International Seminar on Road Financing and Investment

Arusha, Tanzania, April 16 – 20, 2007

Performance-Based Road Management

and Maintenance Contracts –
Worldwide Experiences

by
Dr. Gunter Zietlow

e-mail: [email protected]
1 http://www.zietlow.com
http://www.performance-based-road-contracts.com
 Overview of
Presentation (1)
¾Introduction
¾Introduction
¾Benefits and
¾Benefits and disadvantages
disadvantages of of PMMR
PMMR
¾Performance standards
¾Performance standards andand
response
response times
times
¾Risks
¾Risks
¾Performance monitoring
¾Performance monitoring
¾Payments and
¾Payments and incentive
incentive systems
systems
2
 Overview of
Presentation (2)

¾Data management
¾Data management and
and ownership
ownership
¾Customer perception
¾Customer perception and
and community
community
involvement
involvement
¾Tender design
¾Tender design and
and evaluation
evaluation
¾Changes required
¾Changes required by
by the
the client
client and
and
consulting
consulting and
and contracting
contracting industry
industry
¾Implementation experiences
¾Implementation experiences andand
strategy
strategy
¾Lessons learned
¾Lessons
3
learned
 Importance of Timely
Maintenance

¾When roads
¾When roads areare in
in poor
poor condition
condition
every
every $$ “saved”
“saved” in in road
road conservation
conservation
will
will cost:
cost:
¾$ 33 to
¾$ to road
road users
users in in additional
additional
vehicle
vehicle operating
operating costs
costs and
and
¾$ 22 to
¾$ to the
the road
road administration
administration (or
(or
the
the tax
tax payer)
payer) in in reconstruction
reconstruction
and
and rehabilitation
rehabilitation costs.
costs.
4
 Contracting Out Road
Maintenance Can Save Money

¾Routine
¾ Routineand
andperiodic
periodicroad
roadmaintenance
maintenance
done
donebybyin-house
in-houselabor
laboris
isbeing
beingreplaced
replaced
more
moreand
andmore
morebybycontracts
contractswith
withthe
the
private
privatesector
sectorworldwide.
worldwide.
¾Studies
¾ Studiesmade
madebybythe
theWorld
WorldBank
Bankininthe
the
1980’s
1980’srevealed
revealedthat
thatcontracting
contractingout
outroad
road
maintenance
maintenanceto tothe
theprivate
privatesector
sectorcan
can
reduce
reducemaintenance
maintenancecost
costby
bybetween
between30% 30%
and
and50%.
50%.
5
 Type of Contracts
¾¾Unit
Unitprice
pricecontract
contract(admeasured)
(admeasured)
¾¾Unit
Unitrates
ratesfor
forwork
workitems
items
¾¾Payments
Paymentsarearebased
basedononquantity
quantityof
ofcompleted
completedwork
work
¾¾Lump
Lumpsum
sumcontract
contract
¾¾Definition
Definitionof
oftotal
totalwork
work
¾¾Payment
Paymentbased
basedononsingle
singleprice
pricefor
fortotal
totalwork
work
¾¾Performance
Performancebased
basedcontract
contract
¾¾Performance
PerformanceStandards
Standardsor
orService
ServiceQuality
QualityCriteria
Criteria
¾¾Fixed
Fixedmonthly
monthlypayments
paymentsififperformance
performancestandards
standards
are
arecomplied
compliedwith
with
¾¾Hybrid
Hybridcontract
contract
¾¾Mixture
Mixtureof
ofperformance
performancecontract
contractand
andunit
unitprice
price
6 contract
contract
 Performance-Based Management and
Maintenance of Roads (PMMR)

¾ Performance
¾ PerformanceStandards
Standards define
define the
the minimum
minimum
conditions
conditionsofofroad,
road,bridge
bridgeand
andtraffic
trafficassets
assetsas as
well
wellas
asthe
themanagement
managementand andoperation
operationof ofthe
the
assets
assetsduring
duringthe
theentire
entirecontract
contractperiod,
period,leaving
leavingitit
to
tothe
thecontractor
contractorasastotohow
howto
toachieve
achievethem.
them.
¾ The
¾ Thecontractor
contractorisisfree
freeto
todecide
decide
¾¾ What
Whattotododo
¾¾ When
Whento tododo
¾¾ How
Howtotododo
¾¾ Where
Whereto tododo
¾¾ To
Todo
dothe
thephysical
physicalworks
workshimself
himselfor
orsubcontract
subcontract(with
(with
certain
certainrestrictions)
restrictions)
7
as
aslong
longasashehemeets
meetsthe
theperformance
performancestandards
standardsduring
duringthe
the
contract
contractperiod
period
 Performance-Based Management and
Maintenance of Roads (PMMR) cont.

