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Key Performance Indicators inPublic-Private PartnershipsA State-of-the-Practice Report

AUSTRALIA BRITISH COLUMBIA NEW ZEALAND UNITED KINGDOM UNITED STATES

International Technology Scanning Program

Sponsored by:

In cooperation with:

American Association of State Highwayand Transportation Ofcials

National Cooperative HighwayResearch Program

March 2011



N O T I C E

The Federal Highway Administration provideshigh-quality information to serve Government,industry, and the public in a manner that pro-motes public understanding. Standards andpolicies are used to ensure and maximize thequality, objectivity, utility, and integrity of itsinformation. FHWA periodically reviews qualityissues and adjusts its programs and processesto ensure continuous quality improvement.



Technical Report Documentation Page

1. Report No.

FHWA-PL-10-0292. Government Accession No. 3. Recipient’s Catalog No.

4. Title and Subtitle

Key Performance Indicators in

Public-Private Partnerships

5. Report Date

March 20116. Performing Organization Code

7. Author(s)

Michael Garvin, Keith Molenaar,Desiderio Navarro, Gordon Proctor

8. Performing Organization Report No.

9. Performing Organization Name and Address

American Trade InitiativesP.O. Box 8228Alexandria, VA 22306-8228

10. Work Unit No. (TRAIS)

11. Contract or Grant No.

DTFH61-99-C-005

12. Sponsoring Agency Name and Address

Of ce of International ProgramsFederal Highway AdministrationU.S. Department of TransportationAmerican Association of State Highwayand Transportation Of cials

13. Type of Report and Period Covered

14. Sponsoring Agency Code

15. Supplementary Notes

FHWA COTR: Hana Maier, Of ce of International Programs16. Abstract

This report provides a state-of-the-practice description of domestic and international practices for key performance indicators (KPIs) in public-private partnerships (PPPs). The report is based on a comprehensiveliterature review and eight case studies from Australia, British Columbia, the United Kingdom, and the UnitedStates. The concept for this report came from an implementation strategy in Public-Private Partnerships

for Highway Infrastructure: Capitalizing on International Experience, as well as Linking Transportation Performance and Accountability and Construction Management Practices in Canada and Europe. The reportidenti es how government-developed performance measures re ecting societal goals such as congestionmanagement or environmental impact are translated through KPIs and included in project documents fordesigning, constructing, operating, and maintaining transportation facilities. The report shows that it is

possible to align projects with these higher goals. The ndings are applicable to agencies that wish toalign overarching organizational and societal performance measures through KPIs not only to PPP

projects, but also to conventionally bid projects.

17. Key Words

key performance indicator, performance measure,

public-private partnership, tollroad, transportationasset measurement

18. Distribution Statement

No restrictions. This document is available to the

public from the: Of ce of International Programs,FHWA-HPIP, Room 3325, U.S. Department ofTransportation, Washington, DC [email protected]

19. Security Classify. (of this report)

Unclassi ed20. Security Classify. (of this page)

Unclassi ed21. No. of Pages

12022. PriceFree

Form DOT F 1700.7 (8-72) Reproduction of completed page authorized



Key Performance Indicators in Public-Private Partnerships

This work was sponsored by the Federal Highway Administration Ofces of Innovative Program Delivery,

Asset Management, and International Programs. The topic was identied in the International ScanningProgram report Public-Private Partnerships for Highway Infrastructure: Capitalizing on InternationalExperience as a key implementation item.

Review PanelJan Weingart Brown (FHWA) Steven DeWitt (North Carolina Turnpike Authority) Roger Driskell (Illinois DOT) Ted Ferragut (TDC Partners) Leon E. Hank (Michigan DOT) Steve Gaj (FHWA)

Dusty Holcombe (Virginia DOT) Bob Pieplow (CalTrans) Michael Saunders (FHWA) Jeff Seiders (Texas DOT) Art Smith (National Council for Public-Private Partnerships) Jerry Yakowenko (FHWA)

Research TeamKeith Molenaar (University of Colorado) Michael Garvin (Virginia Tech) Gordon Proctor (Proctor and Associates) Desiderio Navarro (University of Colorado)



IV

The International Technology Scanning Program,sponsored by the Federal Highway Administration(FHWA), the American Association of State Highwayand Transportation Ofcials (AASHTO), and theNational Cooperative Highway Research Program(NCHRP), evaluates innovative foreign technologiesand practices that could signicantly benet U.S.highway transportation systems. This approachallows for advanced technology to be adapted and putinto practice much more efciently without spendingscarce research funds to re-create advances alreadydeveloped by other countries.

FHWA and AASHTO, with recommendations fromNCHRP, jointly determine priority topics for teamsof U.S. experts to study. Teams in the specic areasbeing investigated are formed and sent to countrieswhere signicant advances and innovations havebeen made in technology, management practices,organizational structure, program delivery, andnancing. Scan teams usually include representa-tives from FHWA, State departments of transporta-tion, local governments, transportation trade andresearch groups, the private sector, and academia.

After a scan is completed, team members evaluatendings and develop comprehensive reports, includ-ing recommendations for further research and pilotprojects to verify the value of adapting innovations forU.S. use. Scan reports, as well as the results of pilotprograms and research, are circulated throughoutthe country to State and local transportation ofcialsand the private sector. Since 1990, more than 85international scans have been organized on topicssuch as pavements, bridge construction and mainte-

nance, contracting, intermodal transport, organiza-tional management, winter road maintenance, safety,intelligent transportation systems, planning,and policy.

The International Technology Scanning Program hasresulted in signicant improvements and savings inroad program technologies and practices throughoutthe United States. In some cases, scan studies havefacilitated joint research and technology-sharingprojects with international counterparts, furtherconserving resources and advancing the state of theart. Scan studies have also exposed transportationprofessionals to remarkable advancements andinspired implementation of hundreds of innovations.The result: large savings of research dollars and time,as well as signicant improvements in the Nation’stransportation system.

Scan reports can be obtained through FHWA freeof charge by e-mailing [email protected]. Scanreports are also available electronically and can beaccessed on the FHWA Ofce of International Pro-grams Web site at www.international.fhwa.dot.gov.

International Technology Scanning Program



V

International Technology Scan ReportsInternational Technology Scanning Program: Bringing Global Innovations to U.S. Highways

SAFETY

Assuring Bridge Safety and Serviceability in Europe(2010)

Pedestrian and Bicyclist Safety and Mobility in Europe(2010)

Improving Safety and Mobility for Older Road Usersin Australia and Japan (2008)

Safety Applications of Intelligent TransportationSystems in Europe and Japan (2006)

Trafc Incident Response Practices in Europe (2006)

Underground Transportation Systems in Europe:Safety, Operations, and Emergency Response (2006)

Roadway Human Factors and Behavioral Safety inEurope (2005)

Trafc Safety Information Systems in Europe andAustralia (2004)

Signalized Intersection Safety in Europe (2003)

Managing and Organizing Comprehensive HighwaySafety in Europe (2003)

European Road Lighting Technologies (2001)

Commercial Vehicle Safety, Technology, and Practicein Europe (2000)

Methods and Procedures to Reduce Motorist Delaysin European Work Zones (2000)

Innovative Trafc Control Technology and Practicein Europe (1999)

Road Safety Audits—Final Report and Case Studies(1997)

Speed Management and Enforcement Technology:Europe and Australia (1996)

Safety Management Practices in Japan, Australia,and New Zealand (1995)

Pedestrian and Bicycle Safety in England, Germany,and the Netherlands (1994)

PLANNING AND ENVIRONMENT

Reducing Congestion and Funding TransportationUsing Road Pricing In Europe and Singapore (2010)

Linking Transportation Performance andAccountability (2010)

Streamlining and Integrating Right-of-Way and UtilityProcesses With Planning, Environmental, and DesignProcesses in Australia and Canada (2009)

Active Travel Management: The Next Step inCongestion Management (2007)

Managing Travel Demand: Applying EuropeanPerspectives to U.S. Practice (2006)

Transportation Asset Management in Australia,Canada, England, and New Zealand (2005)

Transportation Performance Measures in Australia,Canada, Japan, and New Zealand (2004)

European Right-of-Way and Utilities Best Practices(2002)

Geometric Design Practices for European Roads(2002)

Wildlife Habitat Connectivity Across EuropeanHighways (2002)

Sustainable Transportation Practices in Europe (2001)

Recycled Materials in European HighwayEnvironments (1999)

European Intermodal Programs: Planning, Policy,and Technology (1999)

National Travel Surveys (1994)

POLICY AND INFORMATION

Transportation Research Program Administrationin Europe and Asia (2009)

Practices in Transportation Workforce Development(2003)



International Technology Scan Reports

VI

Intelligent Transportation Systems and WinterOperations in Japan (2003)

Emerging Models for Delivering TransportationPrograms and Services (1999)

National Travel Surveys (1994)

Acquiring Highway Transportation InformationFrom Abroad (1994)

International Guide to Highway TransportationInformation (1994)

International Contract Administration Techniquesfor Quality Enhancement (1994)

European Intermodal Programs: Planning, Policy,and Technology (1994)

OPERATIONS

Freight Mobility and Intermodal Connectivityin China (2008)

Commercial Motor Vehicle Size and WeightEnforcement in Europe (2007)

Active Travel Management: The Next Step inCongestion Management (2007)

Managing Travel Demand: Applying EuropeanPerspectives to U.S. Practice (2006)

Trafc Incident Response Practices in Europe (2006)

Underground Transportation Systems in Europe:Safety, Operations, and Emergency Response (2006)

Superior Materials, Advanced Test Methods, andSpecications in Europe (2004)

Freight Transportation: The Latin American Market(2003)

Meeting 21st Century Challenges of System

Performance Through Better Operations (2003)Traveler Information Systems in Europe (2003)

Freight Transportation: The European Market (2002)


Methods and Procedures to Reduce Motorist Delaysin European Work Zones (2000)

Innovative Trafc Control Technology and Practicein Europe (1999)

European Winter Service Technology (1998)

Trafc Management and Traveler InformationSystems (1997)

European Trafc Monitoring (1997)

Highway/Commercial Vehicle Interaction (1996)

Winter Maintenance Technology and Practices— Learning from Abroad (1995)

Advanced Transportation Technology (1994)

Snowbreak Forest Book—Highway SnowstormCountermeasure Manual (1990)

INFRASTRUCTURE—GENERAL

Freeway Geometric Design for Active TrafcManagement in Europe (2011)

Public-Private Partnerships for HighwayInfrastructure: Capitalizing on InternationalExperience (2009)

Audit Stewardship and Oversight of Large andInnovatively Funded Projects in Europe (2006)

Construction Management Practices in Canadaand Europe (2005)

European Practices in Transportation WorkforceDevelopment (2003)

Contract Administration: Technology and Practicein Europe (2002)


Geometric Design Practices for European Roads(2001)

Geotechnical Engineering Practices in Canadaand Europe (1999)

Geotechnology—Soil Nailing (1993)

INFRASTRUCTURE—PAVEMENTS

Warm-Mix Asphalt: European Practice (2008)

Long-Life Concrete Pavements in Europeand Canada (2007)

Quiet Pavement Systems in Europe (2005)




VII

Pavement Preservation Technology in France,South Africa, and Australia (2003)

Recycled Materials in European HighwayEnvironments (1999)

South African Pavement and Other HighwayTechnologies and Practices (1997)

Highway/Commercial Vehicle Interaction (1996)

European Concrete Highways (1992)

European Asphalt Technology (1990)

INFRASTRUCTURE—BRIDGES

Assuring Bridge Safety and Serviceability in Europe(2010)

Bridge Evaluation Quality Assurance in Europe (2008)

Prefabricated Bridge Elements and Systems inJapan and Europe (2005)

Bridge Preservation and Maintenance in Europeand South Africa (2005)

Performance of Concrete Segmental andCable-Stayed Bridges in Europe (2001)

Steel Bridge Fabrication Technologies in Europe

and Japan (2001)European Practices for Bridge Scour andStream Instability Countermeasures (1999)

Advanced Composites in Bridges in Europeand Japan (1997)

Asian Bridge Structures (1997)

Bridge Maintenance Coatings (1997)

Northumberland Strait Crossing Project (1996)

European Bridge Structures (1995)



IX


6.2.6 Emphasis on Service RequirementsVersus Asset Condition | 85

6.2.7 Use of Incentives(Positive and Negative) | 85

6.2.8 Creating an Asset ManagementCulture | 85

6.2.9 Opportunity for More Use of KPIs inDesign and Construction | 86

6.2.10 Focus of Handback Provisions | 86

6.3 Application of Key Findings to OtherDelivery Methods | 876.4 Recommendations | 88

Endnotes | 90

Appendix A: Annotated Bibliography | 91

Appendix B: Case Study Protocol | 95

Appendix C: Example SummaryOperations and Maintenance KPI Tables | 97

FIGURESFigure 1. American Society of Civil Engineers guidingprinciples on infrastructure improvement. | 9Figure 2. MoDOT Tracker system. | 11Figure 3. VDOT Dashboard system. | 11Figure 4. Pyramid of relationships. | 14Figure 5. AASHTO performance managementframework. | 15Figure 6. Minnesota DOT performance managementmeasurement example. | 16Figure 7. I-595 corridor improvements. | 22

Figure 8. Golden Ears Bridge. | 22Figure 9. Kicking Horse. | 23Figure 10. EastLink. | 23Figure 11. Capital Beltway. | 24Figure 12. North-South Bypass Tunnel. | 24Figure 13. M25. | 25Figure 14. Airport Link. | 25Figure 15. Relationship between HA goals and M25DBFO performance measures. | 36

Figure 16. Kicking Horse Canyon paymentreduction formula. | 51Figure 17. Linkage between agency goals,performance measures, and KPIs in theHighways Agency. | 82

TABLESTable 1. Case study overview. | 6Table 2. Requirement levels in differentdelivery methods. | 14Table 3. Case study project summary. | 21Table 4. Overall summary of KPI information. | 27Table 5. British Columbia Ministry of Transportperformance measures. | 34Table 6. KPI information for organizational structuresfor operations and maintenance. | 37Table 7. Golden Ears Bridge inspection typesfor structures. | 40Table 8. Golden Ears Bridge inspection typesfor drainage and debris-control structures. | 40Table 9. EastLink customer service and complaintsreporting system. | 43Table 10. Airport Link permitted maintenanceclosures. | 47Table 11. KPI information for performance pointsto track operations and maintenance. | 49Table 12. I-595 noncompliance point noticationapproach. | 51Table 13. Kicking Horse Canyon nonconformityreport point approach. | 51Table 14. EastLink KPI credit approach. | 52Table 15. Capital Beltway performance

point approach. | 53Table 16. Capital Beltway performance pointexamples. | 54Table 17. Capital Beltway performance pointimplications. | 55Table 18. KPI information for remedies and disputeresolution procedures for poor operations andmaintenance performance. | 57Table 19. I-595 operations and maintenanceavailability faults examples. | 58



Contents

X

Table 20. KPI information for organizational structuresfor design and construction. | 62Table 21. CLEM7 North-South Bypass Tunnel required

design life for named features. | 69Table 22. KPI information for remedies and disputeresolution procedures for poor design andconstruction work. | 71Table 23. KPI information for handback requirementsand KPI evolution. | 75Table 24. I-595 example handback requirements. | 75Table 25. Golden Ears example handbackrequirements. | 76Table 26. Examples from FDOT I-595 KPI table. | 83Table 27. Capital Beltway performance pointapproach. | 86Table 28. Capital Beltway performance pointexamples. | 87Table 29. Golden Ears example handbackrequirements. | 87Table 30. Application to other delivery methods. | 88Table 31. I-595 categories for operations andmaintenance performance measurement. | 98Table 32. Golden Ears Bridge/Kicking Horse CanyonPhase II asset preservation performance measurecategories. | 99Table 33. I-595 corridor improvements example

operations and maintenance KPIs. | 100Table 34. Golden Ears Bridge/Kicking Horse CanyonPhase II example asset preservation performancemeasures. | 103Table 35. Kicking Horse Canyon Phase II examplecorridor and environmental management keyperformance measures. | 105Table 36. CLEM7 North-South Bypass Tunnel exampleproject deed KPIs. | 106Table 37. CLEM7 North-South Bypass Tunnel exampleoperating company KPIs. | 108



Chapter 3: PERFORMANCE MANAGEMENT MODELS

1

Overview

This report provides a state-of-the practice descriptionof domestic and international practices for key perfor-mance indicators (KPIs) in public-private partnerships(PPPs). The report is based on a comprehensiveliterature review and eight case studies fromAustralia, British Columbia, the United Kingdom,and the United States. The concept for this reportcame from an implementation strategy in Public-Private Partnerships for Highway Infrastructure:Capitalizing on International Experience (FHWA-PL-09-010), as well as Linking TransportationPerformance and Accountability (FHWA-PL-10-011)and C onstruction Management Practices in Canadaand Europe (FHWA-PL-05-010). The report identieshow government-developed performance measuresreecting societal goals such as congestion manage-ment or environmental impact are translated throughKPIs and included in project documents for designing,constructing, operating, and maintaining transporta-tion facilities. The report shows that it is possible toalign projects with these higher goals. The ndingsare applicable to agencies that wish to align overarch-ing organizational and societal performance measuresthrough KPIs not only to PPP projects, but also toconventionally bid projects.

