Utilization of Value and Risk Assessments in Transportation Procurement: A Case Study of a New Highway Corridor

The Queen Elizabeth II Highway provides the sole transportation link between the city of Edmonton and the city of Leduc. Over 35,000 vehicles commute between these areas on a daily basis, while the Edmonton International Airport is strategically positioned between them. The Canadian government has recognized the need for an alternative transportation corridor in this area. The necessary funding for Phase 1A of the 14.4 mi of new road construction was provided under the Building Canada Fund. The proposed Nisku Spine Road will be completed in four separate phases. The objective of this study was to draw analysis from a government's implementation of a value-based procurement model and risk management approach to minimize project cost. Under this procurement model, the overall project costs were reduced through past contractor experience, risk assessment plans, and value added options. The selected firm's proposal was 30% below the original anticipated cost of $21.8 million dollars. Furthermore, the contractor was able to offer a value added option that resulted in additional savings of approximately $1 million dollars. In all, a total savings of $7.5 million dollars was realized by the utilization of the value-based procurement method for this publicly funded heavy/civil construction project.