¾Lump sum
¾Lump sum payments
payments are are made
made
periodically
periodically and
and might
might bebe adjusted
adjusted inin
accordance
accordance with
with the
the change
change of of
certain
certain factors,
factors, like
like inflation
inflation or
or traffic
traffic
volume.
volume.
¾Major emergency,
¾Major emergency, rehabilitation
rehabilitation and
and
improvement
improvement works
works might
might bebe paid
paid
based
based on
on unit
unit prices
prices for for works
works
8
agreed
agreed case
case by
by case.
case.
 Performance-Based Management and
Maintenance of Roads (PMMR) cont.

¾Deductions
¾ Deductions or or penalties
penalties are
are being
being made
made
for
for non-compliance
non-compliance with with terms
terms and
and
conditions
conditions of of contract,
contract, especially
especially with
with
respect
respect to
to the
the service
service level
level criteria.
criteria.
¾Duration
¾ Duration ofof contracts
contracts should
should atat least
least
include
include one
one periodic
periodic maintenance
maintenance cyclecycle
(4-5
(4-5 years
years for
for gravel
gravel roads
roads and
and 8-10
8-10
years
years for
for bituminous
bituminous roads).
roads). Pure
Pure
routine
routine maintenance
maintenance contracts
contracts can
can bebe 1-
1-
9
22 years.
years.
 Performance-Based Management and
Maintenance of Roads

Complexity

Up to 30 years
Routine and periodic

Routine

Construction, periodic and

routine maintenance

10 2 4 6 8 10 12 14
Contract duration in years
 Scope of Services of PMMR (1)

Management of the
Road Network

Routine Periodic
Maintenance Maintenance

Emergencies Improvements Rehabilitation

PMMR
11
 Scope of Services of PMMR (2)

Management of the
Road Network

Routine Periodic
Maintenance Maintenance

Emergencies Improvements Rehabilitation

PMMR
12
 Scope of Services of PMMR (3)

Management of the
Road Network

Routine Periodic
Maintenance Maintenance

Emergencies Improvements Rehabilitation

PMMR
13
 Scope of Services of PMMR (3)

Management of the
Road Network

Routine Periodic
Maintenance Maintenance

Emergencies Improvements Rehabilitation

PMMR
14
 Contractual Relationship of PMMR (1)

Audit
Client/ by Client
or External
Road Administration Auditor

Performance Contract

Consultant/Contractor

15
 Contractual Relationship of PMMR (2)

Audit
by Client Client/
or External Road Administration
Auditor

Performance or
Performance Contract
Conventional Contract

Road Engineer
Contractor
Consultant
Performance Audit
16 Supervision for Admeasured Work
 Performance-Based Management and
Maintenance of Roads (PMMR)

is
isalso
alsoreferred
referredto
toas
as
¾PerformanceSpecified
¾Performance SpecifiedRoad
Road
Maintenance
MaintenanceContract,
Contract,PSMC
PSMC
(Australia
(Australiaand
andNew
NewZealand)
Zealand)
¾HighwayAsset
¾Highway AssetManagement
Management
Contract
Contract(USA)
(USA)
¾MaintenanceService
¾Maintenance ServiceLevel
LevelContract
Contract
(Latin
(LatinAmerica)
America)
¾Output-and
¾Output- andPerformance-based
Performance-based
17 Road
RoadContract,
Contract,OPRC
OPRC(World
(WorldBank)
Bank)
 Brief History of PMMR

¾1988
¾ 1988 British
British Columbia,
Columbia, Canada Canada
¾1990
¾ 1990 Argentina
Argentina
¾1995
¾ 1995 Sydney,
Sydney, Australia
Australia
¾1996/7/8
¾ 1996/7/8 Uruguay,
Uruguay, Chile, Chile, Colombia,
Colombia, Brazil,
Brazil,
Peru
Peru
¾1996
¾ 1996 Virginia,
Virginia, USA USA
¾1998
¾ 1998 New New Zealand,
Zealand, FinlandFinland
¾1999
¾ 1999 Zambia
Zambia
¾2000
¾ 2000 ChadChad
¾2001
¾ 2001 United
United Kingdom,
Kingdom, Spain Spain
18
¾.......................................
¾ .......................................
19
Source: World Bank
 Benefits of PMMR (1)

¾Road Agency
¾Road Agency
¾Reducesworkload
¾Reduces workload
¾Helpsto
¾Helps toassures
assureslong-term
long-termmaintenance
maintenance
funding
funding
¾Providesbetter
¾Provides bettertransparency
transparencyand
and
accountability
accountability
¾Reducesmaintenance
¾Reduces maintenancecost cost
¾Improvescustomer
¾Improves customerfocus
focus
¾Improvescontrol
¾Improves controland
andenforcement
enforcementofof
quality
qualitystandards
standards
¾Avoidsfrequent
¾Avoids frequentclaims
claimsand
andcontract
contract
amendments
amendmentsto toincrease
increasequantities
quantitiesof
ofwork
work
by
bythe
thecontractor
contractor
20 ¾Reducesroad
¾Reduces roadrehabilitation
rehabilitation
¾Reducesrisks
¾Reduces risks
 Benefits of PMMR (2)

