Summary of Global Experiences

with Performance-Based Road
Contracts
(Do’s and Don’ts)
Mr. Rowan Kyle
Opus International Consultants
New Zealand
Asian Development Bank Transport Forum
16 September 2014


This Presentation Will Cover:
 Background
 Main drivers of testing PBRCs in Punjab,
(India), Liberia and New Zealand
 Capacity building of domestic contractors
 Main benefits obtained after the first pilot
 Recommendations for the future – do’s and
don’ts

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Background
 Punjab, India
Funder – World Bank
Development – 9 Month Contract: 2008 – 2012
204km network – single contract package
Implemented 2012 -10 Years
 Liberia
Funder – World Bank
180km network length – full reconstruction
Implemented 2012 – 10 Years
 New Zealand
 Entire 11,000 KM State Highway Network moving to
PBRC’s. – 7 Years.
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Main drivers of PBRCs in Punjab
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Increased pavement lifecycles
Delivery of defined service levels
Linked to client’s asset management capacity
building
Improved linkage between expenditure and
outcomes
Increased focus on road safety.




Punjab OPRC
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Punjab OPRC
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Punjab OPRC
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Main drivers of testing PBRCs in
Liberia
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A flexible model to deliver full reconstruction and
long term maintenance
Transfer of risk to contractor for design and
construction outcomes
Increase focus on post construction maintenance
and road user needs
Capacity building within the client’s organisation.

Liberia OPRC
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Liberia OPRC
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Liberia OPRC
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Liberia OPRC
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Liberia OPRC
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Liberia OPRC
 Risk Management – what might happen if…...






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Liberia OPRC
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Main drivers of Implementing
PBRCs in New Zealand

23 Regional Maintenance Contracts
Av of 500km in each network
Contracts awarded to date (5) - all below estimate!
 Greater control and asset management by the
Agency
 Consistent service levels nationally
 Increased risk transfer to contractors
 Increased value for money outcomes
 Increased asset lifecycles
 Agency required to save $160m over 3 years.


Capacity Building of Domestic
Contractors

 Punjab, India: - Indian contractor and subcontractors used.
 Liberia: - Chinese contractor, local labour force engaged.
 New Zealand – Significant focus on healthy market place –
20% sub-contractor (by value) is mandatory.
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Main Benefits Obtained after
the First Pilot

 Punjab, India: Programmed works on track and a good
focus on Routine Maintenance and road safety from the
outset.
 Liberia: Improved awareness of the importance of quality
and safety by the Contractor. Approximately 45km of
pavement reconstructed and 1 bridge rebuilt.
 New Zealand, cost savings achieved, more control and
involvement by the highway agency.
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What are the Key Success Factors
(the Do’s)?
 Road Agency institutional buy-in 
 Adequate and committed funding available 
 Early identification of impediments – legal/institutional 
 Capacity building in both government agencies and the private sector 
 Effective risk identification and sharing 
 Procurement process – get the best contractor possible and focus on (i)
technical support; (ii) technical requirements; and (iii) evaluation criteria 
 Performance measurement / incentives / enforcement 


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…. Pitfalls to Avoid (The Don’ts)
 Externally- imposed change (for sake of change) with little internal (domestic)
ownership/buy-in 
 Paradigm shift (centrally driven) incompatible with current industry capacity 
 One size fits all approach 
 Service level scope creep – specifying more to be done than can be afforded 
 The impact of delays…Time really is money! 
 Aging of collected data / cost of recollection / risk of variations
 Increased asset deterioration / additional maintenance requirements
 Impact of price adjustment over time – significant risk to employer / donor
 Increased road user costs / delayed project benefits
 Increasing hazard level / accident rates / fatalities
 Political fallout / loss of credibility.







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Thank You


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