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24 WARRANTIES proportion of respondents with warranty requirements on their chip seals. Warranties in highway construction are defined as "a guaran- tee of the integrity of a product and of the contractor's respon- A major disparity between U.S. contracting practices and sibility for repair or replacement of deficiencies" (Anderson those of Canadian and overseas agencies lies in the use of and Russell 2001). The goal of a warranty in highway con- warranties. International chip seal programs show a clear man- struction is to effectively transfer any risks controlled by the date toward the implementation of warranty requirements for contractor to the contractor--basically distributing risk in a their chip seal programs. The issue of warranties in the United more equitable manner (Notes for the Specification . . . 2002). States was addressed in a comprehensive study of the TxDOT Warranties may also minimize the agency's risk by provid- chip seal program (Gransberg et al. 1998). In that state, the ing a method to require that the contractor correct failures construction industry viewed the issue as one of not being that are the result of defective materials or workmanship. able to control the risk that the traffic actually placed on a Most agencies generally require a warranty bond to transfer newly chip sealed road. Additionally, the industry believed this risk; the bond provides the assurance that the materials that the longitudinal variation in the existing surface condi- and workmanship of the contractor will not fail soon after tion was so great that it virtually discounted the design cal- project completion and acceptance (Hancher 1999). For culations to a mere set of formulas to estimate the quantities instance, Ohio's warranty requires the contractor to provide for the unit-price contract, not a precise engineering design. a 75% maintenance bond for a 2-year period (Supplemental Therefore, the prevailing notion among both the construction Specification 882 . . . 2002). community and TxDOT personnel was that a chip seal was patently unwarrantable. Although warranties are an issue that The key point is that the risk would be allocated to the needs to be addressed not only in Texas but throughout the party that has most control over the risk (Anderson and Russell United States, the situation shown by the international and 2001). Therefore, when it is believed that the risk is likely Canadian responses appears to indicate that this risk can be to be beyond the contractor's control, limitations should be adequately managed. placed on the warranty. For instance, in Ohio, the chip seal warranty is restricted to two-lane routes with less than 2,500 ADT and those projects, which do not qualify as PM, are not Warranty Duration eligible for having warranty requirements (Supplemental Specification 882 . . . 2002). The length of the warranty period required to detect deficien- cies is a concern. The survey responses noted that the most common warranty period for chip seals projects is 1 year. Of Warranty Requirements the 16 international agencies that have warranty requirements, all but the Yukon Territory of Canada responded that their The majority of information obtained on this topic was derived warranty periods were 1 year in duration. Table 4 illustrates from the survey responses. For this discussion, the survey the warranty durations of the six states that have warranty addressed the types of contracts used, inspection force respon- requirements. sibilities, and warranty requirements. Figure 23 illustrates the New Zealand's Experience with 100% Performance-Driven Contracts 100% 89% 81% New Zealand's use of sound engineering principles seeks to 80% minimize the uncertainty and variability associated with their chip seal program. The use of these sound engineering prin- 60% ciples seeks to optimize material application rates to the point where the end-product specifications in their performance- 40% 19% 20% 11% TABLE 4 U.S. STATES WITH CHIP SEAL WARRANTIES 0% State with Warranty Warranty Duration United Canada AU, NZ, California 2 Years States UK, SA Michigan 2 Years Nevada 2 Years New York 1 Year Yes No Ohio 3 Years Wyoming 4 Weeks FIGURE 23 Proportion of respondents requiring warranties.