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26 CHAPTER THREE INSIGHTS FROM LITERATURE As stated in the introductory chapter, a NCHRP synthesis ductivity of specific activities (Roy Jorgensen Associates project draws on two primary inputs. One is the literature on 1972; Markow et al. 1994). the topic and the other is one or more surveys. This chapter is organized in four parts, each based on the literature: An overview of international experience with PBMCs An overview of domestic experience Federal experience and guidance regarding perfor- mance-based contracts; and Information from the literature that provides insights regarding the basic steps of PBMC. The previous chapter sought to provide an overview of PBMC and address most of the important issues. Per- haps none is as important as the accumulated evidence on whether PBMC results in value for money. Whether a cost savings has resulted from PBMC has been particularly con- tentious, partly because of the methodological challenges in determining whether PBMC is less costly than in-house staff doing the work or outsourcing based on unit prices. Regardless of the evidence, politicians, interest groups, managers, and staff often hold strong views regarding the desirability of outsourcing, including PBMC. Keeping an open mind and carefully examining past and accumulating evidence in North America and around the world will help maintenance organizations make better decisions regarding FIGURE 5 PBMC in evolution of outsourcing (Source : Adapted PBMC. A reader can draw different inferences depending from Segal, Moore, and McCarthy 2003). on whether he or she focuses on one case study or on many. This chapter includes numerous case studies from the litera- At roughly the same time, international lending institu- ture that illuminate different facets of performance-based tions such as the World Bank helped developing countries contracting, including whether PBMC resulted in improved make the best use of loaned funds applied to the highway LOS and cost savings. sector. The World Bank developed increasingly sophisti- cated tools for decision support. Development of the High- way Design and Maintenance Standards Model (HDM) was HISTORICAL CONTEXT OF PERFORMANCE-BASED instrumental in formulating maintenance and capital pro- MAINTENANCE CONTRACTING grams that made effective use of limited funds (Watanatada et al. 1987). Figure 5 provides a brief overview of the evolution of PBMC from its early roots to its current role. In the United States, States began outsourcing in the 1970s, and the first per- DOTs became concerned in the late 1960s and throughout formance-based contracts occurred in the late 1970s. Interest the 1970s with better managing their maintenance programs. in new approaches to contracting burgeoned with the forma- Many DOTs implemented the first generation of maintenance tion of the TRB Task Force on Innovative Contracting, an management systems. These systems used information con- outgrowth of the first Strategic Highway Research Program cerning inputs (labor, equipment, material, and costs) and (Research Circular 386 ... 1991). In the following years, outputs (accomplishments) to increase the maintenance pro- many states, provinces, and countries entered into perfor-