Senior Road Executives Programme 2013 Performance-Based Road Contracting A New Approach To Road Network Management Kulwinder S Rao Senior Highway Engineer, GTIDR Content What is a Performance Based Contract ? Why introduce Performance Based Contracts? Performance Based Contract Concepts Types of Contracts Practical Application of PBCs Issues to be considered Final Word 2 Traditional Road Contracts Ok, tell me what to do and how to do it Risk on the owner to design, specify, and control the work Price driven approach- Lowest price Use Recipe or M&M specifications Material to be used (e.g. Polymer modified bitumen) Method (required processes) Follow their Recipe! 3 What is an Output and Performance Based Road Contract (OPRC)? Tell me what you want, but not how to do it the Contract. to perform the services to be provided by the contractor and to execute, complete, and maintain the Works WB OPRC document an approach to contracting that provides disincentives, incentives, or both to the contractor to achieve performance standards or targets for measurable outcomes and sometimes outputs - NCHRP (US) 4 OPRC- A different way of Road Management Road Agency Planning Physical Investment Financing Design Build Construction Contracts Supervision Contracts Contract Management Maintenance Transfer to owner PMMR 5 Source: Y Kamhi Content What is a Performance Based Contract ? Why introduce Performance Based Contracts? Performance Based Contract Concepts Types of Contracts Practical Application of PBCs Issues to be considered Final Word 6 Why use Performance Based Contracts? Issues Challenges with quality or performance or both Limited resources, shrinking budgets Fast deteriorating infrastructure Higher User/Public expectations Frequent claims and variations Lack of expenditure stability Most risks with the employer 7 Why use Performance Based Contracts? Potential Benefits Transfer risks to private sector Accelerated construction Fostering innovation Pay as per performance Achieve fixed levels of service Ability to achieve expenditure stability Avoids frequent claims and contract amendments Do more with less Reduction in contract administration requirements Achieve life-cycle cost savings Value for money 8 Value for Money Value of money= Change in Levels of Service Change in cost Better Value for Money if The LOS remain the same and cost declines The LOS improve for the same cost The LOS improve and cost declines 9 Reported Cost Savings in OPRC as compared to traditional contracts Norway: 2040% Sweden: +/- 30% Finland: 30-35% Holland: 30-40% Britain: >10% Australia: 10-40% New Zealand: 20-30% USA: 10-15% Source: Review of OECD contracts ( 2003) Canada Alberta +/- 20% British Columbia: +/- 10% Ontario: +/- 10% 10 Content What is a Performance Based Contract ? Why introduce Performance Based Contracts? Performance Based Contract Concepts Types of Contracts Practical Application of PBCs Issues to be considered Final Word 11 Implementation Methodologies DesignBuild Maintain Transfer Bid DBT- Design & Build Contracts Input Based contracts DB0MT - OPRC format Maintenance Contracts (PMMR) 12 Setting and Measuring Performance Levels of Service(LOS) relates to all the facets of performance that a contractor is responsible for Key business driver influencing all asset management decisions. Cater to present and future demand SMART Cover Safety, Serviceability, and Sustainability Auditable and easily Monitored What gets measured gets done. 13 Levels of Service Usability of the Road. Road User Comfort. Durability Measures. Other elements. Four Overall Criteria Levels Groups 14 Service Levels- Road Usability Usability of the Road 1.Road is trafficable at all times. 2.No interruptions 15 Service Levels- Road Comfort Road Comfort Pavement Surface Defects Potholes ( max dimension< 150mm), max no 5/km) Cracks (