The following summary conclusions provide a basisfor the recommendations of this study. The reportcontains the background, methodology, and detailson which these ndings are based. Chapter 6discusses the conclusions and recommendationsin greater detail.

Summary Conclusions

Alignment of Agency Goals With PerformanceMeasures and PPP Project KPIsIdeally, agencies will be able to align their higher levelgoals with performance measures and individual PPPKPIs. All agencies are striving for this goal. This reportdocuments several examples of this alignment, butnone of the agencies has achieved a completely

seamless alignment of project KPIs with itsoverarching agency performance measures. Thelargest challenge in this goal is the evolving anddynamic nature of both the agency performancemeasures and the project KPIs.

Dynamic Nature of KPIs and PerformanceMeasurement Over TimeSome cases illustrate the necessity of a dynamicapproach to performance measurement becauseservice or asset requirement expectations are likelyto change over time. In some instances, the measureand the indicator used have an inherent ability toevolve because the indicator is oriented towardtrends in particular measures. In other instances,provisions are put in place to modify measuresover the contract period.

Alignment of Performance Data With AgencyPerformance Management SystemAs U.S. highway agency performance managementsystems continue to mature, PPP performance datawill need to be integrated with these systems toensure optimal network operations. It is importantto collect performance data during the concessionperiod in a manner consistent with the agency’snetwork management approach. This implies thatthe data will also be used to verify PPP performance.The alignment of these measures is challenging.As these systems evolve, PPP project data collectionformats and reporting structures will also need toevolve to be consistent with the overall networkmanagement approach.

Use of Asset Management Plans in Additionto KPIsAlthough specic performance measures or keyperformance indicators are used to categorize andtrack the quality of operations and maintenanceservices, the asset management plans proposedat time of selection, agreed to at time of contractclose, and modied (per contract provisions) overthe contract period are clearly a signicant dimen-sion of the overall approach to asset managementin a PPP arrangement.

Executive Summary



Executive Summary

2

Focus on Outcomes Rather Than OutputsThe agencies are evolving performance measures foruse in internal operations and with their contractors’

measures. Increasingly, these measures focuson outcomes rather than outputs. In some cases,this has evolved from the agency promulgating alengthy set of prescriptive measures to negotiatingkey outcomes. This negotiation provides the localgovernment or the contractor more latitude in howto achieve results, rather than dictating that thecontractor or local government achieve manydetailed performance indicators.

Emphasis on Service Requirements VersusAsset ConditionSpecic performance measures and KPIs usedacross the cases vary, but more recent casesillustrate more emphasis on service requirementsthan asset condition.

Use of IncentivesIncentives used are positive and negative, with thelatter appearing to be more prevalent. In general,positive incentives are more associated with overallcontractor performance, while negative incentives aremore associated with compliance to specied serviceor asset requirements. Some projects include a strongemphasis on incentives for outcomes, such as reward-ing the availability of travel lanes. Penalties anddeductions to payments are also included, but thecontract emphasizes rewards for performanceabove negotiated minimums.

Creation of an Asset Management CultureA theme in all of the case studies is creating anongoing asset management culture in the PPPorganization that fosters a high level of serviceduring the life of the contract and that attemptsto preserve a substantial remaining servicelife at the handback point.

Opportunity for More Use of KPIs in Designand ConstructionWhile the use of KPIs for operations and maintenanceis pervasive in this study, the application of perfor-mance measurement during design and constructionis noticeably absent in the case study projects. Giventhat many PPP projects are upgrades of existingnetworks, there is an opportunity to apply KPIs tomeasure network performance during design andconstruction. The broad agency performance mea-sures that apply to operations and maintenance

should also apply to projects during design andconstruction. As performance-based managementsystems mature, they can be broadened to cover

design and construction of PPP projects and moretraditional forms of project delivery. Focus of Handback ProvisionsHandback provisions are generally asset focusedand rely almost exclusively on residual service lifespecication. This practice introduces a signicantauditing effort at the conclusion of the contractand the potential for disputes. The nature of theseprovisions also tends toward negative, compliance-oriented incentives.

RecommendationsThis study offered considerable insights into theevolution and application of performance measure-ment for PPP projects. Obvious trends toward theapplication of performance-based managementsystems were found in many sectors, includingtransportation. Examination of the PPP agreementsshowed trends in how agencies mandate perfor-mance measures and KPIs while allowing for exibil-ity in changes that will occur over the term of theagreement. The case studies demonstrate the viabil-ity of PPP projects for meeting critical infrastructureneeds. The interviews with agency ofcials alsoprovided insights on how the agencies and projectshave evolved to better meet the goals of theircustomers and society.

The results of this study can be summarized in thefollowing recommendations gleaned from literature,case study document analysis, and interviews.

1. Align project performance measures and KPIswith overarching agency goals.

2. Plan for the dynamic nature of performancemeasures throughout the PPP life cycle andhandback.

3. Do not rely completely on KPIs to align agencygoals and project performance, but strive tocreate an asset management culture throughasset management plans that are continuouslyimproved throughout the concession period.



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4. Similarly, keep the number of programmaticand project-level measures and indicators to amanageable number. Focus on measures and

indicators that result in outcomes instead ofdata outputs.

5. Consider asset management plans duringprocurement and concession agreementnegotiation.

6. Continue to develop and apply KPIs duringdesign and construction to help align all typesof projects to agency goals.

7. Explore outcomes-based handback provisionsrather than compliance-oriented means.

8. Recognize that KPIs are not the only means ofensuring contract compliance during decades ofdesign-build-operate-and-maintain projects.

9. Focus on customer needs and societal goals inaddition to asset condition.

10. Unique agency locations and user demandsnecessitate unique agency goals, performancemeasures, and strategies, which are developedmost effectively by involving upper manage-ment, stakeholders, community residents, andend users in the process.



4



5


1.1 Report PurposeThis report provides a state-of-the-practice descriptionof domestic and international practices for keyperformance indicators (KPIs) in public-private part-nerships (PPP). The report is based on a comprehen-sive literature review and eight case studies fromAustralia, British Columbia, the United Kingdom,and the United States. While the report focuses onPPPs, projects of all delivery methods, traditionaland innovative, can benet from the ndings.

The primary audience for this report is State andFederal agencies that are developing PPP programsand wish to align these programs with the overallstrategic objectives of their agencies. The use ofdenitive performance measures to drive agencydecisions and resource allocation is a relatively recentdevelopment in the U.S. highway industry. Likewise,the use of PPPs as an integral part of highway net-works is relatively new in the United States whencompared to the international community. The U.S.highway industry can benet from the experience ofthe international community in the development ofKPIs for PPP projects and their alignment with over-arching performance measures because internationalagencies have applied these practices for a longertime than the United States.

1.2 DenitionsClear and consistent denitions for performancemeasures and KPIs are critical to appropriate applica-tion, but the denitions for performance measuresand KPIs differ from country to country and even in a

single country. The research team synthesized deni-tions from a number of sources. (1,2,3,4) The followingdenitions are provided for purposes of this report:

» Performance measures are derived from theprogrammatic levels of service sought by thetransport agency and imposed contractuallyas broad classications of desired outcomesrequired of the contractor.

» Key performance indicators are more specicmilestones in or components of performancemeasures that serve as precursors to indicateprogress toward the eventual achievement ofthe desired performance measures.

Performance measures are the broad classicationsof desired outcomes required of the contractor. Theyare reected by contractual goals and statementsof increasing and decreasing specics ensuring aspecic, establishing a specic, or implementinga specic for a project. Key performance indicatorstypically include, but are not limited to, elementssuch as project benchmarks, targets, milestonedates, numbers, percentages, variances, distribu-tions, rates, time, cost, indexes, ratios, survey data,and report data. These denitions are useful inunderstanding the results of and conclusions onthe information gathered from each case study.

1.3 Study ApproachThe core ndings of this research are based on eightinternational and domestic case studies. The studyapproach involved three primary phases: (1) literaturereview—reviewing existing documentation for PPPprojects and literature containing KPI information,(2) data collection—obtaining detailed informationvia communication with foreign practitioners, and(3) synthesis—synthesizing nal results anddocumentation.

The literature review collected data on currentinternational and domestic approaches to perfor-mance management and KPIs. The literature review

included both transportation and nontransportationsectors. From this review, the team captured theoryand practice on performance-based managementsystems. The results of this review provided anunderstanding of the need for performance-basedmanagement systems, a summary of theoretical andapplied models, and a basis for developing a compre-hensive case study protocol. The literature reviewndings are reected throughout the report and inthe annotated bibliography in Appendix A.

Chapter 1: INTRODUCTION



Chapter 1: Introduction

6

Data collection involved gathering information fromeight PPP project case studies and informationfrom the agencies in which they operate. The team

developed a data collection instrument in the form ofa case study protocol to collect comprehensive andconsistent information from the foreign and domesticpractitioners. Many of the detailed ndings derivefrom a rigorous content analysis of the PPP agree-ments. The content analysis of the documents wasaugmented by discussions with project and agencypersonnel when available. Table 1 summarizes theeight case studies.

TABLE 1. Case study overview.

Project Name Owner Location

I-595 CorridorImprovements

FloridaDepartment ofTransportation

Broward County,Florida,

United States

Golden Ears Bridge TransLinkMetro Vancouver,British Columbia,

Canada

Kicking HorseCanyon Phase II

British ColumbiaMinistry of

Transportation

Golden, BritishColumbia, Canada

EastLink Victoria StateGovernment

Melbourne,Australia

Capital BeltwayVirginia

Department ofTransportation

Northern Virginia,United States

CLEM7 North-South Bypass

Tunnel

City Council ofBrisbane Brisbane, Australia

M25 Highways Agency London, England

Airport Link Queensland StateGovernment Brisbane, Australia

The research team synthesized the data by exploringpatterns across the literature and case studies. Theteam used the categories discovered in the contentanalysis to organize the results. The results were

presented to the Federal Highway Administration(FHWA) oversight panel for this research as anadditional form of validation. The following categories

were used for analysis and presentation of results:

Operations and maintenance

Design and construction

Handback requirements and KPI evolution

1.4 Guide to the ReportThis research report contains six chapters, includingthis introduction, and three appendices. This organiza-tion is meant to provide a context for the research,describe the basis for its ndings, and present theresults and recommendations in a concise format.The following is a summary of the sections andappendices for this report:

Chapter 2: Background The background summarizes the ndings fromthe literature review. It takes a broad approachto examining performance-based managementsystems to provide a context for the study.It discusses the need for performance-basedmanagement, the relationship between PPPsand performance-based management, whois using performance-based managementsystems, and the outcomes of measuringperformance.

Chapter 3: Performance Management ModelsAfter discussing the fundamental principlesof performance-based management systems,this section presents models developedby the Dutch Ministry of Transport, PublicWorks, and Water Management and theAmerican Association of State Highwayand Transportation Ofcials (AASHTO) TaskForce on Performance Management. It also

includes insights from the literature on howto develop performance measures.

Chapter 4: Case Studies After describing the approach to theliterature review and content analysis, thissection provides the case study approachand a summary of the case studies. Thecase study summaries are limited to a high-level description of the project contextand PPP agreement.



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Chapter 5: Case Study Findings This section presents the raw data for eachcase study. The information consists of a

blend of KPIs and performance requirementsfrom the language in the PPP agreements.

Chapter 6: Results and Conclusions The research ndings are presented in thissection. The results and conclusions arebased on the patterns and trends foundin the literature review, case studies, anddiscussions with agency and privatesector personnel.

Endnotes This section includes the references to thecitations in the report.

Appendix A: Annotated Bibliography This section expands on the references andprovides an abstract for relevant journalarticles, agency plans and reports, researchreports, government articles, and Web sitegateways.

Appendix B: Case Study Protocol This section includes the case study protocolused for the content analysis and agencyinterviews.

Appendix C: Example SummaryOperations and Maintenance KPI Tables This section includes KPI tables from thePPP case study agreements.



8



9

Chapter 2: BACKGROUND

2.1 IntroductionThe purpose of the background is to dene thestate of practice in the use of performance measuresand KPIs in PPPs for highway design, construction,maintenance, and operations. The backgrounddemonstrates the need for and benets of usingperformance-based management systems in PPPsto fund and manage U.S. transportation networkimprovements. It also offers a brief history andevolution of performance-based managementsystems in transportation agencies.

The background presents highway agencies in theUnited States and abroad that use performancemeasures to successfully manage their highwaysystems and provides the framework the organiza-tions use to apply these measures to their manage-ment process. It also provides valuable insight forcreating useful and effective performance measuresto anchor the management framework. Finally, thebackground describes the challenges and benetsof using performance-based management practiceto govern highway systems.

2.2 Public-Private Partnerships andPerformance-Based ManagementPPPs are a delivery method that is integrally linked toperformance management systems. PPPs generally,but not always, use capital acquired by the privatesector partner to supplement or, in some cases,replace the need for publicly arranged nancingof highway design, construction, operations,and maintenance.

Performance measures and the PPP project deliverymethod are relatively new concepts in the UnitedStates. A possible justication for the PPP conceptis the ability to attain high-level societal or perfor-mance measures related to environmental improve-ment, congestion mitigation, trip reliability, qualityenhancement, or public safety improvement. Inmany cases, the linkage is an integral part of thesolicitation, award, and monitoring of the projectthroughout its life.

This report examined case studies from around theworld to determine if it was possible and benecialto link performance goals to specic project goals.Poor road conditions cost motorists $67

billion a year in repairs and operatingcosts and cost 14,000 Americans their

lives. One-third of America’s major roads arein poor or mediocre condition and 36 percentof major urban highways are congested. (7)

FIGURE1. American Society of Civil Engineers guidingprinciples on infrastructure improvement.

Raising the Grades5 Key Solutions★ INCREASE federal leadership in

infrastructure to address the crisis.★ PROMOTE sustainability and resiliencein infrastructure to protect the naturalenvironment and withstand natural andman-made hazards.

★ DEVELOP national and regional infra-structure plans and complement a national vision and focus on system-wide users.

★ ADDRESS life-cycle costs and ongoingmaintenance to meet the needs of currentand future users.

★ INCREASE AND IMPROVE infrastruc-ture investment from all stakeholders.



10

Chapter 2: Background

2.3 Background of Performance-BasedManagement in Highway Agencies

Performance-based management was initiallyreferred to as a “transportation asset managementsystem” by practicing foreign countries. Australia,Canada, Great Britain, Japan, and New Zealand arerecognized as innovative leaders in performance-based management and have applied this methodol-ogy for nearly two decades. (1,5) Several of thesecountries’ infrastructure agencies established them-selves on principles of performance measurement,such as Japan’s Ministry of Land, Infrastructure, andTransportation (MLIT) and Queensland, Australia’s,Department of Transport and Main Roads. Othersattained this program by way of government policiesand acts requiring the use of measurable standardsand targets for government ministries and agencies,similar to the British Columbia Ministry of Transpor-tation. (1) No matter the journey, various developedcountries around the world are proting from its usewhile others, including the United States, are onlybeginning to realize the system’s effectiveness andpotential for inducing success.

Built on the notion of better understanding andcontrolling outcomes, the concept of using perfor-mance measurement to manage the efciency ofservices and programs has been in the United Statesfor over half a century. It was introduced under titlessuch as “RAND Corporation’s system analysis” in the1950s and “planning-programming-budgeting sys-tems” in the 1960s. (6) However, the approach of using

performance measurement to manage highwaysystems is a more recent phenomenon’ for anumber of U.S. highway agencies. (5)

The process has been in development for about 40years, but has made only incremental advancementseach decade in the transportation sector. The 1970sand 1980s found Ohio, Pennsylvania, Washington,and Wisconsin creating maintenance managementsystems using performance indicators to reect thescope and scale of the programs being performed at

that time. (6) In the early 1990s, Florida, Minnesota,Oregon, and Utah dened an early set of performancebenchmarks for transportation after realizing that

broader performance measurement focusing moreon the outcomes of government programs wasneeded.” (6) In the mid-1990s, more State departmentsof transportation (DOTs) and metropolitan planningorganizations (MPOs) began to establish and applymore comprehensive approaches to performancemeasurement in transportation systems.