¾Road Users
¾Road Users
¾Providesbetter
¾Provides betterand
andsafer
saferroads
roadswith
with
consistent
consistentconditions
conditions
¾Reducesroad
¾Reduces roaduser
usercost
cost
¾Consultants and
¾Consultants and Contractors
Contractors
¾Guaranteesworkload
¾Guarantees workloadover
overlonger
longerperiod
period
¾Providespotential
¾Provides potentialfor
forincreased
increasedmargins
margins
¾Opensexcellent
¾Opens excellentopportunities
opportunitiesfor
forbusiness
business
growth
growth

21
 Development of Road Maintenance
Cost in Sydney
% 1991 Rates
100

80

60

40 RTA (Team of the Roads and Traffic Authority of New South Wales)
SOR Contract
Private contractor
20 Performance
Transfield ContractSpecified Road Maintenance Contract

0
0 10 20 30 40 50 60 70
22 Time (months from June 1991)
Source:
 Examples of reported savings by
introducing PMMR

¾Australia
¾Australia Savings
Savingsin
in%
%
¾Sydney
¾Sydney 35
35
¾Tasmania
¾Tasmania 20
20
¾WesternAustralia
¾Western Australia 15-35
15-35
¾NewSouth
¾New SouthWales
Wales 37
37
¾NewZealand
¾New Zealand 15-40
15-40
¾Virginia(USA)
¾Virginia (USA) 15
15
23
 Reasons for reduction in road
maintenance cost
Drivers
Drivers of
of savings:
savings: Incentives
Incentives //
competition
competition // long-term
long-term management
management
¾Modern management
¾Modern management and and work
work
procedures
procedures
¾Increased productivity
¾Increased productivity
¾Total life
¾Total life cycle
cycle costing
costing
¾Just-in-time maintenance
¾Just-in-time maintenance
¾Work package
¾Work package optimization
optimization
24
¾Use of
¾Use of latest
latest technologies
technologies
 Mobile CONVENTIONAL METHOD
Pothole Average Unit Cost:
$120 per patch
Patching $900 per lane mile
$5,900 per ton

* Production =
20-30 patches per day

MOBILE PATCHER
Average Unit Cost:
$22 per patch
$38 per lane mile
$880 per ton

*Production =
25
120 patches per day
Courtesy VMS
 Disadvantages of PMMR
¾ Road
¾ RoadAgency
Agency
¾¾Tends
Tendsto toprolong
prolongtender
tenderperiod
period
¾¾Requires
Requiresnew newprocedures,mentality
procedures,mentalitychangechangeofofstaff,
staff,
and
andtraining
training
¾¾Might
Mightlead
leadto
toloss
lossof ofinformation
informationififcontractor
contractoris
isnot
not
obliged
obligedto tosupply
supplydetailed
detailedinformation
informationononcondition,
condition,
interventions
interventionsandandinventory
inventoryof ofthe
theroad
road
¾¾Loss
Lossof offlexibility
flexibility
¾¾Loss
Lossof ofexpertise
expertise
¾¾Might
Mightreduce
reducecompetition
competition

¾ Road
¾ RoadUsers
Users
¾¾None
None

¾ Consultants
¾ Consultantsand
andContractors
Contractors
¾¾Increases
Increasesrisks
risks
26 ¾¾Requires
Requiresmentality
mentalitychange
changeof
ofstaff,
staff,new
newprocedures,
procedures,
and
andtraining
training
 Performance Standards

¾Objectives
¾Objectives
¾To satisfy
¾To satisfy the
the road
road user
user
¾accessibility
¾accessibility
¾comfort
¾comfort
¾travelspeed
¾travel speed
¾safety
¾safety
¾To minimize
¾To minimize total
total system
system cost
cost (cost
(cost to
to
road
road users
users and
and agency
agency –– life-cycle
life-cycle cost
cost
of
of assets)
assets)
27
¾To minimize
¾To minimize environmental
environmental impacts
impacts
 Examples of Performance
Indicators/Standards
¾Absence
¾ Absence of of potholes
potholes andand control
control ofof cracks
cracks
and
and rutting,
rutting, which
which affects
affects safety
safety and
and
pavement
pavement performance;
performance;
¾Roughness
¾ Roughness of of the
the road
road surface,
surface, which
which
affects
affects vehicle
vehicle operating
operating cost;
cost;
¾Amount
¾ Amount of of obstruction
obstruction of of the
the drainage
drainage
system
system to to avoid
avoid destruction
destruction of of the
the road
road
structure;
structure;
¾Friction
¾ Friction between
between tires
tires and
and road
road surface
surface for
for
safety
safety reasons;
reasons;
¾Retro
¾ Retro reflexivity
reflexivity of of road
road signs
signs and
and
28
markings
markings for for safety
safety reasons
reasons
¾............
¾ ............
 Scope of Contract (Assets and Services)
Example Washington DC, USA

