Inside alternate bidding

Missouri Department of Transportation formula creates competition and saves money, too.

By Daniel Brown, Contributing Editor

This definitely keeps people on their toes,” says John Donahue, P.E., construction and materials liaison engineer with the Missouri DOT. “We are getting more bidders per job, it stimulates more competition, and it has saved the state millions of dollars.

He’s talking about alternate bidding, which pits two or more equivalent designs against one another in a competitive environment. In Missouri, MoDOT designs equivalent new pavements in concrete and asphalt – both for 45-year design lives – and takes bids on both for the same project. The low bidder gets the work, whether it’s asphalt or concrete.

Missouri has awarded more than $2 billion in construction using alternate bidding and leads the nation in the practice. Other states, including Louisiana and Ohio, also use alternate bidding, but not to the extent that Missouri has.

MoDOT figures that an asphalt pavement will need milling and filling of the driving lanes at year 20, and another mill-and-fill across driving lanes and shoulders at year 33. For concrete, MoDOT assumes a major rehabilitation at age 25. That means replacing 1.5 percent of the panels and diamond grinding the entire surface.

For comparison purposes, the state adds a life cycle cost adjustment (LCCA) factor to the asphalt bid. The adjustment factor is calculated by taking the present value of asphalt’s two mill-and-fill jobs and subtracting the cost of the concrete repairs. That number, the LCCA, represents the future cost of the repairs as discounted to the present using the current discount rate of the federal Office of Management and Budget. And the future cost of the repairs is estimated using current unit prices for asphalt, cement and aggregates.

If the asphalt construction bid plus the LCCA is the low bid, then asphalt gets the job. But if the asphalt bid plus the LCCA exceeds the low concrete bid, then concrete gets the job. That has happened only four times over more than 160 projects in six years, Donahue says.

“We did a couple of projects where we had a 5-inch unbonded concrete overlay bid against a 5.75-inch asphalt overlay. In one case it went to concrete and another time it went to asphalt.”

— John Donahue, P.E., construction and materials liaison engineer, Missouri DOT.