Over the past 10 years, more State DOTs and MPOshave turned to performance-based management inresponse to the limited resources for transportationsystems and the resounding plea from the public forincreased accountability in government programsbefore more tax dollars are spent on highway proj-ects. (6) All State DOTs now track asset conditionand safety data, vital elements of a comprehensiveperformance management system, and areprogressing toward a full and successfulapplication of this system. (8)

2.4 Who Uses Performance-BasedManagement Systems?Performance-based management systems have beenproven effective for a range of scenarios. As a result,a wide variety of programs and organizations outsidethe transportation sector use this technique. In 2002,the Ofce of National Drug Control Policy implement-ed and executed a performance measurement systemwith an overall goal of reducing the supply of anddemand for illegal drugs in the United States withgreat success. (9)

A similar management system based on overall goalsand daily manageable control objectives was intro-duced to a small division in a growing Hewlett Pack-ard company; in 5 years, the division became the

company’s most protable.(10)

Outside the UnitedStates, Japanese businesses for years have applieda similar management procedure termed “policydeployment” (a strategic, direction-setting methodol-ogy used to identify business goals as well as formu-late and execute major change management projectsthroughout an organization) and have continuallyachieved goals. (10)

Observing the success of such an approach, theexecutive and legislative branches of the U.S.

Th e approach of using performancemeasurement to manage highway

systems is a more recent phenomenonfor a number of U.S. highway agencies. (5)




11

government adopted the same policy in the 1993Government Performance Results Act and have usedit to govern planning in cabinet-level departments

with success. (10)

Noting this success, some U.S. transportationagencies have begun to use performance-basedmanagement systems. California’s DOT (Caltrans)has used performance management and perfor-mance measures extensively in program areas suchas maintenance and operations, programming andbudgeting, and project delivery. (6)

The Missouri DOT (MoDOT) also uses perfor-mance-based management extensively andhas implemented an effective user informa-tion tool called “Tracker” to monitor andpublicly report its performance results. (11) An example from Tracker system is shownin gure 2. Former MoDOT Director PeteRahn said the purpose of the Tracker tool isto inform the public of “what we [MoDOT]do well, what we don’t do so well and whatwe are doing to get better.” (11)

The New York State DOT (NYSDOT) is ex-panding its performance management pro-gram from individual units in the DOT to theentire agency. This DOT uses “dashboards”to track and report performance measures tothe public, stakeholders, and agency. (6)

For more than 10 years, Maryland’s State HighwayAdministration has been using performance manage-ment. It now uses its measures for program areassuch as budgeting and programming, programmanagement and project delivery, operations, andmonitoring of results, feedback, and communication. (6)

The Florida DOT (FDOT) is recognized as a nationalleader in performance measurement and has a

systematic approach to decisionmaking that is bothdriven by policy and supported by data collection, keyelements of a successful performance managementsystem. (6)

Finally, the Virginia DOT’s (VDOT) performancemanagement program uses a “dashboard” similarto NYSDOT’s to report performance results (gure 3).Using a performance-based management system hasresulted in commendable benets for VDOT. Sinceimplementing a more focused performance

Since implementing a more focusedperformance measurement system,VDOT’s construction ontime performance

has improved from 20 percent to 90 percentand construction on-budget performance hasimproved from 51 percent to 90 percent. (6)

FIGURE 2.MoDOT Tracker system.

FIGURE 3.VDOT Dashboard system.



12

Chapter 2: Background

measurement system, VDOT’s construction ontimeperformance has improved from 20 percent to 90percent and construction on-budget performance

has improved from 51 percent to 90 percent. (6)

2.5 Outcomes of Measuring PerformancePerformance measurement system application offersboth challenges and benets. A major challenge ofapplying a performance-based management systemis coming to a reasonable agreement in an agency oncommon goals and the strategies to achieve them. (12)

In addition, the magnitude and complexity of current-ly operating transportation networks poses issues forimplementation. These issues will arise specically inthe areas of organization, analysis, consistent datacollection, and application of information based onperformance measures. (6)

Along with the challenges are limitations to theperformance-based management system for trans-portation agencies. First, performance data alonedo not answer the question of why certain outcomesoccurred (i.e., they may not tell the story behindthe numbers). Second, some outcomes, such as theprevention of undesirable events, cannot be mea-sured directly. Third, performance measures are onlypart of the solution. Managers and elected ofcialsneed to make good decisions based on these mea-surements for the process to be a success. Last,

each agency has different issues and problemsbased on specic locations and unique underlyingcircumstances. It is unrealistic to develop a one-size-ts-all performance management system that willcreate absolute solutions for every DOT or MPO. (6) Therefore, different methodologies are likelynecessary for individual agencies.

Although performance management systems havelimitations, the benets clearly outweigh the chal-lenges. Highway agencies using the system view it

as an essential management tool that allows them toprove and improve their performance in deliveringservice with the benet of making better decisions. (2)

Performance-based management facilitatescommunication within the agency and with thepublic, improves accountability, and yields a morebalanced and sustainable transportation system. (3) Agencies using the system are also experiencing amuch-needed increase in investment from stakehold-ers and the public in their transportation projectsand programs. (3) Performance measurement systemscreate strong partnerships between the agency andits stakeholders and the general public that assurebetter transportation systems are developed whileexisting systems are improved. (1)

AASHTO has determined, from numerous examplesof success, that the system allows for more efcientallocation of increasingly scarce resources whileassisting in the development and justication ofbudget and project proposals. Most important, itholds government agencies accountable to roadusers and the public at large for funding, constructing,maintaining, and operating the highway network toan increasingly higher standard. (6) This ultimatelyleads to a better transportation system for todayand tomorrow.

2.6 Conclusion

The application of performance-based managementsystems has the potential to improve the nation’stransportation network. The use of performancemeasures and KPIs in PPP projects is imperativebecause contract terms must align the partners overthe course of the project, which in some cases can bemore than 30 years. The use of performance-basedmanagement systems has increased rapidly in thetransportation sector over the last decade, and thissection of the report highlights some of the leadingagencies’ successes and challenges.

Pe rformance measures are only part of the solution. Managers and electedofcials need to make good decisions

based on these measurements for theprocess to be a success. (6)

[Pe rformance-based managementsystems] hold government agenciesaccountable to road users and the public

at large for funding, constructing, maintaining,and operating the highway network. (6)



13

3.1 IntroductionPerformance-based management systems are basedon a set of common principles and strategies. Thissection provides a discussion of these concepts toaid understanding of performance measures andkey performance indicators. After a discussion ofnonindustry-specic performance-based manage-ment systems, this section presents a fundamentalperformance management model developed bythe Dutch Ministry of Transport, Public Works, andWater Management and ends with a presentationof an applied model developed by AASHTO.

3.2 Performance-Based ManagementSystem PrinciplesAn examination of performance-based managementstrategies in use across many different disciplines andorganizations yields a general framework for thesystem. Before all else, the general purpose of aperformance-based management system is to cultivateaccountability. To achieve this purpose, the formula forthe system must contain four components: strategy,community, budget, and evaluation. (9) Strategy, found-ed on the organization’s mission, contains specicgoals tied directly to specic targets and benchmarksused to set the direction for the organization. Thiselement is subject to continual renement. Communityis the involvement of stakeholders in establishing thesegoals and targets. Stakeholders have a strong notionof what is realistic for these objectives, so their inputshould be highly valued. The budget element assuresthat resources are properly aligned with programactivity in a manner that is consistent with the strategy.

The results of the program performance indicate thebest allocation of resources to reach the targets. Finally,

evaluation is the element that dictates what changesneed to be made to the strategy based on the perfor-mance results and feedback. Evaluation should forcethe interests of budget and community to convergein the creation of strategy. (9) To be successful,performance-based management should containthese four components and be a cyclical process.

3.3 Fundamental HighwayPerformance ModelThe Dutch Ministry of Transport, Public Works, andWater Management developed a model (gure 4,see next page) that denes performance in terms oflevels. (13) The performance levels begin at the mostbasic specication level of material and processingand range through systemwide performance mea-sures. Moving from one level to another in themodel involves the transfer of risk through a contractbetween the agency and the designer, builder, oroperator, depending on how the project deliverysystem is dened.

Starting from the bottom, the Dutch model outlinesve levels for highway construction, maintenance,and systems operations:

5. Basic materials and processing involve currentstandard specication requirements, includingindividual material selection and processingissues.

4. Materials properties are specied by the agencyin traditional project delivery and include items

such as elasticity, plasticity, fatigue, and com-pactibility—elements of a project that can beoptimized by the contractor.

3. Construction behavior and practices involvethe behavior of the construction in terms ofengineering properties. For example, elasticand plastic deformation and durability can bespecied by the agency. Under performancespecications, construction and materials maybe left to the discretion of the contractor.


Be fore all else, the general purpose of aperformance-based management systemis to cultivate accountability. To achieve

this purpose, the formula for the systemmust contain four components: strategy,community, budget, and evaluation. (9)



14

Chapter 3: Performance Management Models

Examples include labor placement, equipmentselection, and time to construct to best addressweather and environmental conditions.

2. Functional performance requirements look atspecic aspects of the products included in thecontract—from embankments to drainage to

structures. Performance requirementsthat link to road users are translated intorequirements for the pavement surface,

such as skid resistance, smoothness,noise reduction, and evacuation ofprecipitation. Traditionally, this is theowner’s responsibility, but it may betransferred to the contractor throughan alternative contract delivery method.

1. User and societal demands arethe highest level of the pyramid. Thedriver wants a road that is usable, safe,environmentally sound, and reasonablyaccessible via different modes of trafcand demand. This level involves analignment of high-level project goalswith broad agency performance require-ments. This is fundamentally the owner’sresponsibility in traditional delivery, butportions of this are transferred to theconcessionaire in a PPP delivery.

The model developed in the Netherlands furtherestablishes a relationship between the form ofcontract and levels of requirements, although nota straightforward (one-to-one) relationship. Asshown in table 2, level 2 requirements are applicablein maintenance performance, design-build (D-B),design-build-maintain (DBM), and PPP contracts.

TABLE 2.Requirement levels used in different delivery methods.

FIGURE4. Pyramid of relationships.

KEY TO SYMBOLS:

X : The rst or highest level at which the owner can specify performance requirements. x : In many cases these levels will be also used for considerable parts of the project. A contract for a typical highway project will

always have a hybrid character in the sense that parts of a project must be specied on different levels.

➞ : During initial development of a project, the owner should always start with Level 1, reasoning down to the desired contract level.

Con : The contractor will have to translate contract specications down to instructions for its personnel, on Level 5 or even lower.

Project Delivery/Contract Type

LEVEL 1User Demands/

Needs

LEVEL 2Functional Performance

Requirement

LEVEL 3Construction Behavior

and Practices

LEVEL 4MaterialsBehavior

LEVEL 5Basic Materialsand Processing

Traditional X x

MaintenancePerformance

X x x x

D-B X X Con ConDBM X Con Con Con

PPP X x Con Con ConKEY TO SYMBOLS

➞ ➞➞

➞

➞

➞



15


But when desired lifetime is longer than the contracttime under DBM and PPP contracts, there might berisks that make it necessary to use level 3 require-

ments, in which the contractor must ensure futureconstruction behavior.

The Dutch performance model aids understanding ofthe relationship between highway performance at itsmost basic level and how that performance can beshared in a PPP delivery. In PPP contracts, the agencyand concessionaire agree on terms at levels 1 and 2.The concessionaires work with their designer andconstructor team members to encompass theperformance of levels 3, 4, and 5.

In this model, the traditional design-bid-buildcontract specications start at level 4 by describingthe material requirements and methods used to placethe materials. As the contract types move to alterna-tive delivery, the specication requirements can bedescribed at progressively higher levels that reectfunctional performance requirements and, at thehighest performance level, user demands orneeds under a PPP contract.

3.4 AASHTO PerformanceManagement ProcessNonsector-specic performance-based managementsystems and an understanding of fundamentalperformance issues in transportation provide acontext for a highway-specic performance manage-ment framework. AASHTO’s Task Force on Perfor-mance Management has used this context to developa basic framework specically for transportationperformance management. The association believesthat a proper framework must be practical, focused,cost-effective, and consistent with what is measured,how it is measured, and how the measured data arepresented while also quantifying agency performance,

driving interest and participation in achieving im-provement, and aligning the measurement activitieswith outcomes and objectives. (2) As gure 5 shows,AASHTO’s fundamental process for performancemanagement consists of ve phases. The rst phaseis the selection of appropriate performance measuresto evaluate the agency in critical program and serviceareas. This is followed by monitoring and reportingthe performance results. The third phase consists ofanalyzing the results and identifying key factors thatinuence performance and opportunities for

improvement. Subsequently, resources must bedistributed to the system in a manner that drivesbetter results. Finally, progress in achieving results

should continue to be monitored and reported. Theprocess cycles back to the third step and repeats. (6)

According to AASHTO’s Task Force on PerformanceManagement, for a highway agency to have a com-prehensive performance management system, thesebasic principles of the performance managementprocess must be integrated into every function inthe agency, including the following:

Policy development and long-range planning —Set the goals and objectives ofthe agency with input from elected ofcials,stakeholders, transportation interestgroups, and the general public.

FIGURE 5.AASHTO performance management framework.

Performance Management Process

Select measures to assessperformance in key

program/service areas

Track and reportperformance results

Identify key factorsinuencing performance and

opportunities to improve

Allocate resources todrive better results

Continue to monitorand report progress



17


presentations of performance results for the publicand top agency decisionmakers to view because “ifwhat is measured and presented is not understood,

the system undoubtedly will be ineffective” (1) (seegure 6). The agency leaders also insist that collectedperformance data not lay dormant; they must be usedin decisionmaking and improving performance forthis system to be effective. Finally, many agencyleaders have picked a handful of what they considerthe most important performance measures, namely inthe area of safety, and designated them “core perfor-mance measures.” They insist that these goals be metat the end of each cycle of the framework process.This is done while monitoring smaller, and stillvaluable, performance measures. (1)

3.5 Performance Measure DevelopmentUseful performance measures are requisite elementsof a successful performance-based managementsystem. In general, performance managementsystem measures should be controllable, actionable,realistic, exible, accurate, and credible. They shouldbe conceived with the overall goals of the agencyin mind while focusing on features such as revenue,cost, effectiveness, customer service, and publicsatisfaction. (14,15) Each measure should be tied to aspecic target to assure it makes a direct contributionto the overall agency goals. (10) Balance is also impor-tant to performance measure development becauseseemingly smaller measures can be as important aslarger ones in achieving agency goals and objectives.Most important, performance measure quality issubstantially more inuential than quantity; an over-abundance of measures is overwhelming and canbe destructive to the effectiveness of the systemas a whole. (15)

The development of a performance measure speci-cally for transportation system management is similar

to the general developmental case. Measures shouldhave the ultimate goal of inuencing decisionmakingand budget allocation in an agency and should beconstructed with this goal in mind. (1) Also, they shouldadd value and drive improvement for the agencywhile simultaneously being practical and cost-effective. (2) Statistical evidence, both quantitative andqualitative, should be used to determine the progressof each measure in contributing to agency goals. Thisevidence is often labeled a “performance indicator”by many leading agencies and is attached directly

to a performance measure. (3) Such indicators mayinclude elements such as pavement smoothness,transportation-related fatalities and injuries, air and

water quality, travel times and quality, fuel use, andcustomer satisfaction determined through surveyresponses. (3) In addition, the number of measures andindicators should be kept to a concise and efcientminimum because too many measures can be over-whelming and confusing to monitor. (1) Finally, itshould be realized that developing performancemeasures for a transportation system is an ongoingprocess. Some measures may need to be added asagency goals and objectives expand or change overtime, while others may need to be deleted as goalsare achieved or become outdated. (3)

3.6 ConclusionsThis chapter presents a common set of principlesand strategies on which performance managementsystems are based to aid understanding of perfor-mance measures and KPIs. At its most fundamental,performance can be organized into ve levels: basicmaterials and processing, materials properties,construction behavior and practice, functional perfor-mance requirements, and user needs. These funda-mental performance issues should be consideredwhen dening a performance-based managementsystem. This report uses the AASHTO performancemanagement process as a generic model for perfor-mance management systems because it representsthe current thinking of leaders in this area.