¾Drainage
¾ DrainageSystem
System
¾Pavement,
¾ Pavement,incl.
incl.markings
markings
¾Traffic
¾ Trafficassets
assets(safety,
(safety,signs,
signs,markings,
markings,
signals,
signals,etc.)
etc.)
¾Roadside
¾ RoadsideAssets
Assets
¾Bridges
¾ Bridges
¾Tunnels
¾ Tunnels
¾Traffic
¾ TrafficServices
Services
¾Emergency
¾ EmergencyResponse
Response
¾Snow
¾ Snow&&IceIceControl
Control
29
 Examples
Examples of
of Performance
Performance Standards
Standards (1)
(1)

Asset Component Performance Standards

Class
Pavement Potholes No potholes
Roughness (a) IRI < 2.0 (A), < 2.8 (U)
Roughness (b) IRI < 2.9 (A), < 3.4 (U)
Rutting < 12mm (A), < 10mm (U)
Cracks > 3mm Sealed
Gravel Potholes No potholes
surfaces Roughness IRI < 6 (U), < 1 (C)
Thickness of > 10cm (C,U)
gravel layer

Paved Potholes No potholes

Shoulders Cracks > 3mm Sealed
Joints with Vertical alignment < 1cm (C,U)
pavement
30

a asphalt; b bituminous surface treatment; A Argentina; C Chile; U Uruguay

 Typical Service Levels for Paved Roads (1)
Fair Good Very Excellent
Good

Typical Traffic Volumes Less 250 – 1000 - 5000 -

(Vehicles/day) than 250 1000 5000 plus

Potholes (Max Dia of any single 400mm 300mm 200mm None

pothole) allowed

Potholes(max number in any 1000m 10 5 1 None

with diameter greater than 100 mm allowed

Patching (Response time) 28 days 28 days 14 days 7 days

Cracking (Response time) 28 days 28 days 28 days 28 days

Cleanliness of pavement surface 8 hrs 4 hrs 2 hrs 1 hr

and shoulders response time for
safety related matters

Cleanliness of pavement surface 14 days 7 days 5 days 3 days

and shoulders response time for all
31 other matters
World Bank
 Distribution of Risk
In-house Outsourcing Performance-Based Long-term Road
Mainte- Specific Concessions (BFOT)
nance Maintenance Road Management and
Works Maintenance Contracts

Short Medium Long-

-term -term term

Risk to contractor increases

Risk to road agency decreases

32
 Overview of
Presentation
¾¾ Introduction
Introduction
¾¾ Benefits
Benefitsand
anddisadvantages
disadvantagesof ofPMMR
PMMR
¾¾ Performance
Performancestandards
standardsandandresponse
responsetimes
times
¾¾ Risk
Riskidentification,
identification,sharing,
sharing,and
andmitigation
mitigation
¾Performance
¾ Performance monitoring
monitoring

33
 Performance Monitoring

¾Contractor’sself-control
¾Contractor’s self-controlsystem
system
¾Formalmonthly
¾Formal monthlyinspections
inspections
¾Informalinspections
¾Informal inspections
¾Roaduser
¾Road usercomplaints
complaints

34
 Self-Control Unit of Contractor

¾Ownorganizational
¾Own organizationalstructure
structurewith
with
qualified
qualifiedpersonnel
personnel
¾Verifyingcontinuously
¾Verifying continuouslythethe
compliance
compliancewith
withthe
theservice
servicelevel
level
criteria
criteria
¾Monthlyreporting
¾Monthly reportingofofcompliance
complianceto to
client
clientusing
usingstandard
standardformats
formats
¾Participatingin
¾Participating inmonthly
monthlyformal
formal
inspections
inspections
35
 Performance Monitoring
Inspection System in Uruguay

¾ Inspections
¾ Inspections forfor purposes
purposes of of payment
payment done done
once
once aa month
month taking
taking 10%
10% ofof the
the road
road network
network
selected
selected at
at random
random different
different stretches
stretches of of 11 km
km
length;
length;
¾ Informal
¾ Informal inspections
inspections done done onceonce aa week week
selecting
selecting 5%
5% of
of the
the network
network atat random;
random;
¾ Inspections
¾ Inspections due
due toto complaint
complaint by by the
the public;
public;
and
and
¾ Follow-up
¾ Follow-up inspections
inspections to to verify
verify ifif contractor
contractor
rectified
rectified deficiencies
deficiencies detected
detected by by oneone of
of the
the
36 inspections
inspections mentioned
mentioned above.
above.
 Overview of
Presentation
¾¾ Introduction
Introduction
¾¾ Benefits
Benefitsand
anddisadvantages
disadvantagesof
ofPMMR
PMMR
¾¾ Performance
Performancestandards
standardsand
andresponse
responsetimes
times
¾¾ Risks
Risks
¾¾ Performance
Performancemonitoring
monitoring
¾Payments
¾ Payments and
and incentive
incentive systems
systems

