Presented in this paper is a method of determining equivalent cost contract prices for highway maintenance activities that can be compared with the costs of performing these activities with city or state Department of Transportation (DOT) forces. These equivalent cost contract prices are the "break even" amounts payable by a DOT to have contractors, rather than DOT forces, perform this work. Two equivalent prices are derived - a contract price that is equivalent in terms of the DOT's budget alone, and a contract price that is equivalent in terms of general public revenues for the city or state as a whole. After computing the total "by-force" cost to a DOT for maintenance activities, this cost is used to determine an equivalent cost contract price (ECCP) and an equivalent public-cost contract price (EPCP). The ECCP represents the highest price for which work can be awarded to contractors at no loss to the DOT's budget relative to the by-force alternative. By comparison, the EPCP takes into account the fact that work done by contract results in a return to the public sector in the form of taxes and other fees that a contractor must pay, but from which most cities and states are exempt. Thus, the EPCP represents the highest price for which work can be awarded to contractors at no loss to the public. Methods developed and data used in conducting a case study of highway maintenance costs in Pennsylvania are presented.
Abstract