Transcript REFORMA FINANCIERA E INSTITUCIONAL DE LA …
Ministry of Transport and Communications, Kazakhstan World Bank / European Bank for Reconstruction and Development / Asian Development Bank Road Asset Management Workshop, 31 May – 3 June 2005 Astana, Kazakhstan
Performance-Based Road Management and Maintenance Contracts
Dr. Gunter Zietlow
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e-mail: [email protected]
http://www.zietlow.com
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Overview of Presentation
Introduction
Brief history of Performance Contracts
Main reasons for implementing Performance Contracts
Service level criteria and response times
Performance monitoring and payments
Bidding and award of contract
Implementation experiences and strategy
Lessons learned
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Overview of Presentation
Introduction
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Poor maintenance
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Importance of timely Maintenance
When roads are in
poor
every KZT “saved” condition in road conservation will cost:
KZT 3 to road users in additional vehicle operating costs and
KZT 2 to the road administration (or the tax payer) in reconstruction and rehabilitation costs.
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Contracting out road maintenance can save a lot of money
Routine and periodic road maintenance done by in-house labor is being replaced more and more by contracts with the private sector.
Studies made by the World Bank in the 1980’s revealed that contracting out road maintenance to the private sector can reduce maintenance cost by between 30% and 50%.
Latin American countries where among the first to replace in-house labor by contracts with the private sector.
Asian countries in general are still lagging behind.
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Type of contracts
Unit price contract (admeasured)
Unit rates for work items
Payments are based on quantity of completed work
Lump sum contract
Definition of total work
Payment based on single price for total work
Performance based contract
Service level criteria (performance criteria)
Fixed monthly payments if service level criteria are complied with
Hybrid contract
Mixture of performance contract and unite price contract
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Performance-Based Management and Maintenance of Roads (PMMR)
Service level criteria define the minimum conditions of road, bridge and traffic assets as well as the management and operation of the assets , leaving it to the contractor as to how to achieve them.
The contractor is free to decide
What to do
When to do
How to do
Where to do
To do the physical works himself or subcontract (with certain restrictions) as long as he meets the performance indicators during the contract period
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Performance-Based Management and Maintenance of Roads (PMMR) cont.
Lump sum payments are made periodically and might be adjusted in accordance with the change of certain factors, like inflation or traffic volume.
Major emergency, rehabilitation and improvement works might be paid based on unit prices for works agreed case by case.
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Performance-Based Management and Maintenance of Roads (PMMR) cont.
Deductions or penalties are being made for non-compliance with terms and conditions of contract, especially with respect to the service level criteria.
Duration of contracts should at least include one periodic maintenance cycle (4-5 years for gravel roads and 8-10 years for bituminous roads). Pure routine maintenance contracts can be 1 2 years.
Performance-Based Management and Maintenance of Roads Complexity Up to 30 years Routine and periodic
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Routine
2 4 6
Construction, periodic and routine maintenance
8 10 12 14
Contract duration in years
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Distribution of risk
In-house Mainte nance Outsourcing Specific Maintenance Works Performance-Based Road Management and Maintenance Contracts Long-term Road Concessions (BFOT) Short term Medium term Long term Risk to contractor increases Risk to road agency decreases
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Performance-Based Management and Maintenance of Roads (PMMR) is also referred to as
Performance Specified Road Maintenance Contract (Australia and New Zealand)
Highway Asset Management Contract (USA)
Maintenance Service Level Contract (Latin America)
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Scope of Services of PMMR (1)
Management of the Road Network Routine Maintenance Periodic Maintenance Emergencies Improvements Rehabilitation PMMR
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Scope of Services of PRRM (2)
Management of the Road Network Routine Maintenance Periodic Maintenance Emergencies Improvements Rehabilitation PMMR
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Scope of Services of PMMR (3)
Management of the Road Network Routine Maintenance Periodic Maintenance Emergencies Improvements Rehabilitation PMMR
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Scope of Services of PMMR (3)
Management of the Road Network Routine Maintenance Periodic Maintenance Emergencies Improvements Rehabilitation PMMR
Contractual Relationship of PMMR (1)
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Audit by Client or External Auditor