37
 Payments

¾Fixed
¾ Fixedmonthly
monthlypayments
paymentsforforscope
scopeofofwork
work
and
andservices
servicescontracted
contractedunder
underservice
service
level
levelor
orperformance
performancestandards
standards
¾Rehabilitation
¾ Rehabilitationworks
worksmay
maybe bepaid
paidasasfixed
fixed
monthly
monthlypayments
paymentsasaswell
wellororbased
basedonon
unite
uniteprices
pricesand
andquantities
quantitiesof
ofwork
work
performed
performed
¾Emergency
¾ Emergencyand andimprovement
improvementworksworkstotobe
be
paid
paidbased
basedononunit
unitprices
pricesand
andquantities
quantitiesof
of
work
workperformed
performed
¾PMMR
¾ PMMRshould
shouldinclude
includeschedules
schedulesof ofrates
rates
as
aswell
well
38
 Bonuses and Penalties

¾Monthly
¾ Monthlyfixed
fixedpayments
paymentsmight
mightbebereduced
reduced
ififcontractor
contractordoes
doesnot
notcomply
complywith
withthe
the
service
servicelevel
levelororperformance
performancestandards
standards
¾Contractor
¾ Contractormightmighthave
havetotopay
paypenalties
penaltiesfor
for
not
notrectifying
rectifyingdeficiencies
deficiencieswithin
withinthe
the
response
responsetimestimesgiven
given
¾Contractor
¾ Contractormightmightget
getbonus
bonuspayments
paymentsifif
heheexceeds
exceedsthe theperformance
performancestandards
standards

39
 Example of Penalties for not Rectifying
Deficiencies within Specified Response
Times (CREMA, Argentina)

Performance Standards Penalty in US$

No pothole > 2cm deep on paved roads 110/day/pothole
No edge failure on paved roads 110/day/failure
No rutting > 20cm long and 12mm deep 66/day/rut
on paved roads
No cracking or raveling on paved roads 88/week/km
Travel speed of at least 50km/hr on earth 176/day/km
and 70km/hr on gravel roads
No potholes > 2cm on paved shoulders 44/day/pothole
Drains, ditches, culverts and other 44/day/structure
drainage structures to be clean
40

Source: World Bank

 Data Management and Ownership

¾Collection
¾ Collectionand
andmanagement
managementof ofdata
datais
is
being
beingshifted
shiftedmainly
mainlyto tothe
thecontractor.
contractor.
¾Road
¾ Roadagency
agencyneeds
needsto toensure
ensurethat
thatdata
data
previously
previouslycollected
collectedby bythe
theagency
agencyisis
being
beingcollected
collectedby bycontractor
contractorandand
transferred
transferredtotothe
theagency.
agency.
¾Proper
¾ Properprocedures
procedureshavehaveto tobe
beincluded
includedinin
contract
contractfor
forcollecting
collectingand
andmanaging
managingdatadata
by
bycontractor.
contractor.

41
 Overview of
Presentation
¾¾ Introduction
Introduction
¾¾ Benefits
Benefitsand
anddisadvantages
disadvantagesof ofPMMR
PMMR
¾¾ Performance
Performancestandards
standardsandandresponse
responsetimes
times
¾¾ Risk
Riskidentification,
identification,sharing,
sharing,and
andmitigation
mitigation
¾¾ Performance
Performancemonitoring
monitoring
¾¾ Payments
Paymentsandandincentive
incentivesystems
systems
¾¾ Data
Datamanagement
managementand andownership
ownership
¾Customer
¾ Customer perception
perception and
and community
community
involvement
involvement

42
 Road User Perception and Involvement

¾Involvementof
¾Involvement ofroad
roadusers
usersin
inthe
the
planning
planningstage
stage
¾Informationdisclosure
¾Information disclosure
¾Consultationon
¾Consultation onservice
servicelevel
levelindicators
indicators
¾andduring
¾and duringoperation
operation
¾Publicationof
¾Publication ofbasic
basiccontract
contractinformation
information
¾Publicationof
¾Publication ofrelevant
relevantservice
servicelevel
level
indicators
indicators
¾Consultationon
¾Consultation onrelevant
relevantservice
servicelevel
level
specifications
specificationsand
andthe
thecompliance
complianceby bythe
the
43 contractor
contractor
 Tendering
Tendering

¾Legal
¾ Legal and
and financial
financial feasibility
feasibility
¾Preparation
¾ Preparation of
of bidding
bidding documents
documents
¾Scope
¾ ScopeofofWork
Work
¾Time
¾ Timeframe
frame
¾Pure
¾ Pureperformance-based
performance-basedor orhybrid
hybrid
¾Role
¾ Roleof
ofcontractor
contractorin
inpreparing
preparingbidding
bidding
documents
documents
¾Risk
¾ Riskallocation
allocation
¾Pre-qualification
¾ Pre-qualification
¾Evaluation
¾ Evaluation criteria
criteria
44
 Example of Bidding Documents

