Transcript HIGHWAY CONCESSIONS AND WORLD BANK GUARANTEES

Regional Seminar on PerformanceBased Management and Maintenance
Contracts
Changes Required by Road
Administrations and the
Consulting and Contracting
Industries
César Queiroz, Ph.D.
Roads and Transport Infrastructure Consultant
Arusha, Tanzania
February 2008
Presentation Outline
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Importance of timely maintenance
Using the PBC approach
What have been the results?
What are the potential pitfalls?
Changes to road administrations
Changes to consultants
Changes to contractors
Changes to road users
Distribution of risks between the public
and the private sectors
• Lessons Learned
Importance of Timely
Maintenance
• It is estimated that $1 spent on timely
maintenance can save more than $3 that
would be required for road
reconstruction
• A well maintained paved road should
last for 10 to 15 years before
resurfacing, but lack of maintenance can
lead to severe deterioration in 5 years
Why PBC?
• Reduced administration: less effort to
measure works
• Avoid frequent claims and contract
amendments to increase quantities of
activities
• Client focus: pay on the basis of userrelated performance indicators
• More responsibility to contractors
stimulates initiative and innovation
• Development of a new industry and creation
of additional job opportunities
Potential Pitfalls of PBC
• Longer tendering period
• Perceived loss of control and
flexibility by road agencies
• Uncertainty of long term relationship
• Lack of some (or unclearly specified)
performance standards and level of
service
• Possible unfair competition for
smaller contractors
Success Factors for PBC
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Training workshops
Technical studies
Prequalification of contractors
Bidding process
Supervision arrangements
Facilitation during pilot contracts
World Bank Sample Bidding
Document
Output- and Performance- based
Road Contract (OPRC)
http://www.worldbank.org/procure/
Payments under PBC Contracts:
Mostly based on the service provided
• The contractor has to ensure that road users
get a certain Level of Service
• Level of Service defined in terms of usability,
road surface conditions, safety features,
roadside assistance, etc.
• Specifications included in Contract describe
Level of Service expected for each road
• If a Level of Service indicator is not
complied with, an assessment in financial
terms is deducted from the contractor’s
monthly invoices
Level of Service: Paved Roads
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Roughness
Potholes / Patching
Cracking
Cleanliness of surface
Rutting / Ravelling
Broken pavement edges
Shoulder drop-off, condition
Drainage cleanliness, condition
Vegetation control
Supervision Arrangements for
Quality Assurance
• Determine adequate supervision
arrangements: consultants (individual
or firm); road agency staff (e.g.,
Argentina, Estonia)
• Prepare Terms of Reference (TOR) for
supervision
• Train road agency staff and consultants
• Coach supervisors during initial period
An Example of Invitation for Bid with
Expected Outcome and Tolerance
• Virginia Department of Transportation,
Invitation for Bid IFB# 156-RT, Issued on July
27, 2007
• Scope: Turnkey Asset Maintenance Services of
I-81 and I-66 sections (about 320 km)
• Mandatory Pre-bid Conference: August 20, 2007
• Technical Proposal Due Date: October 2, 2007
• Initial Contract Period: April 15, 2008 to April 14,
2013
• http://www.virginiadot.org/projects/constSTAN-I81overview.asp
• www.eva.state.va.us
I-81 is one of the eight top truck routes in the U.S.
An Example of Legal Framework:
Commonwealth of Virginia, USA
• The Public-Private Transportation Act of
1995 is the legislative framework enabling
the Commonwealth of Virginia to enter into
agreements authorizing private entities to
acquire, construct, improve, maintain,
and/or operate qualifying transportation
facilities
• http://www.virginiadot.org/business/resour
ces/PPTA-overview.pdf
Changes Required of Road
Administrations
• Attitudes
• Fear to loose control
• Fear to loose expertise
• From distrusting the contractor to a new
partnership
• Fear to loose lucrative “deals”
• Road user orientation
• Procedures
• New tender procedures
• New monitoring procedures
• Training
• Implementation and monitoring of PMMR
Changes Required for Consultants
(depending on role in PMMR)
– Attitudes
• Change from engineer to manager
– Procedures
• Life cycle management
• Pavement management systems
• Public relations management
– Training
• How to manage PMMR
• How to monitor PMMR
Changes Required of Contractors
• Attitudes
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Long-term business
Innovation
From maximizing to “minimizing” inputs
Road user orientation
• Procedures
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Road, bridge and tunnel asset management
Self control system
Traffic and safety management
Public relations management
• Training
• Own staff
• Subcontractors
Changes Required of Road Users
• From a passive to a more
pro-active role (ownership)
• Control of road conditions
(claims)
Build Ownership
Dear ROAD USER
This road is being managed
and maintained with
your tax money by
GOOD ROADS Inc.