Client/ Road Administration Performance or Conventional Contract Performance Contract Road Engineer Consultant Contractor Performance Audit Supervision for Admeasured Work
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Contractual Relationship of PMMR (2)
Client/ Road Administration Performance Contract Audit by Client or External Auditor Consultant/Contractor
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Overview of Presentation
Introduction
Brief history of Performance Contracts
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Brief history of Performance Contracts
1988 British Columbia, Canada
1990 Argentina
1996/7/8 Uruguay, Chile, Colombia, Brazil
1995 Sydney, Australia
1996 Virginia, USA
1998 New Zealand
2000 Chad
2001 India (Karnataka)
2001 Spain (Alava)
Examples of PMMR in Latin America (12/2001)
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Country Argentina Argentina Brazil Colombia ME Chile Guatemala ME Uruguay Uruguay ME No contracts Total km 59 11 7 280 11295 3623 2000 11487 2 130 7 9 747 4200 1473 1768 Duration Type of maintenance Av. annual US$/km 5 4 5 1 CREMA Km months CREMA routine 11000 2100 7000 1500 5 1 4 - 5 2 + 2 CREMA routine CREMA routine 3200 1500* 7000 3800
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Cleaning of drainage system and right of way
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Overview of Presentation
Introduction
Brief history of Performance Contracts
Main reasons for implementing Performance Contracts
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Main reasons for implementing Performance Contracts
Reduces maintenance cost
Provides better transparency
Improves customer focus
Improves control and enforcement of quality standards
Improves overall road conditions
Helps to reduce road user costs and road rehabilitation costs
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Overview of Presentation
Introduction
Brief history of Performance Contracts
Main reasons for implementing Performance Contracts
Service level criteria and response times
Service level criteria
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Objectives
To minimize total systems cost
To satisfy the road user
accessibility
comfort
travel speed
safety
To minimize environmental impacts
Service level criteria and response times
Examples
Examples of service level criteria
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International Roughness Index (IRI)
Absence of potholes and control of cracks and rutting
Minimum amount of friction between tires and road surface
Maximum amount of obstruction of the drainage system
Retro reflexivity of road signs and markings
............
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Scope (assets or services)
Drainage System Pavement, incl. markings Traffic assets (safety, signs, markings, signals, etc.)
Roadside Assets Bridges
Tunnels Traffic Services Emergency Response Snow & Ice Control
Examples of service level criteria (1)
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Asset Class Pavement Gravel surfaces Component Potholes Roughness (a) Roughness (b) Rutting Cracks > 3mm Potholes Roughness Thickness of gravel layer Paved Shoulders Potholes Cracks > 3mm Joints with pavement Service Level Criteria No potholes IRI < 2.0 (A), < 2.8 (U) IRI < 2.9 (A), < 3.4 (U) < 12mm (A), < 10mm (U) Sealed No potholes IRI < 6 (U), < 1 (C) > 10cm (C,U) No potholes Sealed Vertical alignment < 1cm (C,U) a asphalt; b bituminous surface treatment; A Argentina; C Chile; U Uruguay
Examples of service level criteria (2)
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Asset Class Drainage system Component Obstructions Service Level Criteria No obstructions. Should allow for unhindered flow of water Structures Road signs and markings Road signs Reflectivity of Road markings Structurally sound with no damages Complete, visible, and clean > 160 mcd/lx/sqm (Argentina), > 70 mcd/lx/sqm (Chile) Right of way Vegetation < 15 cm height of grass (Argentina) 5 –15 cm height of grass (Uruguay) Foreign objects No foreign objects allowed a asphalt; b bituminous surface treatment; A Argentina; C Chile; U Uruguay
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Service level criteria and response times
SERVICE LEVEL CRITERIA Roughness IRI < 2.5 and < 2.4 at the end of contract Surface defects < 50 mm < 50 mm Underground drainage -blocked -siltation > 15% Road markings -missing, not legible, worn > 50% -loss of reflectivity > 70% Warning signals -missing -loss of reflectivity > 50% -Traffic signals ----------- RESPONSE TIME 24 hrs. 4 hrs. 4 weeks 4 weeks 4 weeks 4 weeks 24 hrs. 4 weeks 2 hrs. to 7 days
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Performance Specified Maintenance Contract, New Zealand Feature Potholes on highways > 10000 vpd Potholes on all highways Contract Standard (Service Level Criteria) Not more than 3 potholes with a diameter greater than 70mm on any 10km section No potholes greater than 150mm in diameter Response time 48 hours 48 hours Depressions and Rutting No ponding greater than 30mm in depth at any location 6 months Lined Channels Edge Break No lined channels with more than 10% of the cross-sectional area obstructed and free of vegetation No more than 2m of edge break within any continuous kilometer greater than 0.5m 1 week 1 month
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Mainly input (hours worked) or output based (lane kilometers cleared) payment with some outcome based criteria like the response time of one hour when called upon or snow level reaches 2 inches.