¾Sample Bidding
¾Sample Bidding Document:
Document:
Procurement
Procurement ofof Works
Works and
and Services
Services
under
under Output-
Output- and
and Performance-
Performance-
Based
Based Road
Road Contracts
Contracts (World
(World Bank
Bank
2005)
2005)
¾State Highway
¾State Highway Maintenance
Maintenance Contract
Contract
Proforma
Proforma Manual
Manual SM032
SM032 (Transit
(Transit
New
New Zealand
Zealand 2006)
2006)
45
 Changes Required
¾Roadadministration
¾Road administration
¾¾Attitudes
Attitudes
¾¾Procedures
Procedures
¾¾Training
Training
¾Consultants
¾Consultants
¾¾Procedures
Procedures
¾¾Training
Training
¾Contractors
¾Contractors
¾¾Procedures
Procedures
¾¾Training
Training
¾Roadusers
¾Road users
¾¾Control
Controlof
ofroad
roadconditions
conditions(claims)
(claims)
46
 First Pilot Project Uruguay

¾Extension:
¾ Extension: 359
359 km
km
¾Contract
¾ Contract period
period was
was 44 years
years
¾Deadlines
¾ Deadlines to
to comply
comply with
with performance
performance
indicators:
indicators:
¾2months
¾2 monthsfor
forpotholes
potholes
¾6months
¾6 monthsfor
forother
otherdefects
defectson
onmain
mainroads
roads
¾oneyear
¾one yearfor
forall
allroads
roads
¾The
¾ The contractor
contractor is
is being
being paid
paid aa fixed
fixed
monthly
monthly fee
fee
¾Sanctions
¾ Sanctions for
for non-compliance
non-compliance
47
 PMMR - Uruguay

48 Source: DNV Uruguay

 AUSTRALIA
PMMR

¾Actually, more
¾Actually, more than
than 20000
20000 kilometers
kilometers
of
of road
road are
are being
being managed
managed and and
maintained
maintained under
under PMMR
PMMR in in several
several
provinces
provinces of of Australia
Australia
¾Some of
¾Some of the
the contracts
contracts are
are hybrid
hybrid
contracts
contracts (some
(some works
works are
are being
being
paid
paid on
on aa unit
unit price
price basis)
basis)
¾Reported savings
¾Reported savings are
are between
between 15%15%
and
and 35%
35%
49
 PMMR, New Zealand (1)

¾First
¾ Firstcontract
contractcovering
covering406406km
kmof of
national
nationalroads
roadswaswaslet
letfor
for10
10years
yearsin
in
12/98
12/98
¾Contract
¾ Contractcost
costwas
was15%
15%below
below
comparable
comparablecostcostof
oftraditional
traditional
contracting
contracting
¾Performance
¾ Performancestandards
standardsare arevery
verywell
well
elaborated
elaborated
¾System
¾ Systemof ofquality
qualitycontrol
controlby bythe
the
contractor
contractor(quality
(qualitymanual,
manual,quality
qualityplan,
plan,
50 quality
qualitysystem
systemprocedures)
procedures)in inplace
place
 PMMR, New Zealand (2)

¾In
¾ In2000
2000aasimilar
similarcontract
contractwas
wasconcluded
concluded
and
and
¾Two
¾ Twoyears
yearslater
lateraathird
thirdPMMR
PMMRcovering
covering
1040
1040km
kmof oflocal
localroads
roadsand
and122
122km
kmof ofstate
state
highways
highways
¾While
¾ Whilethe
thefirst
firstcontract
contractresulted
resultedin
in15%
15%
savings
savingsthe
thelatest
latestone
onecame
cameinin22%
22%below
below
the
thecost
costestimate
estimatefor forcomparable
comparable
conventional
conventionalcontracts
contracts
¾New
¾ NewZealand
Zealandwillwillcontinue
continueto
toexpand
expand
PMMR
PMMR
51
 First Performance Based Road
Management and Maintenance Contract in
the State of Virginia (Comprehensive
(Comprehensive Agreement
Agreement for
for
Interstate
Interstate Highway
Highway Asset
Asset Management
Management Services)
Services)

¾Maintain
¾ Maintainand
andrefurbish
refurbish1250
1250lane-miles
lane-milesonon
three
threeInterstate
InterstateHighways,
Highways,6262rest
restareas,
areas,
and
and77visitor
visitorcenters
centers
¾5+
¾ 5+year
yearcontract
contractsince
sinceearly
early1997
1997
¾131
¾ 131million
millionUS$
US$forfor55years
yearswith
with
approximately
approximately16% 16%savings
savingsover
overVDOT
VDOT
cost
cost
¾Contractor
¾ Contractoris isVMS
VMS
52 ¾15%
¾ 15%ofofwork
workis isdone
donebybyVMS
VMSstaff
staff
 Washington D.C.
Performance-Based
Performance-Based Asset
Asset Preservation
Preservation

