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210 APPENDIX E European Warranty Experience U.S. REVIEWS OF EUROPEAN ods would result in corresponding advances in the United WARRANTY PRACTICE States, the Synthesis 195 author cautioned that institutional differences between the European and U.S. road construction European experience in road construction warranties has a environments might inhibit the effectiveness of such a trans- long history. This experience has been addressed in several fer. These differences included a less litigious relationship studies and international scans by U.S. agencies. While many between agencies and contractors in Europe, differences of these fact-finding missions are not necessarily focused on in the structure of the respective construction industries, pavement marking warranties specifically, they do establish and greater European use of bid alternatives, contractor test- differences in legal and institutional approaches between Euro- ing, and end-result (or performance-based) specifications pean and U.S. practice that likely influence the success of war- rather than method-based (or prescriptive) specifications. ranty use. The following sources have been consulted for this synthesis study: Common Ground Report NCHRP Synthesis 195, Use of Warranties in Road Con- struction (Hancher 1994), which reviewed U.S. and The Common Ground report provides a succinct statement European practices on road construction warranties. of key characteristics of the European and Canadian road A Federal Highway Administration scan, in coopera- construction environment. Central to this environment are tion with AASHTO, of asphalt pavement warranty changing public and private sector roles that are adapting to practice and technology in Denmark, Germany, Spain, alternative methods of project delivery. Sweden, and the United Kingdom (D'Angelo et al. Nov. 2003). Critical components of these new methods include the evolving A FHWA scan, in cooperation with AASHTO and relationships among public agencies, contractors, and private engineering firms, which are transforming risk allocation pro- NCHRP, of construction management practices in cesses, quality control/quality assurance, and general contract Canada and Europe (Common Ground . . . Summer 2005; administration procedures. Emerging delivery methods include DeWitt et al. May 2005). the use of non-traditional procedures such as design-build con- A description of laboratory turntables in Germany and tracts, public-private arrangements, maintenance and warranty requirements, and use of third-party consultants to perform con- Spain for accelerated testing of pavement markings tract management. ("Superior Materials . . . " Summer 2004). A white paper submitted to this synthesis study by a . . . The scan team discovered a more spirited effort of long-term representative of the American Traffic Safety Services partnership and collaboration between public and private sectors and witnessed heightened customer awareness among industry Association, ATSSA ("Pavement Marking Material . . ." members. n.d.), which gives U.S. industry perspectives on pave- ment marking product evaluation and the proposed use of Canadian and European agencies have developed construction European-style pavement marking turntables for acceler- management systems that promote the alignment of team goals through the use of integrated risk analysis techniques that sup- ated product evaluation. port the strategic application of alternative delivery methods. These concepts thread through the project life cycle, from pro- curement systems that set the framework for success to contract NCHRP Synthesis 195 payment systems that reinforce trust. The review of road construction warranties presented in Source: Common Ground . . . Summer 2005. NCHRP Synthesis 195 includes a section on European war- ranty practices as of the early 1990s, with a focus on pave- The recommendations of the Common Ground report were ments. This review consolidated the findings of several inter- characterized as motivating change within U.S. transportation national scans, fact-finding visits to Europe by FHWA staff, agencies "to promote teamwork and more collegial relation- and knowledge of the Synthesis 195 author. Findings were ships" between public and private sector groups. "This change presented for Austria, Denmark, France, Germany, Norway, should occur in collaboration with industry and should benefit Sweden, and the United Kingdom. The Synthesis 195 author both large and small engineering firms, contractors, and sup- noted that road construction warranties were already widely pliers" (Common Ground . . . Summer 2005, p. 3). Warranties accepted in Europe, and contractors there were afforded a are addressed specifically in one of this report's recommenda- greater role in design and construction method input than tions. Moreover, the broad changes in U.S. construction man- their U.S. counterparts. While it might be concluded that agement proposed in the other recommendations envision transfer of contracting and construction management meth- practices and contracting environments that could accommo-