Pure performance contract: the contractor receives a lump-sum per year and the client calls the contactor to achieve bar pavement within 24 hrs.
http://www.vmsom.com/news/pro-paper.asp
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Overview of Presentation
Introduction
Brief history of Performance Contracts
Main reasons for implementing Performance Contracts
Service level criteria and response times
Performance monitoring and payments
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Quality control and assurance
Formal monthly inspections
Informal inspections
Contractors self-control system
Road user complaints
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Performance monitoring
Inspection system in Chile
Inspections for purposes of payment done once a month taking 10% of the road network selected at random different stretches of 1 km length;
Regular inspections done once a selecting 5% of the network at random; week
Inspections due to complaint by the public; and
Follow-up inspections to verify if contractor rectified deficiencies detected by one of the inspections mentioned above.
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CHILE
System of payment
During the monthly inspection the compliance of performance standards is being evaluated for each category having different importance. Based on a pre-established formula compliance is calculated as a percentage which is multiplied by the monthly payment foreseen for 100% compliance. During the first year of the contract compliance has been around 95%, mainly due to deficiencies related to road safety and right-of way. In addition, penalties are being applied if the contractor does not rectify deficiencies within the time periods defined in the contract.
Evaluation of service level for a one-km test section
(World Bank)
38 The overall coefficient of compliance for a specific road (or road section) in a particular month is determined by calculating the simple average of the coefficients of compliance of all test sections of that month within the road concerned.
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Example of penalties for not responding to rectify deficiencies within specified response times (CREMA, Argentina) Service level criteria No pothole > 2cm deep on paved roads Penalty in US$ 110/day/pothole No edge failure on paved roads No rutting > 20cm long and 12mm deep on paved roads No cracking or raveling on paved roads 110/day/failure 66/day/rut 88/week/km Travel speed of at least 50km/hr on earth and 70km/hr on gravel roads No potholes > 2cm on paved shoulders 176/day/km 44/day/pothole Drains, ditches, culverts and other drainage structures to be clean 44/day/structure
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Self-Control Unit of Contractor
Own organizational structure with qualified personnel
Verifying continuously the compliance with the service level criteria
Monthly reporting of compliance to client using standard formats
Participating in monthly formal inspections
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Performance monitoring by contractor Example Virginia, USA
Asset inventory and condition assessment (updated annually)
Pavement management program
Bridge management program
Safety management and traffic control plan
Emergency response plan
Hazardous materials communications plan Customer response plan
Public information plan
Annual work plan updated every 3 months
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Quality Management System ISO 9001:2000 “Quality Management System – Requirements” requires contractor to establish, document, implement, and maintain a QMS that:
Identifies processes Illustrates sequences and interactions Identifies criteria and methods to ensure effectiveness
Documents resources and information necessary operate, monitor, measure and analyze the processes
Defines action required to achieve the planned results and continually improve the process
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Overview of Presentation
Introduction
Brief history of Performance Contracts
Main reasons for implementing Performance Contracts
Service level criteria and response times
Performance monitoring and payments
Bidding and award of contract
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Bidding and award of contract
Legal and financial feasibility
Preparation of bidding documents
Scope of Work
Time frame
Pure performance-based or hybrid
Role of contractor in preparing bidding documents
Risk allocation
Pre-qualification
Evaluation criteria
Contract award
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Examples of Bidding Documents
Sample Bidding Document for Performance-based Management and Maintenance of Roads prepared by the World Bank (World Bank 2002)
State Highway Maintenance Contract Proforma Manual SM032 (Transit New Zealand 2002)
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Overview of Presentation
Introduction
Brief history of Performance Contracts
Main reasons for implementing Performance Contracts
Service level criteria and response times
Performance monitoring and payments
Bidding and award of contract
Implementation experiences
Uruguay
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Pilot Project Uruguay
Extension: 359 km
154 km bituminous concrete
88 km concrete
37 km bituminous surface treatment
21 km forced impregnation
59 km gravel
Variable conditions
30 km of roads need initial rehabilitation and others require strengthening during the contract period.
