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OCR for page 74
64 CHAPTER FIVE CONCLUSIONS AND FUTURE RESEARCH NEEDS Key conclusions of the study are as follows: maintenance organization of a transportation agency will be privatized. As a result, a large number of public The use of Performance-Based Maintenance Contracting employees might have to seek employment with con- (PBMC) is accelerating worldwide. By 2005, 35 coun- tractors if they wish to continue doing similar work. tries had performance-based maintenance contracts. By In-house maintenance staff become unsettled with the early 2006, approximately 15 more were exploring this potential loss of worker protection and the possibility approach to maintenance or adopting it. of reduced pay or benefits. In the United States and Canada, there are already The most frequent approach to payment in PBMC is many examples of PBMC. States, provinces, and other a lump-sum with deductions for failing to meet per- entities that have been leaders include Virginia, Texas, formance standards. The literature and responses to Florida, and the District of Columbia, and British the surveys suggest that a more balanced approach Columbia, Alberta, and Ontario. including both incentives and disincentives is a better PBMC reflects a long-term trend in changing the focus approach and enhances partnering. of upper management and maintenance managers to Successful partnering appears to be critical to the suc- outcomes, especially those that are customer oriented. cess of PBMC. Evidence suggests that PBMC results in better out- PBMC is even more likely to succeed when both risks comes at lower cost with less risk and more financial and rewards are shared between the contracting agency predictability for highway agencies. and the contractor. The evidence on whether PBMC results in improved Many performance-based maintenance contracts are levels of service is not consistent. In some cases, par- hybrids and include performance and method specifi- ticularly in which asset condition or the quality of ser- cations, payments based on both lump-sum and unit vice are low or have been allowed to deteriorate a great prices, maintenance and rehabilitation work, and dif- deal, PBMC has resulted in a sharp increase in levels ferent phases of a facility life-cycle such as design, of service (LOS). Also, many other reported improve- build, operate, and maintain. ments in LOS have resulted from PBMC. However, Training has an essential role to play on the part of the one state and two Canadian provinces, where a large contracting agency, the contractor, and any indepen- amount of PBMC occurs, do not separate the outcomes dent third party responsible for evaluating the perfor- achieved by in-house staff and private contractors, and mance of the contractor. the LOS of contractors cannot be verified. Sometimes The following are suggestions for future research: LOS will decline at first before starting to rise. The Texas Department of Transportation observed this pat- tern on two interstate performance-based maintenance Research could be conducted to explore performance contracts. measures and measurement protocols concerning A number of agencies are skeptical about the claims of LOS for different types of maintenance assets and cost savings, even though studies provide evidence that operations. these cost savings exist. These agencies question--as Research is needed on methodologies for evaluating cost have a number of internal and external audits regarding savings of performance-based contracting. This research specific contracts or programs--whether there is a valid could include an analysis of administrative savings. basis for cost comparisons between workforce account Further investigation regarding the impacts of PBMC work and PBMC by private firms. Issues regarding cost on agency staff and how to mitigate adverse effects is comparisons are complex. For example, it is not easy desirable. The impacts will vary depending on the per- to develop accurate comparisons that place both direct cent of maintenance work contracted out under PBMC, and indirect costs of public agencies and private firms whether maintenance is completely privatized, whether on an equal footing. there is publicprivate competition, the size and nature PBMC, despite the success touted by its advocates, is of the contracting community, and the management controversial. There is a risk that a large part of the and organizational structure used.

OCR for page 74
65 More research is required on how to implement an curement documents and contracts. PBMC is con- effective benchmarking process that can be used to tinually evolving and these model documents would compare agency and contractor performance (out- need to be updated from time to time. comes and outputs relative to costs with adjust- Training programs would be useful for PBMC. A ments for uncontrollable factors), identify best variety of audiences and formats could be addressed, performers, and determine the corresponding best including maintenance organizations of transpor- practices. tation agencies, contractors, subcontractors, in- The maintenance community in the United States house staff and contractors working together, and and Canada could benefit from a set of model pro- contractorsubcontractor interaction.