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11 CHAPTER TWO BACKGROUND AND CONTEXT PURPOSE sheeting, and roofing. Warranty durations ranged from 1 to 10 years across all types of work; for pavement markings, the This chapter provides background and context for the tech- warranties extended from 2 to 6 years. An FHWA website sum- nical findings in chapter three. The chapter is organized as marizes the experiences of 27 states in terms of highlights, war- follows: ranty duration, performance indicators, and bonding and pay- ment provisions ("Briefing: Warranty Clauses . . ." 2000). A An overview of the history of highway construction war- subset of these projects in 14 states was accomplished with ranties in the United States, including the roles played by FHWA assistance through the innovative contracting compo- state DOTs and the FHWA in advancing warranty prac- nent of its Special Experimental Projects 14 (SEP-14) program. tices generally and those with respect to pavement mark- Following the passage of the Intermodal Surface Transporta- ings specifically. tion Efficiency Act (ISTEA, P.L. 102-240, Dec. 18, 1991), the Reference to a warranty framework that was based on FHWA subsequently engaged in a rulemaking process to allow cumulative U.S. road construction experience to 1999. the use of warranties on National Highway System (NHS) as This framework synthesized categories of information well as non-NHS federal-aid projects. This rulemaking was believed to be useful when developing road construction completed successfully and went into force in 1996. warranties. Current examples of actual state DOT war- ranties for pavement markings that are discussed in chap- Copies of many documents related to this early warranty ter three and Appendix D generally conform to this frame- research, as well as administrative changes during this period work, but illustrate the variety of specific approaches that (e.g., Federal Register announcements as part of FHWA rule- agencies have used in implementing their respective making), are available on the technology transfer website for warranty specifications. innovative contracting that is operated by Utah State Univer- A discussion of performance characteristics related to sity ("Innovative Contracting" n.d.). Brief histories, discus- pavement markings, which helps in understanding tech- sions, or analyses of these research studies, their successes nical provisions of pavement marking warranties dis- and failures, and the administrative actions during this period cussed in chapter three and Appendix D, as well as cur- are available in several sources in addition to the FHWA web- rent shifts toward more performance-based approaches site cited earlier. Among these are compilations of the status when developing warranty specifications. and use of road construction warranties in the United States and Europe as presented in NCHRP Synthesis 195: Use of Pavement markings were the first highway-related asset to Warranties in Road Construction (Hancher 1994) and a paper be addressed through warranty specifications in recent U.S. summarizing U.S. warranty experience by Russell et al. (1999). road history. The historical review that follows shows that A study to develop performance-based warranties for the Vir- early experience with pavement marking as well as other types ginia DOT also reviewed work during this period as well as of road construction warranties provided useful experience on the concepts underlying warranty specifications (Ozbek 2004). how to avoid obvious problems and prompted thinking about A study conducted in 20012003 to update information on what information and requirements could be included in war- U.S. road construction warranties likewise briefly reviewed ranty specifications. the warranty use experiments by state DOTs during the 1980s and 1990s (Bayraktar et al. 2004, 2006). HISTORICAL REVIEW Lessons Learned from Early Archived Sources U.S. Highway Warranty Use The 1980s and 1990s saw the introduction and growth of trial Overview Through 1999 use of road construction warranties in the United States. War- ranties during this period were used for road construction and An overview of U.S. warranty contracting for highway con- maintenance on several types of highway assets including struction was developed by Russell et al. (1999). The first pavements, bridges, intelligent transportation system com- experiment with a highway warranty was for pavement mark- ponents and buildings, landscaping, pavement markings, sign ings by the North Carolina DOT (NCDOT), beginning in 1987.