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211 date new types of warranty provisions and new approaches To use appropriate alternative payment methods: to their administration. The recommendations include the An agency can assess the feasibility of structuring con- following: tractor payments differently when they can serve par- ticular types of projects and customer goals; for exam- To align team goals to customer goals: Procurement ple, milestone payments and lump-sum payments. practices, contract provisions, and construction man- To consider alternative application of life-cycle agement methods should align goals of the customer, responsibility: When it is appropriate to give the con- agency, and contractor. The industry should form teams tractor responsibility for maintaining project quality early in the process to integrate these goals and main- through a period of its life-cycle, long-term warranties tain this alignment through project development and can deliver better products, promote innovation, and construction. eliminate redundancy in QA processes between the To develop risk assessment and allocation techniques: agency and the contractor. Improved risk assessment processes should extend from project scope development through construction man- Note that several themes that run through these recommenda- agement. These processes should identify risks and tions--e.g., early contractor involvement in the project devel- assign them to the party best able to manage them. opment process, integration of the contractor's role within a To strategically apply alternative delivery mecha- partnering approach to meet a customer's goals, a recognized nisms: Consider alternative delivery mechanisms that contractor role in promoting quality during the project life- can best align goals and allocate risk. Work toward early cycle, and a willingness to consider alternative processes and industry involvement and more effective life-cycle design methods--can also work for innovative approaches to war- solutions. ranties. For example, an agency could use a prequalification To enhance qualification rating processes: Processes process in lieu of requiring warranty bonds. for quality-based rating and contractor selection are key to successful projects. All international parties who participated in this scan cited accurate and timely rat- Scan: European Asphalt Pavement Warranties ing processes as critical to successful construction management. An international scan team organized through the FHWA To use qualifications in procurement: The recom- and AASHTO in November 2002 visited five European mendation is to increase the use of best value procure- nations--Denmark, Germany, Spain, Sweden, and the United ment, which considers price, contractor qualifications, Kingdom--to review short- and long-term warranties for proposed project schedule, and proposed technical asphalt paving projects (D'Angelo et al. Nov. 2003). Topics of approach, and encourages long-term partnership and interest included risk assessment for agencies and contractors, work efficiency. administration of warranty contracts, and performance indica- To pilot early contractor involvement: A proposed tors and practices related to pavements specifically. Findings qualification-based process of contractor rating and and recommendations applied to material and workmanship selection should be pilot-tested using a target-price con- warranties, performance warranties, best-value procurement, tract. The pilot should be formulated and conducted and alternative contracting methods. Since the scope of the with industry support. Early involvement of the con- tractor represents a fundamental change in how high- current synthesis study is on pavement markings, the review way construction is conducted in the United States. of this international scan focuses more on the concepts and To apply alternative designs and bids in procure- implementations of European warranties and how they com- ment: The recommendation is to increase the use of pare with U.S. practice, rather than its specific pavement- alternate bids in the traditional low-bid environment. related findings. In this context, the experiences of these five A bid evaluation process that is perceived as fair and European nations with respect to asphalt pavement warranties transparent is critical to success, and can achieve better are as follows (D'Angelo et al. Nov. 2003): value-for-money. To conduct preproposal meetings: When considering Materials and workmanship warranties of various dura- alternate designs, confidential preproposal meetings tions have been used for 30 to 40 years. These countries allow prospective contractors to validate the accept- are continuing to move toward pavement performance ability of innovative designs. This approach, now used warranties and other methods to engage the contractor on design-build projects, could be extended to other into assuring the quality of pavement performance methods of project delivery. through its full life cycle. To apply more contractor quality management: Among these quality-oriented practices are the devel- Contractor quality management systems can comple- opment of partnership relationships among agencies ment agency QA processes. Contractor quality plans and industry participants, the use of best-value procure- can be part of procurement competition and written into ment techniques, and the application of alternative con- the project contract. Quality-management-process cer- tract methods including warranties, performance-based tifications can be used when appropriate. contracts, and design-build-finance-operate (DBFO)

