Maintenance Contracts for Rural Roads

1. International Road Federation (IRF) German Agency for Technical Cooperation (GTZ) Economic Commission for Latin America and the Caribbean(ECLAC) Maintenance Contracts for Rural Roads Technical Assistance Program of the Federal Republic of Germany Presented by Dr. Gunter Zietlow e-mail: gunter@zietlow.com http://www.zietlow.com XXIst World Road Congress, Kuala Lumpur, 3 - 9 October 1999

2. International Road Federation (IRF) German Agency for Technical Cooperation (GTZ) Economic Commission for Latin America and the Caribbean(ECLAC) Performance Specified Road Maintenance Contracts-The Road to the Future - Technical Assistance Program of the Federal Republic of Germany Presented by Dr. Gunter Zietlow e-mail: gunter@zietlow.com http://www.zietlow.com XXIst World Road Congress, Kuala Lumpur, 3 - 9 October 1999

3. Overview ofPresentation • Introduction • Alternative contractual schemes • Case studies • Lessons learned

4. Objective • To improve road conditions and/or reduce maintenance cost.

5. Precondition Contracting out rural road maintenance requires a secure and stable flow of funds.

6. Funding • National or regional road (maintenance) fund • Local funds • Local dedicated taxes • Road access and/or user fees • levied on property • levied on production • vehicle registration fees • fees levied on motor fuels • Local road boards to control proper use of funds

7. How often did I tell them: we need a road fund

8. Contractual schemes • Unit price contract • Lump sum contract • Performance specified contract

9. Responsibilities

10. Performance Specified Road Maintenance Contract A service level agreement between the road authority and a contractor concerning a schedule of payments in return for an agreed level of road condition performance or measurable parameters defining the performance of drainage system,road side assets, traffic assets, road surface and bridges in terms of maintenance program outcomes.

11. Performance SpecifiedRoad Maintenance Contracts - Example of Performance Indicators - • Visual appreciation • Potholes • Cracks • Rutting • Obstruction of drainage system • Others • Roughness (IRI) • Friction • Deflection • ...... METHOD OF VERIFICATION

12. Contracting out can reduce road maintenance cost PERFORMANCE SPECIFICATIONS UNITE PRICE CONTRACTS FORCE ACCOUNT % ROAD MAINTENANCE COST

13. ArgentinaProvince of Buenos Aires, General Arenales • 1089 km of earth roads • Lump sum 3 year contracts, one contractor • Contract price resulted in savings > 30% • Cost of maintenance: US$ 1000 per km • Financing: Road user fee (US$ 2.2 per acre) • Contractor collects the fee BEFORE AFTER

14. 130 performance specified road maintenance contracts maintaining 4100 km of roads (routine maintenance only) 130 small scale enterprises Sanctions for non-compliance Financed through the national road maintenance fund Guatemala

15. ColombiaMunicipality of Popayán • 300 km urban and 280 km rural roads • 15 small scale enterprises (cooperatives) with a total of 151 persons • 6 contracts with administrators which will guide and supervise the small scale enterprises • Contracts are based on performance specifications • US$ 1600 per km (US$ 900 per km for routine maintenance, US$ 700 per km for administration)

16. Minor pothole patching Cleaning of pavement and right-of-way Cleaning of drainage system Maintenance of road signs Vegetation control Clearing of land slides Removing of bill boards Emergency response Erosion control Activities performed by small-scale contractors

17. Physical inventory Evaluation of pavements Traffic counts Advising on maintenance procedures Design of small structures Emergency response Environmental protection Accident recording Road user inquiries Proposing road and bridge improvements Activities of the administrators

18. Uruguay • 10 contracts with former employees of the road administration of ~ 180 km of national and rural roads each • 4 contracts between 250 and 350 km each • contracts cover a specific district with different kind of road surfaces • Maintenance by performance specifications • Contract periods are 4 - 5 years

19. Uruguay • Contractor has a well developed auto evaluation and control system. • There are extensive reporting procedures. • Road administration is using a sophisticated evaluation scheme to control adherence to performance standards. • Monthly payment is based on a monthly evaluation taking 10% of the assets at random. • Penalties are being applied if defects are not rectified with a specific time period.

20. Lessons Learned (1) • A secure and stable flow of funds is a precondition for contracting out road maintenance. • Contracting out will eventually result in substantial savings and improvement of road conditions. • Contracting small scale enterprises preferably cooperatives made up of people living along the road show excellent results. • Good supervision is a key to success.

21. Lessons Learned (2) • Generally contractors and supervisors need adequate training, especially small scale contractors. • Direct contract letting may be acceptable in the beginning but only competitive bidding will drive prices down. • Performance specified road maintenance contracts should be introduced gradually.

22. Lessons Learned (3) • Performance indicators should be comprehensive and clearly defined and measurable. • Penalties for non-compliance should be sufficiently high to encourage the contractor to comply in the first place. • Control of compliance with performance standards should be strict.

23. VISION No potholes Business Opportunities Transport Cost

24. For further information, please visit my website at http://www.zietlow.com