Data-Driven Assessment of Fuel Price Adjustment Clauses and Bid Pricing Patterns in Highway Construction

Document Type

Conference Proceeding

Publication Date

1-1-2026

Abstract

Fluctuations in crude oil prices directly affect the cost of fuel-intensive highway construction activities. To hedge against this volatility, state departments of transportation (DOTs) use fuel price adjustment clauses (PACs) to share risk with contractors, yet their effects on bidding remain unclear. This study provides a data-driven assessment of how fuel PACs relate to bid prices and price variation. The analysis uses roughly 20,000 item-level bids from 2,878 projects across seven US state DOTs and applies a double machine learning framework to control for nonlinear and high-dimensional confounders. Results show that contracts with fuel PACs are associated with lower unit bid prices overall but limited changes in aggregate price dispersion. Category-level findings indicate the strongest effects in excavation, where PACs coincide with both lower prices and reduced variability, while base and embankment show weaker or negligible impacts. These patterns suggest that fuel PACs improve pricing efficiency primarily in fuel-sensitive work types.

Publication Title

International Conference on Transportation and Development 2026 Transportation Planning and Operations Selected Papers from the International Conference on Transportation and Development 2026

ISBN

[9780784487020]

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