7th International Conference on Managing Pavement Assets (2008)

Key Success Factors For Global Service Contracts For Road Mangement And Maintenance M. Crispino, Polytechnic of Milan, Piazza L. Da Vinci, 32, Milan, Italy, +39 02-23996606, +39 02-23996602, maurizio.crispino@polimi.it G. Flintsch, Virginia Tech, 3500 Transportation Research Plaza, Blacksburg, VA, 24060, +1540-231-9748, flintsch@vt.edu M. Pozzi, Polytechnic of Milan, Piazza L. Da Vinci, 32, Milan, Italy, +39 02-23996605, +39 0223996602, mauro.pozzi1@polimi.it

ABSTRACT The use of global service, or asset management, contracts has emerged in the last decade as a successful road maintenance contracting practice. In these contracts, payments are linked (at least partially) to the contractor meeting or exceeding certain outcomes, performance indicators, or results. This type of contracting transfers some (or all) of the risks associated with managing and maintaining the road to the contractor. The implementation of these types of contracts is currently at different stages of progress in different countries. This paper discusses the lessons learned from the experience in Italy and compares performance-based contracts (PBC) developed by the local Agencies (Provinces and Municipalities) in Italy with similar experiences in others parts of the world. The contracting of the road management and maintenance through PBCs has both, advantages and disadvantages, and the degree of success is highly depended on how the contract is structured. This paper analyzes the potential benefits and risks associated with PBCs for road maintenance and the key factors for the successful implementation of this relatively new contracting tool at national that at international level. Successful Italian experiences for rural and urban networks are discussed and compared with similar examples in North and South America. INTRODUCTION Insufficient road maintenance is a widespread problem in many countries, including Italy, and can be attributed to different reasons. A primary aspect of the problem is the general absence of (binding or voluntary) standards, regulations and/or procedures to force road authorities to plan road preservation activities over a defined period, evaluating available budgets and the impact of the implemented preservation strategies. The prevalent practice is to solve emergencies, rather than adopting proactive, preventive, or planned preservation programs. For example, the Region of Lombardy, in Italy, has defined criteria and standards for road pavement management, but the agencies are still in the preliminary implementation phase, through pilot projects (1). At the local level, another important aspect is the lack of road management expertise in small local authorities as their engineers are generally responsible for conducting general purpose activities (management of schools, buildings, roads, pipelines, etc.). In addition, it must be emphasized that agencies generally make a large effort to manage the works. The administrative work behind pothole repair is often more time consuming than the work itself. Last but not least, there are often issues related with accountability. Many of the activities related to road maintenance, such as road surveillance, emergency works, planning and executing the work, etc., are generally carried out by different subjects or groups within the agency itself, and/or one or more contractors. This creates two main problems: (i) inefficiencies

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).

Crispino, Flintsch, and Pozzi

7th International Conference on Managing Pavement Assets (2008)

