bidder, the contract will be managed by changing the quantities of each pay item to deliver the project budget. Budgets for the project cannot be increased to accommodate more work with the project. There are two scenarios that could occur. The first scenario is the awarded bidder’s total bid is lower than the project budget. Since the contractor’s total bid is less than the budget identified in the project special provisions, MoDOT would look at the priority list of routes identified in the special provisions to add additional quantities of work from the next highest priority. This will be accomplished using the standard contract change order process using the contract bid prices. The unit prices should not be adjusted due to the change in contract quantity.
The second scenario is the awarded bidder’s bid is higher than the project budget. Since the contractor’s total bid is more than the budget identified in the project special provisions, MoDOT would look at the priority list of routes identified in the special provisions to remove quantities of work from the lowest priority included in the bid quantities. This will be accomplished using the standard contract change order process using the contract bid prices. The unit prices should not be adjusted due to the change in contact quantity.
147.4.5 FPVS Examples
Some projects that used FPVS are:
- Sign installation
- Chip Seal.