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Performance-Based Contracting in
Road Management:Experiences and Lessons Learned
on the DC Streets Project
Presented to The World BankApril 21, 2005
Attendees:World Bank: Marie Laygo, Natalya Stankevich,
Cesar Queiroz, Navaid QureshiSAIC: Mark Robinson, Eloisa Raynault
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Presentation Overview
What is Performance-Based Asset Preservation?Why Privatize Maintenance?DC Streets - Project InformationContract IssuesWhat Happens to Existing Employees?How is Performance Tracked?Key Lessons LearnedWhat is Next? Summary
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What is Performance-Based Asset Preservation?
A management approach to rehabilitate and maintainroad assets in stable, safe, pre-defined conditions(establish the baseline and raise the bar).
– Performance measures are specified instead of maintenance techniques (not what to do, rather what to achieve)
– Performance-based contracting shifts the risk from the customer to the contractor
– Contractor receives a schedule of payments in return for an agreed level of performance
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Performance-Based Asset Preservation Objectives
1. To stabilize and improve the condition of assets and/or reduce overall maintenance and rehabilitation costs.
2. To promote and encourage the development of innovative asset preservation practices.
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Why Privatize Maintenance? DC Example• Transportation infrastructure needs routine maintenance
and timely preservation, regardless of available fundingsources
• The District Department of Transportation (DDOT) suffered a reduction in available operating funds, and a reduction in staffing through attrition and retirement incentives
• Opportunity for DDOT to improve the infrastructure through innovative contracting
• Ability for DDOT to allocate limited resources to local neighborhood streets
• Provides local small businesses and residents increased opportunities for employment
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DC Streets - Project InformationDC Streets is a public-private partnership to rehabilitate and maintain the District’s portion of the National Highway System. It is the first urban performance-based asset preservation effort in the United States.
Coverage includes:Pavement StructureRoadway CleaningDrainageRoadsideTraffic SafetyRoadside CleaningRoadside VegetationBridges
TunnelsSnow & Ice ControlPavement MarkingsTraffic SignsHighway LightingMiscellaneous (ped.
bridges; WIM)
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The Four Project Partners
1) Customer: DDOT
2) Funding and Engineering Services: FHWA Office of Asset Management and DC Division Office
3) Consulting Agency: SAIC
4) Contractor: VMS, Inc.
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Contract IssuesThe following contract structure issues must be considered:• Proposal or bid?• Which contract type?• What will be the method of payment?• How much asset condition data will be included and where
will this information come from?• Which assets are included?• What happens to existing contracts?• What happens to existing workers?• Does this type of contract fit within current contract
regulations?
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Contract Issues (Cont’d)• Who needs to review and/or approve the RFP?• How will innovative methods/technologies be
approved if they are different from the standard specifications?
• How will the successful contractor be chosen?• What is the relationship between contract signing and
NTP and what are the payment implications of this relationship?
• What happens if the project doesn’t work?
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The Procurement ProcessThe procurement committee used a Request forProposals with “Best Buy” analysis.
Both pre-release informational and pre-bid meetingswere held to disseminate project information.
A necessary element of the development of the RFPwas an inventory of the condition of the assets.
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What happened to existing workers and contracts?
• DDOT workers were re-focused to improve and maintain assets on non-NHS segments.
• Assets covered under existing maintenance contracts were either excluded or included later in the project when the existing contract expired.
• Segments for which there is planned construction are not maintained under the asset preservation agreement during period of construction.
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Condition InventoryA comprehensive inventory of the assets and theircondition was performed to provide a condition baselinefor the project.
The information was shared with potential offerors through the RFP package.
Most of this information had to be collected in the fieldbecause it was not available from an existing inventory.
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Q: How are assets organized?A: Each maintenance category is divided intoelements.
For example, the Category for Bridges is subdividedinto Decks, Superstructure, Railings/Barriers/Parapets,Substructure, and Approaches.