Page 2

in the communication chains of information and decisions, and (ii) the eternal conflict between road authority and contractor, naturally standing on opposite sides due to their different interests. These factors often play a detrimental role in terms of works quality, road safety, organizational efficiency, and time and money saving, and create the permanent risk of grey zones in which responsibilities cannot be clearly attributed. In this context, the outsourcing of the road pavement maintenance through correctlyformulated Global Service Contracts can be a solution for several of the aforementioned problems. These contracts allow outsourcing activities, by specifying the outcomes that the road authority expects over a defined period and guaranteeing a total and unitary service consisting of surveillance, data condition evaluation, planning, design of interventions and execution of the works. Experiences with PBC in different countries, such as Italy, have showed that such contracts can be implanted successfully, provided that they are well structured, based on a managing model that clearly establishes the responsibilities and expected outcomes for both, the road authority and the contractor. However, experience has shown that a wrong model behind a PBC can produce situation and problems quite similar to those it was intended to solve. This paper highlights the most important success factors for global service or asset management contracts and provides recommendation to help develop well-structured PBCs. PERFORMANCE BASED CONTRACTS General overview Performance-based contracts (PBCs) are a generally successful road maintenance contracting practices in which payments are linked to the contractor meeting or exceeding certain outcomes, performance indicators, or results. This type of contracting transfers some of the risks associated with managing and maintaining the road to the contractor. The concept was piloted in British Columbia, Canada, in 1988 (2) and it has expanded steadily since then with different names and scopes: performance specified maintenance contract (PSMC), performance-based management and maintenance of roads (PMMR), output-based service contract, and performance-based road asset management and maintenance contract (3). The most inclusive types of PCBs include all the road assets, as is the case with the global service or asset management contracts. The World Banks Resource Guide for Performance-based Contracting for Preservation and Improvement of Road Assets provides detailed information for national and sub-national road agencies in developing and transition countries interested in launching or enhancing a performance-based contracting (PBC) program to manage and maintain their road networks. The Guide contains information and practical documentation to: (i) identify a PBC approach to fit specific conditions in a given country; (ii) design bidding and contract documentation; and (iii) develop an efficient PBC implementation strategy (4). A performance-based contract is different from a method-based contract (traditional contract type which is common in the construction industry). A performance-based contract, as the name implies, sets forth the performance expected from the end product of a project rather than directing the contractor with the methods to achieve that end product (5). In other words, a performance-based contract specifies the desired outcomes rather than the desired processes to reach those outcomes. A performance-based contract leaves the contractor free to choose the most convenient construction methods. This type of contract transfer most of the risk of deficient design to the contractor, and often incentives the contractor to seek innovative construction methods (6).

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).

Crispino, Flintsch, and Pozzi

7th International Conference on Managing Pavement Assets (2008)

Page 3

The following are some of the reasons for road agencies to choose a PBC approach over more traditional approaches: (i) cost savings in managing and maintaining road assets; (ii) greater expenditure certainty for road agencies; (iii) the ability to manage the road network with fewer agency staff; (iv) better customer satisfaction with road service and conditions; and (v) stable, multi-year financing of maintenance (5). Global Service Contracts in Italy In Italy, PBC are also known as Global Service Contracts (GSC). According to UNI regulation 10685, Criteria for the formulation of a performance-based contract, a Global Service Contract for road maintenance is a contract that concerns a plurality of services for maintenance activity, with the contractor responsible for results. Maintenance, as such, does not imply a cost, but rather a guarantee of the outcome required. GSC ought not to be seen as a contract for works in the traditional sense, but essentially as a service. In this service, the execution of maintenance works only represents one phase of the whole process (often not the most important), which includes other important factors, such as the following: o In-depth knowledge of the assets conforming the network; o Relationship with consumers / citizens; o Correct diffusion of information; o Monitoring of the roads to avoid risk to public safety. Benefits The contractor undertakes both the maintenance works and the organization of such works. Furthermore, it must guarantee a level of quality predetermined by the contract, and must take responsibility in the event of any extraordinary circumstances that may arise on the road under management. The benefits of delegating to a single external entity the sole management all the maintenance services are management and economic in nature. From the management/organizational point of view, a GSC allows the rationalization and redeployment of human resources which would otherwise be required in a more fragmented kind of service, thanks to the reduction of troublesome interventions on the part of personnel within a road authority. The activities of the road authority are reduced to direction and control, identifying in the contractor a single coordinator for all activities, using its discretion, judgment and technical responsibility, over the courses of action to take. The expected results or outcomes are defined by the management of the road authority via technical service specifications, without, however, entering into discussion as to the methods to adopt for achieving these outcomes. The attainment of objectives (outcomes) is verified according to objectively measurable parameters, which are compared with the thresholds established in the service specifications. This allows measuring the resulting compliance and determining the corresponding rewards or penalties to the contractor. Furthermore, since relevant data are continuously monitored over time, the maintenance of the service standards is achieved by optimizing the selection of the best form of intervention thanks to a more organic, concentrated and rational form of management. In addition, GSC also guarantees continuity in maintenance services, which must be carried out according to established timeframes and qualitative standards that are determined calculating the resources required to carry out the work, facilitating to the smooth handling of critical situations. From the economic/ financial point of view, the advantages derive from the reduction of administrative and management costs because to the possibility of obtaining economies of scale

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).