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12 Only a handful of projects were completed through the early tractor were observed after that. However, in the third year of 1990s, but warranted work increased substantially in the late the trial, the condition and performance of the markings were 1990s, spurred by passage of ISTEA and subsequent changes unexpectedly degraded by premature failures of the asphalt in federal regulation that allowed warranty use on federal-aid pavement surface. These problems required maintenance and projects both on and off the NHS. From 1987 through 1997, resurfacing, which first reduced the effectiveness of the mark- 240 projects involving warranties were completed by 21 states, ings and then obliterated them. The trial evaluation was halted and Florida and Utah were planning to begin warranty use in after three years (Stanley 1990, 1991). 1998. The count of 240 projects was a conservative number, because DOTs were not able to provide an accurate tally of all While the logistical and administrative feasibility of pave- the traffic marking, landscaping, and irrigation projects. War- ment marking warranties was demonstrated, the results also ranty specifications in this initial 10-year period covered work showed the sensitivity of pavement marking performance to on asphalt pavement, chip sealing, microsurfacing, patches on road maintenance work (Stanley 1991). portland cement concrete pavement, bridge painting, bridge components, landscaping and irrigation systems, pavement The pavement markings cracked as a result of reflection markings, and roofs (Russell et al. 1999). cracking and spalling of the underlying pavement surface. This cracking caused both a reduced presence (durability) For pavement marking specifically, agencies promoted and reduced retroreflectance. quality of work by focusing on contractor qualifications and The reflectance of the pavement markings suffered fur- quality of materials and methods of application and installation. ther from road maintenance and repair as evidenced Specific requirements by DOTs included some or all of the through asphalt spotting and tracking from nearby crack following: personnel resumes, lists of materials and equipment sealing, short overlays, and pothole filling. Even small to be used, test reports or manufacturer's data on materials, amounts of asphalt on the surface of pavement markings annual performance reports, and manufacturer's warranty of reduced their measured reflectance. materials performance and, in some cases, of workmanship. The latter requirement typically included training of contrac- tor's personnel who applied or installed the markings and onsite WisDOT: Asphalt Pavement Warranties presence of a manufacturer's representative during application. Other requirements might also include a traffic control plan, Useful lessons on how to structure and administer warranties a striping plan giving the timing and area of each stage of also came from demonstration projects involving paved road work, a spill recovery plan, and a placement, procurement, surfaces. WisDOT engaged in trial use of asphalt pavement and handling plan (Russell et al. 1999). warranty specifications with assistance from the FHWA through SEP-14. This effort was an outgrowth of a WisDOT Two project examples from this period provide additional quality control/quality assurance program to give contractors insight into the outcomes of these early efforts. The first is a stronger role and greater responsibility in undertaking pave- the NCDOT project that warranted pavement markings; the ment work in the state. By 1994 almost all asphalt pavement second is a pavement (roadway surface) warranty initiative being placed on the state trunk highway system came under by the Wisconsin DOT (WisDOT). this quality control/quality assurance program, and a warranty specification for asphalt concrete pavement construction was seen as the next logical step. The result indicated that war- NCDOT: Pavement Marking Warranty ranty specifications could be developed and used successfully in connection with low-bid project procurements. Warranties In 1987, epoxy pavement marking materials were installed on added 5% to 10% to the cost of pavement projects over their a section of I-85 in central North Carolina, with the objectives 5-year duration, but reduced WisDOT's construction engi- of (1) monitoring the condition and performance of the mark- neering costs, gave contractors greater flexibility and control ings through a 4-year performance period, and (2) assessing in managing their project work, and provided a quality pave- the use of a performance-based warranty specification that ment. Salient characteristics of this warranty program were could be applied on future NCDOT pavement marking projects as follows (Shober et al. 1996): (Stanley 1989, 1990). The warranty specification required that the markings meet or exceed criteria governing physical dura- Purpose. WisDOT identified several purposes of this bility and reflectance during the 4-year performance period. warranty program; for example, to move from method- based specifications to performance-based specifications; As the trial progressed, the basic mechanisms of the war- to reduce departmental costs of testing, supervision, and ranty specification appeared to work as planned. Most of the construction; to encourage contractor innovation; to ori- markings performed satisfactorily through the first two years. ent highway construction toward a performance-based Sections of the yellow edge line that had incurred physical process; to strengthen customer-oriented results in safety, damage after one year of service were replaced promptly by ride quality, and asset longevity; to gain administrative the contractor. No other deficiencies attributable to the con- and management experience in warranty-related matters

