Section 4


This page is under construction. Please use the downloadable Road User Cost Manual.

The calculation of road user costs provides information enabling the designer to make better informed decisions in regards to staging, allowable work hours, project delivery method, and the actual design itself. Therefore, before a scheme is finalized, traffic volumes should be evaluated on a 7 day 24 hour basis. Staging should be evaluated for potential queues. Often, queues can be avoided by simply allowing lane closures only during non-peak hours. If the proposed design reveals substantial road user costs, an alternative scheme that reduces these costs may be a better choice. At other times, the queues are not avoidable, and thus an alternative project delivery method (i.e., A+B Bidding, Incentive/Disincentive) should be considered. In all cases, the significant risks and costs associated with night operations including safety, quality, and productivity should be considered. The many applications of road user costs in projects will be discussed in the following sections.

4.1    Liquidated Damages

A failure to complete a project or portion of a project on time results in damages in terms of delay on the use of the Project and delay to the traveling public using the facility. A failure to complete on time also results in additional costs to the Department for engineering, inspection, and administration of the Contract.

A “liquidated damage” is a liquidated sum or specified amount of damages in the event of a noncompliance with the specifications where it is difficult or impossible to accurately estimate the damages incurred. The liquidated damages a contractor may pay include the Construction Engineering Charge, the Road User Charge, and the Lane Occupancy Charge. The purpose of these charges is intended to constitute a reasonable liquidated sum designed to compensate for the damages incurred by the traveling public and the Department. The charges are not imposed for the purpose of ensuring timely compliance with the lane closure time limits or project completion requirements in the contract documents. The charges collected are in turn intended to be used in conjunction with future capital transportation projects so as to help relieve traffic congestion and to improve travel time and convenience for the traveling public. Each component of the liquidated damages is discussed in the following sections.

4.2    Construction Engineering Charge

Construction Engineering (CE) costs are the costs incurred by the Department for engineering, inspection, and administration of a project. As per Section 108 of the Standard Specifications, for each day of overrun in the Substantial Completion Date the contractor will pay 100% of the Construction Engineering Charge and for each day of overrun in the Completion Date the contractor will pay 50% of the Construction Engineering Charge.

4.3    Road User Charge

Road User Costs (RUC) are added vehicle operating costs (VOC) and delay costs to the traveling public resulting from the establishment of construction, maintenance, or rehabilitation work zones. The procedures in this manual provide a reasonable estimate of the added VOC and delay in terms of dollars per day. If the highway facility is exceeding capacity prior to construction, only the road user costs associated with the proposed construction activity are considered. As per Section 108 of the Standard Specifications, for each day of overrun in the Substantial Completion Date the contractor will pay 100% of the Road User Charge. The Road User Charge is in addition to the Construction Engineering Charge. There is no Road User Charge associated with overrun of the Completion Date.

The road user costs incurred by the traveling public during a Project can be extremely high. If this risk were to be transferred wholly to the contractor, it would lead to higher bid prices. The Department has determined that the maximum Road User Charge to be collected from the contractor for any one day will be $10,000. However, the maximum amount can be exceeded when using an A+B Bidding or Incentive/Disincentive project delivery method, which are discussed later in this section.

4.4    Lane Occupancy charge

The contract documents provide Allowable Lane Closure time limits for the contractor’s use and occupancy of a lane or lanes to perform work. In the event that the contractor fails to reopen a lane or lanes of traffic on time, the contractor will pay a Lane Occupancy Charge (LOC) for the period of time a lane is unavailable to the traveling public beyond the allowable lane closure time limits. A Lane Occupancy Charge will not be collected when a lane or lanes are closed by extraordinary circumstances as defined in Section 108 of the Standard Specifications.

If the Allowable Lane Closure time limits permit the contractor to close lanes more than once a day, several occupancy charges are possible. For example, if a contractor can close a lane from 9 AM to 4 PM and again from 8 PM to 6 AM, an occupancy charge may be collected for the overrun of time beyond 6 AM and the overrun of time beyond 4 PM.

Each occupancy charge is calculated by multiplying the overrun of time, in minutes, by the chargeable rate per minute. The chargeable rate per minute is based on using the procedures in this manual to calculate the road user costs incurred by the traveling public during the next hour of each period the contractor fails to open a lane or lanes. For the Allowable Lane Closures shown above, the road user costs would be calculated for 6 AM to 7 AM and 4 PM to 5 PM and then divided by 60 to obtain the chargeable rate per minute (rounded up to the nearest ten dollars).