Crispino, Flintsch, and Pozzi

7th International Conference on Managing Pavement Assets (2008)

Page 4

from the availability of a single, integrated service. The costs involved in managing multiple service contracts are eliminated, simplifying the administrative load of the road authority. In addition, a Global Service Contract enables the on-going monitoring of spending and the allocation of funds for various annuities, with a comprehensive saving on management costs, and allows more accurate financial planning. Furthermore there is a cost saving in the carrying out of the tendering process. Services Included Generally, in Italy, Global Service Contracts include the following services: 1. Governance Center: for the organization and management of an information system to organize the execution of ordinary an extraordinary maintenance works (e.g.: timeframes for the execution of road works), and manage the historic and current data. In addition, the contractor should provide an operations centre, complete with a call center, whose role is to run the surveillance service of the road resources, collect and document requests for intervention and schedule emergency road works. 2. Surveillance Service: which consists of continuous observation (24 hours a day, 365 days a year) with the aim of identifying and eliminating any kind of unexpected problem or damage to the road that may present a danger to public safety. 3. Emergency road works: timely positioning of appropriate, temporary road signs to indicate the presence of danger and/or execute temporary works (such as pothole repair). 4. Routine maintenance: activities to keep the road/pavement at a functioning state, without modifying its original state. Typical interventions include sealing of cracks, resurfacing of sections with worn surfaces, and restoration of horizontal marking, among others. 5. Extraordinary maintenance: activities that restore the infrastructure to its correctly functioning state. Typical extraordinary maintenance activities include structural overlays and reconstruction of the pavement layers. SUCCESS FACTORS FOR GSC AND PBC Although road maintenance PBCs have not received widespread application in many countries, their use is increasing. For example, in Italy, the Government in 2000 formally identified PBC as the most effective and economic road management typology for local agencies. It is interesting to note that, in Italy, at present there are two oppose points of views regarding PBCs; they are seen as the solution to all road maintenance problems or, on the contrary, as a tool which does not allow the road authority to have the control of the management of the pavement network and results in an increase of the costs, respect to a more traditional in-house management. However, neither of the opinions are generally based on hard data and/or proved facts, because there are only a few on-going experiences are they are generally different. Although it is still too early to have conclusive experiences, it is useful to review these experiences to learn from them and apply the lessons to new contracts. Challenges Internationally, the World Bank has summarized the main challenges that road agencies face when implementing PBCs. The main challenges identified include: (i) adequate allocation of risks to the party that is able to manage them best; (ii) establishing a true partnering relationship between the contractor and client; (iii) the need to acquire a new set of skills and expertise to enable the road agency staff to effectively develop and manage a PBC program; (iv) downsizing

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).

Crispino, Flintsch, and Pozzi

7th International Conference on Managing Pavement Assets (2008)