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13 such as bonding; and to leverage the WisDOT pave- be beneficial to all parties: the contractor would save ment management system in helping define acceptable on bonding and maintenance costs and WisDOT and performance targets. the motoring public would have a superior performing Duration. WisDOT considered warranty durations of pavement. from 3 to 5 years. A 5-year warranty was selected because it provided sufficient time to assess pavement perfor- mance without placing an undue burden on the contractor. More Recent Study of U.S. Construction Warranty Experience Performance indicators. Developing customer-oriented performance indicators for the warranty likewise involved An updated picture of the use of road construction warranties balancing desired qualities with realistic warranty-based in the United States was obtained through a study conducted in issues. Of eight measures considered initially, three were 20012003 (Bayraktar et al. 2004, 2006). Data were obtained selected: rutting, friction, and longevity. These customer- through a literature review, survey questionnaire, and inter- oriented indicators were then related to technical cate- views with personnel among selected transportation agencies, gories of pavement distress that are managed using Wis- contractors, and surety companies. The survey questionnaire DOT's pavement management system. was cast broadly among 158 organizations in the United States. Pavement management system contribution. Data Sixty-three responses were received from 40 state DOTs, from WisDOT's pavement management system proved 16 contractors, and 7 bonding companies. These responses valuable in several tasks: (1) establishing realistic war- were culled to retain only the subset from agencies and firms ranty performance thresholds based on historical data; that had solid experience with road construction warranties. (2) providing well-documented, proven methods of con- Questionnaire responses were qualified in this way for 13 state ducting distress surveys to establish pavement perfor- DOTs, 16 contractors, and 6 surety companies. The survey was mance; (3) through its store of data, giving contractors followed up with interviews of key individuals in transporta- and surety companies the confidence that what was being tion agencies to clarify responses where needed and gain addi- asked for in the warranty specifications was entirely tional information on perceived benefits of warranties, per- achievable; and (4) giving the surety companies proven ceived barriers to implementation, preferred warranty duration data on which to base a bond. for different types of work, typical bidders' profiles, and pos- Conflict resolution. A conflict resolution team was estab- sible alternatives to then current warranty provisions. Contrac- lished for each pavement project and empowered to tors and bonding companies were likewise interviewed on resolve disputes between WisDOT and the contractor. topics relevant to their experience and perspectives. Key results Agency and contractor practices. Both WisDOT and of the Bayraktar et al. study that relate to findings of this the contracting community applied practices that con- synthesis project are discussed in chapter three. tinue to be reflected in warranted road construction. For example, WisDOT adhered to the principle that con- tractors would not be held responsible for distresses FHWA Activities caused by factors beyond their control--an important perspective when considering the multifaceted causes Following the passage of ISTEA in 1991 and final rulemak- of pavement distresses such as alligator cracking and ing in 1996, which together allowed use of construction war- rutting. Contractors developed a reliable approach based ranties on federal-aid projects, the FHWA has maintained on established construction technology, avoidance of active support of warranty clauses. The information on the unreasonable risk, and a focus on quality. FHWA website regarding the historical development of con- Sense of opportunity. Contractors taking a long view struction warranties and state usage was discussed earlier. of their business opportunities welcomed the use of war- The FHWA has also sponsored international scans on Euro- ranties. Warranties gave the contractors a better under- pean warranty use, which are discussed in chapter three. In standing of how pavements performed in service, and addition, the FHWA is conducting the following activities put long-term performance in their business interest. The relevant to the subject of this synthesis: greater latitude and responsibility they were given dur- ing construction enabled contractors to be more nimble The FHWA is sponsoring research by Utah State Uni- and creative in solving problems. versity to study best practices in innovative contracting WisDOT recommendations. Based on this experi- and to compile relevant sources on the Innovative Con- ence, Shober et al. (1996) recommended that WisDOT tracting website discussed at the beginning of this chap- expand the warranty approach to other types of pave- ter ("Briefing: Warranty Clauses . . ." 2000; "Innova- ments, reevaluate and adjust performance thresholds as tive Contracting" n.d.). It has also developed materials needed, and consider incentives for exceptionally well- that provide an overview and explanations of warranty performing pavements. If, for example, a pavement practices ("A New Look . . ." 2007; "Background for exhibited exceptional performance at the end of 3 years, Pavement Warranties" n.d. draft). the contractor could be relieved of future warranty The FHWA is meeting a Congressional mandate to work on that project. Such incentives were believed to develop minimum acceptable retroreflectivity thresholds