Delivering Measurable Outcomes through Performance-based contracts

Performance-based maintenance contracts are gaining traction internationally as a growing number of transportation agencies embrace this approach and recognize it as an effective instrument to making investment decisions that minimize risk and lower operating costs of existing and newly constructed highway infrastructure at a time of constrained public budgets.

Progress on the ground remains uneven however, as a comprehensive survey conducted across 56 countries by IRF’s Asset Management Committee has revealed. A majority of survey respondents indicate that no centralized coordinating structure exists, few or no national knowledge resources are available and asset management remains predominantly a manual task.

To address these gaps, participants from 16 countries participated on August 14-16 in the 3rd IRF Workshop on Performance-based Contracts & Evaluating Asset Condition held in Washington DC. The third edition of this annual IRF featured presentations of country experiences from Brazil, Canada, Japan, Liberia, México, Netherlands, New Zealand and the United States.

The workshop keynote address was provided by Kirk Steudle, Director, and Michigan Department of Transportation and President of the American Association of State Highway and Transportation Officials (AASHTO). Other notable international attendees included Alfredo Tolentino, Undersecretary of the Department of Public Works and Highways (Philippines), Kulwinder Rao, Lead Transport Specialist at the World Bank, Moh Lali, Executive Director, Alberta Transportation (Canada) and Humberto Ibarolla, Director of Technical Services, Ministry of Transport (Mexico).

Although performance-based contracts come in different shapes and sizes, workshop participants identified several critical success factors, chief among which a cultural shift by tendering agencies, rigorous asset inventory practices and the importance of risk management in relation to pricing.