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74 GLOSSARY Acceptable Quality Levels: These performance standards factors--for example, participation by disadvantaged reflect the statistical variation in target levels of perfor- business enterprises. mance measures such as outputs and outcomes. Contract- Commonly Recognized Elements (CoRe): These are stan- ing agencies may establish not only performance targets dard bridge elements and corresponding possible condi- for each performance measure but also acceptable quality tion states and definitions of alternative actions. The levels. CoRe elements were adopted by AASHTO and are used Acquisition: The process of procuring a contractor to enter in many bridge management systems in the United States into a contract to perform a scope of work. and other countries. Agency-to-Agency Contract: A transportation agency that Commonly Recognized Measures: These are maintenance has a contract with another city, county, state, or provin- performance measures that the highway maintenance cial transportation agency to perform road maintenance. community recognizes are in common use. The AASHTO Subcommittee on Maintenance began a process of devel- Area Maintenance Contract: A performance-based main- oping commonly recognized measures. tenance contract that focuses on a subarea of a country, state, or province. A Canadian province, for example, Concession: A type of contract or agreement that grants to might divide the province into numerous areas and enter a private entity the right to take over a public road, recon- into performance-based maintenance contracts for each struct and rehabilitate it as necessary, maintain and oper- one. ate it, and recover the investment and expenses and earn a profit by charging tolls. A concession may involve Areawide Contract: A performance-based contract that granting to a private entity the right to design, build, pertains to an area. A garage or area shop might have a finance, maintain, and operate a highway. Again, the performance contract that pertains to its area. An area- entity would be permitted to recover its investment and wide performance-based maintenance contract could expenses and earn a profit by charging tolls. concern a district, city, township, county, state, or coun- try. An areawide contract could cover one activity or all Condition Data: Information on the condition of each phys- types of maintenance activities and assets within the rel- ical asset or a sample of assets on the highway network or evant boundary. subnetwork. Alternatively, condition data may consist of information on the levels of service that have been Asset Management Contract (now called Asset Mainte- achieved for maintenance concerning physical assets and nance Contract): A term used for a performance-based for maintenance operations, such as ditch cleaning, mow- contract, usually applicable to maintenance but poten- ing, incident management, and snow and ice control. tially applicable to all phases of an asset's life-cycle. Contract for Rehabilitation and Maintenance: Refers to a Award Fee: An incentive fee consisting of an extra payment specific performance-based contract used in Argentina for meeting or exceeding one or more desired results. For known as CREMA (Contrato de REcuperacion y MAn- instance, the award fee might be tied to timeliness of tenimiento). In this is a type of performance-based main- performance. tenance contract, the first phase begins with an emphasis Award Term: An incentive in which the contractor is on rehabilitation. The second phase focuses on awarded an additional contract term for achieving certain maintenance. desired outcomes or levels of performance. Contract for Related Activities: A performance-based Benchmarking: Loosely speaking, benchmarking uses contract that pertains to a set of activities that are related measurement to compare the performance of organiza- by virtue of their location, the type of asset they concern, tional units to one another or with respect to some bench- or other factors. A good example is a contract that con- mark. A more rigorous definition describes benchmarking cerns rest area maintenance. as a way to discover best practices for potential adoption Conventional Contract: A contract based on unit prices. by an organization by using measurement to compare the performance of other organizations and identify those Corridor Contract: A performance-based maintenance that are the best performers. The business processes of contract that pertains to a corridor, such as a long section best performers are by definition best practices. of limited access highway. These contracts are likely to address a major category of maintenance (e.g., routine Best Value: A criterion for awarding a contract based on a maintenance) or a large number of activities. Because combination of technical considerations, price, and other these contracts frequently concern most every asset and

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75 maintenance activity that is found in the right-of-way, Job Order Contracting: This procurement method typi- they are sometimes called fence-to-fence maintenance cally involves awarding a fixed price contract to a con- contracts. tractor to perform maintenance, repairs, and minor construction work. The contracting agency issues job Cost Plus: A contract in which the contractor is paid in orders to the contractor such that the total dollar value of accordance with the cost it incurs plus a fixed fee the job order does not exceed the contract's fixed price. (profit). The contractor is normally paid based on unit costs. Disincentives: Contractual provisions that penalize a con- Level of Service: A measure of the condition of an asset or tractor for failing to achieve performance standards or the quality of service a contractor achieves regarding a other criteria, for example, erecting a work zone and clos- maintenance service (activity or operation) being ing one or more lanes during rush hour. provided. Econometrics: