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15 Single asset. A performance-based contract may pertain Examples include design-build-operate-maintain (DBOM), to just one type of asset, but it could involve a single main- design-build-finance-operate-maintain, and finance-build- tenance activity or multiple activities. A performance-based sale-leaseback-operate and maintain. Around the world, contract for bridge maintenance is likely to involve numer- award of a concession is a common way to finance a toll ous bridge maintenance activities such as joint repair bear- road. The concession agreement requires the concessionaire ing replacement, and washing and cleaning. to operate and maintain the toll road once it is built. All of these examples include maintenance under contract. These Set of related activities. Sometimes a performance- contracts may include performance-based specifications for based contract pertains to a set of activities that are related maintenance. by virtue of their location, the type of asset they concern, or other factors. A good example is a contract that concerns rest The broader performance contracts include preventive area maintenance. maintenance, routine maintenance, periodic maintenance, and demand-responsive maintenance. Rehabilitation of Corridor. Many performance-based contracts pertain to roads and bridges has been part of many performance-based corridors, often long sections of limited access highways. contracts. These contracts are likely to address all activities necessary to maintain the assets in the corridor and ensure safe and In areas in which PBMC is a new practice, the road agency efficient highway operations. These contracts frequently often finds the best approach is to first gain experience by concern everything in the right-of-way and are sometimes contracting for maintenance regarding a single activity, a called fence-to-fence maintenance contracts. single asset, or one set of related activities in a single main- tenance area. Once the agency has acquired experience, it is Areawide. A performance-based contract can concern likely to expand the number of assets under contract, cover- areas of different size. A garage or area shop might have age area, and the period of performance. In short, it is usu- a performance contract that pertains to its area. An area- ally best to start simply on a small scale. wide PBMC could also concern a district, city, township, county, state, or country. An areawide contract could cover Figure 2 shows the number of different types of perfor- one activity or all types of maintenance activities and assets mance-based maintenance contracts reported by the survey within the relevant boundary. respondents that said they do PBMC (except the District of Columbia). The District's performance-based contract con- Hybrid. There are a variety of different hybrid contracts. cerns a large number of types of maintenance activities on One has a combination of method specifications and perfor- 75 miles of the NHS within its jurisdiction. mance specifications. Another has incentives and disincen- tives that are both output- and outcome-driven. A third uses a combination of unit prices and a lump-sum payment, where the latter is adjusted based on whether or not the contractor meets performance standards. Agency-to-agency. A public agency responsible for main- taining a roadway network contracts with one or more other public agencies to perform the maintenance. States may con- tract with counties to perform maintenance, as in Wisconsin. FIGURE 2 Number of different types of performance-based Many Michigan counties contract with the state for mainte- maintenance contracts from survey respondents reporting nance. States may also contract with cities or authorities for they do PBMC. maintenance services under certain circumstances. LINKAGE BETWEEN OBJECTIVES, MEASURES, Warranty-based. These are contracts that require the MEASUREMENT, AND PERFORMANCE contractor to warranty the workmanship and materials for one or more maintenance activities. Warranties require the contractor to maintain the end product in the condition Effective PBMC benefits form a clear understanding of proj- specified for a certain number of years. Warranties can apply ect objectives. Ideally, the objectives stem from the objectives to pavements, rest areas, signs, striping, and so on. If the of plans and programs a performance-based maintenance contractor fails to meet the terms of the warranty, then the project is intended to serve. Furthermore, measures should contractor must fix the problem. correspond to important activities for accomplishing the objectives. There could be generally accepted performance Multiphase. Some contracts involve more than one measures and compensation tied to achieving desired levels phase of an asset's life-cycle and may also include financing. of performance (Hyman 2003).