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212 concessions. The motivations for these contracting inno- Scan: European Programs in Superior Materials vations include: and Advanced Testing Opportunity for contractor innovation; Need for private sector financing assistance; and An international scan team on Superior Materials, Advanced Desire to improve quality and efficiency. Test Methods, and Specifications toured four European countries--the United Kingdom, Denmark, Germany, and All of the countries visited use materials and workman- the Netherlands--in July 2003 to learn about European prac- ship warranties on their traditional road construction tices in the subject topics. A particular focus concerned ways projects. Warranty periods vary from 1 year (Spain) to to accelerate identification, evaluation, approval, and accep- 4 years (Germany). Denmark and Sweden use perfor- tance of new products, and to incorporate the products within mance warranties in their traditional contracts, while the project specifications. The investigation also included pro- UK employs performance warranties in design-build con- cesses that yielded superior materials--i.e., materials that could tracts, which have become its preferred method of pave- improve facility performance significantly, cost-effectively, ment construction contracting. All three of these coun- with improved safety or reduced construction time. The Euro- tries use a 5-year performance warranty, which balances pean environment for innovative materials development and an assurance of satisfactory pavement performance testing was found to comprise several processes ("Superior without undue burden on the contractor to maintain the Materials . . ." Summer 2004), of which the following are warranty through the full service life of the pavement. most relevant to this synthesis study: All five countries visited use best-value rather than low- bid procurement. Criteria for contractor selection include European Union standardization of highway specifica- safety, innovation, and environmental impact. Denmark tions, common testing and evaluation protocols that were adds the bidding of additional years of warranty protec- integrated into binding specifications across the EU, and tion as a best-value criterion. In some cases contractor a structuring of specifications toward function and per- prequalification is also used as part of the best-value formance rather than method. This approach allowed process. All countries reinforced the importance of a greater innovation by private industry while protecting best-value approach to the warranty approach, since it the confidentiality of the production methods. promotes trust and confidence among the parties. The UK's Highway Authorities Product Approval Much longer warranty periods (e.g., up to 35 years) are Scheme (HAPAS). Under HAPAS, the Highways being explored in alternative types of contracts such as Agency (HA) and industry jointly develop functional DBFO and Pavement Performance Contracts (PPCs, specifications to replace method specifications. Once which have warranty periods of 1120 years among the the HA approves these new specifications, the private host countries). These longer warranty periods reflect sector is able to develop products that meet these func- the fact that contractors have responsibility for pave- tional requirements. Prior to use, the HA subjects the ment design, construction, and maintenance according products to independent third-party review, evaluation, to performance criteria established by the owner agency. and certification through a program managed by the These alternative arrangements are developed in col- British Board of Agrment (BBA). After certification, a laboration with industry. product may be used on HA-funded projects. HAPAS also enforces a requirement that manufacturers of new The scan report recommended actions at the federal, state, products train and certify installation contractors and and local governmental levels in the United States to pro- provide evidence of such to the HA before construction. mote greater use of warranties, including short-term (e.g., up The countries visited engage in performance contract- to 5 years) materials and workmanship warranties leading to ing and use of warranties as routine practice. The dura- long-term performance warranties in the future. Legislation tion of warranties is negotiable between agency and enabling wider use of best-value procurement processes and contractor; new products that are perceived as riskier contractor prequalification should be sought where needed. might be subject to a longer warranty period. A combi- The report also recommended that the federal government nation of price and quality forms the basis of bid award, take the lead in establishing a warranty resource center for where quality includes a credit for innovation. use by the federal, state, and local governments. State and The Netherlands is conducting a pilot program to encour- local governments should take practical steps toward devel- age long-range, visionary solutions to highway prob- oping and implementing