In general, any measure of performanceshould be controllable, actionable, realistic,exible, accurate, and credible and should

be conceived with the overall goals of theagency in mind. (14)



18



19

4.1 IntroductionA series of international and domestic case studies isthe basis for the exploration of performance measuresand KPIs in this report. Three primary research taskswere developed to complete this research. Thesubsequent sections discuss the tasks in detail.The rest of this chapter describes the case studiesand their salient characteristics. Chapter 5 discussesthe results of the case studies.

4.2 Research ApproachThe research approach consisted of three primarytasks: (1) literature review—reviewing existing docu-mentation for PPP projects and literature containingKPI information, (2) data collection—obtainingdetailed information via communication with foreignpractitioners, and (3) synthesis—synthesizing nalresults and documentation.

4.2.1 Literature ReviewThe research team conducted a thorough review ofexisting documentation for PPP projects. This taskfocused on collecting data on current national andinternational industry approaches to KPIs and moregeneral performance measures. The objective of thedata collection effort was to provide information todene the state of the practice. An extensive literaturereview was conducted using the following sources:

General Internet search engines(Google, Google Scholar, Yahoo, etc.)

Transportation Research Board’s TransportationResearch Information Services (TRIS) database

Academic engineering databases, such asLexisNexis® and Engineering Village

Academic business databases, such as EBSCOBusiness Source Complete and Managementand Organizational Studies

American Society of Civil Engineers CivilEngineering database

Selected transportation agency Web sitesand reports

The team gathered more than 40 scholarly articlesand research reports from these sources. The teamextracted more than 1,700 performance measures andindicators in use or previously used by highwayagencies relating to all aspects of a project, includingdesign, construction, operations, maintenance, safety,and environmental stewardship. This extraction wasuseful both in dening performance measures andindicators for the purpose of this report and in famil-iarizing the team with possible measures and indica-tors for use in examining the case study projects. Theinformation gathered was constructed into a review inan annotated bibliography format (see Appendix A)that addressed the essential elements of performance-based management for highway construction:

The need for performance-based managementand PPPs in highway construction

The history of performance-based managementin highway agencies

Who uses performance-based managementsystems

The proper framework for a performance-basedmanagement system

How to develop a useful performance measure

The outcomes of measuring performance

4.2.2 Data CollectionThe scope of the data collection involved gatheringinformation from eight PPP project case studies. Theproject case studies also required collecting agencydata on programmatic performance measures. Before

beginning the case studies examination, the researchteam conducted a content analysis of the literatureand contract documents in its database. Subsequent-ly, the team developed a data collection instrument inthe form of a case study protocol to collect compre-hensive and consistent information from the foreignpractitioners.

The rst step in obtaining detailed information wasanalyzing the content of relevant documents beforeor concurrent with creating the data collection

Chapter 4: CASE STUDIES



20

Chapter 4: Case Studies

instrument. The purpose of the content analysis wasto identify measures used in policy and implementa-tion documents and minimize the burden on the

international respondents. A formal content analysisinvolves collecting and organizing information in astandardized format that allows for the transformationof nonstructured information into a format thatpermits analysis. The basic steps of the contentanalysis method are (1) deciding to use contentanalysis, (2) determining what material should beincluded in content analysis, (3) selecting units ofanalysis, (4) developing coding categories, (5) codingthe material, and (6) analyzing and interpreting theresults. The result of the content analysis was a list ofperformance measures and KPIs that the team usedas a basis for designing the case study protocol andsupplementing data collection from foreignpractitioners.

To preserve the quality of the research, the casestudies were required to maintain trustworthiness,credibility, conformability, and data dependability.Four validity tests were used to determine the qualityof the case study research: (1) construct validity,(2) internal validity, (3) external validity, and (4)reliability. Construct validity deals with people’sopinions and biases; subjectivity should be avoidedin the research. This study dealt with construct validityby using multiple sources to collect the data for theresearch (e.g., both agency and contractor representa-tives). Internal validity refers to the interpretation ofthe data, especially when some causal factors arenot recognized or omitted during analysis of the data.To ensure the internal validity of this study, the teamused the technique of pattern matching across thecase studies. External validity in this study involvedthe transfer of the results to practice. The externalvalidity test was met by replicating the ndingsdeveloped in one case study in another. Reliabilityis the capability of replicating the ndings if the samesteps are repeated. The condition of reliability was

met by drafting a detailed protocol that guided theformulation of propositions, research questions,case study design, and data collection.

The team worked together to develop the nalcase study protocol. The FHWA oversight panelreviewed and approved the protocol to assure itwas not too burdensome for the foreign practitionersto answer. The approved case study protocol is inAppendix B.

4.2.3 SynthesisThe research team synthesized the data by exploringpatterns across multiple case studies and literature.

The team used the categories discovered in thecontent analysis to organize the results. The resultswere presented to the FHWA oversight panel as anadditional form of validation. The following categorieswere used for presenting results. These categorieswere also chosen to align as closely as possible withAASHTO’s performance management model.

I. Operations and maintenanceA. Organizational structure for monitoring

operations and maintenanceB. Use of performance points to track

operations and maintenanceC. Remedies and dispute resolution procedures

for poor operations and maintenanceperformance

D. Example operations and maintenanceperformance measures and KPIs

II. Design and constructionA. Organizational structure for monitoring

design and constructionB. Remedies and dispute resolution procedures

for poor design and construction workIII. Handback requirements and KPI evolution

4.3 Case StudiesThe research team, with the concurrence of the FHWAoversight panel, selected 10 PPP case study projectsfor this research. Eight of the case studies are includ-ed in this report. The case studies were selected fortheir applicability to the research in terms of (1)containing design, construction, maintenance, andoperations activities; (2) availability of contract docu-ments; (3) previous and ongoing contact with keyproject personnel; (4) diversity of status in the projectdelivery process; and (5) diversity of geographical

location. The case studies and pertinent informationare in table 3. The text describes the salient character-istics of the case studies.

To set a foundation for understanding subsequentcase study results, the following sections providethe salient characteristics of each case study, includ-ing the location, duration, and cost of the project,as well as the project owner and major partnersinvolved in the contract. This is intended to provide ahigh-level description of the type and size of projects,



21


using both PPP agreements and performancemanagement systems in their contract tofacilitate this understanding. 4.3.1 I-595 Corridor ImprovementsThe Interstate-595 highway project in BrowardCounty, FL, is a corridor reconstruction andaddition of auxiliary lanes. The project involvesresurfacing the I-595 mainline and adding areversible express lane system in the I-595 median.

Florida’s Turnpike mainline and interchange willalso be widened and new bicycle and pedestrianpaths will be constructed as components of thecounty’s New River Greenway System. Thirteensound barriers will be constructed to provide noiseabatement for 21 communities in Broward County,and a bus rapid transit and express bus service willbe added to the corridor to increase trafc mobility.The $1.2 billion contract involves a 35-year conces-sion for a total project length of 10.5 miles (mi)(16.8 kilometers (km)).

The PPP agreement is between FDOT and the privateconcessionaire I-595 Express LLC (created by ACSInfrastructure Development). The concessionaire’sdesign team consists of nine design rms, includingAECOM; its construction team consists of ve contrac-tors, including GLF Construction Corp.; and its opera-tions and maintenance contractor is Jorgensen ContractServices. FDOT’s management team is comprised of apublic involvement team headed by Media RelationsGroup, LLC; a design oversight team made up of ve

rms, including Reynolds Smith & Hills; and a construc-tion oversight team headed by the Corradino Group.

4.3.2 Golden Ears BridgeThe Golden Ears Bridge project is located inmetropolitan Vancouver, British Columbia, Canada.The project consisted of constructing 4,656 meters(m) of bridge length and 112,000 square metersof bridge deck. Also, 13.3 km (8.2 mi) of roadwaywere constructed, including the bridge span, and12.2 km (7.5 mi) of public streets were upgraded.

Project Name Owner Location Project Duration Cost

I-595 CorridorImprovements

Florida Department ofTransportation

Broward County,Florida, United States

Award: October 2008Begin Concession: Spring 2014Concession Term: 35 years

US$1.2billion

Golden Ears Bridge TransLink Metro Vancouver,British Columbia,Canada

Award: December 2005Begin Concession: June 2009Concession Term: 35.5 years

CA$808million

Kicking Horse CanyonPhase II

British Columbia Ministryof Transportation

Golden, BritishColumbia, Canada

Award: October 2005Begin Concession: August 2007Concession Term: 25 years

CA$13million

EastLink Victoria StateGovernment

Melbourne, Australia Award: July 2003Begin Concession: June 2008Concession Term: 39 years

AU$2.5billion

Capital Beltway Virginia Department ofTransportation

Northern Virginia,United States

Award: December 2007Begin Concession: December 2007Concession Term: 80 years

US$1.93billion

CLEM7 North-SouthBypass Tunnel

City Council of Brisbane Brisbane, Queen-sland, Australia

Award: April 27, 2006Begin Concession: 2010Concession Term: 35 years

AU$3.2billion

M25 Highways Agency London, England Award: May 2009Begin Concession: 2012Concession Term: 30 years

£6.2 billion

Airport Link Queensland StateGovernment

Brisbane,Queensland,Australia

Award: May 2008Begin Concession: 2012Concession Term: 45 years

AU$3.4billion

TABLE 3.Case study project summary.



22


The project’s PPP agreement is between TransLink,the owner, and a joint venture led by Bilnger Bergerand CH2M Hill. TransLink, British Columbia’s SouthCoast Transportation Authority, was the sponsor and

is the remaining project owner for the Golden EarsBridge. The Bilnger Berger–CH2M Hill partnership,calling itself the Golden Crossing General Partnership(GCGP), was awarded the project contract on Dec. 7,2005. Construction started in June 2006. Golden EarsBridge formally opened to trafc 3 years later on June16, 2009. TransLink engaged GCGP to design, build,nance, and operate the project over a 35.5-yearperiod under a contract totaling roughly CA$808million. GCGP, owned by Bilnger Berger ProjectInvestments, a branch of the Bilnger Berger

organization, delegated the design and constructionservices to 20 British Columbia-based rms (includingBel Contracting, Imperial Paving, and Fraser RiverPile and Dredge Ltd.) and acted as the design andconstruction project manager. The partnership electedCapilano Highway Services to maintain the bridgeand road network in accordance with the contract’soperations, maintenance, and rehabilitation agree-ment after it opened to trafc to complete the35.5-year concession term.

4.3.3 Kicking Horse Canyon Phase IIThe Kicking Horse Canyon Phase II project is locatedin Golden, British Columbia, Canada. This phase ofthe project involved the design, construction, andnancing of 5.8 km (3.6 mi) of highway and thereplacement of the Park Bridge. It also included asubcontracted agreement for HTMC Services Inc.to maintain, operate, and rehabilitate the entireproject (phases I, II, and III), a total of 26 km (16.1 mi)of highway, for 25 years. The cost of the secondphase of the Kicking Horse Canyon Project was

calculated at CA$143 million.

The PPP agreement between the British ColumbiaMinistry of Transportation and the Trans-Park High-way Group is a performance-based agreement usedto govern the phases of design, construction, main-tenance, and operations. The foundation of thissystem is the proper monitoring of performance,which for Kicking Horse Canyon was done by theprovince of British Columbia represented by theBritish Columbia Ministry of Transportation. The

FIGURE 8.Golden Ears Bridge.

FIGURE 7.1-595 corridor improvements.



23


British Columbia Ministry of Transportation hasmonitored performance since the late 1980s.The ministry monitored all aspects of the design,

construction, completion, commissioning, testing,and maintenance of the works through inspections,testing, surveys, certications, and review. Thecontract for the project was awarded to Trans-ParkHighway Group on Oct. 28, 2005, and the projectofcially opened to trafc on Aug. 30, 2007. TheTrans-Park Highway Group is a joint venture led andmanaged by Bilnger Berger BOT Inc. The partner-ship includes other teams, such as Flatiron Construc-tors Canada, responsible for construction manage-ment, and Parsons Overseas Co. of Canada, leadingdesign program and management. HTMC ServicesInc. was subcontracted the task of ongoing opera-tions and maintenance services for the project’slengthy concession term. The partnership alsoconsists of smaller subconsultants and subcontrac-tors providing specic designs, checks, andspecialized construction.

4.3.4 EastLinkMitcham-Frankston Freeway (EastLink) is an AU$2.5billion tolled freeway linking a large area throughthe eastern and southeastern suburbs of Melbourne,Australia. It is part of Melbourne’s MetropolitanRing Road project. The project includes a new 39-km24.2-mi) roadway and 6 km (3.7 mi) of bypass roadsat Ringwood and Dandenong. Three trafc lanes ineach direction run for 33 km from the Eastern Freewayto Thompson Road at Carrum Downs. At the southernend, two trafc lanes in each direction run for 6 km(3.7 mi) from Thomson Road to the FrankstonFreeway. Twin 1.6-km (0.9-mi) three-lane tunnels runthrough the Mullum Mullum Valley as a means ofenvironmental protection. EastLink is electronicallytolled with no toll collection booths.

The PPP agreement is between Victoria andConnectEast. The Southern and Eastern Integrated

Transport Authority (SEITA) was established to acton behalf of Victoria to plan, procure, and commis-sion this facility. ConnectEast was selected as theconcessionaire to fund, design, construct, operate,toll, and maintain the road for 39 years and wasofcially awarded the contract by SEITA in October2004. ConnectEast contracted Thiess John Hollandfor the detailed design and construction, SICE for thetolling system, and United Group Infrastructure formechanical and electrical work. Construction beganin March 2005 and the freeway opened to trafc 3

years later in June 2008. Tolling for the freeway didnot begin until July 2008, so motorists used it freeof charge for the rst month.

4.3.5 Capital BeltwayThe Interstate 495 Capital Beltway project will build14 mi (22.5 km) of new high-occupancy toll (HOT)lanes (two in each direction) on I-495 from the Spring-eld Interchange to north of Dulles Tollroad in North-ern Virginia. These HOT lanes will allow the CapitalBeltway to offer HOV-3 connections with I-95/395,I-66, and Dulles Tollroad for the rst time. In additionto providing new travel choices, this project willalso make a contribution to the beltway’s 45-year-oldinfrastructure, replacing more than 50 aging bridgesand overpasses, upgrading 10 interchanges, andimproving new bike and pedestrian access. Whencompleted, buses, carpools and vanpools with three

FIGURE 9.Kicking Horse.

FIGURE 10.EastLink.



24


or more people, and motorcycles will be able to ridein the new lanes for free. Vehicles carrying two peopleor fewer will either travel for free in the regular lanes

or pay a toll to ride in the HOT lanes. Tolls for theHOT lanes will change according to trafc conditions,which will regulate demand for the lanes and keepthem congestion free. The project will be electroni-cally tolled using transponder technology.

In 2002, VDOT received an unsolicited PPP conceptualproposal from Fluor Daniel to develop, nance, design,and construct HOT lanes on the Capital Beltway.Although VDOT advertised for competing proposals,none were received. In spring 2003, VDOT submitteda grant application to FHWA to study HOT lanes andother value-pricing applications in Northern Virginia.In September 2007, VDOT and Capital BeltwayExpress, LLC, formed by Fluor and Transurban,reached an agreement in principle for the design,construction, operation, and maintenance of the

Capital Beltway HOT lanes. A comprehensiveagreement was nalized on Dec. 20, 2007. Underthis agreement, VDOT will own and oversee

the HOT lanes and Capital Beltway Express willconstruct and operate them. The length of theconcession is 80 years (5 years of constructionand 75 years of operation). 4.3.6 CLEM7 North-South Bypass TunnelThe Clem Jones Tunnel, formerly known as theNorth-South Bypass Tunnel, will be a 4.08-mi (6.5-km)tunnel in Brisbane, Australia, that links ve freewaysand arterials on the north and south sides of theBrisbane River. When it opened in 2010, it will operatewith fully electronic tolls that rely on either vehicletransponders or license plate recognition photogra-phy. The project is also called the CLEM7 after itsroute designation. It will feature two twin tunnels of4.8 km (2.88 mi). The Brisbane municipal governmentanticipates that it will be the rst of ve major projectsintended to relieve congestion in the rapidly growingAustralian metropolis. The CLEM7 is also the rstsection of the new M7 motorway in Brisbane. The M7is expected to be completed in 2012 following com-pletion of the Airport Link tunnel. That will be a 6.7-km(4.1-mi) tunnel that will connect the CLEM7 to theregion’s airport and growing northern suburbs.

The project is being built and managed by theRiverCity Motorway Group on behalf of the Brisbane,Queensland, City Council. RiverCity Motorway isa publicly traded company under contract to theBrisbane City Council. RiverCity Motorway, in turn,contracted the design and construction of the tunnelto the Leighton Contractors and Baulderstone Horni-brook Bilnger Berger Joint Venture (LBB JV). The35-year contract includes design-build-nance-operate(DBFO) provisions. Another rm, Brisbane MotorwayServices, a joint venture of Leighton Services andBilnger Berger, will operate and maintain theCLEM7 during the concession period.

