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agency enforcement of contract requirements, and failure pavement marking projects. These suggestions included the
to maintain proper communications among all parties. For wider use of incentives for superior-performing pavement
these reasons, the interviewed firms all supported effec- markings, with a balanced administrative approach that com-
tive, realistic specifications that are properly enforced. bined realistic incentives and penalties; considering war-
Such an approach, they believed, maintains a level play- ranties as one of a range of available options to achieve
ing field among competing contractors during the bid improved performance and cost-effectiveness; having materi-
process and a uniform expectation of quality during the als manufacturers and contractors engaged to a greater degree
construction and the warranty period. in all aspects of project performance; improved communica-
· Administrative risks relate to problems with either the tion and dispute resolution procedures; and greater use of
warranty specifications themselves or their administra- quality control mechanisms such as approved product lists.
tion by the agency. These problems make it difficult to
complete a job properly and create stresses in the rela-
tionships among agency, contractor, and materials man- FHWA CONTRIBUTIONS
ufacturer. Technical risks resulting from unrealistic
An important role in the development and promotion of pave-
specifications and ineffective enforcement of technical
ment marking warranties has been played in the United States
requirements have been discussed previously. Other
by the FHWA. The FHWA helped sponsor the early trials of
administrative issues that might create risks include proj-
pavement marking and other highway construction warranties
ect bond requirements, ineffective enforcement of safety
through its Special Experimental Projects 14 (SEP-14) pro-
requirements, lack of uniformity in agency administra-
gram. The FHWA promotes the use of road construction war-
tion of warranty provisions across multiple jobs, and lack
ranties on U.S. federal-aid highway projects and supports dis-
of a competent evaluation of contractors' qualifications
semination of web-based information on such warranties. The
and suitability for future work.
FHWA is meeting a Congressional mandate to develop mini-
· Financial risks comprise two types of risks identified
mum acceptable retroreflectivity thresholds for pavement
by interviewed firms: (1) having insufficient reserves to
markings. It is also conducting pavement marking demonstra-
fund warranted repairs, and (2) having an imbalanced
tion projects in Alaska and Tennessee to improve pavement
cash flow in which agency payments to contractors are
marking durability, resulting highway safety, environmental
not in step with the pace at which project costs are
protection, and related agency procurement processes.
incurred. The interviewed firms regarded mitigation of
the first risk as requiring good technical knowledge of
likely pavement marking performance (including the EUROPEAN WARRANTY EXPERIENCE
factors affecting that performance) through the warranty
evaluation period. This understanding helps guide the The review of European warranty practice was based on recent
firms in maintaining sufficient reserves to fund repairs international scans of highway agencies that were sponsored
that might be needed. The second risk points to the need by the FHWA and AASHTO, and a review of other literature.
for a shared understanding between agency and contrac- The European warranties that were addressed applied primar-
tor on a fair and reasonable financial structure for a ily to pavements and thus represented general findings rather
multi-year warranty project. Such a structure could pro- than those for pavement markings specifically. Nevertheless,
tect the interests of agency and contractor alike in pro- these findings established differences in legal and institutional
viding a proper incentive for satisfactory pavement approaches between European and U.S. practice that influence
marking performance, while reimbursing contractors for the success of warranty use.
costs incurred on a fair and timely payment schedule.
This issue will likely grow in importance as more agen- European experience in road construction warranties has a
cies begin using warranty specifications and as warranty long history. Materials and workmanship warranties of various
performance evaluation periods grow longer. durations have been used for 30 to 40 years. European coun-
· Risks to business reputation concern damage to a tries are continuing to move toward performance warranties
firm's reputation if a pavement marking project does not and other methods to engage the contractor more fully into
turn out well. Contractors and materials manufacturers assuring the quality of asset performance through its full life
agreed: business reputation is important for maintaining cycle. Institutional differences between Europe (and to some
good standing among current and future clients. Because degree Canada) and the United States include a less litigious
any of the risks discussed earlier can have negative relationship between agencies and contractors in Europe, and
impacts on business reputation, mitigating this risk greater European use of bid alternatives, contractor testing,
becomes a matter of managing the spectrum of risks and end-result (or performance-based) specifications rather
identified previously. than method-based (or prescriptive) specifications. Several
European countries use best-value rather than low-bid pro-
In addition to the risk-mitigation steps mentioned earlier, curement. European agencies reinforced the importance of a
the interviewed firms suggested several ideas that they best-value approach to the implementation of warranties,
believed could enhance the benefits of using warranties on because it promotes trust and confidence among the parties.
