Contract Payment Provisions and Project Performance: An Analysis of Municipal Water and Wastewater Facilities

In a continued effort to provide water and wastewater facilities, owners have been using a variety of contract pricing methods for the construction of new facilities. Increasing use of cost-plus-fee with a guaranteed maximum price (GMP) contract payment provisions along with the more traditional lump sum contract payment provisions has created a need to measure the effectiveness of these contract pricing methods. Through a detailed survey of public water and wastewater facility owners, performance data were collected to compare project performance based on schedule and cost growth measures. The results of this study indicate that contracts using cost-plus-fee with a GMP contract pricing provisions are more likely to have no schedule or cost growth as compared to projects with lump-sum provisions. Overall, the results of this study provide new data for water and wastewater projects that can be used by owners to improve future project performance.