4.3.7 M25As a hub of the United Kingdom’s motorway network,the M25 is one of the busiest motorways in Europeand is the key strategic orbital route around London.Widening of the M25 began in May 2009. The projectis designed to widen about 102 km (63.3 mi) of theM25 by adding a lane in each direction, making themajority of it a four-lane motorway. The wideningwill be done around the north side of Londonbetween Junctions 16 (M40) and 23 and betweenFIGURE 12.North-South Bypass Tunnel.

FIGURE 11.Capital Beltway.



25


Junctions 27 and 30 (A13 Interchange). Constructionwill take place over 3 years. In addition, the M25may be widened between Junctions 23 and 27

and between Junctions 5 (M26) and 7 (M23) aroundsoutheast London. The decision on these two sectionswill be made later in the contract period. The totalcost of the project, including the operations andmaintenance, is £6.2 billion.

On May 20, 2009, the Highways Agency (HA) awardedthe M25 DBFO contract to Connect Plus. Design andconstruction completion is expected in 2012 with asubsequent 30-year operating contract period. ThePPP agreement for the M25 is based on the DBFOform of contract that has evolved in HA for more than10 years. The agreement is based on previous agree-ments used for DBFO roads, but incorporates amend-ments to reect the more complex nature of the M25DBFO and to make the agreement compliant withTreasury’s Standardization of PFI Contracts (Version3). Because of heavy trafc on the M25, HA decided toapply an availability payment mechanism rather thana congestion management payment. Availabilitypayments are subject to lane availability, conditioncriteria, and performance measures.

4.3.8 Airport LinkThe Queensland government included a voluminousset of performance metrics and management systemrequirements to ensure that its 11-km (6.8-mi) AirportLink toll project will operate acceptably for 45 years.Airport Link is a mainly underground tollroad plannedbetween Brisbane’s northern suburbs, the airport, andthe inner city. When completed in 2012, it will connectthe North-South Bypass Tunnel, Inner City Bypass,and local road network at Bowen Hills to thenorthern arterials of Brisbane.

Airport Link will include one northbound and onesouthbound three-lane tunnel. It is expected to carry95,000 vehicles soon after opening, with volumes

predicted to reach 120,000 in 2026. It will allowmotorists to avoid 18 sets of trafc signals in therapidly growing city, which is expected to grow from2.6 million today to 3.7 million by 2026. In May 2008,the Queensland government announced BrisConnec-tions as the preferred bidder for the Airport Link andthe adjacent Northern Busway and Airport Round-about upgrade projects—all under a 45-year DBFOcontract. Despite a controversial collapse of theproject’s original stock-nancing plan, the projectremains on schedule and its nancing is guaranteed

FIGURE 13.M25.

FIGURE 14.Airport Link.



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by major partners Macquarie Capital Advisors andDeutsche Bank.

BrisConnections is a publicly traded operating com-pany under contract to the Queensland governmentto build and operate the facility. BrisConnections,in turn, contracted with Thiess-John Holland, a jointventure between Thiess and John Holland Group,to build the facility. Airport Link Motorway Services,a joint venture between Thiess Services and JohnHolland Services, will operate and maintain thetollroad on completion.

4.4 ConclusionsThis section presented the case study approach forthis research. The case study protocol is in AppendixB. The eight international and domestic case studiesare the basis for the exploration of performancemeasures and KPIs in this report. This section pre-sented a high-level summary of the cases studies.Section 5 of this report discusses the results ofthe case studies.



27

5.1 IntroductionThe research team collected a wealth of datafrom the content analysis of the PPP case studyagreements and interviews with the project teammembers. This chapter summarizes the ndings andpresents the raw data from the case studies. Chapter6 presents the interpretation of the overall resultsand conclusions from the ndings. The informationconsists of a blend of KPIs and performance require-ments from the language in the PPP agreements.While the performance requirement examples arenot KPIs per se, they do provide insights into perfor-mance management in the key areas identied inthe case study protocol. The results are organizedinto the following three categories:

Operations and maintenance

Design and construction

Handback requirements and KPI evolution

Table 4 summarizes the ndings for each category.Data were found for each category, but not in everyproject because of the nature of the data availablefor each case study. Much of the data in this sectioncome directly from the actual contract language inthe agreements. The section summarizes the datarst by category and then by subcategories foreach project.

In addition to the KPI data summarized in this section,Appendix C provides a summary of KPI tables for

Chapter 5: CASE STUDY FINDINGS

TABLE 4.Overall summary of KPI information.

KPI Category I-595Corridor

GoldenEars Bridge

Kicking HorseCanyon

EastLink

CapitalBeltway

North-SouthBypass M25 Airport

Link

5.2 Operations and Maintenance (O&M)5.2.1 Linking Agency PerformanceMeasures With Project KPIs

✓ ✓ ✓ ✓

5.2.2 Organizational Structure forMonitoring O&M

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

5.2.3 Using Performance Points toTrack O&M

✓ ✓ ✓ ✓ ✓ ✓

5.2.4 Remedies and DisputeResolution Procedures for PoorO&M Performance

✓ ✓ ✓ ✓ ✓ ✓

5.3 Design and Construction (D&C)

5.3.1 Organizational Structure forMonitoring D&C

✓ ✓ ✓ ✓ ✓ ✓ ✓

5.3.2 Remedies and DisputeResolution Procedures for PoorD&C Work

✓ ✓ ✓ ✓ ✓ ✓

5.4 Handback Requirements and KPI Evolution

5.4 Handback Requirements andKPI Evolution

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓



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Chapter 5: Case Study Findings

I-595, Golden Ears Bridge, Kicking Horse Canyon, andthe North-South Bypass. The Appendix C tables comedirectly from the project agreements.

5.2 Operations and MaintenanceThe richest set of KPIs was found in the operationsand maintenance categories of the PPP agreements.The agencies use KPIs to align project operations withnetwork operations and overall agency performancemeasures. The KPIs for operations and maintenanceare presented in the following subcategories:

Linking project performance measures withagency and societal goals

Organizational structure for monitoringoperations and maintenance

Using performance points to track operationsand maintenance

Remedies and dispute resolution procedures forpoor operations and maintenance performance

5.2.1 Linking Agency PerformanceMeasures With Project KPIsIdeally, agencies will be able to link their higher levelperformance measures with individual PPP KPIs.These higher level performance measures typicallydeal with network operations and societal goals. Forexample, AASHTO strongly promotes reform for theentire U.S. highway system centered on reaching thesix key national interests. (6) AASHTO is in the processof developing and establishing a handful of broad,overall agency goals for the entire U.S. highwaysystem on highway construction safety, mobility, andstewardship. These six key national interests appearto reect the interests of American society and ad-dress the public’s major concerns about and views ofthe transportation system. If the goals are accepted

and implemented, AASHTO believes that everyhighway agency in the United States will be ableto—and will be held accountable for—producingresults that reect and work toward realizing thesegoals. The challenge for each PPP is to link projectKPIs to these higher level agency goals.

A number of the eight case studies reveal strategiesforeign highway agencies are implementing to meetsome of their unique performance measures. It isapparent that the agencies are attempting to align

KPIs with performance measures. This can be seen inindividual project contract elements and the underly-ing strategies on which they are founded. However,

the agencies have not found integration of the perfor-mance measures and KPIs to be seamless. Agencygoals and performance measures can change overtime in response to societal goals, while PPP agree-ments must be more rigid in dening KPIs. A goodexample involves agency goals on climate changeissues that were not contemplated when the PPPcontracts were executed. This section details thegeneral alignment between project goals and agencygoals, as well as between agency goals and widersocietal goals. This linkage is built on the idea thatmany small and specic achievements (meetingproject goals) will eventually lead to larger, moresignicant accomplishments (reaching societal goals).

Airport Link and CLEM7 North-SouthBypass Tunnel

Linking Societal Goals to Project Performance

A linkage is evident between Brisbane’s broadgoals and the KPIs and other oversight mechanismsin the Airport Link and the CLEM7 North-SouthBypass Tunnel projects. Although the contractdocuments do not directly reference the largerstate strategic objectives, the many managementsystems, including quality plans and KPIs in theprojects, appear to parallel or replicate many ofthe same strategic objectives articulated in the statetransportation strategic plans. General strategicoutcomes desired in the state transportation plan,such as environmental sustainability, trafc reliability,neighborhood quality of life, and safe transport,all have parallel requirements in the contractdocuments for both projects.

The Queensland Department of Transport and MainRoads (QDTMR) is the state transportation agency

governing the projects. Both projects are linked tolarger state transportation plans and objectives,although both projects were developed by spinoffgovernment entities, not QDTMR, which is typical inAustralia for large, multiyear toll facilities. The AirportLink project was developed by Queensland througha spinoff entity labeled City Infrastructure North (CNI).The CLEM7 North-South Bypass Tunnel was managedthrough the RiverCity Motorway Group. CNI is agovernment agency, while RiverCity Motorway Groupis a publicly traded private company under a long-



29


term contract with the city of Brisbane. Both CNI andRiverCity motorway issued tenders for other rmsto construct and operate the facilities.

While priority concerns from the state transportationplans are mirrored in the contract documents for theprojects, the contract documents do not rely solelyon a set of KPIs to ensure the concessionaire fulllsthe state’s strategic objectives for the project. Instead,the contracts rely on a more comprehensive approachthat requires the concessionaire to develop manage-ment plans and management systems for all majoraspects of the projects’ planning, design, construc-tion, maintenance, operations, toll collection, andcommunity relations. At least 28 different manage-ment systems or plans are required for the projects,while only 19 individual KPIs are explicitly statedin the contract documents. Outside audits and anindependent verier are required as part of thecontract to attest to the Brisbane City Council andQueensland that the many provisions of the manage-ment systems and plans are being followed. At leastthree management systems—project, environmental,and health and safety—must comply with the Austra-lian provisions of the International Organization forStandardization (ISO) for these management systems.Also, a minimum of three performance bonds arerequired to ensure adherence to the performancespecications. These include bonds for design andconstruction, operations and maintenance, and thetollroad’s condition at handover. Although KPIs areincluded in the project contracts, they comprise only asmall part of the oversight framework for the complexand multiphased CLEM7 North-South Bypass Tunneland Airport Link projects. For example, all 19 of theKPIs referenced in the contract documents relate toaspects of the operations phase, and none relateto the design and construction phase.

Underlying State Strategic Planning Process

QDTMR displays a well-articulated strategic manage-ment framework in which broad, catalytic state goalsow through a performance management processin the transportation agency down to the individualproject and activity level. Although many of the issuesaddressed by the strategic management frameworkfor QDTMR also are addressed in the CLEM7 North-South Bypass Tunnel and Airport Link projects, theyare addressed in different ways. Generally, the stateagency adopts objectives and metrics to guide itsnext 5-year period. With the 40-year horizons for

the CLEM7 North-South Bypass Tunnel and AirportLink projects, the contracts rely on longer termmanagement systems and quality assurance process-

es that can adapt and change over time. One BrisCon-nections executive said, “The contract approach isintended to provide the owner with exibility toevolve its oversight metrics over time while providingthe concessionaire some certainty of performanceto enable the concessionaire to predict and manageits costs.” In an interview, an ofcial of BrisConnections, theconcessionaire selected by CNI to build and operatethe Airport Link, said that the most direct linkagebetween the state’s strategic transportation objectivesand the Airport Link contract documents is the actualconstruction of the project. The construction andoperation of the facility fullls a fundamental trans-portation objective of the state’s strategic plan,which is to alleviate congestion and improvemobility in the rapidly growing urban area.

For more than a decade, QDTMR has operated undera state strategic transportation plan. In 2008, Queen-sland’s minister for Transport, Trade, Employment,and Industrial Relations and minister for Main Roadsand Local Government jointly developed the updatedstate transportation plan known as the TransportCoordination Plan for Queensland. This plan set thestrategic direction for the highway and transit agen-cies before and after a recent merger to form QDTMR.It expresses the strategic context and challenges thestate faces. The state is coping with rapid growth,high congestion, automobile dependency, environ-mental changes, high community expectations, athreatened quality of life, and diverse regions withdiffering transportation needs, according to the plan.The Transport Coordination Plan lays out 10 strategicobjectives for the transportation agencies:

Make the most of the existing transportation

network by balancing demand and supplyof infrastructure and services to maximizeefciency.

Invest in Queensland’s transport system bytargeting investment to achieve best valuefor industry and community.

Keep the system working well by ensuringthe transport system performs well and accom-modates the changing travel patterns andrequirements of society and industry.



30


Get people walking, cycling, and using publictransport by increasing the share of trips madeby public transport, walking, and cycling and

providing alternatives to private car use.Support regional and remote communitiesby connecting them to essential services thatsupport economic development and socialcohesion.

Move freight efciently by contributing toa strong and diverse trading environment.

Make transport safer by reducing transport-related incidents, fatalities, and injuries.

Make transport more secure by protectingpersonal security and the integrity of thetransport network.

Care for the natural and built environment bycontributing to a cleaner, healthier, and morelivable environment for all Queenslanders.

Integrate transport planning and land use bymatching transport and land use patterns toenhance livability and trade.

QDTMR converts these broad goals into an increas-ingly specic set of reports and metrics by which itcan assess—and be measured on—how well it isimplementing the state government’s overall trans-portation aspirations, including the following:

Adopt a 5-year strategic plan derived directlyfrom the 10-year state plan.

Adopt a specic list of projects, called the roadsimplementation plan, that are intended to meetthe strategic plan objectives.

Annually, produce a highly detailed and quanti-ed service delivery statement (SDS), which is apublic report on what QDMTR plans to achievein the upcoming budget year.

Every quarter, produce a board of management

report to the cabinet agency reporting onQDMTR’s progress on the SDS.

Conclude each year with an annual report thatspecies what QDMTR actually accomplished inthe SDS and through overall efforts in the pastscal year.

Translating State Goals Into Project Performance

Although QDMTR has its own set of departmentalKPIs and objectives, they do not closely correlate to

the KPIs and objectives in the CLEM7 Tunnel orAirport Link contracts. There are, however, generalsimilarities in that both the state agency and the

project entities create systems and metrics forcommon transportation issues, such as safety,emissions, travel reliability, and asset conditions.

The QDTMR strategic plan has a key results area(similar to a strategic goal) of having “effectiverelations,” which are supported by key result indica-tors of “stakeholder satisfaction” and “effectiverelationship management.” The project deed for theCLEM7 North-South Bypass Tunnel project requiresthe concessionaire to have a relationship manage-ment plan facilitated by a third-party contractor tobring stakeholders together to create a shared mis-sion, vision, and objectives for the project. A reportingsystem will be designed to keep all stakeholdersinformed throughout the project of key areas, suchas cost, safety and health, environmental compliance,project quality, schedule status, and design status.Although both the state transportation departmentand the CLEM7 North-South Bypass Tunnel projectorganization have strategic objectives for customerrelations, they approach them somewhat differently.The state agency approaches its objective with a5-year timeframe and key results indicators, whilethe CLEM7 North-South Bypass Tunnel contractdocuments require a permanent, ongoing relationshipmanagement plan that evolves over the years asstakeholder requirements mature. The CLEM7 North-South Bypass Tunnel’s overall quality system alsois paired with the project community relations planand a corresponding community relations policy. Allpersonnel must complete an induction, or training, onthe community relations policy before beginning workon the jobsite. The community relations policy and itscorresponding plan say, in part, that the concession-aires will adopt the following:

Company approach —Demonstrably treat

the community with sensitivity and respect inrelation to its issues, views, and suggestions.

Community interaction —Interact with thecommunity in a way that is—and is seen tobe—accessible, transparent, and responsive.

Mutual trust and respect —Achieve a level ofmutual trust and respect that leads to problem-solving and solutions that improve the overallproject outcomes.



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Shared recognition —Leighton Contractorsand the community will achieve industryrecognition for world-best practice

performance in project delivery.

Management systems —Use innovative,people-focused management systems toachieve the above.

In the area and interest of safety, QDTMR has thefollowing key result indicators:

Safety of the state-controlled road network inline with national targets

Efciency of heavy vehicle operation on the

state-controlled road networkTravel efciency and reliability on the state-controlled road network

In its 2009 SDS, QDTMR has a 2008–09 target fatalcrash rate per 100 million kilometers of less than orequal to 0.57 and a target number of fatalities per100,000 population of 3.97.