The application of statistical techniques-- Levels of Service (LOS): The condition of assets and qual- including those developed within the field of econom- ity of service being achieved for each measurable dimen- ics--to economic issues. sion of maintenance performance. Evaluation Criteria: Factors used to evaluate contractor Liquidated Damages: The sum of money specified in the performance and that serve as a partial or full basis for contract to be paid to the contracting agency by the con- payment. tractor if there is a breach of contract. Explanatory Variables: These are variables outside the Lump-Sum Contract: A contract such that the maximum control of contracting agency and contractor that influ- payment is a lump-sum amount, usually paid out monthly ence outcomes, outputs, and inputs. Examples include over the contract term. Deductions or additions may weather, terrain, and traffic growth. occur if there are negative and positive incentives, Fence-to-Fence Contract: A performance-based mainte- respectively. nance contract that concerns nearly everything in the Maintenance Quality Assurance: A process involving right-of-way from fence to fence. Usually refers to a cor- scoring the levels of service a contractor achieves for ridor contract. each performance measure on a numerical scale. Data for Fixed Price Contract: In this type of contract, the payment calculating the performance measures are based on a ran- for the work to be performed is a fixed amount. dom sample of road sections. Scores can be aggregated by area, functional class, and categories of maintenance. Hybrid Contract: There are a variety of different hybrid contracts. One has a combination of method specifica- Maintenance Rating Program: A maintenance quality tions and performance specifications. Another has a com- assurance process involving scoring the levels of service a bination of output and outcome performance measures. A contractor achieves on a 0 to 100 scale for a random sample third uses a combination of unit prices and a lump-sum of road sections. Scores can be aggregated by area, func- payment, where the latter is adjusted based on whether or tional class, and categories of maintenance. Florida and not the contractor meets performance standards. other states use a Maintenance Rating Program. Incentives: Contractual provisions that motivate a contrac- Managing Agent Contracting: A type of performance- tor to achieve performance standards. Incentives can be based maintenance contracting used in the United King- positive, negative, or both. dom. In one version, the highway agency transfers responsibility for the network to the Managing Agent Incentives and Disincentives: Contract clauses that have a Contractor. The role of the contractor includes advising positive or negative impact on the contractor's earnings the highways agency and serving as the network and are designed to motivate the contractor to achieve contractor. performance standards and contract objectives. Method Specifications: The required means and methods Inputs: The resources used in maintenance, for example, for performing work. Method specifications describe how labor, equipment, and materials. Inputs may consist of the work is to be performed. dollars or other resources, such as facilities and land. Multiphase Contracts: Some contracts involve more than Inventory Data: The number of each type of maintenance one phase of an asset's life-cycle and may also include asset that will have to be maintained under a perfor- financing. Examples include design-build-operate-main- mance-based contract. Inventory data also include each tain, design-build-finance-operate-maintain, and finance- area or feature that will require different types of mainte- build-sale-leaseback-operate-maintain. A concession nance, for example, acres of grass that require mowing or applies in a multiphase contract when the contractor is linear miles that require tree trimming. responsible for more than one phase.

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76 Outcomes: The results of undertaking a maintenance activ- Performance-Based Maintenance Contracting: A method ity, or more broadly, the set of results that a contractor of contracting for maintenance work that uses perfor- achieves in carrying out a performance-based contract. mance specifications and incentives to achieve desired Outcomes may consist of the condition of an asset, the results. level of service for a certain type of maintenance opera- Procurement: The process of soliciting a firm or entity to tion, reductions in life-cycle costs, and reductions in such enter into a contract to perform a scope of work to achieve user costs as accidents and travel time. a set of objectives. Outputs: The accomplishments associated with carrying PublicPrivate Partnership: A formal or informal agree- out a maintenance activity. Examples of outputs are num- ment in which one or more public sector entities and one ber of lane-miles resurfaced per year, number of potholes or more private sector entities pursue shared objectives. repaired per day, and number of damaged sign faces Typically, the public and private sector share both costs replaced per day. and rewards. The characteristics of costs and rewards Outsourcing: Synonymous with contracting out. usually differ. For example, the public sector might pro- vide in-kind resources, while the private sector offers Partnering: A process in which the contracting agency and investment dollars. The public sector reaps benefits that the contractor work cooperatively and constructively to flow to road users (a better travel experience) and the pri- ensure that work proceeds smoothly, to anticipate and vate sector earns a profit. resolve issues, and to achieve the contract's performance targets and objectives, which both parties embrace. Quality Assurance: A set of procedures that the contracting agency adopts to ensure that the contractor achieves the Percent within Limits: Performance standards used in desired results. This