Road construction
I am writing on the conditions prevailing in the US. LANE RENTAL charges (a charge in addition to Liquidated Damage) are introduced on many important road construction projects in USA to reduce public sufferings during construction. In brief it works as follows,
1. A User Delay Cost (in dollar per day per lane, this is the rent for closing a lane for a day or part of it) is set depending on traffic volume and importance of the road. It is an estimate of the loss in dollar by the road users due to use of a longer detour, longer travel time, congestions etc during construction of a section of a road.
2. While bidding, the contractor is required to bid in 2 sections,
A= Total for the contract work items, and
B= Total Lane Rental amount = Number of days he needs to complete the job x UDC
The contractor with the lowest (A+B) amount gets the job. This way a contractor with a higher A can get the job if his B is low enough to make him the low bidder.
Keep in mind, A+B amount is only for the determination of the low bidder and not for payment for contract work items. With the progress of work, as he closes the road/lane Lane Rent is deducted from his B amount at a rate equal to the set daily UDC.
3. (a) If he finishes the work by his bid time he will be paid per A with no deduction for lane rent since his total rent will be same as his bid amount for B. (b) If he fails to complete the project by his time and completion is delayed the contractor is paid (the amount due for his completed work) minus (UDC x No of days delayed), thus costing him the rent for extra days he took to complete the work. (c) If he finishes the work and opens all lanes to traffic before the completion time, he is awarded an incentive in addition to his dues for work items. This amount is usually equal to UDC x No. of days he saved. This incentive is usually capped to a reasonable maximum amount.
4. Provisions are kept so that the Department and the Contractor can come to a consensus on extension or reduction of completion time in case a critical work volume changes or if the contractor cannot work due to unusual circumstances beyond his control (like rain/flood etc.)
This way the contractor is awarded an incentive for his early completion and fined for his delay to complete a project.
Of course, all these measures can work if, and only if, the field records of lane closures are honestly maintained signed by the Engineer and the Contractor or their authorized representatives on a weekly basis. If the same old practice of manipulation of records of Tar Boiler/Roller Rentals in favour of contractors continues then it will neither benefit the public, nor the departments.
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