Performance Contracting

1. Performance Contracting 2008 WASHTO – CMS Meeting April 8, 2008

2. Overview • What is Highways for LIFE? • What is Performance Contracting? • Why Performance Contracting for Construction? • Why Performance Contracting for a Highways for LIFE Project • Framework Purpose • Stakeholder Involvement • Framework Contents • Lessons Learned • Pilot Program • Seeking the Best Solutions Workshops

3. What is Highways for LIFE (HfL)? • HfL is a Federal Program driving the concept that we can build highways: • Faster • With less congestion • With better safety and quality • At lower cost, and • With better user satisfaction

4. The Highways for LIFE Philosophy • Set motorist-focused stretch goals • Identify and use innovative practices and technologies to meet or exceed those goals • Interact/communicate with customers

5. The Highways for LIFE Program • Projects • Technology Partnerships • Technology Transfer • Workshops • Information Dissemination • Monitoring and Evaluation • Stakeholder Involvement

6. Oregon’s Highways for LIFE Project • Replacing five bridges on Oregon 38 • Goal is to minimize disruption to the traveling public • Will use prefabricated bridge elements made with high-performance concrete • Will move the prefabricated structures into place overnight with self-propelled modular transporters • Anticipated total project cost is $47,554,000

7. What is Performance Contracting? • Innovative contracting technique • Contractor is responsible for achieving a defined set of goals • Performance goals are specified instead of prescriptive methods

8. Why Performance Contracting for Construction? • Allows State and local agencies to define and communicate to contractors specifically what they want to achieve • Contractors will have the flexibility to determine how they do the work

9. Why Performance Contracting for a Highways for LIFE Project? • Someone needs to be responsible for meeting the goals that are set for the project • If the goals are under the influence of the contractor, why not make the contractor responsible for meeting them? • Performance contracting provides a mechanism for assigning that responsibility to the contractor

10. Relation to the Highways for LIFE Program • Performance contracting is a tool in the HfL toolbox • HfL projects are not required to use performance contracting

11. Pros Contractor is responsible for meeting the goals that they can influence Introduction of Innovation Defined Outcomes Contractor Flexibility Share of risk and rewards Some Pros and Cons of Performance Contracting • Cons • New approach that requires a culture shift • May not be applicable to all projects

12. Performance Contracting Framework - Purpose • To provide State and local agencies with processes and materials that they can use to accelerate the development of a performance contract solicitation package for construction contracts • Meant to be used as a reference guide • Should help agencies to avoid common obstacles and pitfalls

13. Performance Stakeholder Involvement • The project team developed the materials working with: • A select group of stakeholders from State DOTs and Industry • Provided guidance and review at the 30%, 60%, and 90% stages • Subject matter experts from FHWA

14. Scott Jarvis - Caltrans Chuck Suszko - Caltrans Gene Mallette - Caltrans Peggy Chandler - Texas DOT Steve DeWitt - North Carolina DOT Kevin Dayton - Washington State DOT Dexter Newman - the Kentucky Cabinet State DOT and Industry Stakeholder Group • Sid Scott - Trauner Consulting • Brian Deery - AGC • Bob Lanham - Williams Brothers Construction- • Brian Burgett - Kokosing Construction • Rich Juliano - ARTBA Note: Participation did not involve formal endorsement of the final product

15. Framework Contents • Overall process for performance contract development • Guidance on selecting appropriate projects • Processes, lessons learned, and sample solicitation package materials for: • Performance Goals • Measurement Methodology • Enhanced Low Bid Award Process • Best Value Award Process • SEP-14 Process

16. Pilot Program • FHWA is currently seeking 4 to 8 agencies that are interested in piloting the Performance Contracting Framework. • Pilot states will receive tailored technical assistance to help them implement this approach • Pilot states can propose the use of the framework as an innovative approach when applying under the Highways for LIFE Program • For more information on how an agency can become a pilot agency, talk to Mary Huie at mary.huie@dot.gov or 202-366-3039

17. Seeking the Best Solutions Workshops • A one-day workshop for State DOTs • Instructs participants how to use the HfL, ACTT workshop and performance contracting concepts to deliver a project better, faster and cheaper. • Leads participants through the process of: • identifying goals that respond to motorists’, highway users’ and the agency’s highest priorities and • seeking the best ways to achieve those goals. • For more information on hosting a workshop, contact Mary Huie at mary.huie@dot.gov or 202-366-3039

18. For More Information • Mary Huie, FHWA mary.huie@dot.gov, 202-366-3039 • Chris Schneider, FHWA christopher.schneider@dot.gov, 202-493-0551 • Jim Sorenson, FHWA james.sorenson@dot.gov, 202-366-1333 • Mark Robinson, SAIC mark.d.robinson@saic.com, 703-676-2384

19. Questions