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25 driven contracts transfer the risk of the project to the con- uct greatly diminishes. However, if the agency wants the con- tractor. Research in New Zealand has shown that there has tractor to assume the majority of the performance risk through not been any significant increase in bid prices to reflect the a warranty, the agency must allow the chip seal contractor to shift in risk caused by their performance-driven contracts make the salient detailed materials and methods decisions (Owen 1999). New Zealand's experience illustrates that when and to control the outcome of those decisions through pro- warranties are used in association with performance and end- mulgated performance specifications. The survey responses product specifications, the contractor is provided with the from the states indicated that they rate their resultant chip incentive to pursue more innovative technologies and meth- seal product as good to excellent no matter where the states ods for highway projects, leading to economic benefits for all are located on the risk continuum. Therefore, it is impossible parties involved in the highway construction process (Owen to recommend one end of the spectrum over the other. The 1999). Perhaps this is a fundamental reason why New Zealand level of performance liability that a given agency wishes to and its Australian neighbors have taken the art out of chip seal- assume must become a business and policy decision tempered ing, and developed engineering-based chip seal programs. by both the business and political climate in which the proj- That the expected service life of a chip seal in these two ects will be built and the past experience of the agency itself. nations is twice as long of that expected by North American Therefore, the following four contract administration best agencies speaks for itself. It should be noted that Michigan practices have been identified: had a similar experience when it experimented with chip seal warranties. Research on the Michigan experience noted that 1. Letting chip seal contracts in time to permit early sea- "The final results gave contractors greater flexibility [empha- son construction; sis added] in selecting the materials and application methods 2. Timing the letting of the contract to allow sufficient time used for warranted surface treatments" (Galehouse 1998). for the curing requirements of preconstruction pavement preparation activities; 3. Packaging chip seal contracts in jobs large enough to CONTRACT ADMINISTRATION CONCLUSIONS AND BEST PRACTICES attract the most qualified contractors; and 4. For warranty chip seal projects, giving the contractor This chapter has shown the need for an objective project latitude to determine the final materials and methods selection and prioritization system that maximizes the eco- used to achieve a successful chip seal. nomic benefits of a chip seal. The major conclusion from the warranty portion of the study relates the level of owner pre- Because Transit New Zealand has been successfully using scription to the ability of the owner to impose a warranty this warranty method argues strongly that it can be success- requirement on the chip seal contractor. Essentially, as the fully implemented in the United States as well. The measuring highway agency demands to retain more specific control over of New Zealand chip seal project macrotexture after 1 year of materials and methods, the balance of performance risk swings service and then adjusting the maintenance contract payment more toward the agency, and the chip seal contractor becomes as a function of actual performance versus design performance merely an instrument to execute the agency's professional creates a strong financial incentive for chip seal contractors to judgment, and the ability to effectively warrant the final prod- both design and install the best possible chip seal.