Assessing the Effectiveness of K.P.M.sAlex Finn – WBoPDC Transportation Manager David McDougall – Inroads Asset Manager

Where and What

• Population 42,000– 3x national growth rate– 10th fastest growing (96-01)– 14th fastest growing (01-06)

• 212,000 hectares• 1030 km roads

– 790/240 (sealed/unsealed)– 177 Bridges and Structures

• Encompass Tauranga City– 110,000 pop– Largest port in NZ

Background

• The problem faced in 1999– Growth at 4%– Declining Levels of Service– Escalating costs– Council not wanting rate rises

• The Solution– Lump sum, performance based, long

term maintenance contract ….PBC-01

PBC-01 - Introduction

• 10 Years – 2002-2012• Joint Principals – NZTA & WBOPDC• 2-Tier Governance structure

Joint Client Panel

WBoPDC NZTA (Transit)

PBC-01 Features

• Outcome based (measured by KPM)• Lump sum• Transfer of Operational Control &

therefore some risk transfer• Single provider

Investment

$3million investment including subsidy

• Gathering data• Setting up KPMs• Developing contract document• Tendering process• Compensating tenderers

Savings for Council

• Estimate for 10 years $135m• Tender $105m• Saving $30m• Tender/Estimate $78%

In Summary

• Investment $3 million• Savings over 10 years$30 million

Includes savings in NZTA subsidy

Setting up Performance Measures

• Affordable Level of Service• Necessary for community and the

asset• Must drive the contractor to provide

the correct response

Basis of PBC Savings

• Economy of scale• Contract period – 10 years• Risk allocation• Definition of Level of Service

• Economy of Scale– Efficiency–Multi-skilled workforce

Contract Period

• Better resources• Opportunity to invest in asset• High value staff

Risk Allocation

• To party suffering consequences of failure to manage

• To party best able to lower risk

What has Worked

• Average road roughness has improved

• Smooth travel exposure has improved

• Surface condition (SDI) has improved• Condition of structures has improved• Provision of streetlighting has

improved• Roads are safer than peer local

authorities• Customer service has improved

RFT Bench Mark Jun-04 Jun-05 Jun-06 Jun-07 Jun-09 Jun-1080

81

82

83

84

85

86

Table 3.3.1 Local Roads - 3 Rural

Road Group 3 - Rural KPM KPM Tolerance

Mea

n N

AASR

A

What has not worked

Dust KPM• Difficult to measure• Subject to environmental conditions

What has not Worked (2)

Sealed Width KPM• Good idea in principle• Formula weighting focused on long

straight underwidth roads• Mountainous, winding roads were

avoided• New roads agreed by negotiation

What has not Worked (3)

Streetlighting• Intended to provide consistent level

of illumination• Difficult to measure consistently• Difficult to address if lights are too

far apart

David McDougall

Asset Manager - Inroads

Asset Consumption

• Whole of Life Value for money– Consuming inherent value/life of an asset by deferring

maintenance and thereby incurring more expense later– Assessing the long term impacts that negate initial

gains– Applies to assets where life cycle>> contract period

• Big Ticket Items– Resurfacing ($350k per annum)– Pavement Reconstruction ($1M p.a.)

Resealing

• Why Resurface in a Performance Based Contract?– Minimise maintenance costs (internal)– Texture KPM (%<0.5mm thresholds)– Surface Defects Index KPM• f(RAMM Rating, High Speed Data)

– Residual Seal Life KPM

Residual Seal Life – Issues

• RAMM Default life - based on average performance over similar geographical areas in NZ

• Measured @ Start = Matched @ End• Compares existing age to RAMM default age

f(traffic, seal type)• ∑network• Set at Year 0• KPM requires same Y0 profile @ Yr 8, 9 & 10• Flawed…? Why?

Residual Seal Life – Flawed? Why?

• Large variation in actual performance• Not necessarily optimal @ start of Yr 0– Previous MIS, philosophy– Conservative seal selection criteria– Snapshot

• To insist @Yr 10 to match Yr 0?– Counter productive– Could extract more value with careful MIS

Residual Seal Life – Why is it Important?