materials and workmanship war- lems. For example, concepts were developed to provide ranties and, when it is appropriate to engage contractors in a prefabricated road surface that could be applied or design, short-term performance warranties. Best-value and removed quickly, and that would generate less vehicle- contractor-prequalification processes should also be imple- pavement noise than existing paved surfaces. mented. The report recommended roles for industry in educa- Germany has built a laboratory turntable on which to tion, participation in roundtable discussions and pilot projects, conduct accelerated performance tests of selected pave- and strengthening of knowledge and capabilities regarding ment markings: tape, temporary paint, and permanent construction and maintenance methods and products to sup- paint. Marking samples are mounted on plates on the port warranty use. turntable. When rotated, the turntable causes the sam-

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213 ples to pass under tire assemblies that simulate passage The ATSSA members felt that while the facility itself of traffic. The test protocol describes the number of was impressive, the value of its data would be primar- cycles (rotations) and laboratory environmental condi- ily for research and development rather than for evalu- tions (environmental controls were being added by Ger- ation of potential performance of pavement markings or many). Spain has a similar facility, although it was not for product approval. visited during this scan tour. The scan team believed The paper identified four areas of technical concern in that this turntable concept should be considered for which it was felt that a laboratory turntable would not application in the United States by AASHTO's NTPEP. yield valid results: Lack of exposure to ultraviolet light; Laboratory preparation of pavement marking sam- ATSSA WHITE PAPER ples that does not mimic actual installation or appli- The ATSSA white paper responded to the recommendation of cation methods in the field; the scan team regarding consideration of a U.S. pavement Standardized, constant laboratory environmental marking test facility, incorporating results of a follow-up visit conditions that reflect neither the full degree of vari- to the laboratory turntable facility in Spain. The background ability in conditions throughout the United States nor section of the paper summarized a joint ATSSASASHTO the short-term cycles of fluctuation that stress high- (Southeast Region of the American Association of State High- ways in the field; and way and Transportation Officials) effort begun in the 1980s. Differences between the substrate material on the This effort involved a public-private partnership to test and turntable plates that is used to simulate the pavement evaluate new road safety devices on a test deck in the South- surface versus the actual pavement substrate proper- eastern U.S. The items tested included raised pavement mark- ties in the field, including variability in materials (e.g., ers and adhesives, snowplowable markers, durable and non- asphalt vs. concrete) and variations in these material durable pavement markings, as well as other items not related properties among states. to pavement markings. The paper noted that the single most The institutional framework and construction industry challenging obstacle to overcome in this program was the rel- and culture in the United States is much different from ative lack of acceptance of program results by the state DOTs. those in Europe. It is not clear that the technological Few states were willing to accept the NTPEP results as the sole transfer of the laboratory turntable from Europe to the determinant for including the product on their Qualified Prod- United States will ensure that the effective use of test uct Lists. Pavement markings were among those products that results from the facility can likewise be successfully received relatively weaker acceptance of test results. transferred to the U.S. legal and business environment. The paper closes with several questions to which the Given this history, the paper considered the implications of industries represented by ATSSA are seeking answers: NTPEP's pursuing the idea of an accelerated testing turntable for pavement markings. The paper made the following obser- What is the goal of the turntable and what is proposed vations ("Pavement Marking Material . . ." n.d.): to be accomplished? Why is the turntable the answer? While the Spanish and German turntables have been Why not study and develop models of programs that used for many years, they are not without controversy are successfully working in the United States? regarding validation of laboratory data versus actual Is the turntable a replacement for NTPEP? Is it in conditions and performance in the field. addition to NTPEP? It is not clear how the turntable would accommodate Will there be broader acceptance of this facility and the climatic and topographic variability throughout the the data it generates? United States. Moreover, it was felt that the goals of Is this the first step in the development of a mecha- the laboratory facility and proposed use of the test nism to establish a National Performance Standard results had not been articulated. for Pavement Markings?