† pavement (344 lane-miles)

† drainage (2950 catch
basins, 7 miles of ditches)
† roadside and landscape
(450,000’ of curb and
gutter)
† bridges (109 structures)
† tunnels (4 major)
† snow and ice control
† traffic control and safety
(108,270’ guardrail,
53
51 crash attenuators)
Source: FHWA
 Colombia
Cooperatives

¾>300
¾ >300 micro-enterprises
micro-enterprises for
for
routine
routine maintenance
maintenance only
only
¾30-50
¾ 30-50 km
km of
of roads
roads with
with
10-15
10-15 people
people each
each
¾11 road
¾ road management
management firm
firm
supervises
supervises 4-6
4-6 micro-enterprises
micro-enterprises
¾Micro-enterprises
¾ Micro-enterprises receive
receive extensive
extensive
training
training
54
 Bangladesh
Labor contracting societies

¾ Off pavement
maintenance only
¾ Simple
performance levels
¾ Simple incentive
scheme
¾ Predominantly in
rural areas

55
 Pilot project in Chad

56 Courtesy Andreas Schliessler, WB

57
58
59
 Pilot Application of PRMM Contract in
Chad

¾440km
¾440 kmofofunpaved
unpavedmain
mainroads
roads
¾4years
¾4 years(48
(48months)
months)
¾Contractor:DTP
¾Contractor: DTP(Bouygues
(BouyguesGroup,
Group,
France)
France)
¾Supervision:SADEG
¾Supervision: SADEG(Cameroon)
(Cameroon)
¾Contractsigned
¾Contract signedininApril
April2001
2001
¾Contractorstarted
¾Contractor startedin
inJuly
July2001
2001
60
 Pilot Application of PRMM Contract in
Chad

¾Includes
¾ Includes(explicitly)
(explicitly)Management
Managementand and
Maintenance,
Maintenance,plusplusself-control
self-controlof of
contractor
contractor
¾Includes
¾ Includes(implicitly)
(implicitly)initial
initialrehabilitation
rehabilitation
spread
spreadout
outover
over2121months
months
¾Includes
¾ Includes(explicitly)
(explicitly)reconstruction
reconstructionof of
drainage
drainagestructures,
structures,signalling,
signalling,
emergency
emergencyassistance
assistancefor forroad
roadusers
usersinin
case
caseofofaccidents,
accidents,cleaning
cleaningup upof
ofaccident
accident
sites,
sites,management
managementof ofrain
rainbarriers,
barriers,axle
axle
load
loadcontrol,
control,etc.
etc.
61 ¾Includes
¾ IncludesEmergency
EmergencyWorksWorks(as (asneeded)
needed)
 PRMMC in Chad
Contract value and payments
¾Contract
¾ Contractvalue
valueof ofUS$
US$11.9
11.9million
million
¾15%
¾ 15%reserved
reservedfor forEmergency
EmergencyWorks
Works
¾Management
¾ Management//Maintenance
Maintenance//
Rehabilitation
Rehabilitationequivalent
equivalentUS$ 5.740per
US$5.740 per
year/km
year/km(excl.
(excl.taxes)
taxes)
¾Paid
¾ Paidininfixed
fixedmonthly
monthlypayments
paymentsof ofUS$
US$
210.000
210.000(if(iffull
fullcompliance)
compliance)
¾Initial
¾ Initialadvance
advancepayment
paymentofof20%
20%
¾Performance
¾ PerformanceGuarantee
Guaranteeofof10%
10%
62
63
64
 Difficulties encountered
¾¾No
Nomajor
majordifficulties
difficulties----overall
overallaagreat
greatsuccess
success----
road
roadin
inexcellent
excellentcondition,
condition,in incompliance
compliancewith with
contract.
contract.
¾¾Contractor
Contractortried
triedto
tomake
makeuseuseofofreserve
reserveforfor
Emergency
EmergencyWorksWorks––without
withouttrue
truejustification.
justification.
¾¾Contractor
Contractortried
triedto
toexploit
exploitweaknesses
weaknessesof of
Supervision
SupervisionConsultant
Consultant––especially
especiallyon onthe
theside
sideof
of
contract
contractmanagement
management(claims(claimsand
andresponse
responseto to
claims).
claims).
¾¾Conciliation
Conciliationprocess
processto tosolve
solveproblem
problemof ofroad
road
section
sectionononnatural
naturalterrain.
terrain.
¾¾Increase
Increaseininaccidents,
accidents,manymanyby bycontractor’s
contractor’sstaff.
staff.
65
 Results