Comparable metrics on safety were not found inthe contract documents for the CLEM7 North-SouthBypass Tunnel or Airport Link projects. Instead, on theCLEM7 North-South Bypass Tunnel project, safety isbased more specically on the unique conditions ofa highway tunnel. For instance, the re and life safetysystems must be reliable at least 99.995 percent of thetime. The electrical system must be reliable 99.971percent of the time, and the facility control systemsmust have total redundancy and have availability of99.995 percent. The communication systems musthave 99.99 percent availability and the ventilationsystem, at full capacity, must be reliable 99.954percent of the time. Outages within those limitsare not allowed to exceed 1 hour.

Roadway safety is addressed through continuallyimproving processes instead of adhering to a speci-cally narrow metric. Safety audits are required byan independent and qualied party. They must beperformed during the design phase, immediatelybefore the public opening, and every 2 years duringthe operations and maintenance phase. The conces-sionaire must implement the recommended correctedactions or justify to the independent verier whythe actions cannot be implemented. Not evident inthe contract documents for either the CLEM7 North-

South Bypass Tunnel or the Airport Link project wereKPIs related to the number of crashes or a crash rate.Instead of a xed numeric crash KPI, the project relies

on the creation, operation, and continual monitoringof a project safety and health management plan thataddresses all aspects of the project, including vehicu-lar crashes, injuries to the project workforce, and there suppression and ventilation systems in the tunnel.

In the asset management areas, similar contrastsare evident between how QDTMR measures andmanages its performance and how the contractdocuments provide for the measurement and man-agement of the CLEM7 North-South Bypass Tunneland Airport Link projects. QDTMR begins with astrong policy-based transportation asset management(TAM) program and relies on annual performancemetrics to ensure the ongoing achievement of soundroadway and bridge conditions. The service deliverystatement has a target that 95 percent of miles trav-eled on urban routes and 92 percent of travel on ruralroutes meet pavement smoothness standards. Tosustain those levels, it measures whether its targetednumber of miles of pavement that need to be rehabili-tated or resurfaced are met. For bridges, its strategyis to continue retiring substandard timber bridges,the primary structures that reduce the quality of theoverall bridge inventory. The QDTMR asset manage-ment processes produce a total needed level ofexpenditure to sustain roadway conditions, whichin 2008–09 was AU$461 million. In the SDS thedepartment tracks whether it successfully deliversthat program.

In the CLEM7 North-South Bypass Tunnel and AirportLink projects, a slightly different approach is taken.The contract documents do not prescribe speciccondition levels for pavement smoothness, bridgeconditions, or annual maintenance expenditure levels.Instead, they rely on a series of complementary andoverlapping strategies to ensure that the project is

designed, constructed, and maintained to ensure ahigh quality of condition throughout its service lifeand at its handover. The adequacy of the maintenancefor the 31-year operations phase is controlled throughextensive operations and maintenance requirementsand adherence to an asset management plan. Duringthe design stage, the designs for elements such aspavements and bridges are subjected to a mandatoryreview process by the independent verier to ensurethey meet current design specications. Qualityassurance plans throughout construction are required



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to ensure that construction means, methods,and materials are sound.

The concessionaire must establish and update anasset management system satisfying the projectdeed. The asset management system must record thecurrent, historical, and projected future condition ofeach project asset. It must include detailed recordsof the repair or replacement of assets to assist inestimating the residual design life of the variouselements. An asset inventory should be maintainedthat records the nature, extent, quantity, location,time, and type of any maintenance and repair. Theasset inventory must be layered in terms of assetelements, types, items, and subitems, and the assetmanagement system must document their regularinspection. The system must also trigger the neces-sary response dened in a code of maintenancestandards for each asset element.

The Operations and Maintenance Manual coversmore than 600 pages of how the operating companywill perform maintenance throughout the life of theproject. The manual is, in effect, a comprehensivemaintenance management system. It describes thevarious maintenance elements, denes their adequatestate of condition and inspection cycles, describesnecessary corrective actions, and includes a reportingprocess to monitor the overall condition of themaintained items. It includes more than 200 pages ofsummary tables, each providing details on a mainte-nance subitem, how it is to be inspected, what itsgeneral performance characteristics should be, andhow it should be repaired to bring it into serviceableoperation. The items cover many general roadwayelements, such as potholes, pavement markings,signage, lighting features, and bridge elements suchas bearings, expansion joints, and scuppers. It alsoincludes details on the ventilation system, re-sup-pression system, electrical components, and otherelements of the physical plant. Both internal and

external audits of the operations and maintenanceactivities are required, which serve as the basis fordetermining compliance with the contractspecications. Summary In summary, Queensland and the Brisbane CityCouncil ensure sound infrastructure conditions aremaintained by the concessionaires, but they do notachieve that assurance by imposing a lengthy list ofKPIs to address each roadway component throughout

the 4-decade contract life. Instead, they requirecreation of asset management and maintenancemanagement systems to ensure that the projects

remain in sound condition through each year of theircontract life. The contract strategy for ensuringserviceability at the project handover is to require aremaining service life of about 50 percent for eachasset component. Throughout the project’s life,oversight of the independent verier and otherauditors is the principal means to gauge the adequacyof the asset management and maintenance manage-ment efforts.

Review of the contract documents for the CLEM7North-South Bypass Tunnel and Airport Link indicatethat KPIs are only one component of the contractualstrategy to ensure quality. The other componentsinclude the following:

Performance bonds

Management system

Hiring of an independent quality manager

KPIs

Audits of performance and nances

Oversight of the independent verier and otherveriers, such as the construction verier

The contract documents for the Airport Link and theCLEM7 North-South Bypass Tunnel projects are verysimilar. In an interview, Airport Link project ofcialsindicated that because the projects are close to eachother and both are intended to operate as part ofthe Brisbane roadway network, the same attorneysdrafted both sets of contract documents for the localtransport agencies. The BrisConnection ofcialsconrmed that KPIs are only a small part of the overallmanagement structure of the contracts. They notedthat the 19 KPIs all focus on long-term operationalissues and do not pertain to the design or construc-

tion phase. They also noted that the other perfor-mance strategies listed in the bullets above create acomprehensive and overlapping series of strategiesto ensure reliable operation of the facility over the40-year life of the contract.



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Kicking Horse Canyon Phase IIAgency Goals and Objectives

The British Columbia Ministry of Transportation hasmandated that it “is committed to opening up BCthrough innovative, forward-thinking transportationstrategies that move people and goods safelythroughout BC, while helping maintain our provincialeconomy.” Two strategies the ministry has adoptedto accomplish this mandate are (1) maintaininghighways at a high standard through contracts withprivate sector road maintenance providers and (2)managing funding for high-quality, modern publicinfrastructure that supports the development ofstrong communities by contributing to long-termeconomic growth and a clean environment. Closelyrelated to these strategies are ve goals the ministrylives by. Each goal contains its own objectives,strategies to accomplish the objectives, and aperformance measure.

Goal 1: Key infrastructure is improved to driveeconomic growth and trade.

• Objective 1.1: Improve mobility servicing majoreconomic gateways.

• Objective 1.2: Identify and select priorityimprovement projects.

• Objective 1.3: Use available provincial invest-ment dollars as effectively as possible.

• Objective 1.4: Improve road access for resourceindustries and rural residents.

• Objective 1.5: Manage to build and improveinfrastructure that contributes to their sustain-able development.

Goal 2: British Columbia’s transportationindustries become more globally competitive.

• Objective 2.1: Develop Canada’s PacicGateway.

Goal 3: Greenhouse gases are reduced for thetransportation sector.

• Objective 3.1: Increase use of transit, cycling,and other alternative modes of personaltransportation.

• Objective 3.2: Improve supply chain efciencyfor the movement of goods.

• Objective 3.3: Reduce greenhouse gasesthrough the adoption of new technologies.

Goal 4: British Columbia is provided with a safeand reliable highway system.

• Objective 4.1: Contractors maintain the provin-

cial highway system to a high standard.• Objective 4.2: The main highway system is

rehabilitated on a lowest life-cycle cost basis.

• Objective 4.3: Improve highway safety andreliability.

• Objective 4.4: Have effective road safety en-forcement, education, and programs for thecommercial transport industry.

Goal 5: Excellent customer service is achieved.

• Objective 5.1: Continue to improve servicelevels to the British Columbia businesscommunity.

• Objective 5.2: Excellent customer service isprovided to all British Columbians.

Each goal has an attached high-level performancemeasure with a target for the upcoming years in eacharea. The goal of increasing highway safety andreliability is the only one with two performancemeasures. These measures are presented in table 5(see next page).

Translating Agency Goals Into Projects To achieve these larger agency goals, the goals’objectives must be passed down to individual minis-try projects. For the Kicking Horse Canyon project, theministry has required a number of management plansfrom the concessionaire. Each management plan hascharacteristics and attributes that contribute smallportions to the achievement of the ve overall goalsof the agency. The ministry has also set project-specif-ic operational performance measures, asset preserva-tion performance measures, and operations, mainte-nance, and rehabilitation (OM&R) specications.These performance measures and indicators must be

monitored, collected, and reported to the ministry.

The concessionaire is required to develop sevenmanagement plans for the project concession.These plans, in the ministry’s Highway CorridorManagement Specications for HighwayConcessions, include the following:

Quality and OM&R management plan

Five-year management plan



34


Asset management plan

Communications and customer care plan

Salt management plan

Emergency response plan

Safety management and intervention plan

Most of the management plan titles reasonably implywhich of the ve agency goals they reect. Thesegeneral management plans are built around agencygoals four and ve. Although there is no clearlydened link between these strategies and goals, thereis an underlying tie between them and the manage-ment plans. A brief summary of the notable plans isin the next subsection of the case study ndings forthis project.

Along with developing these management plans, theconcessionaire must also report its performance tothe ministry in several different areas. These reportsinclude the following:

Monthly reports

Asset condition reports

Trafc incident reports

Salt use reports (during the winter months)

Highway condition reports

Wildlife collision reports

Operations and maintenance manual for specialfacilities

A chargeable maintenance cost report

An example of the link from agency performancemeasures to project-specic KPIs can be seen foragency goal number four. The goal states that BritishColumbia is provided with a safe and reliable highwaysystem. The rst objective under this goal is thatcontractors maintain the provincial highway systemat a high standard. The ministry required the conces-sionaire for the Kicking Horse Canyon Project todevelop an asset management plan that includes

TABLE 5.British Columbia Ministry of Transport performance measures.

Agency Goal PerformanceMeasure

Description 2008–09Actual

2009–10Target

2010–11Target

2011–12Target

Key infrastructure isimproved to drive economicgrowth and trade.

Projectperformance

The percentage of projects thatmeet their budget and schedule 91.1% 91.5% 91.5% 91.5%

British Columbia’s transportation industries becomemore globally competitive.

Container trafcgrowth

Growth in container volumehandled at west coast ports in TEUs(20-foot equivalent units)

2.67millionTEUs

2.34millionTEUs

2.69millionTEUs

2.96millionTEUs

Greenhouse gases arereduced for the transportation sector.

Transit ridership Annual public transit ridershipin British Columbia 229

million235

million248

million264

million

British Columbia isprovided with a safe and

reliable highway system.

Contractorassessment

Rating of the maintenance contractors’ performance using contractor

assessment program

92.4% 92.5% 92.5% 92.5%

British Columbia isprovided with a safe andreliable highway system.

Highway safety Crash reduction after constructionon safety improvement capitalprojects, with baseline of 152

18%reduction

20%reduction

25%reduction

30%reduction

Excellent customer serviceis achieved.

Customer service Customer satisfaction survey:Stakeholder satisfactionwith existing ministry services anddelivery processes, rated on a scaleof 1 to 5, with baseline of 3.89

4.05 4.10 4.10 4.10



35


an annual summary of the preceding year’s complet-ed maintenance work, a presentation of the results ofthe data collected, and an indication of the expected

performance of the asset over the remainder of theconcession period and how the concessionaire isensuring that full contractual compliance will beachieved. It is the ministry’s method of ensuring thatthe concessionaire is held to this high standard. Theconcessionaire is also required to report the assetcondition in the asset condition report, providing theministry with evidence that the concessionaire hascomplied with the asset preservation performancemeasures. A small sample of these asset preservationperformance measures is in table 34 of Appendix C.

Summary

The British Columbia Ministry of Transportation hasve clear goals for the transportation sector. Each goalhas objectives and strategies for achievement. Toreach these large goals, there are small connectionsto individual transportation projects. This connectionis evident in the Kicking Horse Canyon project, andthe link is created through project-specic manage-ment plans, reporting techniques, performancemeasures, indicators, and specications.

M25Highways Agency Overview Established in 1994 as an executive agency of theDepartment of Transport, the Highways Agency (HA)is responsible for the country’s strategic roadwaynetwork that includes 2,700 km (1,677 mi) of motor-ways and 4,350 km (2,702 mi) of all-purpose trunkroads. This network is only 3 percent of all roadwaysin the United Kingdom, but it carries one-third of allroad trafc and two-thirds of all freight trafc and isvalued at more than £85 billion.

Since its formation, HA has used private contractorsto operate and maintain major portions of its

existing network, and it has entered into multipleDBFO agreements with private entities to expand orenhance the network. Effectively, HA is the managerof the highway network, not the provider of it.

Agency Aim, Objectives, and Performance Measures As the network’s manager, HA conducts its businessdifferently than a typical department of transportation.Quite simply, HA’s principal focus is its customers.Accordingly, its aim is “safe roads, reliable journeys,informed travelers.” These three principles guide all

agency efforts. This aim is manifested in severalagency objectives:

Reducing congestion and improving reliabilityImproving road safety

Respecting the environment

Seeking and responding to feedback fromcustomers

To deliver on its aim and objectives, HA hasestablished seven key program-level performancemeasures:

Reliability —Implement a program of deliveryactions that tackle unreliable journeys on thestrategic road network.

Major projects —Deliver on time and budgetthe program of major schemes on the strategicroad network.

Safety —Deliver HA’s agreed proportion of thenational road casualty reduction target.

Maintenance —Maintain the strategic roadnetwork in a safe and reliable condition anddeliver value for money.

Carbon emissions —Contribute to nationaland international goals for a reduction in carbondioxide emissions by lowering HA’s emissions.

Customer satisfaction —Deliver a high levelof road user satisfaction.

Efciency— Deliver HA’s contribution to theDepartment for Transport’s efciency target.

Across its network, HA has enacted a number ofinitiatives to deliver on its aims and objectives, and

it uses performance measures to guide and monitorits actions at both programmatic and project levels.

Translating Agency Goals Into DBFO Projects In HA’s DBFO contracts, a consistent challenge ismapping the broader programmatic goals into theperformance measures and indicators in theseprojects. Figure 15 provides an overview of how HAtranslates it broader goals into DBFO project perfor-mance measures and links these with the paymentmechanisms used in the contracts. This gure



36


indicates the most current thinking becauseit corresponds to the structure of the performancemeasures and the payment mechanism in the

agency’s most recent (and largest) DBFO project,the M25 enhancement. The payment mechanismis described in further detail in Section 5.2.3 ofthe case study ndings.

5.2.2 Organizational Structure forMonitoring Operations and MaintenanceFundamental to the concept of a performance-basedmanagement system is a well-constructed monitoringapproach that ensures all major performance objec-tives are consistently met. A variety of methods tomonitor the operations and maintenance performanceof a project exist, each technique offering its ownunique benets and structure to the project. A com-mon monitoring tool used in the industry is a quality

management plan for operations and maintenance.Typically, the concessionaire develops this qualitymanagement plan and submits it for review and

acceptance by the owner, or a third-party representa-tive of the owner, before the system is cleared forapplication. The signicance of the plan is to identifywho is doing what operations and maintenance work,how well it is executed, and who is inspecting it. Theowner continually reviews these results to assessthe quality and performance of the concessionaire’soperations and maintenance performance.

Along with operations and maintenance qualitymanagement plans, other tools and techniquessuch as asset management plans, monthly progressreports, monthly meetings, performance scorecards,inspections, audits, and the use of intelligent transpor-tation systems (ITS) are commonly included in PPP

agreements. Each one has a specic line ofmanagement that the results must go throughbefore reaching the owner, creating a chain ofaccountability to keep the project operatingand maintained at peak performance. Gener-ally, the concessionaire is responsible forapplying most of these techniques individuallyand honestly and reporting the results to theowner. In some instances, however, the resultstravel through the management chain, whichmay involve inspecting engineers, auditors,program directors, and other third-partyentities that hold an interest in the project.In other instances, the owner conductsinvestigations to determine the extent ofthe concessionaire’s success in meeting theproject’s objectives and performance stan-dards. Most of the projects in this study usea combination of these techniques alongwith the operations and maintenance qualitymanagement plan to achieve results andensure accountability.

