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![Page 1: Performance Based Contracting in Estonia. Word Bank PBC Resource Guide César Queiroz Consultant, Former Highways Adviser World Bank Washington, D.C., February.](https://reader035.fdocuments.us/reader035/viewer/2022062321/56649dd35503460f94aca97f/html5/thumbnails/1.jpg)
Performance Based Contracting in Estonia. Word Bank PBC
Resource Guide
César QueirozConsultant, Former Highways Adviser
World BankWashington, D.C., February 1, 2011
Evolution of road maintenance management and Performance-Based Contracting (PBC) in Roads – 3rd BBL
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Presentation Outline• Performance-based contracting in Estonia– Pioneers in ECA: Estonia and Serbia– Coverage of the national road network– Features and requirements– Road users’ satisfaction
• Resource Guide for Performance-based Contracting
• PBC is not limited to roads• PBC, road concessions and the distribution of
risks between the public and the private sectors
• Conclusions
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PBC in Estonia• 1995 – the Estonian Road Administration
(ERA) launched two pilot performance-based contracts for road management and maintenance
• 1995 to 2000 - ERA tested several one-year and two-year PBCs
• 2001 to 2009 Several 5-year PBCs awarded; coverage reached 100% of ERA’s network (16,487 km)
• Since 2010: 7-8 year long PBC contracts; prices adjusted annually
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Some Features of PBC in Estonia
• Cover routine maintenance and winter maintenance (snow removal, snow blowing, ice cleaning)
• No rehabilitation is included • Contracts are purely performance based• Following initial use of supervising
consultants, supervision is currently done directly by ERA
• Fewer complaints from road users• Substantial reduction in ERA’s work force
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PBC in Estonia (cont’d)• Current number of performance-based road
maintenance contracts: 18• 13 contracts with private companies • 5 contracts with state owned companies• 2011-2012: ERA plans to privatize the
remaining state owned companies. An attempt to do so in 2010 failed because their contracts will close in 2011 – the private sector showed no interest without long-term contracts
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Performance Requirements in Estonia• Paved roads: evenness of road; amount of
surface defects; condition of shoulders, road signs, road marking; side visibility distance; general appearance
• Gravel roads: evenness and cross section of road surface, side visibility distance, general appearance of road
• Bridges: condition of pavement, sidewalks, handrails, joint sealant, drainage system, piers, embankment, river bed
• http://www-esd.worldbank.org/pbc_resource_guide/Case-Estonia.htm
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PBC Satisfaction in Estonia
• 2006 Winter Road Users Survey: 50% of polled road users considered the traffic conditions on main roads good or very good
• 2009-2010 Winter Road Users Survey: 66% of polled road users considered the traffic conditions on main roads good or very good
• Government is also satisfied. ERA and the Ministry of Economic Affairs and Communications intend to continue to use the PBC approach
Source: Personal correspondence with ERA on January 31, 2010
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Performance-based Contracting in Serbia: Two Pilot Contracts
• 2004 – the Public Enterprise Roads of Serbia (PERS) awarded two pilot performance-based contracts for road management and maintenance under WB-supported project
• Area-wide contracts covering two regions, Macva and Kolubara (about 1,180 km or 8% of the country’s national road network)
• Funding: 9% PERS budget, 91% World Bank
• Contracts satisfactorily completed in 2009
• http://www.putevi-srbije.rs/index.php/en/
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Some Features of Serbian Pilot Contracts
• Three-year contracts, with a two-year extension option
• Supervision: a local consulting firm
• Procurement: ICB using WB Standard Bidding Document with modifications approved by RPM
• Six local and international firms prequalified
• Advance payment: 10% of contract price
• Hybrid contracts: lump sum (routine and winter maintenance) and quantity based items
• http://www-esd.worldbank.org/pbc_resource_guide/Case-SerbiaMn.htm
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Serbia: PBC alive after the pilots?
• 2009 – the Public Enterprise Roads of Serbia (PERS) awarded a PBC contract to a local company, PZP Valjevo (which was a subcontractor to PZP Beograd and Alpine for the two pilots), for Macva and Kolubara regions
• Will PERS extend the use of PBC to the remaining of the national road network?
