Guidelines for the Use of Pavement Warranties on Highway Construction Projects (2011)

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S U M M A R Y State departments of transportation (DOTs) develop and implement warranty provisions because of the potential benefits that warranty contracting provides for the DOT. The advantages of warranty contracting are identified in almost all of the literature related to warranties. These advantages include • Ensuring quality of materials and workmanship, • Reducing agency staffing requirements for inspection and testing of construction, • Promoting contractor innovation, • Changing the business model by shifting performance risk to the contractor, and • Improving performance and reducing life-cycle costs. State DOTs have gained considerable warranty experience, with varying results, since the Federal Highway Administration lifted its prohibition against the use of construction warranties in 1995. This research report summarizes current pavement warranty practices based on a review of the literature, DOT interviews, a joint industry/DOT workshop, and a review of internal DOT procedures and specifications collected as part of the research. It focuses more specifically on the question of warranty project selection. It also addresses various DOT evaluations of warranty projects that have been performed to date, identifying factors that contribute to the failure or success of a warranty program. This report summarizes the results of research on established pavement warranty programs of various DOTs and identifies programmatic and project-level decision criteria that DOTs may consider when applying pavement warranties on highway construction projects. The findings of this research are briefly summarized as follows: • Three types of warranties identified in this research are currently being implemented by practitioners. These are classified as Type 1—materials and workmanship, Type 2— short-term performance, and Type 3—long-term performance. • The number of pavement warranties implemented by DOTs in the United States varies widely. The number of pavement warranty projects within these DOTs ranges from a very small number to virtually all pavement projects, with certain limitations. • Few DOT practitioners have developed a systematic approach to project selection. Where warranty decision criteria are used, warranties are often limited to safe projects or stable base conditions. In a very few cases, warranties are used for all pavements unless the existing conditions preclude their use on the entire project or portions of the project. • Risk allocation on a warranty project can vary greatly depending on the type of warranty implemented and the anticipated project outcomes. Guidelines for the Use of Pavement Warranties on Highway Construction Projects 1

2• To implement successful pavement warranty projects, owners must apply the right type of warranties to the right type of project scope of work, and the provisions must effectively manage risk based on the stated objectives and goals for the warranty project. • A warranty decision tool was developed as part of the research. The tool is available in both manual and automated formats in Microsoft Excel (see Appendix A2). The tool first guides users through a set of programmatic criteria designed to assess whether program- level issues must be addressed before a DOT can successfully implement and sustain a warranty program. These issues may include DOT or industry resistance to changing the traditional contracting or business model, bonding limitations, resistance to transferring quality or performance risk to the contractor, or a reluctance to move from the lowest initial cost and minimum quality model to aiming for improved quality and reduced life-cycle costs. • The warranty decision tool also includes an assessment of the risks of implementing a Type 1, 2, or 3 pavement warranty based on project-specific characteristics and suggests strategies to mitigate these risks. Project-specific characteristics may include project location, size and complexity, existing foundation and base conditions, accuracy of traffic projections, average annual daily traffic (AADT) and traffic phasing requirements, and level of control ceded to the contractor for design, construction, and quality management. If the risks are high for a given warranty type, the tool suggests strategies to mitigate risk by modifying the scope of the project or the warranty or choosing the warranty type that fits with the level of control or responsibility allocated to the contractor under the contract, the accuracy of the traffic projections, or historic pavement performance data for the pavement type. • Comprehensive warranty guidelines are necessary to assist DOTs in implementing the appropriate warranty type for the specific project or program objectives, allocating risk, and addressing what elements are important to consider when drafting a warranty specification for hot mix asphalt (HMA) or portland cement concrete (PCC). Lastly, the guidelines include model pavement warranty provisions for HMA and PCC pavements that DOTs can use when developing their own project-specific warranty provisions. The appendices and the warranty decision tool are provided on the CD-ROM accompany- ing this report.