Table 6 summarizes the KPIs and relatedcontract provisions for operations andmaintenance organizational structures.Example contract language is in thetext that follows.

I-595 Corridor ImprovementsSelf-Monitoring System The PPP contract agreement for I-595 requiresthe concessionaire to establish its own

FIGURE 15.Relationship between HA goals andM25 DBFO performance measures.

Reduce Casualties

Maintain Project Road in Safeand Serviceable Condition

Minimize Delay and Disruptionfrom Planned Maintenance

Minimize Delay and Disruptionfrom Incidents

Ensure Technology SystemsAre Kept Operational

SafeRoads

ReliableJourneys

Informed

Travelers

Work Proactively With the Agency to Improve



37


TABLE 6.KPI information for organizational structures for operations and maintenance.


GoldenEars Bridge

Kicking HorseCanyon

EastLink CapitalBeltway

North-SouthBypass

M25 AirportLink

5.2 Operations and Maintenance (O&M)

5.2.1 Organizational Structure for Monitoring O&M

Self-MonitoringSystem

✓

Monthly MaintenanceRating Program

✓

Quality ManagementSystem Plans andManuals

✓ ✓ ✓ ✓ ✓ ✓ ✓

Monthly Meetings andReports ✓ ✓ ✓

Intelligent Transporta- tion Systems

✓ ✓ ✓

Monitoring HighwaySurfaces

✓ ✓ ✓ ✓ ✓ ✓

Monitoring HighwayStructures

✓ ✓ ✓ ✓ ✓ ✓

Monitoring Drainageand Debris-ControlStructures

✓ ✓

Joint O&M Protocols ✓

Asset ManagementPlan

✓ ✓ ✓ ✓ ✓

Five-Year Manage-ment Plan

✓

Safety Managementand Intervention Plan

✓

Corridor and Environ-mental Management

✓

KPI AssessmentProcess

✓ ✓ ✓ ✓

Customer Service andComplaint Reports andScorecards

✓ ✓ ✓ ✓

Independent Veriersand/or Auditors

✓ ✓ ✓ ✓ ✓ ✓

Maintenance DataManagement System

✓ ✓



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self-monitoring system to oversee operationsand maintenance. In this system, the concessionairemust develop two operations and maintenance

plans, one for the construction phase and one forthe concession (operations) phase. These plansdetail the concessionaire’s approach to executingthe operations and maintenance requirements and,at a minimum, are required to include (1) a list ofprocedures to be used in the self-monitoring processto monitor compliance with the minimum perfor-mance criteria, (2) a bridge inspection and mainte-nance schedule, and (3) the method to be used totrack and report noncompliance points (NCPs). Theseplans also describe the concessionaire’s approachto meet what the contract calls the monthly mainte-nance rating program (MRP) requirements. SeeAppendix C, table 33, for KPI examples from thelanguage in the agreement.

Monthly Maintenance Rating Program The MRP is the primary tool the department uses toevaluate the overall quality and effectiveness of theconcessionaire’s execution of routine maintenanceactivities. The program uses a formal and systematicmethod of data collection to rate the maintenancelevel provided. The concessionaire is required toconduct MRP ratings on randomly generated loca-tions of the project decided on by the department.The results of the monthly ratings are pooled intoa single sample set and assessed every 3 months todetermine the quarterly success or failure rating ofthe concessionaire in fullling the MRP requirementsin the contract. See Appendix C, table 33, for KPIexamples from the language in the agreement.

Quality Management System As part of the self-monitoring system for operationsand maintenance, the concessionaire must alsodevelop a quality management system. This systemmust include both an operations manual and amaintenance manual. The operations manual

must identify the procedures to be used to monitorelements such as incident response, express laneoperation, and trafc events during construction andoperation. Similarly, the maintenance manual mustinclude procedures to be used for maintaining theproject assets during the construction and concessionperiods. A detailed asset management plan to beused by the concessionaire’s maintenance staff isa required element of this maintenance manual.In addition to these manuals, a quality managementplan is required. It must (1) be reviewed by the

department before it is applied, (2) provide a meansto evaluate the level of performance, (3) provide thenecessary information to compare the operations and

maintenance ratings to the minimum performancerequirements so the department can determine ifNCPs are in order, and (4) include a quality assuranceplan to validate the information, accuracy, and resultsof the system itself. See Appendix C, table 33, for KPIexamples from the language in the agreement.

Monthly Meetings and Reports Monthly meetings and reports identifying recentlyexecuted operations and maintenance activities arealso used to evaluate the concessionaire’s perfor-mance. The monthly reports are used as conrmationthat the concessionaire has performed its operationsand maintenance duties in compliance with theminimum contract requirements. The importantminimums to be included in these reports are asummary of the maintenance performed andcompleted during the month, a summary of NCPsassessed and the details of the assessments, anddetailed results of all inspections, assessments, andtesting activities, including the related proceduresand forms used. The department is given full accessto audit these reports and other operations andmaintenance records. The department may alsoperform periodic inspections and testing at its owndiscretion to verify minimum performance require-ments are being satised. Finally, the concessionaireand department conduct monthly meetings to discussthe assessment of any NCPs, the number of incidentsor emergencies that occurred in the past 30 days, theplanned maintenance schedule for next month, andany future lane closures necessary to repair andmaintain the project.

Using Intelligent Transportation Systems to Monitor ITS is also an integral tool for evaluating the conces-sionaire’s performance via status reports, real-timevideo, and live streaming video of trafc conditions,

incidents, and toll operations. The data collected fromthese devices are used to generate monthly, quarterly,and yearly performance measure reports to identifyareas of operations and maintenance that are meetingstandards and those that need improvement. Theoutputs from these devices are posted on a weekly,monthly, quarterly, and annual basis in SMARTSunGuide on the department’s Web site for publicviewing. Publishing the results keeps concessionaireaccountability high and the public well informed.The Florida Transportation Committee monitors the



39


department’s operational productivity, performance,and scal management and, in turn, the departmentmonitors the concessionaire using the results

produced by the SunGuide software and ITS.See Appendix C, table 33, for KPI examplesfrom the language in the agreement.

Golden Ears BridgeQuality Management System The ministry requires the concessionaire to developand implement a quality management system foroperations and maintenance to monitor performanceand document the processes and procedures usedto meet the minimum criteria listed in the operationsand maintenance performance measures. Innovationis strongly encouraged under the contract, and theconcessionaire is expected to develop new andcreative ways of providing services to achieve projectgoals and performance levels set in the contract’sperformance measures. The ministry reviews theproposed quality management system for approvalbefore it is admitted for application. Quality manage-ment systems support the ministry in monitoringproject assets during the concession term throughaudits and inspections performed by the ministryand/or independent third parties. All costs forperforming these audits and inspections are includedin the agreement. This system provides the ministrywith information to assess concessionaire compliancewith operations and maintenance standards.

The maintenance quality management systemconsists of (1) inspections at specied intervals,(2) rating of the structure or asset condition,(3) programming treatments, (4) physical remedialworks when asset conditions fall below minimumstandards, (5) inventory updating, and 6) reportingon achievements after any remedial work is con-ducted. If the data collected during steps one and twoof the process reveal that physical remedial works are

necessary to comply with the contract performancemeasure standards, the concessionaire must developand report to the ministry a remediation strategydetailing an action plan to limit asset consumptionwithin a specied response time. Strategies consid-ered appropriate include excess monitoring, specialinspection, investigation (which may include materialtesting), reevaluation, and physical remediation(maintenance, rehabilitation, and replacement). Thesephases are consistent with the provincewide approachfor monitoring maintenance performance with subtle

differences between the highway running surfacesand structures data collection and inspection proce-dures specic to the Golden Ears Bridge Project.

See Appendix C, table 34, for KPI examples fromthe language in the agreement.

Monitoring Highway Surfaces The concessionaire is responsible for collectingannual pavement condition data for measuringperformance achievement. Generally, these measure-ments are taken using high-speed data results col-lected at 50-m intervals along the paved travel lane.The data collected must be in accordance with theministry’s specications so the ministry can enterthe data into its own pavement management andmonitoring system for performance verication.See Appendix C, table 34, for KPI examples fromthe language in the agreement.

Monitoring Highway Structures Any condition data collected for the project’s struc-tures must also be in accordance with the ministry’sspecications, specically its bridge managementinformation system (BMIS) program, for vericationpurposes. The concessionaire is required to employa qualied bridge structural engineer (BSE) to takeownership of the structure assets and quality manage-ment plan and interpret any structure inspection datato devise acceptable remediation strategies. The BSEwill interpret three types of structure inspections overthe course of the concession (see table 7, next page).If one or more of these inspections identies a defectin any project structure, the concessionaire’s corestructures management team will correct or engage aspecialist staff (when the problem requires expertiseoutside the core management team) to correct thedefect according to the BSE’s newly developedremediation strategy. See Appendix C, table 34, forKPI examples from the language in the agreement.

Monitoring Drainage and Debris-Control Structures

Drainage and debris-control structures require anotherset of maintenance performance measures for thisproject’s performance monitoring cycle. These mea-sures are similar to the project’s structures measuresin that a BSE must take ownership for these assetsand the quality management system governing them,as well as interpret inspection results and develop andapply an acceptable remediation strategy. However,the inspections for drainage and debris-controlstructures are slightly different and are presented intable 8 (see next page) for comparison. Considering



41


The OM&R quality management plan details aperformance measures compliance monitoringprocess to track the concessionaire’s ability to meet

all specied performance measures. This monitoringprocess, constructed by the concessionaire, mustclearly describe the approach taken in assessingcompliance and dene the frequency and methodused for monitoring and reporting compliance.The concessionaire must submit the proposedOM&R quality management plan to the province’srepresentative according to the review process in theagreement. The review process allows the province’srepresentative to request changes in the monitoringand measuring procedures to facilitate the accurateand appropriate monitoring and reporting of compli-ance with the performance measures. The conces-sionaire’s monitoring process is subject to review bythe province’s representative throughout the entireagreement term. See Appendix C, table 34, for KPIexamples from the language in the agreement.

Five-Year Management Plan This management plan is described as “a rollingforward works program” that is meant to describe thepreventive maintenance and rehabilitation, excludingroutine maintenance, that the concessionaire plansto undertake over the next 5-year period. These plans

are broken into two asset types: linear assets (shoul-ders, trafc lanes, etc.) and point assets (bridges,rock slopes, etc.). Among other things, the planmust contain details on eld investigations complet-ed, updated rehabilitation treatments and costs, andany advanced technical evaluations completed.

Asset Management Plan The concessionaire must also develop an assetmanagement plan for the pavement, structures,and related highway infrastructure that describesthe concessionaire’s procedures for achieving thekey performance criteria in these areas. This planincludes elements such as a description of how

key performance indicators will be achieved, theintervention criteria for each indicator, and theapproach for asset condition inspection and workidentication. This asset management plan is usedto track all routine maintenance activities as well asthe condition and disposition of the highway pave-ment assets. The concessionaire is required to keeples of all structure inspection records and associatedremedial works for ministry review. See Appendix C,table 34, for KPI examples from the language inthe agreement.

Communications and Customer Care Plan The purpose of managing communications andcustomer care is to ensure that public perception

of the project and its management is enhanced andpositive. According to the ministry, this is done bytreating all customers courteously, promptly, andin a professional manner. The ministry requires theconcessionaire to include certain minimums foraddressing requests for information, responding topublic inquiries, conducting customer surveys, andadvising the province and media of road conditions,among others.

Safety Management and Intervention Plan The ministry has dened the purpose of these plansas improving the safety of the highway corridor andensuring health and safety systems are establishedand implemented. At a minimum, these plans mustinclude an understanding of compliance with laws,regulations, and Workers Compensation Boardrequirements; a crash database for recording andtracking incidents; and the application of crash datawith inspections to identify safety hazards and im-provements. Overall, the objective is to reduce risksrelated to safety and security on the corridor.

Corridor and Environmental Management A set of key performance measures establish outcomecriteria against which the concessionaire’s perfor-mance is measured for the delivery of corridor andenvironmental management. The concessionaire isrequired to develop, implement, and manage corridoractivities to achieve the outcomes specied in thesemeasures. The objective of the corridor managementmeasures is to maximize the reliability, safety, andavailability of the corridor at all times. The environ-mental management key performance measures alsoaim to minimize the environmental impact of theactivities carried out during the concession term.Table 35 in Appendix C offers a glimpse of theseoutcome-oriented performance measures.

Reporting The ministry requires a number of reports from theconcessionaire. These reports, provided at high level,include the following:

Monthly reports —Provide the ministry witha status of the concession. They include anupdated maintenance and rehabilitation pro-gram for the next 12-month period, status andaudit reports, copies of relevant newspaper



42


clippings noting negative commentaryon the highway, and a summary of keyevents occurring during the month.

Asset condition report —Provides the ministrywith evidence that the concessionaire hascomplied with the asset preservation perfor-mance measures through an asset conditionsurvey. It includes details of the data collectionsurvey on timing, data collected, procedures,and quality assurance measures employed.

Trafc incident report —Provides the ministrywith sufcient information to understandthe nature of the incident within 24 hours of thecrash. It includes information such as date, time,location, and description of the incident; weatherand road conditions at the time; a crash historyof the site; and suggested improvements.

EastLinkOperations and Quality Management The concessionaire (ConnectEast) has obligations todevelop project plans that explain how it will executeoperations activities in accordance with the projectdeed. Project plans must be updated during theperformance of operations activities to reect eventsor circumstances that will or may affect the perfor-mance of these activities, and the plans must beprepared and updated in a way that ensures Connect-East can comply with its obligations at all times.

Specically, ConnectEast must prepare a trafcmanagement strategy, an incident management plan,and operations and maintenance manuals. Connect-East may amend its trafc management strategy onlywith the agreement of the state and in accordancewith the project scope and requirements, and eachtrafc management plan must be consistent with thecurrent trafc management strategy. It must prepare

an incident management plan in consultation withthe Incident Planning Committee and provide it to thestate and the independent reviewer before completingconstruction activities. It must review the incidentmanagement plan at least once every 6 months inconsultation with the Incident Planning Committee.ConnectEast also must develop operations andmaintenance manuals in consultation with the stateand provide copies to the state and the independentreviewer. It must ensure that the operations andmaintenance manuals comply with the project scope

and requirements. It must also (1) ensure that theoperations and maintenance manuals are maintainedand revised in consultation with and take into account

the reasonable requirements of the state, in accor-dance with the project scope and requirements andoperations and maintenance best practices; (2)conduct a complete review (and revision whennecessary) of all consistent with operations andmaintenance best practices at least once every 2years; and (3) provide the state and independentreviewer with copies of the manuals promptly afterthey are revised. ConnectEast must comply with theoperations and maintenance manuals.

Monitor Freeway Each concessionaire involved in operations activitiesmust prepare and submit to the state for approval thetrafc management plans mandated by the project scopeand requirements. Each concessionaire must control,direct, manage, and protect all trafc in the leased areato ensure (1) the safe, efcient, and continuous passageof vehicles; (2) that the trafc-carrying capacity of localroads is maintained; (3) that any trafc congestion,delays, or disruptions to public transport or pedestrianor shared-use paths are minimized; and (4) that theconcessionaires otherwise comply with the deed.

Maintenance Management The concessionaire must comply with current opera-tions and maintenance manuals. By the date the rstfreeway section is opened for public use, the conces-sionaire must establish a maintenance and repairsaccount, maintain that account with a nancial institu-tion nominated by ConnectEast and approved by thestate, and give details of that account to the state. Atleast every 5 years during the concession period, theconcessionaire must update the forecast maintenanceprogram to comply with its operations, maintenance,and repair obligations.

KPI Assessment Process

Beginning with the rst date of freeway sectioncompletion, ConnectEast must prepare a quarterly KPIreport and deliver it to the state within 20 businessdays of the end of each quarter. The quarterly KPIreport must include the KPI data and the informationrequired or contemplated by schedule 5 and contain acerticate signed by a ConnectEast director that thereport is accurate and complete.

Within 30 business days of the end of each nancialyear, ConnectEast must give the state an audit report



45


to develop management plans and managementsystems for all major aspects of the project’s planning,design, construction, maintenance, operations, toll

collection, and community relations. At least 28management systems or management plans arerequired for the project. Adherence to these manage-ment systems and plans is enforceable under thecontract. Outside audits and an independent verierare required as part of the contract to attest to theBrisbane City Council that the many provisions of themanagement systems and plans are being followed.At least three management systems—project, envi-ronmental, and health and safety—must comply withthe Australian provisions of ISO for those manage-ment systems. In addition, at least three performancebonds are required to ensure adherence to the perfor-mance specications—for design and construction,operations and maintenance, and tollroad condition athandover. Although KPIs are included in the contracts,they comprise only a small part of the oversightframework for the complex and multiphased ClemJohnson Tunnel. See Appendix C, table 36, for KPIexamples from the language in the agreement.