• Measurement of value left in a network• Difficult to measure• Now favour comparison to previous top

surface• Tracking texture change over time

Existing Top Surface vs Previous Top Surface

UNKN

<-25

-25

-24

-23

-22

-21

-20

-19

-18

-17

-16

-15

-14

-13

-12

-11

-10

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 170%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

5

10

15

20

25

30

35

40

45

50

WBOPDC - Network Remaining Surface Life - Pave Use 2Top Surface and 2nd Layer, by Length, Excluding First Coats

PaveUse2_Achieved PaveUse2_Top NETWORK (Top) NETWORK(Achieved) PaveUse2%_Achieved PaveUse2%_Top

Residual Life (Yrs)

Cum

ulati

ve %

Leng

th (k

m)

UNKN

<-25

-25

-24

-23

-22

-21

-20

-19

-18

-17

-16

-15

-14

-13

-12

-11

-10

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 170%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

5

10

15

20

25

30

35

40

45

50

WBOPDC - Network Remaining Surface Life - 1CHIPTop Surface and 2nd Layer, by Length, Excluding First Coats

1CHIP_Achieved 1CHIP_Top NETWORK (Top)NETWORK(Achieved) 1CHIP%_Achieved 1CHIP%_Top

Residual Life (Yrs)

Cum

ulati

ve %

Leng

th (k

m)

UNKN

<-25

-25

-24

-23

-22

-21

-20

-19

-18

-17

-16

-15

-14

-13

-12

-11

-10

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 170%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

5

10

15

20

25

30

35

40

45

50

WBOPDC - Network Remaining Surface Life - 2CHIPTop Surface and 2nd Layer, by Length, Excluding First Coats

2CHIP_Achieved 2CHIP_Top NETWORK (Top)NETWORK(Achieved) 2CHIP%_Achieved 2CHIP%_Top

Residual Life (Yrs)

Cum

ulati

ve %

Leng

th (k

m)

Seal Residual Life - Summary

• Extending the life of an asset through a careful and proactive MIS thereby adding value

• Residual Life KPM should encourage the extraction of its maximum potential life through – an effective MIS– tracking age profiles– not through Y0 profiles– flexible– risk transfer– needs to have understanding/management

Pavement Residual Life

• “Consuming inherent value/life of an asset by deferring maintenance and thereby incurring more expense later”

• What pavement KPMs drive Reconstruction?• Roughness – STE• Maintenance Costs• Residual Life

Pavement Residual Life

• Intent in 2002:– Design Checks pre construction– Performance Measurement Post Construction

• Use FWD deflection to measure Residual Life

– Transfer maintenance consequences• Reality in 2010– Design Checks – Verify Design Assumptions Post Construction– Maintenance is only short term ( life)

Design Theory

• Measure subgrade deflections• Calculate thickness of aggregate to protect

subgrade based on stiffness (Es)of aggregate• Empirical– Based on what has worked in past– If we do this in these situations then % failures

should be less than 5%– No guarantees

Pavement Residual Life

• We don’t know how to measure residual life of pavements– Deflection (e.g. FWD) does not measure life– We know when they have failed/about to fail– Measurement/prediction of actual life is difficult

Pavement Residual Life

• What have we learnt?– Rely on good investigation, design– Rely on Quality Assurance and Control during

construction– Monitor over time rutting and roughness– Expected life projection based on actual annual

trends in rutting and roughness

Alex Finn

Transportation Manager - WBoPDC

Team Culture

• Mindset “best for the network”• Win-win approach• Drive for innovation• Danger of under-pricing• Contractor must make a profit• Reported through Balanced

Scorecard

Customer Care

• Contractor and client support each other

• Sharing information• Act jointly to resolve issues• Managing community expectations• Customer processes measured and

reported• Customer satisfaction surveys

reported

Conclusion

• More for less • Partnering relationship based on

mutual respect • Data specific• Clearly articulated outcomes• Councils seeks to extend• Subject to NZTA endorsement

Questions