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CHAPTER two
OVERVIEW OF PERFORMANCE-BASED MAINTENANCE CONTRACTING
WHAT IS PERFORMANCE-BASED maintenance nance contract in California for public streets in the late 1970s
CONTRACTING? and a pilot for the Pennsylvania Department of Transportation
(DOT) in the early 1980s. Lawyers stopped the California
effort, and union and tort liability issues brought the Pennsyl-
The hallmark of PBMC is to pay a contractor based on the vania DOT effort to a halt (A5T60 Task Force 2004).
results achieved, not on the methods for performing the
work. PBMC is an approach to contracting that provides dis- More recently Virginia, Texas, and Florida have used
incentives, incentives, or both to the contractor to achieve PBMC on a large scale, including fence-to-fence maintenance
performance standards or targets for measurable outcomes contracts on Interstate highways. Texas and Florida have used
and sometimes outputs. Measures of performance are often PBMC for rest area contracts and the Maryland State High-
expressed in terms of levels of service (LOS) represented by way Administration (SHA) recently did as well. The District
specific rating scales corresponding to the condition of dif- of Columbia entered into a performance-based maintenance
ferent assets achieved or to the outcomes of a particular type contract for 75 miles of the National Highway System (NHS)
of maintenance service. Measures also may be expressed in within its jurisdiction (Stankevich et al. 2006).
response times.
The Oklahoma DOT sought to implement PBMC in five
The disincentives or incentives can consist of reductions counties encompassing Tulsa and Oklahoma City. However,
or increases in payments for respectively falling short or a dispute arose (Hill et al. 2007). New Mexico entered into
exceeding the desired targets. Some disincentives or incen- a performance-based warranty contract on State Route 44
tives are not directly tied to measurable outcomes and out- (renamed US-550). The contractor failed to deliver to New
puts. These disincentives or incentives include liquidated Mexico a quality product and was required to repair the
damages for failing to satisfy a contract provision, an award highway under the warranty provisions (Lowry 2007).
fee for satisfying qualitative criteria, and a contract exten-
sion if the contractor performs well. Table 2 shows the states and provinces that have tried or
are currently doing PBMC among those who responded to
There are many names for PBMC used around the world the survey administered for this synthesis project. The infor-
and within certain states or provinces including: mation in this table says nothing about each agency's experi-
ence with PBMC. As noted previously, some states have had
· Performance-Based Maintenance Contract (United considerable success with the approach. The experience of
States) some was not so positive. Others are getting their feet wet and
· Performance Contract (Western Australia) have not seen a contract to the completion of its term. Note
· Total Maintenance Contract (Texas) that Wisconsin contracts with all of its counties. Although
· Performance-Specified Maintenance Contract (Australia the contracts do not mandate PBMC, they include a clause
and New Zealand) that allows reimbursement of the costs of the county mainte-
· Asset Management Contract (originally more common nance managers to partner with state regional managers and
abroad, but this term now used in the United States) conduct performance evaluations of randomly selected road
· Contract for Rehabilitation and Maintenance (Argentina) sections (A. Lebwohl, personal communication, 2007).
· Managing Agent Contract (United Kingdom)
· Area Maintenance Contract (Finland and Ontario,
Canada). BRIEF OVERVIEW OF INTERNATIONAL EXPERIENCE
In 1988, the British Columbia Ministry of Transportation
BRIEF OVERVIEW OF U.S. EXPERIENCE conducted a pilot performance-based maintenance contract.
The provinces of Ontario and Alberta followed suit with
There were a variety of early efforts to pursue PBMC in the performance-based contracts of their own (Stankevich et al.
United States. These included a performance-based mainte- 2005). New Brunswick indicated in its survey response that
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it does use PBMC; Manitoba and Nova Scotia said they do Table 3
not (see Table 3). CANADIAN PROVINCES THAT DO PBMC BASED ON
SURVEY RESPONSES
Table 2
Canadian Province Yes No
STATE AGENCIES THAT DO PBMC BASED ON SURVEY
RESPONSES Ontario X
State Yes No New Brunswick X
Arizona X Manitoba X
Arkansas X
Nova Scotia X
California X
Colorado X
PBMC has become widespread in South America. The first
Connecticut X
major performance-based maintenance contract occurred in
Delaware X Argentina in 1995 and is known as Contrato de REcupera-
District of Columbia X cion y MAntenimiento (CREMA), which means Contract for
Florida X Rehabilitation and Maintenance. The initial CREMA was
structured to first rehabilitate part of the network; simulta-
Hawaii X
neously, maintenance under performance-based specifica-
Illinois X tions began on the other sections of the network under the
Iowa X CREMA contract and then was expanded to the rehabilitated
Idaho X sections of road. Today, performance-based maintenance
contracts cover 44% of Argentina's roadway network. Based
Kansas X
on Argentina's success, Uruguay followed suit and so did
Louisiana X the city of Montevideo on its main city streets. Other Latin
Maryland X American countries have followed Argentina's and Uru-
Michigan X guay's lead and adopted or have begun to adopt some form
of PBMC. These include Brazil, Chile, Columbia, Ecuador,
Minnesota X
Guatemala, Mexico, and Peru (Stankevich et al. 2005).
Mississippi X
Missouri X PBMC has been prominently used in Australia, New Zea-
Nebraska X
land, England, and Finland. Sydney, Australia, sought to use
PBMC to maintain its city roads beginning in 1995. Sub-
Nevada X sequently, New South Wales, Tasmania, and Southern and
New Hampshire X Western Australia have used performance-based and hybrid
New Mexico X contracts (Pakkala et al. 2007).
New York X
The use of PBMC is accelerating throughout the world.
North Carolina X The following countries are also using PBMC (Stankevich
North Dakota X et al. 2005):
Ohio X
· Sweden
Oklahoma X
· Netherlands
South Carolina X · Norway
South Dakota X · France
Tennessee X · Estonia (63% of national roads)
· Serbia and Montenegro (8% of national roads)
Texas X
· South Africa (100% of national roads)
Utah X · Zambia
Vermont X · Chad (17% of all season roads)
Virginia X · Philippines (231 km of national roads).
Washington X
According to the World Bank, preparations were being
West Virginia X made for PBMC in the following countries as of approxi-
Wisconsin X mately 2005 (Stankevich et al. 2006):