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Pilot Project Uruguay Examples of Service Level Criteria
Remaining thickness of gravel surface layer:
5 cm during and 10 cm at the end of the contract period
Roughness ( IRI ) of pavements:
< 2,8 for bituminous concrete
< 3,4 for bituminous surface treatment
< 6 for gravel
Bituminous surfaces
Absence of potholes
Settlements < 10 mm
Shoulders
Absence of potholes and settlements
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Pilot Project Uruguay Examples of Service Level Criteria
Drainage systems, like culverts and ditches, should be clean to allow for a permanent free flow of water.
Right of way should be clear of trash and other foreign objects.
Vegetation should not exceed 6 cm on the median strip and 15 cm up to 5 m from the borders of ditches.
Traffic signs and markings: standards defined by the Traffic Department apply.
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Pilot Project Uruguay Deadlines, Payments, and Sanctions
Contract period: 4 years
Deadlines to comply with performance indicators:
2 months for potholes
6 months for other defects on main roads
one year for all roads
The contractor is being paid a fixed monthly fee per kilometer and type of road surface.
Sanctions for non-compliance
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Pilot Project Uruguay Redeployment of Displaced Staff
Started with 2 routine maintenance contracts and 1 maintenance contract for traffic signs and markings with former road agency’s staff.
Contracts have been let for 2+ 2 years.
The former road agency’s staff had the right to take up their former employment with the road agency, if they wish to do so, within one year of contract commencement.
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PMMR Uruguay Improvement in road conditions Contractor Year Very good 1996 0% A 1998 25% Good Regular Bad 60% 60% 40% 15% 0% 0% B 1996 23% 1998 37% 13% 46% 64% 17% 0% 0%
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PMMR - Uruguay
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PMMR - Uruguay
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PMMR - Uruguay
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Pilot Project Montevideo
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Pilot Project Montevideo
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Pilot Project Montevideo
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Pilot Project Montevideo
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Uruguay PMMR
Actually 46% of the national road network is being managed and maintained by PMMR
Contracts are of fourth generation
Contracts receive priority for financing
Argentina
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Argentina
National Road Network
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Tolled concessions Untolled concessions CREMA Under contract by provinces Contracted on km/month DNV force account Total Paved (km) 9508 1879 14399 1503 3623 30912 Unpaved (km) Total (km) 9508 5220 2612 1879 14399 6723 3623 2612 7832 38744
Australia
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AUSTRALIA
PMMR
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Actually, more than 20000 kilometers of road are being managed and maintained under PMMR in several provinces of Australia
Some of the contracts are hybrid contracts (some works are being paid on a unit price basis)
Reported savings are between 15% and 35%
New Zealand
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New Zealand
PMMR
First PMMR covers 406 kilometers, has a duration of 10 years and was let in 1998
Two years later a similar contract was concluded
In 2002 a PMMR covering 1040 km of local roads and 122 km of state highways
While the first contract resulted in 10% savings the latest one came in 22% below the cost estimate for comparable conventional contracts
USA
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First Performance Based Road Management and Maintenance Contract in the State of Virginia (Comprehensive Agreement for Interstate Highway Asset Management Services)
Maintain and refurbish 1250 lane-miles on three Interstate Highways, 62 rest areas, and 7 visitor centers
5+ year contract since early 1997
131 million US$ for 5 years with approximately 16% savings over VDOT cost
Contractor is VMS
15% of work is done by VMS staff
Washington D.C.
