Performance Contracting

2008 WASHTO – CMS Meeting

April 8, 2008

Overview

• What is Highways for LIFE?• What is Performance Contracting?• Why Performance Contracting for Construction?• Why Performance Contracting for a Highways for LIFE Project• Framework Purpose• Stakeholder Involvement • Framework Contents• Lessons Learned• Pilot Program• Seeking the Best Solutions Workshops

What is Highways for LIFE (HfL)?

• HfL is a Federal Program driving the concept that we can build highways:

• Faster

• With less congestion

• With better safety and quality

• At lower cost, and

• With better user satisfaction

The Highways for LIFE Philosophy

• Set motorist-focused stretch goals

• Identify and use innovative practices and technologies to meet or exceed those goals

• Interact/communicate with customers

The Highways for LIFE Program

• Projects

• Technology Partnerships

• Technology Transfer Workshops

• Information Dissemination

• Monitoring and Evaluation

• Stakeholder Involvement

Oregon’s Highways for LIFE Project

• Replacing five bridges on Oregon 38

• Goal is to minimize disruption to the traveling public

• Will use prefabricated bridge elements made with high-performance concrete

• Will move the prefabricated structures into place overnight with self-propelled modular transporters

• Anticipated total project cost is $47,554,000

What is Performance Contracting?

• Innovative contracting technique

• Contractor is responsible for achieving a defined set of goals

• Performance goals are specified instead of prescriptive methods

Why Performance Contracting for Construction?

• Allows State and local agencies to define and communicate to contractors specifically what they want to achieve

• Contractors will have the flexibility to determine how they do the work

Why Performance Contracting for a Highways for LIFE Project?

• Someone needs to be responsible for meeting the goals that are set for the project

• If the goals are under the influence of the contractor, why not make the contractor responsible for meeting them?

• Performance contracting provides a mechanism for assigning that responsibility to the contractor

Relation to the Highways for LIFE Program

• Performance contracting is a tool in the HfL toolbox

• HfL projects are not required to use performance contracting

Some Pros and Cons of Performance Contracting

• Pros Contractor is

responsible for meeting the goals that they can influence

Introduction of Innovation

Defined Outcomes Contractor Flexibility Share of risk and

rewards

• Cons New approach that

requires a culture shift

May not be applicable to all projects

Performance Contracting Framework - Purpose

• To provide State and local agencies with processes and materials that they can use to accelerate the development of a performance contract solicitation package for construction contracts

• Meant to be used as a reference guide

• Should help agencies to avoid common obstacles and pitfalls

Performance Stakeholder Involvement

• The project team developed the materials working with: A select group of stakeholders from State DOTs

and Industry

• Provided guidance and review at the 30%, 60%, and 90% stages

Subject matter experts from FHWA

State DOT and Industry Stakeholder Group

• Scott Jarvis - Caltrans• Chuck Suszko - Caltrans• Gene Mallette - Caltrans• Peggy Chandler - Texas DOT• Steve DeWitt - North Carolina

DOT• Kevin Dayton - Washington

State DOT• Dexter Newman - the

Kentucky Cabinet

• Sid Scott - Trauner Consulting

• Brian Deery - AGC• Bob Lanham - Williams

Brothers Construction-• Brian Burgett - Kokosing

Construction• Rich Juliano - ARTBA

Note: Participation did not involve formal endorsement of the final product

Framework Contents

• Overall process for performance contract development• Guidance on selecting appropriate projects• Processes, lessons learned, and sample solicitation

package materials for: Performance Goals Measurement Methodology Enhanced Low Bid Award Process Best Value Award Process SEP-14 Process

Pilot Program

• FHWA is currently seeking 4 to 8 agencies that are interested in piloting the Performance Contracting Framework.

• Pilot states will receive tailored technical assistance to help them implement this approach

• Pilot states can propose the use of the framework as an innovative approach when applying under the Highways for LIFE Program

• For more information on how an agency can become a pilot agency, talk to Mary Huie at mary.huie@dot.gov or 202-366-3039

Seeking the Best Solutions Workshops

• A one-day workshop for State DOTs• Instructs participants how to use the HfL, ACTT

workshop and performance contracting concepts to deliver a project better, faster and cheaper.

• Leads participants through the process of: identifying goals that respond to motorists’, highway

users’ and the agency’s highest priorities and seeking the best ways to achieve those goals.

• For more information on hosting a workshop, contact Mary Huie at mary.huie@dot.gov or 202-366-3039

For More Information

• Mary Huie, FHWAmary.huie@dot.gov, 202-366-3039

• Chris Schneider, FHWAchristopher.schneider@dot.gov, 202-493-0551

• Jim Sorenson, FHWAjames.sorenson@dot.gov, 202-366-1333

• Mark Robinson, SAICmark.d.robinson@saic.com, 703-676-2384

Questions