Page 5

of the agency triggered by the adoption of the PBCs; (v) choosing a PBC format that is consistent with the contracting industrys capacity in the country; (vi) identification and clear definition of appropriate performance specifications; (vii) design of an incentive payment mechanism that encourages the contractor to consistently meet or exceed the specified minimum performance indicators; (viii) assured long-term funding for multi-year PBCs; and (ix) determination of the liability and indemnity of the contractor and client particularly in relation to incidents, accidents, and emergencies (5). Key Factors The Italian experience agrees with the international one; however, there some particular key factors which are worth to be discussed in detail: 1. Contract duration: should not be less than 6 years, whereas on-going experiences are showing that 9 years is considered a reasonable duration for both road authorities and contractors. Relatively long contracts allow the contractor to invest in new equipments and to hire specialized personnel, which improve the quality of the works and all services included in the PBC. This is a clear advantage of PBCs respect to traditional maintenance contracts which are generally for only one year. Longer contracts (at least 9 years), transfer more responsibilities to the contractor and give the road authority more certainty about the quality of the works. In other words, reciprocal trust between the authority and contractor are supposed to be better in a long duration contracts than in a traditional one-year contract. 2. Budget: the budget allocated for a PBC must be calibrated on the services the road authority wants to include and above all on the level of quality for the network the authority intends to reach. PBCs for road management can include different services, traffic light operation, road lightning maintenance, emergency road works, curbs cleaning, winter maintenance, etc. Preventive and routine maintenance, pavement rehabilitation planning and design, execution of the works, surveillance and call center operation should be the core of the GSC. The cost of the contract can be therefore higher than the cost of in-house road management just because the authorities add more services which, without PBC, would not be carried out. It is the case for example of surveillance and call center. In other words, there is an increase of costs just because there is an increase of services. 3. Type of services controlled through performance indicators: it is important to note that not necessary all of the services include in the contract must be outcome-based; some services can be defined based on the quantity of work the contractor does. In other words, some GSC may be hybrid, while some core services are measured based on pre-defined performance indicators, independently from how the goal is reached, other services can be measured based on the work actually done. For example, within a PBC the traffic lights management can be included by establishing a pre-defined number of lights that have to be replaced over a certain period. Similar criteria can be set for the substitution of road lights, or the number of potholes to be repaired annually. These services are not measured based on performance, as it could be for example for the horizontal marking (or other services) whose performances to be reached are defined over the whole network and over the entire duration of the contract. 4. Inventory of the Maintained Assets: another key factor for a well structured PBC is that it cannot be implemented without a deep knowledge of the pavement network and its needs. An inventory database must therefore be built together with a pavement condition database. A PMS (Pavement Management System) must thus be developed by the road authority to find

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).

Crispino, Flintsch, and Pozzi

7th International Conference on Managing Pavement Assets (2008)

Page 6

the optimal annual budget to be allocated (and transferred to the contractor) to assure a defined level of quality (7-9). Therefore, in the context of a GSC or PBC a PMS is a fundamental tool for the road authority to find the right figures (technical and economical) on which to build the contract. This means that additional costs, for database and PMS, have to be considered before starting a PBC. In different on-going experiences, PBC where initiated without an adequate knowledge of the road condition data and without analyzing future scenarios/ budget relationships. Moreover, some authorities delegated the activities of data monitoring and PMS to the contractors, including such activities in the due services. The transfer of the data collection appears to be a bad choice for different reasons. First, pavement condition data, on which the efficacy of a PBC is mostly evaluated, should not be monitored by the contractor itself due to an evident conflict of interests. Secondly, the PMS is a tool which must be constantly used by the authority to analyze the evolution of the scenarios (due to the evolution of roughness, bearing capacity, skid resistance, etc.) according to the maintenance and rehabilitation activities chosen and carried out by contractor. In general, a pavement management system for a PBC needs more money, but not because is more expensive itself but just because there is a radical change of approach respect to a traditional management approach. In addition to the basic activities are needed (such as inventory and condition data collection and management, PMS development, etc) included in case of in-house management, more services can be incorporated (and thus included and paid in PBC) which are not generally carried out when the management is not done under contract (such as surveillance, call center, etc.). 5. Contractor Type: another key factor able to determine the success of a PBC is the type of contractor which is individuated by the PBC. As mentioned before, one of the main criticalities of the actual situation concerning public works is the natural conflict between contractors and authority, due to their different and contrasting interests. The road authority makes projects and then must strictly control the quality of the execution. The contractor is interested instead to minimize its own costs with possible consequences on the quality of the works. It is very difficult for the road authority to attribute responsibilities to the contractor in case of early distress because it is not easy to demonstrate the direct correlation to the quality of the work. The contractor normally tries to highlight how the problem arisen is due to a bad project. Often, all this come to legal issues which cant be solved in short time, with other not negligible costs. This negative model of opposite interests must not be reproduced in PBC. Whereas it seems that it not possible for PBC to run such risk, it can happen, as already happened in some of the on-going experiences, that a large PBCs require the association of different contractors with different capacities and skills. In this model the main contractor assume with the role of government centre of the PBC, a sort of head of the body made by the association of contractors, and thus, they assume a thinking role (planning, project, design, etc.). The other contractors become the arms, those who just execute the services (e.g. the surveillance) and the works. Inside such a model, the same conflict that normally stands between authority and contactor (work executor) arise between head and arms. Executors try to reduce the costs reducing the quality of the works and thus, the head have to strictly control all activities (spending lots of money for this) carried out by the executors. Responsibilities are hardly shared in this model inside the body, as they are mainly attributed to the PBC main contractor (the head contractor). Low quality of works (due to

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).

