A response from Stephen J. Hemphill, P.E., M. ASCE, New Mexico DOT
Cancelling projects after bids: This is primarily a consequence of the designer not knowing the construction market – both geographically and temporally, or sometimes with very few bidders bidding a project. It can be a much bigger waste of time for contractors. An independent constructability review is almost always worthwhile, but is sometimes discouraged by engineers who are afraid it will expose weaknesses in their design, or will cost them more to work on the improvements. In-house designers are usually more amenable as cost by the owner is reduced (or at least recognized).
Risk sharing: The only time “cost plus” should be used in public works is when the owner purchases the material and the contractor still quotes the job – thereby eliminating the term anyway… Care should be taken so the risk of confusion concerning quality of the delivered product is not in question, which would lead to disagreements on the cause of failures. Cost plus removes incentive for the contractor to finish the job expediently.
Risk allocation: Risk belongs with whoever has the most control. For information the owner could possibly have obtained before bid date, the owner should take it. If it’s put on the contractor, the contractor will put a contingency on his bid that will (for *successful* contractors anyway) exceed the probable cost. If it has to do with construction methods, the risk should go to the contractor.
Construction Institute of the American Society of Civil Engineers