Performance-Based Asset Preservation
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Source: FHWA
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, 51 crash attenuators) contact “[email protected]”
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Overloading
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Weigh Station
Caminos del Río Uruguay
Cost savings
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Contracting out can reduce road maintenance cost 120 100 80 60 40 20 0 in-house unite price contract performance contract range minimum cost
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Cost of Road Maintenance in Sydney
100 % 1991 Rates 80 60 40 RTA SOR Contract 20 0 0 10 20 30 40 Time (months from June 1991) 50 60 70
Mobile Pothole Patching
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Courtesy VMS CONVENTIONAL METHOD
Average Unit Cost:
$120 per patch
$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 = 120 patches per day
Innovative RoadFlex™ Pothole Patching Material
Multiple Benefits: Permanent patch material No failures in 3 years No rework required Reduced labor and lane closures Less disruption to motorists
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Courtesy VMS
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Cost savings summary Performance Contract: Incentives / competition / long-term management
Modern management and work procedures
Increased productivity
Total life cycle costing
Just-in-time maintenance
Work package optimization
Use of latest technologies Helps to reduce road user costs and road rehabilitation costs
Implementation strategy
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“Ideal” conditions for PMMR
Well developed contracting environment with local contractors experienced in road maintenance
Road agency with good contract management experience, committed to the PMMR concept
Good knowledge and data of network, maintenance needs and cost
Network does not need mayor rehabilitation
Financing secured for contract duration
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Performance-Based Management and Maintenance of Roads - Implementation Strategy -
Phased introduction of service level criteria.
Routine maintenance
Roughness and friction
Deflection
Increase time span of contracts.
1 to 2 years
4 to 5 years
< 12 years
Monitor implementation process.
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Pilot Projects for PMMR (1)
Legal feasibility
Financial feasibility
Technical feasibility
Pilot Projects for PMMR (2)
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Constitution of a working group and definition of responsibilities.
Definition of the road network and scope to be contracted.
Selection and definition of performance indicators.
Definition of how to measure the performance indicators.
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Pilot Projects for PMMR (3)
Preparation of the inventory of the road network selected and determination of its present condition.
Determination of the traffic volume by type of vehicle.
Definition of maintenance works required and estimation of their cost.
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Pilot Projects for PMMR (4)
Preparation of Tender Documents.
Selection of contractors and award of contract.
Monitoring and evaluation.
Pilot Projects for PMMR (5) - Criteria for Selecting the Road Network -
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Moderate climate and topography
Length: 300 to 500 km
Concentrated area
Close to a major city
Include different types of road surfaces, road conditions, and traffic levels
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Overview of Presentation
Introduction
Brief history of Performance Contracts
Main reasons for implementing Performance Contracts
Service level criteria and response times
Performance monitoring and payments
Bidding and award of contract
Implementation experiences and strategy
Lessons learned
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Lessons learned (1)
Financing needs to be secured for the entire contract period.
Performance Contracts have to be tailored to each specific situation
Pilot schemes should be carefully planned and implemented
Risks shall be assigned to the party that can best manage the risk
Performance Contracts should be longer than 5 years and should include periodic maintenance as well
Lessons learned (2)
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Qualification of contractors and inspectors is key to success
All contractors should use proper Quality Management Systems (QMS)
Performance Contracts need strict performance monitoring and application of penalties for non compliance
Performance Contracts might not produce cost saving immediately.
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VISION
No potholes
Business Opportunities
Transport Cost
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http://www.zietlow.com
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