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14 15. Develop an approach for performing inspections; agency to have an appropriate selection process. The con- tracting agency must perform due diligence to ensure that 16. Draft Request for Proposals (RFPs); the winning contractor is able to achieve the desired perfor- mance standards. 17. Establish monthly payment with adjustments for per- formance incentives and disincentives; An agency cannot start too early in identifying potential contractors. The ways to do so include (1) identifying contrac- 18. Hold prebid meeting; tors that have performed similar work for other government agencies, (2) issuing a Request for Qualifications (RFQ), 19. Finalize and issue RFP; (3) inviting contractors to an information meeting or a pre- bid conference designed to encourage contractors to form 20.Make award; teams, and (4) examining the feasibility of restructuring the government maintenance organization into a part that will 21. Conduct meeting with contractor before start of work; administer the contract and another part that will compete for the work (Pakkala 2002; Hyman 2003). In a number of 22.Authorize work to begin; countries, governments will contract with a consultant or the equivalent of a system manager who in turn will oversee the 23. Allow contractor to perform work; activities of the contractor that will enter the performance- based maintenance contract (Pakkala 2002). The consultant 24.Conduct periodic and random inspections of or system manager can help identify potential contractors. performance; A key issue is whether there are enough contractors to bid 25. Make monthly payments to the contractor in accor- on a contract to ensure that prices are reasonable. In Alberta, dance with performance; and Canada, the Ministry of Transportation divided the prov- ince into Maintenance Contract Areas (MCAs) and peri- 26.End contract, unless it is renewed for a subsequent odically evaluated whether there was adequate competition. term. The transportation agency adjusts the maximum number of MCAs for which a firm can win a contract to try to ensure There are many possible variations in the steps of a effective competition (Lali 2007). Other issues concerning performance-based maintenance contract. Although some competition are the availability of smaller subcontractors agencies try to establish asset inventory and condition before that can perform the work and whether there will be public- issuing an RFP, others leave this responsibility to bidders private competition. and believe that no contractor will bid unless it has a reason- able concept of what the future maintenance requirements The acquisition process includes preparing and issuing an will be. Most contractors will not take the risk of depending RFP. The RFP will include the project objective, the scope of entirely on the agency's estimates of the number and condi- work, the dollar value of the contract and payment schedule, tion of each type of asset that must be maintained. incentives or disincentives and payment adjustments, per- formance measures and targets, a description of the contract Some other variations in the business process for PBMC monitoring process, contractor requirements such as bond- include microcontracting to develop a pool of subcontractors ing and a quality control (QC) plan, an explanation of who (Zietlow 2005b), self-monitoring and reporting by contractors, will be responsible for performance reporting and monitor- performance evaluations by independent third parties, and ing, contractor selection criteria, and a sample contract. combinations of performance evaluations involving the con- tractor, the owneragency, and an independent third party. TYPES OF PERFORMANCE-BASED CONTRACTS A radically simplified form of PBMC, discussed in the next chapter, is the "Statement of Objectives" procedure, There are a handful of different types of performance-based which many federal agencies have used. Also, PBMC might contracts (for some of these, see AASHTO 2002). They each be integrated into a design-build-finance-operate contract or differ according to scope and coverage. The scope refers to a toll road concession. the activities and assets addressed and the coverage pertains to the amount of the highway network covered and the geo- graphic area. ACQUISITION PROCESS Single activity. A simple performance-based contract Obtaining qualified contractors to perform under a perfor- may deal with only a single activity such as sign replace- mance-based maintenance contract requires the contracting ment or striping.