Crispino, Flintsch, and Pozzi

7th International Conference on Managing Pavement Assets (2008)

Page 7

bad execution) can result in more maintenance activities in the future to reach the pavement performances required by the contract. This requires additional costs and, in case of these or other problems, the head contractor should in turn demonstrate that the problem did not arise due to mistakes in its planning or projects activities but just to execution (made by executor contractors). This is not easy to be demonstrated and legal issues arise again and the PBC would fail in solving the existing conflict with executors. A different and better organization model does not have such risk. The body which is in charge of carrying out the PBC must belong preferably to one contractor or at least to an association of contractors which share both the head and the arms. Responsibilities are shared by all partners, which have one common goal, the success of the PBC. Reduction in costs and therefore in quality of the works, can mean an increase of costs in the long-term (because of more maintenance required in the future to assure pre-defined performances of the pavement network), but this choice will be agreed by all of them. 6. Type of Works Included: the last key factor that must be considered for the success of a PBC is that both routine maintenance and rehabilitation must be included in the PBC. However, some on-going experiences in Italy only include maintenance, while the latter was managed in the traditional way, through public bids, on a case by case base. This seems to be the worst way to formulate a PBC, as great confusion may arise about responsibilities when the performance is not achieved. For the same reason, it is recommended that the PBC include all those services which interfere in some way with pavement performance, such as: (i) the winter maintenance, as the equipments which remove snow and the chemical substances spread to reduce the ice risk can modify the pavement surface characteristics; and (ii) utility repairs, as bad reconstruction dramatically influence the pavement life. CASE STUDIES Worldwide there are some on-going experiences of PBCs. It must be emphasized that such PBCs are quite different in terms of (i) number and type of assets included; (ii) number and type of services included; (iii) roles and responsibilities of the contractor; (iv) type of contractor required; (v) length of the contract; (vi) budget allocated; (vii) procedures to control the achievement of the specified outcomes. It was considered interesting report here some references of some PBCs experiences. Italian Experiences Urban Network: in 2005 the municipality of Cernusco S.N. initiated a Performance Based Contract for maintenance and rehabilitation of the road pavements of an urban network. Extension of the network was about 100 km (700.000 m2). The contract covered a period of 9 years with an amount of 15,6 million (mean value 22,3 /m2). The main activities included within the contract are: implementation of a condition and inventory database, pavement monitoring and diagnostic, surveillance and emergency maintenance (crews available 24 hours a day and 365 days a year) and operation of a call centre to let users warn the contractor about problems on the network. The following maintenance works were included: patching all potholes, sealing of cracks, maintenance of the horizontal marking and vertical sign, rehabilitation of asphalt concrete pavements, traffic light and road lightening maintenance. Economical penalties and bonuses are applied to the contractor based on the comparison between contractual requirements and effective outcomes achieved.

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).

Crispino, Flintsch, and Pozzi

7th International Conference on Managing Pavement Assets (2008)