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PBC in Other ECA Countries• Albania: Four output and performance based
road maintenance contracts awarded in 2009
• Ukraine: Ongoing WB-supported Roads and Safety Improvement Project includes TA to assist Ukravtodor to launch two pilot performance-based road maintenance contracts
• Armenia: PBC contracts first awarded in 2007, for three years. Bidding documents being updated/revised based on experience gained. Second wave of PBC contracts to be awarded in 2011
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World Bank Resource Guide for Performance-based Contracting
• Assists road agencies in developing countries to launch or enhance a PBC program to manage and maintain their road networks
• Contains practical documentation to– identify a PBC approach to fit specific conditions in a
given country– design bidding and contract documentation– develop an efficient PBC implementation strategy
• Produced under a partnership between the UK DFID and the World Bank
• http://go.worldbank.org/YRWQT6YL80
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World Bank Resource Guide for Performance-based Contracting• Sample Bidding Documents• Sample TOR for preparation of PBC
projects and support to bidding process
• Sample TOR for Supervision• Sample TOR for Facilitator / Trainer• Sample Technical Specifications• WB Technical Note No. 27 on PBC• Actual Contracts• Resource People
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PBC in Different Countries
• Long-term PSMC in AU, NZ, Canada (3-10 years)
• CREMA (Contrato de REcuperation y MAntenimiento) in Argentina, Brazil, Uruguay
• Warranty contracts in the USA
• Asset Management and Maintenance Contracts in Virginia, USA
• DBFO (up to 30 yr) in UK, Finland, Portugal
• Some are hybrid type of contracts (i.e., quantity-based and performance-based)
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Factors favoring PBC
• A study found that “large projects with strong competition, long duration, long outsourced road sections that incorporate crack sealing, pothole repair, illumination repair/maintenance, and mowing activities, favor outsourcing under PBC”
• Cost Savings Analysis of Performance-Based Contracts for Highway Maintenance, Journal of Infrastructure Systems, ASCE, December 2010
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Performance-based Contracts Are Not Limited to Roads
• Airports in Alaska
• Waterways in Argentina
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Use of Performance-based Contracts in Alaska
• 146 performance-based maintenance contracts for airports, seaplane facilities and roads
• Minimal performance standards• Started using PBC in 1980s• Good results• Source: Frank Richards, “Use of Performance
Based Maintenance Contracts in Alaska,” 2005
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Use of Performance-based Contracts for Waterways in Argentina
• “Hidrovia Waterway Concession” – Rio Parana, Rio de la Plata waterway between Santa Fe and the Atlantic Ocean (800 km)
• The contractor maintains the fairway (10.2-m depth) and the signalization over the concession life (1995-2013) and collects toll from the ships that navigate the fairway
• Very good results
• Source: Jan Van den Driessche and Carl Heiremans, “Performance-based Contracting in the Dredging Industry,” 2007, and http://www.jandenul.com/
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21
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Distribution of Risks between the Public and Private Sectors
• PBC can help transfer the contractual performance and management risks from the public to the private sector
• How much risk should the public sector transfer to the private sector?
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Allocation of RisksAllocation of Risks
Force AccountHigh
RISKTO
PUBLIC SECTOR
LowRISK TO PRIVATE SECTOR High
Traditional Maintenance Contracts
PBC
BOT
Decreasing Public Risks,
Increasing Private Risks
BOO
M&O Concessions
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Thank you!
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Some Basic ReferencesWorld Bank (2006). “Resource Guide for Performance-based Contracting.” Washington, D.C. http://www.worldbank.org/transport/roads/resource-guide/index.html
World Bank (2005). “Performance-based Contracting For Preservation and Improvement of Road Assets.” Transport Note No. 27. Washington, D.C. http://www.worldbank.org/transport/roads/resource-guide/Docs-latest%20edition/PBC/trn_27_PBC_Eng_final_2005.pdf
World Bank (2006). “Sample Bidding Document - Procurement of Works and Services under Output- and Performance-based Road Contracts,” October 2006. http://go.worldbank.org/NMR4NH2CU0
PPIAF/WB Toolkit for Public-Private Partnerships in Roads & Highwayshttp://go.worldbank.org/P2XMGNYLD0
Performance Indicators for Maintenance Workshttp://www.ppiaf.org/documents/toolkits/highwaystoolkit/2/2-31.html#Anchor-Specific-35882
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Some basic references (cont’d)• Training Course for Performance-Based Management and
Maintenance of Roads http://go.worldbank.org/75K6S7W2O1
• Road Management Catalog http://go.worldbank.org/6NJUB6UOP0
• Gunter Zietlow’s PBC website: http://www.performance-based-road-contracts.com
• “Cost Savings Analysis of Performance-Based Contracts for Highway Maintenance,” by Anastasopoulos, McCullouch, Gkritza, Mannering and Sinha. Journal of Infrastructure Systems, ASCE, Volume 16, Issue 4, pp. 227-354, December 2010 http://scitation.aip.org/iso
• Estonian Road Administration (ERA) Annual Reports http://www.mnt.ee/index.php?id=12453 http://www.mnt.ee/?lang=en
• Personal correspondence with Mart Puust, Dep Dir General, ERA, Jan 31, 2011