Output- and Performance-based Road Contracts (OPRC)

WB Transport Forum 2007 - Learning Event -

Course Segments:

Part 1: Concept and Rationale of OPRC’s(Andreas Schliessler)

Part 2: Creating a framework for OPRC’s(Chris Bennett)

Part 3: OPRC’s using Micro-Enterprises(Gerardo Flintsch)

Part 4: How to prepare and procure OPRC’s(Patricia Baquero / Andreas Schliessler)

Principles and Rationale of Output- and Performance-based Road Contracts(OPRC)

(…also called PMMR: Performance-based Management and Maintenance of Roads)

What is this contracting modality meant for?

PrimarilyTo better respond to a new approach to Road Network Management.To achieve better roads for the same money, or …… to use less money for assuring the same Level of ServiceTo reduce the administrative effort for the Road Agency (fewer contracts)

What is this contracting modality meant for?

…but alsoTo ensure more stable funding for Road Maintenance.To make Road Maintenance a more attractive business for contractorsTo create incentives for technical innovation and higher efficiencyTo satisfy the needs of Road UsersTo support local communities

Washington DC Road Pre - PBMC

CONVENTIONALCONVENTIONALAverage Unit Cost:Average Unit Cost:

$120 per patch$120 per patch$900 per lane mile$900 per lane mile$5,900 per ton$5,900 per tonProduction = Production =

2020--30 patches per day30 patches per dayMOBILE PATCHERMOBILE PATCHERAverage Unit Cost:Average Unit Cost:

$22 per patch$22 per patch$38 per lane mile$38 per lane mile$880 per ton$880 per tonProduction = Production =

120 patches per day120 patches per day

Courtesy VMS

Equipment Innovation:Mobile Pothole Patching

Material Innovation: RoadFlex™Pothole Patching Material

Permanent patch Permanent patch materialmaterialNo failures in 3 No failures in 3 yearsyearsNo rework requiredNo rework requiredReduced labor and Reduced labor and lane closureslane closuresLess disruption to Less disruption to motoristsmotorists

Courtesy VMS

Cost savings reported by Road Agencies

Norway: 20–40%Sweden: +/- 30%Finland: 30-35%Holland: 30-40%Britain: 10% minimumAustralia: 10-40%New Zealand: 20-30%USA: 10-15%Ontario, Cda: +/- 10%

Alberta, Cda.: +/- 20%British Columbia, Cda: +/- 10%

Change of Approach

Provision of Service Level over long periods

Completion of works …Payment … End .

Payment based on Outputs (agreed service levels)

Payment based on Input quantities and Unit Prices

Road User view(Service Levels)

Road Engineer view(Road characteristics)

Sector Program FinancingProject Lending

Road Sector Efficiency (Network Management)

Road by Road (fixing bad roads)

New ApproachOld Approach

OPRC can be used to…

Manage and Maintain existing roads during multi-year periods Bring roads to a maintainable condition and then manage and maintain them for several yearsRehabilitate and improve roads, and then manage and maintain them for several yearsConstruction of new roads, followed by a long period of management and maintenance

OPRC : Four types of activities

Management and Maintenance ServicesRehabilitation Works: Bring roads back to a standard they had before.Improvement Works: Add new characteristics to the road, in response to new traffic, safety, or other considerations.Emergency Works: Repair the road after damage from unforeseeable events.

Balance between Initial Upgrading / Maintenance

0

50

100

Verygood

Lessgood

Mgmt & Maint.First-Year Works

Contract must remain attractive throughout contract period, and not only during initial period.

Payments under OPRC Contracts: mostly for a Service to be provided:

Contractor has to ensure that road users get a certain Level of ServiceLevel 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 in the network.

Service Level – Unpaved RoadsGeneral

Road open to trafficAverage traffic speed

User Comfort & SafetyCorrugationRut DepthOther surface degradationsUseable road widthCleanliness of surfaceHeight of tree branches above road, etc.

Durability: Crown Height

Service Level – Paved RoadsPotholes / PatchingCrackingCleanliness of SurfaceRutting / RavellingLoose pavement edgesHeight pavement / shoulderShoulder conditionsetc. …

Payments under PMMR Contracts:

Unit prices per output productImprovement Works

Output-based Lumpsum for total volume, paid prorata according to actual progress towards target

Rehabilitation Works

Based on input unit prices, for works agreed case by case

Emergency Works

Lumpsum per km/month(100% Output- and Performance-based)

Management & Maintenance

Payment basisActivity

Contractor is free to decide …

nononoyesWhat to do

yes (*)yes (*)yes (*)yes (*)Subcontract

nonoyes / noyesWhere to do

nodeadlinedeadlineyesWhen to do

noyes / noyesyesHow to do

Emer-gency

Improve-ment

Rehabili-tation

Mgmt. & Maint.

Bid Evaluation for OPRC contracts

Output Unit prices x quantitiesImprovement Works:

Lumpsum for total rehabilitation works Rehabilitation Works:

SUM OF THE ABOVE (Net present value)

TOTAL BID PRICE:

Hypothetical Input Quantities x input unit prices

Emergency Works:

Network km x Lumpsum per km/month x No. of months

Management & Maintenance:

Bid Evaluation basisActivity

T im e ta b le o f c o m p lia n c e w ith se r v ic e q u a lity r e q u ir e m e n ts m o n th s s in c e g in n in g o f C o n tra c t

U sa b ility o f th e r o a d (s)C o m p lia n c e re q u ire d o n

(% o f to ta l le n g th o f ro a d s u n d e r c o n tra c t)

A v e r a g e T r a ff ic S p e e d M in im u m sa fe tra f fic sp e e d w h ic h c a n b e

m a in ta in e d (in K m /h )

R o a d U se r C o m fo r t C o m p lia n c e re q u ire d o n

(% o f to ta l le n g th o f ro a d s u n d e r c o n tra c t)

D u r a b ilitr o a d

C o m p lia n c e r(% o f to ta l

ro a d s u n d e r1 a n d 2 N o m in im u m se t N o m in im u m se t N o m in im u m se t N o m in im

3 1 0 0 4 0 3 2 4 1 0 0 4 0 8 4 5 1 0 0 5 0 1 3 7 6 1 0 0 5 0 1 8 1 17 1 0 0 5 0 2 4 1 58 1 0 0 6 0 3 0 2 09 1 0 0 6 0 3 6 2 5

1 0 1 0 0 6 0 4 2 3 01 1 1 0 0 6 0 5 0 3 51 2 1 0 0 6 0 6 0 4 01 3 1 0 0 6 0 7 0 4 51 4 1 0 0 6 0 8 0 5 11 5 1 0 0 6 0 9 0 5 71 6 1 0 0 6 0 1 0 0 6 31 7 1 0 0 6 0 1 0 0 6 91 8 1 0 0 6 0 1 0 0 7 51 9 1 0 0 6 0 1 0 0 8 12 0 1 0 0 6 0 1 0 0 8 72 1 1 0 0 6 0 1 0 0 9 3

u n til E n d o f tra c t p e r io d

1 0 0 6 0 1 0 0 1 0 0

Evolution of the performance requirements over time

0

20

40

60

80

100

120

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Months

Passability (% total length) Average speed (km/h) User's comfort (% total length) Durability (% total length)

Role of Road Agency staff …

… changes for those involved in OPRC:

From counting cubic meters to checking Service Levels

From “policing” contractors to Partnership arrangements (PPP)

From Maintenance Engineer to Road Asset Manager

End of Part 1Thank you for your attention.

Andreas Schliessler

Next – Part 2: Examples of actual use of OPRC contracts under World Bank financed contracts (Chris Bennett).