Page 8

Urban and Rural Network: in 2006 the municipality of Rome activated a Performance Based Contract for the pavements of an urban and rural road network of about 800 km (11.000.000 m2) with 2.200.000 m2 of sidewalks. The contract covered a period of 9 years, with a total amount of 570 million (43,18 /m2). The main activities of this contract are similar to those reported for the urban network; a difference concerns instead the performance indicators which in this case had to be proposed by the contractor in the context of his technical offer; the contract instead fixed the type and extension of each maintenance and rehabilitation intervention. Rural Road: in 2003 the provinces of Florence, Pisa and Livorno started a Performance Based Contract to manage a single rural road (FI-PI-LI: FIrenze-PIsa-LIvorno) with dual carriageway and two lanes in each direction, 100 km of length (1.600.000 m2) (10). The contract covered also in this case 9 years with a total amount of 41,4 million (mean value 25,8 /m2). The contract organization and the activities are similar to the ones previously reported for the rural network. In addition, the rules for bonuses and penalties are also similar; for example the accessibility to the call center operators is established based on the time elapsing before an operator answers; the minimum service level is defined in 60 seconds. In this PBC is noteworthy how the users/customers point of view is taken into account. Through opinion polls the road users examine the results in relation to discomfort causes (presence of road work, lack of information, etc.) and in relation to different aspects (vertical signs, horizontal marking, safety barriers, pavement characteristics, etc.). In this way it is possible comprehend both the perceived quality and expected quality from the users. Thanks to the comparison between effective data (i.e. number of accidents, number of dead, etc.) and those concerning the perceived quality from user opinion polls, it is possible to set up the correct information campaign. Moreover, for the road authority this represents an incentive to increase both the user satisfaction and awareness about the choice made within the contract. International Experiences Urban Networks: in 2001 the city of Buenos Aires, Argentina, started an ambitious program for developing a pavement management system for the citys collector and local roads. One of the main problems were utility cuts, which amounted to about 600 cuts per day and the cuts stayed open an average of 3 days. The city hired a consultant to conduct an inventory and condition evaluation of 30,000 blocks of city streets (each approximately 1,000 m2) and develop a pavement rehabilitation program. The blocks that had a condition below a threshold were rehabilitated by force account and then transferred to the contracted maintenance program. The routine maintenance tasks included in the contract were: patching of different pavement surfaces and gutters, sealing of cracks and joints in concrete and cracks in asphalt pavements, clearing and repositioning metallic fences, maintenance of the pavement painting, replacement of raised pavement markings, and replacement of concrete slabs. The road management contracts require the contractor to evaluate the surface condition of the entire network every four months. The Pavement Management System group checks 10% of the evaluated segments. The contract is hybrid, and includes items that are paid based on unit prices (rehabilitation and emergencies) and others that are paid based on performance. The performance indicators used are PCI, no potholes, curb and gutter in good condition, patching in good condition, horizontal markings in good condition, and smoothness only for the avenues. In addition, the contracts require the contractor to measure traffic volumes twice a year and loads (using WIMs) once a year. There are a total of 144 stations in the city.

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).

Crispino, Flintsch, and Pozzi

7th International Conference on Managing Pavement Assets (2008)

Page 9

The municipality of Montevideo, Uruguay, began using road maintenance PBCs in 1997 to improve the quality of the urban network and to reduce maintenance costs. The initial contract was issued for a three-year term, and the contractor received a fix monthly payment. In addition to the routine maintenance and rehabilitation activities, the contracts require the contractor to measure traffic volumes twice a year and loads once a year. An example of performance indicators concerns IRI: the rehabilitated roads must maintain the following IRI values: 2.0 m/km for asphalt concrete, 3.8 m/km for concrete, 3.0 m/km for surface treatment, and 6.0 m/km for gravel surfaces. The contractor has a maximum time to correct the problems once they have been identified. The program recognized that the condition of the pavement must at least be regular to be maintainable. For this reason the methodology included two phases: (i) a first phase focused on upgrading pavements in condition below regular to good or very good and (ii) a second phase that included the routine, and occasionally preventive, maintenance of all the roads in regular, good, or very good condition. The rehabilitation work is paid based on unit quantities. Urban and Rural Network: under the 1995 Public-Private Transportation Act (PPTA), a private contractor, Virginia Maintenance Services (VMS) submitted an unsolicited proposal to Virginia Department of transportation (VDOT) for the maintenance of assets within a portion of the interstate highway system of Virginia (USA). The performance-based contract required VMS to administer and maintain all assets and carry out incident management and snow removal facilities on 250 miles of Virginias interstate highways (I-81, I-77, I-95, and I-381). By this contract, a total of 20% of Virginias interstate highways were covered. The contract was a fixed-fee (lump-sum) 5.5 year contract with an option of renewal for one more term and with a total fee of $131.6 million. Furthermore, the contract was renewed in June 2001 for 5 more years (contract term to commence in July 2002 and end in July 2007) at a fixed-fee of $162 million with contract provisions (other than the fee) remaining exactly the same as the previous terms. The VDOT-VMS contract made the contractor in charge of maintaining all assets between VDOTs right of way fences within the sections of the interstate highway system covered by the contract. This includes all road surfaces, roadside, drainage, and traffic assets. Moreover, the contractor was responsible to provide snow and ice removal services. CONCLUSIONS GSC or asset management contracts are still in a developing phase in many countries, and particularly in Italy. Its use is not widespread but the interest for it is strongly increasing. The type of performance-based contracts has great potential for solving many of the actual problems that road authorities have with pavement/road maintenance and management. Additional services, in some way related to pavement/road management, can be outsourced in the same contract (surveillance, call centre, emergency road works, horizontal and vertical marking, traffic lights and road lightening, curbs cleaning, etc.). Furthermore, a PBC cannot be developed without a complete inventory and conditions database and a PMS for the definition of the budget to be allocated for the PBC and a continuous monitoring and evaluation of the evolution of the activities (performance vs. maintenance activities carried out by the contractor). These contracts are a powerful tool that can be successful if they are well structured. Many factors and above all the model, which stands behind the contract, need to be carefully evaluated and defined to avoid the type of conflicts and problems which PBC had to solve. Many prejudices against or perceived problems related with performance-based contracts are now due to experiences in which the contract were not carefully formulated. The increase of costs is