Road
RoadUsers
Users Road
RoadAdministration
Administration
¾¾Are
Arevery
veryhappy,
happy,since ¾¾Satisfied
since Satisfiedwith
withthe
the
service
servicequality
qualitymuch
much experience
better experience
betterthan
thanever
ever ¾¾Wish
before
before Wishtotoexpand
expandthe
the%-
%-
age
ageof
ofthe
thenetwork
networktoto
¾¾Appreciate
Appreciatethatthatroad
road
is be
becovered
coveredbybyPMMR
PMMR
isalways
alwaysgood,
good,not
not
only contracts
onlyafter
afterworks
worksareare contracts
done
done ¾¾Road
RoadMaintenance
Maintenance
¾¾Can
Cannow
nowtravel
traveleven
even Fund
FundBoard
Boardalso
also
in
inrainy
rainyseason,
season,which
which positive
positive
was
wasimpossible
impossiblebefore
before
66
 Overloading

67 Source: unknown
 Weigh Station
Caminos
Caminos del
del Río
Río Uruguay
Uruguay

68

Courtesy: Gunter Zietlow

 “Ideal” Conditions for PMMR

¾Well
¾ Welldeveloped
developedcontracting
contractingenvironment
environment
with
withlocal
localcontractors
contractorsexperienced
experiencedininroad
road
maintenance
maintenance
¾Road
¾ Roadagency
agencywith
withgood
goodcontract
contract
management
managementexperience,
experience,committed
committedtotothe
the
PMMR
PMMRconcept
concept
¾Good
¾ Goodknowledge
knowledgeandanddata
dataof
ofnetwork,
network,
maintenance
maintenanceneeds
needsand
andcost
cost
¾Network
¾ Networkdoes
doesnot
notneed
needmajor
major
rehabilitation
rehabilitation
69 ¾Financing
¾ Financingsecured
securedfor
forcontract
contractduration
duration
 Performance-Based Management and
Maintenance of Roads
- Implementation Strategy -

¾Phasedintroduction
¾Phased introductionof of
service
servicelevel
levelcriteria.
criteria.
¾¾Routine
Routinemaintenance
maintenance
¾¾Roughness
Roughnessandandfriction
friction
¾¾Deflection
Deflection

¾Increasetime
¾Increase timespan
spanof
ofcontracts.
contracts.
¾¾11to
to22years
years
¾¾44to
to55years
years
¾¾<<12
12years
years

70
¾Monitor implementation
¾Monitor implementationprocess.
process.
 Make Use of Available Knowledge and
Experiences

¾Inviteexperts
¾Invite expertsin
inPMMR
PMMR
¾Arrangevisits
¾Arrange visitsto
tocountries
countrieswhich
which
have
haveimplemented
implementedPMMRPMMR
¾Userecourses
¾Use recoursesavailable
availableon
onthe
the
internet
internet
¾¾Sample
SampleTerms
TermsofofReference
Referencefor
forconsultancy
consultancy
services
services
¾¾Sample
Samplebidding
biddingdocuments
documents
¾¾Case
CaseStudies
Studies
71 ¾¾Relevant
Relevantpresentations
presentationsand
andpapers
papers
 Lessons learned (1)

¾Financing needs
¾Financing needs to to be
be secured
secured for
for
the
the entire
entire contract
contract period.
period.
¾Performance Contracts
¾Performance Contracts have
have to
to be
be
tailored
tailored to
to each
each specific
specific situation
situation
¾Pilot schemes
¾Pilot schemes should
should be be carefully
carefully
planned
planned andand implemented
implemented
¾Road have
¾Road have toto be
be in
in “maintainable”
“maintainable”
conditions
conditions
72
 Lessons learned (2)

¾Full Performance
¾Full Performance Contracts
Contracts should
should
include
include at
at least
least one
one periodic
periodic
maintenance
maintenance cyclecycle
¾Risks shall
¾Risks shall bebe assigned
assigned toto the
the party
party
that
that can
can best
best bear
bear and
and manage
manage thethe
risk
risk
¾Qualification of
¾Qualification of contractors
contractors and
and
inspectors
inspectors is is key
key to
to success
success
¾All contractors
¾All contractors should
should use
use proper
proper
73
Quality
Quality Management
Management Systems
Systems (QMS)
(QMS)
 Lessons learned (3)

¾Performance Contracts
¾Performance Contracts need
need strict
strict
performance
performance monitoring
monitoring and
and
application
application of
of penalties
penalties for
for non-
non-
compliance
compliance
¾Include Dispute
¾Include Dispute Resolution
Resolution
Mechanism
Mechanism
¾Performance standards
¾Performance standards need
need to
to be
be
developed
developed further
further
¾Performance Contracts
¾Performance Contracts might
might not
not
74
produce
produce cost
cost saving
saving immediately
immediately
 VISION
No
potholes
Business
Transport Cost
Opportunities

75
Thank you for your attention

76