1. Quality Assurance: Pay Factors and Dispute Resolution
QA Program
Agency Acceptance
Dispute Resolution
Independent Assurance
Contractor QC
Lab Qualification
Personnel Qualification
Dennis Dvorak
Pavement and Materials Engineer
FHWA Resource Center
(708) 1

2. Background
Why is Quality Assurance (QA) Important? - Testing Materials - Inspection of Workmanship
Approximately 70% of the construction Dollar is spent for the PURCHASE of materials.

3. Core Elements of a QA Program
Agency Acceptance
Dispute Resolution
Independent Assurance
Contractor QC
Lab Qualification
Personnel Qualification
Introduction and Key Points
We know QC is important, but what exactly is it?
Instruction
Review the definition of Quality Control: “The system used by a contractor to monitor, assess, and adjust processes to ensure that the final product meets the specified level of quality.”
Engagement
Before displaying the next slide, ask participants to state what activities might be included in a contractor‘s QC system in order to ensure quality. Write answers on a flipchart. Then compare those items to the activities shown in the definition. (Examples may include but are not limited to: control charts; preventative equipment maintenance; equipment calibration; proper materials handling and storage; employee training.)
Note how the system ensures quality during production or placement (monitoring, assessing, adjusting) and not only at the end of a project or work item. 3

4. Material Process Sampling Testing
Composite
Variability
Introduction and Key Points
There are four main sources of inherent variability.
Variability exists in all construction materials. It is one of the key factors that is integral to Quality Assurance and must be clearly understood. Variability is defined as “differences in measured test values for a given Quality Characteristic within a stable pattern due to chance, or outside this normal pattern due to an assignable cause.” Variation can be controlled, but cannot be eliminated. The level of Quality of any material or product is associated with the level of Variability. There are four primary sources of Inherent Variability; Material Variability, Process (or Production/Construction) Variability, Sampling Variability and Testing Variability. Sampling and Testing Variability, combined, have been stated as comprising up to 50 percent of the total overall composite variation in test results from independent random samples.
Instruction
Review information on the slide.
Engagement
N/A

5. Agency Acceptance Verification sampling & testing Acceptance & payment
May include contractor test results if validated
Agency verification sampling & testing excluding the contractor & vendor [23 CFR (d)]
Agency verification sampling & testing independent of Contractor QC [23 CFR (a)(1)(ii)(B)]
Contractor QC may be included if material quality is validated [23 CFR (a)(1)(ii)(B)]

6. Contractor Quality Control (QC)
Materials sampling & testing
If part of acceptance decision
Independent of agency verification
Qualified technicians
Qualified laboratories
Independent assurance evaluation
Contractor QC may be included if sampling & testing meets certain requirements [23 CFR (a)(1)(ii)]

7. Quality Assurance Program
Independent Assurance (IA)
Evaluate all acceptance sampling & testing
Separate from acceptance testing
Technician procedure evaluation
Testing equipment evaluation
IA to evaluate qualified sampling and testing personnel and testing equipment [23 CFR (a)(2)]
IA performed using qualified technicians [23 CFR (b)]
(both photos taken by FHWA employee)
Note: See 23 CFR (a)(2) and (b) for specific requirements.

8. Qualified Laboratories & Accredited Laboratories
All state central labs must be accredited.
All private labs conducting dispute or Independent Assurance testing must also be accredited.
All other labs must be qualified through a state sponsored program.

9. Requirements for Personnel Qualification/Certification
Recommended program guidelines:
Formal training; hands-on training
On-the-job training
Written and performance examinations
Periodic re-qualification (typically 2-5 years)
Process to remove personnel performing procedures incorrectly, falsifying statements or data

10. Function of Materials Testing Dispute Resolution
Formal system designed to address significant differences between partners data of such magnitude to impact payment
Not intended to address day to day issues
Required (by FHWA) when contractor results used in acceptance decision

11. Responsibility for Materials Testing Dispute Resolution
Can be performed within the State DOT
Use of accredited third party laboratory can be used.

12. What do we want from a pay factor?
Obtain a more uniform product
Increase service life
Fairness issues
Owner needs to know product quality
Pay for what you get
Reward contractors for quality
Obtain a more uniform product
We expect that uniformity will provide better performance than if there is a lot of variability. A quality measure can assist in monitoring trends as well a point out variability.
Increase service life
The pavements and structures represent a tremendous investment and we expect it to last and perform well. A quality measure assists in getting to that by providing information on the product.
Fairness issues
One way to ensure things are fair to the agency and the contractor is to use a good statistical basis for acceptance and payment. The quality measure should provide that statistical basis.
Owner needs to know product quality
Agency should have a reasonable assurance that the product meets requirements. The quality measure should indicate whether the requirements are being met.
Pay for what you get
As we mentioned, the highway industry is unique in that even if the product is not exactly what was desired (likely due to variability) the Agency buys it, in some cases for a reduced cost. The quality measure is part of an overall system that also includes the payment plan (which will be discussed in Module 7)
Reward contractors for quality
By providing incentives, an agency may encourage contractors to improve their processes to meet requirements. Again this is linked to the payment plan as well as other previous bullets.

13. Percent Within Limits (PWL)
Using the statistical sample data, with its mean and standard deviation, we can determine the quality level of the statistical sample

14. PWL
Efficiently captures mean and standard deviation in one quality measure
X - mean
s - standard deviation 3s 2s 1s
-3s
-2s
-1s X

15. Using PWL to Compute Pay Factors
Recoup reduced life expected from poor quality work
Reward increased performance from increases in product consistency

16. Pay Factor Formula
A pay factor formula presents a mathematical equation that typically derives a linear schedule of pay from the PWL
AASHTO provides a recommended equation:
Pay Factor (PF) = (PWL)
(PWL is expressed as a decimal value in this equation)

17. Maine Example Data analysis of materials testing from 1978-1998
Per cent “passing” tests ranged from 87%-92% every year
Confirms that our industry, without incentives, operates around 90 PWL

18. Questions