typically involves some type of ran- highway quality assurance and warranty contracts to dom sampling and monitoring or inspection. reflect the statistical variation in performance measures. Percent within limits represents the percentage of a sam- Quality-Based Selection: Loosely speaking, quality-based ple falling above a lower specification limit, below an selection means picking a contractor based primarily on upper specification limit, or in between. considerations of quality. A form of quality-based selec- tion is Qualifications-Based Selection, which often is Performance Contract: In the context of road maintenance, legally mandated when design work is involved. Qualifi- another term for a performance-based maintenance cations-Based Selection would be applicable in many contract. states to a design-build-operate-maintain contract. Qual- Performance Measures: Measurement scales that are used ifications-Based Selection involves issuing an announce- as the basis for determining contractor performance with ment for needed services, identifying a short list of respect to maintenance of assets and providing mainte- qualified respondents, entering into discussions with nance services. each firm, ranking the firms based on their qualifications, negotiating with the highest ranked firm, entering into a Performance Specifications: A set of desired and measur- contract if the negotiations are successful, turning to the able results that describes the outcomes a contractor is bidder with the next-highest ranking if the negotiations required to achieve, not the methods for achieving them. are unsuccessful, conducting negotiations, and so on. Performance-Specified Maintenance Contract: A term Quality Control: A set of procedures the contractor uses to used in Australia and New Zealand for a performance- ensure that it achieves the desired results of the contract. based maintenance contract. Quality control procedures apply to executing the work, Performance Standard: Targets that represent desired monitoring performance, and applying statistical analy- results expressed on a measurement scale. sis procedures, if warranted. Performance Target: Synonymous with performance Regression: A statistical procedure for establishing the rela- standard. tionship between an independent variable and one or more dependent variables. Regression procedures can Performance Work Statement: This includes the scope of establish linear and nonlinear relationships. Linear work and other information useful in formulating a regression reveals the statistical significance of the inde- request for proposal for a federal or other performance- pendent variables and information on the amount of vari- based service contract. Other information might include ation explained by the independent variables. background and deliverables. Requirements Summary Matrix: A matrix that federal Performance-Based Contract: In the context of road main- agencies frequently use to summarize the key elements of tenance, another term for a performance-based mainte- performance-based service contract. The requirements nance contract. summary matrix typically includes desired outcomes,

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77 required service, performance standards, acceptable Term Maintenance Contractor: One of the organizational quality level, and monitoring method. models for delivering maintenance under a performance- based contract in Great Britain. The Term Maintenance Results: Results are the same as outcomes. Contractor carries out maintenance and limited rehabili- Retroreflectivity: A physical measure of the reflectivity of tation on the highway network under the instructions of a signs, striping, and markers. Managing Agent, which is a contractor and intermediary for the highways agency. Risk: Uncertain costs. Total Maintenance Contract: A performance-based main- Selection Criteria: In a competitive procurement process, tenance contract that addresses a large number of main- the factors used to select an entity with which an agency tenance activities in an area or within a corridor (e.g., will enter into a performance-based maintenance along a right-of-way). contract. Unit Price Contract: A contract for which payments are Single Activity Contract: A performance-based mainte- made in accordance with the unit prices bid for each nance contract that deals with only a single activity, such maintenance activity or bid item. as sign replacement or striping. Value for Money: A surrogate for a benefit-cost ratio--the Single Asset Contract: A performance-based contract that change in levels of service relative to the change in costs pertains to just one type of asset, but it could involve a of a performance-based maintenance contract. single maintenance activity or multiple activities. A per- formance-based contract for bridge maintenance is likely Warranty-Based Contract: Two definitions may apply. to involve numerous bridge maintenance activities such First, this type of contract requires the contractor to war- as joint repair, bearing replacement, and washing and ranty the workmanship and materials for one or more cleaning. maintenance activities. Second, a warranty-based con- tract may require the contractor to maintain the end prod- Statement of Objectives: A four- to 10-page procurement uct in the condition specified for a certain number of document that federal agencies use to acquire a contrac- years. Within the warranty period, if the contractor fails tor for a performance-based service contract to achieve to meet the performance standards, then the contractor specific objectives. The bidders, not the procuring agency, must fix the problem. Warranties can apply to pavements, have responsibility for defining the details of the scope of rest areas, signs, striping, and so on. work, tasks, performance measures, performance stan- dards, quality control, quality assurance (monitoring) procedures, incentives and disincentives, contract term and renewals, and the method of payment.