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).

Crispino, Flintsch, and Pozzi

7th International Conference on Managing Pavement Assets (2008)

Page 10

typically not a good reason not to use PBC; on the contrary, many well structured PBCs can bring the road authority long-term savings. REFERENCES (1) Region of Lombardy Specifications, Resolution n. 1790 - 25 January 2006, BURL n. 8 S.S., 21.2.2006. Standard prestazionali e criteri di manutenzione delle pavimentazioni stradali (2) Zietlow, G., Implementing Performance-based Road Management and Maintenance Contracts in Developing Countries An Instrument of German Technical Cooperation, 2005, German Development Corporation http://www.zietlow.com/docs/PBMMC-GTZ.pdf (accessed 3/07) (3) Queiroz, C. 2005, Options for Implementing Performance-based Contracts, Presentation for the World Bank Transport Forum 2005, Washington, D.C., World Bank, http://www.worldbank.org/transport/ roads/resource-guide/Docs-latest%20edition/cases-andpdfs/Queiroz_Performance-Based%20Contracts.ppt (accessed 3/07) (4) World Bank TN-27 Resource Guide for Performance-based Contracting for Preservation and Improvement of Road Assets, http://www.worldbank.org/transport/roads/resourceguide/ (accessed 3/07) (5) Stankevich, N., Qureshi, N. and Queiroz, C., Performance-based Contracting for Preservation and Improvement of Road Assets, 2005, Transport Note TN-27, The World Bank, Washington, D.C. http://www.worldbank.org/transport/roads/resource-guide/Docslatest%20edition/PBC/trn_27_PBC_Eng_final_ 2005.pdf (accessed 3/07). (6) Hardy, P., "Austroads Review of Performance Contracts: The Potential Benefits of Performance Contracts ", 2001, Contracting the Future NZIHT Symposium (7) Crispino M., Olivari G., Mismetti G., Scazziga I., First experience in developing a PMS for a Province road Network, 2004, International Conference on Managing Pavements, Brisbane, Australia (8) Crispino M., Olivari G., Mismetti G., Scazziga I., Development Of A Pavement Management System In The Province Of Milan: The Validation Of Pavement Performance Curves, 2004, International Conference SIIV, Florence (9) Crispino M., Olivari G., Poggioli M., Scazziga I., Including Bearing Capacity into a Pavement Management System, 2005, International Conference on Bearing Capacity of road Pavements, Trondheim, Norway (10) D. Bellini, Provided and Perceived Quality for Performance-Based Road Management: A Comparison Model, 2007, 23 Congres Mondial de la Route, Paris, France

TRB Committee AFD10 on Pavement Management Systems is providing the information contained herein for use by individual practitioners in state and local transportation agencies, researchers in academic institutions, and other members of the transportation research community. The information in this paper was taken directly from the submission of the author(s).