If the chargeable rate is $20/minute for 6 AM to 7 AM and $50/minute for 4 PM to 5 PM, a 30 minute overrun in each period would result in a $600 and $1,500 Lane Occupancy Charge respectively. The Department has determined that the maximum Lane Occupancy Charge to be collected from the contractor for any one day will be $10,000.

4.5    Interim Completion Charge

Contract documents may require a portion of work, stage of construction, or critical path item to be completed by a specified interim date or within a specified number of days. In these cases, the associated charge is generally based on the road user cost or other supporting justification. As per Section 108 of the Standard Specifications, for each day of overrun in the Interim Completion, the contractor will pay 100% of the Interim Completion Charge. This charge can be different than those calculated for the entire project completion, depending on the type and location of work being specified for the interim date or time frame.

For example, the Department has determined a project has a road user charge of $4,000/day and a construction engineering charge of $7,000/day. The associated liquidated damage amounts for Interim Completion, Substantial Completion and Completion would be $4,000/day, $11,000/day and $3,500/day respectively.

4.6    Project Delivery Methods

A contract that establishes proper completion dates for a construction project is more important today than ever before. Most construction projects now involve the reconstruction of existing highways, which means that traffic is often maintained with lane and shoulder restrictions while the reconstruction takes place. A standard contract delivery method should include a completion date based on the shortest practical duration of construction to minimize road user impacts while allowing the contractor a reasonable amount of time to complete the work.

An agency may desire to accelerate construction of a project in order to reduce high road user costs, improve safety, or to avoid a winter/summer season. The Designer shall consider the Calculated Road User Cost (CRUC) as a useful tool to determine the most appropriate project delivery method to accelerate construction. Several project delivery enhancement methods are discussed in the sections that follow.

4.7    Increased Production Rate

Increased Production Rate project delivery method is the simplest method to speed up the construction. This method utilizes multiple crews, longer workdays, night work, and/or an around-the-clock work schedule to establish the contract completion date. Production rates can generally increase by 20% or more based on the type of work, the necessary equipment, and the available working space.

4.8    A+B Bidding

An A+B Bidding project delivery method is a cost plus time bidding procedure that selects the low bidder based on a monetary combination of the contract bid items (A) and the time (B) needed to complete the project or a critical portion of the project. The award is based on the lowest combined bid using the following formula.

Bid Amount for Evaluation = A + (B x RUV).  Where:

(A) = Bidder’s Estimate of Contract Bid Items ($)

(B) = Bidder’s Estimate of Construction Time (Days)

(RUV) = Road User Value ($/Day). This value is determined by the Department and is often based on a percentage of the Calculated Road User Cost (CRUC).

For example, a project’s CRUC is $22,000/day and RUV is $5,000/day. The bids are received as follows:


Tortoise Company

Fox Company



(A) Value








(B) Value

140 Days

110 Days

95 Days

Time Value (B x RUV)




(A) + (B)

Combined Bid




The Fox Company would be awarded the contract based on the lowest combined bid. The contract amount for payment purpose is the (A) value of $2,600,000. The project completion date and liquidated damages will be based on the (B) value of 110 days and (RUV) value of $5,000/day respectively.

4.9    Incentive and Disincentive

An Incentive/Disincentive (I/D) project delivery method is intended to motivate the contractor to complete the project, or a particular construction stage, on or ahead of an accelerated schedule. I/D projects compensate the contractor a daily amount for completing the work ahead of the I/D completion date or assess a daily amount for finishing later than the I/D completion date. The I/D value selected is based on a starting percentage (25%) of the CRUC and can be increased or decreased based on available monies and the scheduled duration of the accelerated work. The I/D value should be sufficient enough to cover the contractor’s additional costs to accelerate the work. The total accumulated I/D payment is limited to 5% of the estimated construction cost based on FHWA Technical Advisory T5080.10, dated February 8, 1989.

For example, a $20 million project’s CRUC is $50,000/day. Based on 25% of the CRUC, the I/D Value would be $12,500/day. Therefore, the contractor would receive a $12,500/day incentive bonus for each day he finishes prior to the specified completion date up to a maximum incentive portion of $1,000,000 (5% of the project construction cost). Conversely, the contractor would be assessed a liquidated damage of $12,500/day for each day of overrun in the contract completion date up to a maximum disincentive portion of $1,000,000.