Then, performance measures are assigned to eachelement.
There are 170 performance measures under the contract.Each measure is evaluated on a 1 to 5 scale, where 5 isexcellent and 1 is very poor.
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Asset Example
Excellent 5
Good 4
Fair 3
Poor 2
Very Poor 1
No Potholes
No potholes encompassing an area > 64 square inches
1 pothole per 1/10th mile segment encompassing an area > 64 square inches
2 potholes per 1/10th mile segment, each encompassing an area > 64 square inches
3 or more potholes per 1/10th mile segment, each encompassing an area > 64 square inches
Number of Potholes orBlowups
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Q: How is Performance Tracked?A: Daily, Monthly, and Annually
Daily: Activities log maintained by contractor in line with approved QC/QA plan; DDOT Project Engineer works with contractor to resolve questions and monitor activities.
Monthly: Team field inspection occurs; Assets receive a subjective condition rating of good, fair, or poor; Areas of recurring problems or continuing concerns are documented.
Annual: Comprehensive engineering evaluation of contractor’s performance; an objective evaluation of the condition of the asset elements; variable award fee compensation for excellent performance.
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Monthly Evaluation Rating Trends
Rating Trends
0%
20%
40%
60%
80%
100%
2 3 4 5 6 7 8 910
*11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 49 50 51 52 53 54 55 56
Month
Prop
ortio
n of
Rat
ings
Poor Fair Good
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Monthly Evaluation Scoring Trends For a single score, the proportion of “Good” ratings is multiplied by 100, “Fair”ratings by 50, and “Poor” ratings by 0. The resulting values are added to obtain the score out of 100.
Overall Evaluation Score by Month
0
2040
6080
100
0 10 20 30 40 50 60
Month
Scor
e
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Where are we today?
Overall, the system is in much better condition than at the beginning of the contract. Some poor ratings are still being received at this stage, so further improvements are needed before the end of the contract.
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Lessons Learned• Clearly define that payment under the contract starts
after the contractor demonstrates that work on each of the maintenance categories is underway.
• Provide a specific amount and time for mobilization.• Identify the Project Manager at the beginning of the
procurement and involve the Project Manager throughout the procurement process.
• Require that the parties to the contract enter into a formal partnering agreement.
• Include damages or penalties for failure to comply with time critical performance measures. Include incentive/disincentive clause for exceeding or for failure to meet performance measures.
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Lessons Learned Cont’d• Consider consulting with industry experts.• A contract can’t cover every conceivable issue. Project
partners must work together within the spirit of the contract to make a project like this work.
• The urban environment is dynamic and challenging to work in due to heavy traffic and the large number of people/organizations to work with and to please.
• A good working relationship between the transportation agency’s project manager and the contractor’s day-to-day project manager is essential for project success.
• Regular team meetings help to keep outstanding issues in focus until they are solved.
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What is Next?
• Complete the rehabilitation efforts• Continue performing maintenance • Continue tracking progress and performance• Spread the word about lessons learned and project
successes• Continue and encourage use of performance-based
asset preservation at DDOT:– District-wide asset management for lighting– Asset Management for Tunnels– DC Streets II
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Why Move in This Direction?
• DDOT does not want the NHS assets to revert to their pre-DC Streets condition, and
• DDOT recognizes that asset preservation and preventive maintenance can be an effective way to keep the assets at or above their current condition.
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Summary• DC Streets is a demonstration project to showcase the
effectiveness of working together with the private sector to improve and preserve the infrastructure of the NHS.
• A performance-based approach is being taken to reduce cost/risk and encourage innovative preservation techniques.
• Contractor compliance in meeting performance standards is key for this type of contract and is being monitored on a daily, monthly, and annual basis.
• The condition of the system continues to improve.
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Questions?Please contact Science Applications International Corporation (SAIC):
Mark D. Robinson
703-676-2384
Eloisa Tigre Raynault
703-676-5345