JKKKKKMNN
SDDFDERDK
SAADSCC
ZZZZZZZZ
We welcome any comments
or suggestions
Tel/fax: 302 552 0098
Reconciling the Interests of
Three Actors
Road Agency
Road Users
Contractor
Road Agency
• Objective: meet public demand for
safe and smooth roads; reduce
budget expenditures
• Alternatives: force account,
admeasure, performance-based
contracts, concessions
• Appropriate use of consultants
Road Users
• Acceptable level of service
• Safety
Contractor
• Risks and profit competitive with
other investment alternatives
Changes are required, but they do
not have to be radical
• Some countries have used the same
form of bid and contract documents
as for traditional contracts (e.g.,
Estonia, Serbia)
• Hybrid contracts can be successful
(e.g., CREMA in Argentina and Brazil)
• But changes are often difficult…
Lessons Learned:
Contracting
• Ensure solid and credible financing of
contract during the entire contract
period
• Use of small local contractors: Only
after adequate preparation and
training, and for contracts with very
simple requirements (or as
subcontractors)
• Build in a Dispute Resolution
Mechanism
Lessons Learned:
Management of PBC
• Supervision consultant’s role: control
service level and assure overall technical
quality - - but no micro-control and micromanagement
• Road agency staff changed role: from
performing quality control to focusing on
quality assurance (no longer counting cubic
meters…)
• Arrange communication links with
contractors, including regular review
sessions
Lessons Learned:
Planning of PBC
• Define clear and simple performance
standards and measures before
advertising bids
• Include only “maintainable” roads
(unless rehabilitation is envisaged)
• Have consistent documents and
requirements
• Do not try to impose too many risks on
the contractor
Toolkit for PPP in Highways
The toolkit is structured under five
headings and includes a library and
interactive financial simulation model
Available at the World Bank’s web site:
www.worldbank.org/highways
Forms of Contracts and the
Distribution of Risks
Option
Works
Demand Performance
Force account Public
Public
Public
Admeasure
Pri/Pub
Public
Public
PBC
Private
Public
Private
Concessions
Private
Pri/Pub
Private
High
Allocation of Risks
Force
Account
Admeasure
Maintenance
Contracts
RISK
TO
PUBLIC
SECTOR
PBC
Concessions
Decreasing
Public Risks,
Increasing
Private Risks
Low
RISK TO PRIVATE SECTOR
BOO
High
Thank you!
Some Basic References
World Bank (2006). “Resource Guide for Performance-based
Contracting.” Washington, D.C.
http://www.worldbank.org/transport/roads/resourceguide/index.html
World Bank (2005). “Performance-based Contracting For
Preservation and Improvement of Road Assets.” Transport Note
No. 27. Washington, D.C.
http://www.worldbank.org/transport/roads/resourceguide/Docslatest%20edition/PBC/trn_27_PBC_Eng_final_2005.pdf
World Bank (2005). “Sample Bidding Document: Output- and
Performance-based Road Contract (OPRC).”
http://www.worldbank.org/procure/
World Bank (2003). “Toolkit for Public-Private Partnership in
Highways.” Public-Private Infrastructure Advisory Facility
(PPIAF) and World Bank.
http://rru.worldbank.org/Documents/Toolkits/Highways/index.ht
m
WB PPP-related Sites
• Toll Roads and Concessions
http://www.worldbank.org/transport/roads/toll_r
ds.htm
• How to Hire Expert Advice on PPP
http://rru.worldbank.org/Toolkits/Documents/Ad
visors/Full_Toolkit.pdf
• Labor Issues in Infrastructure Reform
www.ppiaf.org/Reports/LaborToolkit/toolkit.html
• Toolkit for PPP in Highways
http://rru.worldbank.org/Toolkits/PartnershipsHighway
s/
World Bank Websites on
Performance-based Contracts
• Resource Guide for Performance-based Contracting
http://www.worldbank.org/transport/roads/resourceguide/index.html
• Training Course for Performance-Based Management
and Maintenance of Roads
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/E
XTTRANSPORT/EXTROADSHIGHWAYS/0,,contentMDK:
20706624~pagePK:148956~piPK:216618~theSitePK:338
661,00.html
• Road Management Catalog
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/E
XTTRANSPORT/EXTROADSHIGHWAYS/0,,contentMDK:
20735996~pagePK:210058~piPK:210062~theSitePK:338
661,00.html
Cesar Queiroz
Roads and Transport Infrastructure
Consultant
World Bank, 1818 H Street NW
Washington DC 20433 USA
Tel +1 202-473 8053
Mob +1 301-755 7591
Email: [email protected]
http://www.worldbank.org/transport
http://www.worldbank.org/highways
Cesar Queiroz is an international consultant on roads and
transport infrastructure, with main interest in publicprivate partnerships (PPP) in infrastructure, road
management and development, performance-based
contracts, port rehabilitation, improving governance,
quality assurance and evaluation, research, teaching and
training. Between 1986 and 2006, he held several
positions with the World Bank in Washington, D.C.,
including principal highway engineer, lead highway
engineer, and highway advisor. Prior to joining the World
Bank, Cesar was the deputy director of the Brazilian Road
Research Institute in Rio de Janeiro. He holds a Ph.D. in
civil engineering from the University of Texas, USA, a
M.Sc. in Production Engineering from the Federal
University of Rio de Janeiro, and a B.Sc. in civil
engineering from the Federal University of Juiz de Fora,
Brazil. Cesar was awarded the Maua Medal for his
contribution to transport development in Brazil, and is an
elected member of the Russian Academy of Transport. He
has published more than 130 papers and articles,
including being a co-author of two World Bank main
publications on PPP and performance-based contracts,
respectively the “Toolkit for PPP in Highways” and the
“Resource Guide for Performance-based Contracting.”
He has participated actively in several international
organizations, such as TRB, SHRP, OECD, PIARC, IRF.