4.10  Lane Rental

Lane Rental is an innovative project delivery method which charges a contractor daily or hourly fees for occupying lanes and/or shoulders to perform work during hours other than the allowable times. The rental fee rate is based on the road user costs incurred by the traveling public and/or costs incurred by the Department. The Department will deduct these costs from the monies due the Contractor. A sample Lane Rental table is shown below.

Lane Rental Availability & Charges

Roadway Direction

Closure Description

Closure Time

Rental Rate


Start Time

End Time

Route 123 NB

Single Lane Closure

Stages 1 and 3 only

Mon. - Fri.

4:00 PM

7:00 PM

$4,000 per hour

Route 123 SB

Single Lane Closure

Stages 2 and 5 only

Mon. – Fri.

6:00 AM

9:00 AM

$2,000 per hour

4.11  Alternative Selection

Each project, and sometimes each stage of a project, may have unique road user costs and require potential mitigation strategies. Travel delays may become less acceptable as traffic volumes increase. As road user costs increase, effective traffic mitigation strategies may include reducing the construction duration or the travel delays during construction. The example below illustrates a useful method for comparing staging alternatives.




# of




Project Cost in Millions



RUC (25% Value)



1 Lane









1 Lane WB,

EB detoured
















Based on the comparison, Alternative C is the preferred option.

4.12  Benefit / Cost Ratio

The Benefit/Cost Ratio (B/C) is a useful tool for the designer to measure the benefits of transportation improvements and increase the value of a project. It is also useful in comparing the value of two or more alternative projects. The B/C Ratios of approved, dormant, and rejected projects should be documented and maintained to aid the Department in prioritizing project needs. The user benefits are defined as the savings in vehicle operating costs and travel time that the facility users will experience.

For example, an intersection improvement project is being designed. Exclusive right turn lanes (RTL) are being considered for the northbound and westbound approaches. The calculated B/C ratio without exclusive right turn lanes is 2.5:1 and the overall intersection LOS is ‘C’. The specific improvement information is shown below.

Northbound RTL

Exclusive Right Turn Lane

Westbound RTL


Projected Peak Hour Volume



Projected Peak Hour LOS (No Build)



Projected Peak Hour LOS (Build)


$3 Million

User Benefits (25% x CRUC)

$1 Million

$1 Million

ROW and Construction Costs

$0.2 Million


Benefit/Cost Ratio


The results show that the B/C for each improvement exceeds the 2.5:1 ratio established from the original design. Therefore, adding either of these elements to the project would increase the B/C ratio for the project.

4.13  Life Cycle Cost

Life Cycle Cost Analysis (LCCA) is an analysis technique that supports more informed and better investment decisions. It builds on some well-founded principles of economic analysis that have been used in evaluating highway and transit programs with a slightly stronger focus on the long term. It incorporates discounted long term agency, user, and other relevant costs over the life of a highway or bridge to identify the best value for investment expenditures (i.e. the lowest long term cost). It can be applied to a wide variety of investment related decision levels to evaluate the economic worth of various designs, projects, and alternatives to get the best return on the dollar.

Road user cost may be considered in the LCCA. For example, a State Highway Agency is conducting a Life Cycle Cost Analysis for a proposed six lane facility. The 30 year analysis period is utilizing the initial and future costs to the agency and the road users to help determine a preferred alternative. Compute the total Net Present Worth (NPW) for each alternative based on the future rehabilitation occurring at Year 20 with a discount rate of 4%. The present worth factor at Year 20 is 0.4564.

Alternative A

Alternative B











Agency Cost

($ million)





Road User Cost

($ million)





Alternative A

Project Data

Alternative B

$15 Million

Agency Cost (Initial)

$20 Million

$15 Million

Road User Cost (Initial)

$5 Million

$4.56 Million

Agency Cost (Future)

$6.85 Million

$4.56 Million

Road User Cost (Future)

$2.28 Million

$39.12 Million

Total Net Present Worth (NPW)

$34.13 Million

The results show that Alternative A has the lowest initial agency cost. However, Alternative B is the preferred option (lowest NPW) when future and road user costs are considered. Therefore, Alternative B would be the preferred alternative.

Last Document Correction:
September 1, 2015