The independent verier is a third-party contractorcharged with verifying compliance with the majormanagement systems and plans. The independentverier was selected jointly by the concessionairesand the Brisbane City Council, which share the costof the verier. The independent verier will functionthroughout the project, but provisions exist for theparties to end the verier’s services and rely onperiodic audits once the project begins functioningto the satisfaction of the council, concessionaires,nance agencies, and performance bond providers.

Asset Management Plan Adequacy of maintenance for the 31-year operationphase is controlled through extensive operations andmaintenance requirements and adherence to an assetmanagement plan.

The concessionaire must have in place and update anasset management system that satises the projectdeed. The system must record the current, historical,and projected future condition of each asset in theproject. It must include detailed records of the repairor replacement of assets to assist in estimating theresidual design life of the various elements. An assetinventory must be maintained that records the nature,extent, quantity, location, time, and type of anymaintenance and repair. The inventory must include

asset elements, types, items, and subitems. The assetmanagement system must document the regularinspection of the various elements, types, items, and

subitems. The system must also trigger the necessaryresponse dened in a code of maintenance standardsfor each asset element.

The Operations and Maintenance Manual has morethan 600 pages covering how the operating companywill perform maintenance throughout the life of theproject. In effect, the manual is a comprehensivemaintenance management system. It describesthe various maintenance elements, denes theiradequate state of condition, denes inspectioncycles, describes necessary corrective action, andincludes a reporting process to monitor the overallcondition of the maintained items. It has more than200 pages of summary tables that provide details oneach maintenance subitem, how it is to be inspected,what its general performance characteristics shouldbe, and how it should be repaired to bring it intoserviceable operation. The items cover manygeneral roadway elements, such as potholes,pavement markings, signage, lighting features, andbridge elements such as bearings, expansion joints,and scuppers. It also includes details on the ventila-tion system, re-suppression system, electricalcomponents, and other elements of the physicalplant. See Appendix C, tables 36 and 37, for KPIexamples from the language in the agreement.

Both internal and external audits of the operationsand maintenance activities are required, which serveas the basis for determining compliance with thecontract specications.

M25Performance Management Framework The performance management framework for theM25 DBFO contract is founded on (1) performance

management to achieve the project objectives;(2) performance planning; (3) performance monitor-ing, reporting, and reviewing; and (4) incentivesand sanctions.

The primary objective of the project, as dened in theinvitation to tender, is to provide high-quality servicein accordance with the agency’s aims, objectives, andvalues. The following are specic objectives of theproject:



46


Delivery of high-quality, exible service thatputs customers rst and helps reduce conges-tion, improve journey time reliability, and

improve safety through the following:Integrated operation of the whole of the•

project road in a way that minimizesdelay to the traveling public

Timely, efcient, and safe management of•

incidents, crashes, road work, and winterservice

Timely planning and delivery of trunk road•

improvements while minimizing disruptionto the traveling public

Provision of proactive public relations service•

to customers and stakeholders

Accurate forecasting, planning, and imple-•

mentation of road space management

Maintenance of the project road in a safe and•

serviceable condition

Use of state-of-the-art asset, trafc, and safety-•

related information recording, analysis, andpresentation systems

Timely and accurate delivery of information to•

inuence travel behavior and inform decisions

Delivery of continuous improvement in•

performance and processes

Respect for the environment, promotion of ahealthier community, and integration of sustain-ability principles into the project through thefollowing:

Mitigation of the potentially adverse environ-•

mental impact of the project and, wherepossible, reduction of the existing impact

Proactive engagement with stakeholders to•

identify, develop, and implement environmen-tal improvement measures

Delivery of sustainability as part of the capital•

works and operation and maintenance of theproject in support of the Department forTransport Sustainability Action Plan

Delivery of best value through the following:

Achievement of value for money for the•

widening works, asset management, andoperations

Effective (and cost-effective) contract•

management

Central to the performance management frameworkis the performance management plan, which isreviewed and modied annually. This plan (1) is

responsive to any changes in the project’s objectives,(2) guides and informs management activities such asmonthly performance reports and periodic progressmeetings, and (3) uses information from contractualaudits for subsequent adjustments. Contractualperformance audits also provide routine feedbackto periodic progress meetings, which may resultin improvement planning and additional auditingrequirements. These regular audits are closely linkedto the payment incentives or sanctions that the DBFOcontractor may receive periodically. Ultimately, thegoal of this managerial and contractual performancemanagement system is to ensure that the DBFOcontractor delivers on the agency’s aim of “saferoads, reliable journeys, informed travelers”throughout this project.

Airport LinkSimilar to the strategy the Queensland governmentused for the North-South Bypass Tunnel, the volumi-nous Airport Link contract documents contain rela-tively few explicit KPIs. Instead, they rely on anextensive series of management systems and perfor-mance reviews to ensure the quality and performanceof the project over its 45-year lifespan.

Manuals and Plans The operator is required to adopt and abide by acomprehensive series of operating and maintenancemanuals. These cover all major systems in the facilityand include performance standards. The performancestandards must include hazard and risk mitigationstrategies and a comprehensive tunnel danger study.The operating and maintenance manuals mustinclude the following:

A pavement performance system, including

pavement cracking, roughness, skid resistance,rutting, and deection targets

Response times for incident management

Maintenance targets for timeliness of defectrectication and inspection, quality of mainte-nance work, and how to mitigate road userimpacts as a result of maintenance activities

Equipment reliability targets

Tunnel noise limits



47


Airow velocity targets and limits

Normal operating condition levels, includinglighting, air quality, signage, and other features

Unsafe operating thresholds that can triggerclosure or response

System capacities, including safety limits andprotection levels

Design life and durability strategies

Load limits and ratings

The intention of the operations and maintenancerequirements are to ensure safe, reliable operation ofthe facility and its remaining service life at the 46-yearhandover point. Among the rst requirements is anincident response plan. This must include creationof a trafc management center, which must operatecontinuously to monitor trafc ow and respond toincidents. The incident response plan must includestrategies, equipment, employee training, responseprotocols, and formal methods for coordinating withemergency responders and adjacent agencies toensure prompt incident response. As noted in theKPIs, all incidents must be recognized within 2 min-utes of occurrence. A maintenance operation trafcplan is required to address planned incidents involv-ing maintenance. The plan must ensure that to theextent possible, maintenance occurs in offpeak,overnight periods. Maintenance must also occur, tothe extent possible, when maintenance activities arenot occurring on parallel local roads, which may relyon the facility as a detour. The maintenance trafcplan must also include protocols and practices forensuring safe operating conditions and speedsthrough the facility during maintenance periods.

The operators must present an annual scheduleof planned maintenance closures, which must beapproved. Each minute of additional maintenance

closure time results in a $1,000 penalty.

During the years of operation, the operator is requiredto participate in a Trafc Management OperationsLiaison Group, which consists of other roadwayoperators such as the Queensland Department ofMain Roads and local authorities. The group is intend-ed to be an ongoing forum of communication andcoordination to ensure that operations and incidentresponse strategies remain coordinated for thetollroad, which is an integral link in the metropolitantransportation network.

The tollroad must also be operated to integrate intothe regional trafc management system and ITSnetworks of the larger region. The operator mustmanage the tollroad in compliance with the localcouncil’s and QDMR’s overall planning and manage-ment hierarchy, protocols, and processes for theBrisbane metropolitan network. The operator isrequired to coordinate its changeable message signs,variable speed limit signs, detector loops, closed-circuit television cameras, and communicationsystems with the ITS systems of the state and localcouncils. The operator also is expected to adopta continuous improvement ethos. It must conductdebriengs of incidents and conduct tabletop plan-ning exercises at least twice a year. The operationsresponse plan is expected to mature and improveas a result of the continuous improvement efforts.

In an interview, a key project ofcial said the reliabilityrequirements are somewhat redundant for the con-

cessionaire, for which trafc reliability isa critical customer requirement. Becausethe concessionaire is paid through the tollrevenue of the project, it has an overridinginterest in ensuring that trafc ows freely

and that the route remains the preferredalternative for motorists.

Asset Management System The operator must develop, maintain, andupdate an asset management system inaccordance with the project documents.The system must be acceptable to thestate and in a form that enables the stateto assess the adequacy of the system. Thesystem must accomplish the following:

TABLE 10.Airport Link permitted maintenance closures.

Period Maximum AllowableFull Closure, Including

Ramps (hours/year)

Maximum AllowableSingle-Lane, Partial Ramp,

or Elevated StructureClosure (hours/year)

5 to 10 a.m. 0.2 0.4

10 a.m. to 3 p.m. 2 4

3 to 8 p.m. 0.2 0.4

8 to 10 p.m. 1 2

10 p.m. to 5 a.m. 84 42



48


Maintain a record of the current, historical,and projected condition of each asset, includingdetailed records of the repair and replacement

of asset elements. They must be prioritized bycriticality of safety, trafc capacity, and othercriteria.

Maintain a record of the nature, maintenanceactivity, extent, and actual work of all types ofworks performed or programmed for the assets.

Include a method for reporting on the perfor-mance of any asset.

Provide for the development and maintenanceof models for monitoring pavement perfor-mance throughout the 45-year operating period.A model must provide for the expected pave-ment performance as the facility ages andtrafc volumes increase.

The asset management system must document theregular inspection of the asset items and documentany failure to meet the code of maintenance stan-dards. Any documented failure to the meet themaintenance schedule triggers a necessarymaintenance response.

Auditing The project deed requires quarterly audits of theKPI data and may also require a more extensive auditat least once a year if the owner questions the KPIndings. Road safety audits are also required every2 years throughout the life of the project and aftermajor incidents.

Maintenance Data Management System The operator is required to create a code of mainte-nance standards and a maintenance managementsystem to assure the continued maintenance of thefacility throughout its life. It must include a routinemaintenance schedule that details a systematicapproach to performing the cleaning, preventive

maintenance, inspections, and monitoring thatcomply with the maintenance code. The maintenancemust extend to the safety appurtenances and facili-ties, such as the trafc control center, re-suppressionsystems, incident-management systems, and otherfacility components.

It must also develop a nonroutine asset repair processto ensure the durability of assets approaching theend of their useful life. The systematic approach isrequired to ensure that the assets retain their required

residual design life throughout the life of the project.Detailed records of repairs and maintenance must beretained in a maintenance data management system.

It must include records of all operations and mainte-nance activities undertaken, as well as assets thathave been repaired, rehabilitated, and replaced.The system must track all parts and inventoriesnecessary to maintain the facility and its systems.

Data Collection, Reliability, and Cost In an interview, an ofcial tied to the concessionairerevealed a simple approach to addressing the collec-tion of accurate data to support KPI measurement:the concessionaire is responsible. The project deedrequires the concessionaire to have a KPI assessmentsystem, which must be audited periodically by anindependent rm. The cost of producing the KPI data,the cost of the audit, and ensuring that the projectcontinuously meets the KPI requirements are the soleresponsibility of the concessionaire over the life of theproject. The project ofcial indicated that the questionof how much KPI data collection costs is not one theconcessionaire has frequently discussed. He notedthat the cost of data collection is only one componentof the much larger and more complex managementsystems and management plans.

The degree of risk the concessionaire assumes issubstantial under the models used in both Australiancase studies. The concessionaire assumes the trafcrisk and agrees to provide the various managementsystems, audits, and performance bonds while payingits share of the independent verier costs and abidingby the contract documents and appendices in theproject deed. Project ofcials indicated that it costthe project team about AU$30 million just to producethe winning proposal for the project. The costs ofmaintaining the facility at the high level requiredin the contract documents is solely the risk of theconcessionaire, and its ability to increase toll ratesis limited to escalation of the consumer price index.

In the total scheme of the complex, multidecadeprojects, the cost of KPI data collection was nota signicant issue.

5.2.3 Using Performance Points toTrack Operations and MaintenanceTracking operations and maintenance performanceis often achieved through the use of a formal pointsystem. A point-tracking system assesses points toan operations and maintenance concessionaire basedon examinations of its success or failure in fullling



49


performance standards. If the system assigns pointsfor successes in meeting requirements, it is generallyreferred to as a “compliance” point-tracking system,and the concessionaire is rewarded for meetingperformance targets and benchmarks on schedule.In contrast, some systems assign points correlatingto the concessionaire’s failure to meet performancestandards. These are called “noncompliance,”“nonconformity,” or “demerit” point-trackingsystems. In this case, the concessionaire is penalizedfor not meeting performance targets on time, andthe penalty typically results in payment reductions,retentions, or credit to the owner. The owner mustdecide whether to use the funds obtained from poorconcessionaire performance to refund frequentcustomers using the project, fund a new project,or reinvest in the current project.

Table 11 summarizes the KPIs and related contractprovisions for using performance points to trackoperations and maintenance performance.Example contract language is in the text that follows.

I-595 Corridor ImprovementsNoncompliance Point-Tracking System A noncompliance point system is used to trackthe progress of satisfying the operations and

maintenance requirements for the I-595 highwayproject. The system is based on both the concession-aire and the department recognizing instances ofnoncompliance. The concessionaire is responsible fornotifying the department, as soon as possible and inwriting, of any noncompliance that matches Appen-dix 5 in the contract documents, which lists potentialareas of noncompliance. The written noticationmust completely describe the noncompliance andthe associated cure period given in Appendix 5.The cure period is critical because a noncompliancerectied within that time is not assessed any pointsif the concessionaire notied the department of thenoncompliance before the department issued anotice of determination. A notice of determination,which the department issues if it believes there isa noncompliance in the project’s operations and

maintenance procedures, describes the issue andthe associated cure period. If the concessionaireoverlooks or ignores a noncompliance in a notice,noncompliance points will be assessed to the conces-sionaire whether or not the issue is rectied withinthe cure period. However, both a fast-cure period andfull-cure period are offered for each noncompliance.If the department noties the concessionaire of anoncompliance before the concessionaire noties thedepartment but the concessionaire is able to rectifythe issue within the fast-cure period, only half of the

TABLE 11.KPI information for performance points to track operations and maintenance.


GoldenEars Bridge

Kicking HorseCanyon

EastLink

CapitalBeltway

North-SouthBypass

M25 AirportLink


5.2.2 Using Performance Points to Track O&M

NoncompliancePoint-TrackingSystem

✓ ✓ ✓ ✓ ✓

Calculation andAllocation ofKPI Credits

✓ ✓ ✓

PerformancePoint System

✓ ✓ ✓ ✓ ✓ ✓

Demerit/PenaltyPoints

✓ ✓ ✓ ✓ ✓ ✓

PaymentMechanisms

✓



50


noncompliance points will be assessed.Table 12 reveals how points are assessedbased on different notication categories.

Penalties and Deductions for Noncompliance Points If the concessionaire has accumulated more than 50NCPs in a 1-year period, 100 NCPs in a 3-year period,or 75 instances of noncompliance in a 3-year period,the department is entitled to increase the level ofmonitoring, inspection, sampling, measuring, testing,auditing, and oversight of the project at the conces-sionaire’s expense. These levels of oversight will beincreased until the concessionaire can demonstratethat it has reduced the number of outstanding NCPsand is capable of performing the remainder of theproject according to the agreement. Along with pointallocation, specic instances of noncompliance resultin monetary deductions, including liquidated dam-ages to compensate the department for increasedmonitoring and inspection costs relating to a highnumber of NCPs, potential loss of toll revenuesresulting from noncompliance, harm to the depart-ment’s reputation, and potential harm to highwayusers. The department may also exercise its step-inand work suspension rights any time a noncompli-ance is not rectied within the associated cureperiod given in the contract documents.

Kicking Horse Canyon Phase IINonconformity Point-Tracking System The OM&R quality management system requiredby contract calls for the concessionaire to develop anonconformity report log detailing any nonconformityidentied to date and how it will be managed andremedied in the near future. If the province is notiedor identies (by audits, inspections, and investiga-tions) that there is a nonconformity in the operationor maintenance of the project facilities, it may issuea nonconformity report to the concessionaire. Thisreport will remain in the nonconformity tracking

system until the concessionaire can provide satisfac-tory evidence that the identied issue has beenacknowledged by the concessionaire’s quality man-agement system and is being corrected or has beenremedied within the allotted timeframe. If one or bothof these criteria are met, the province will remove thenonconformity report from its list of outstandingreports in the system. However, until the report isremoved from the tracking system, the concessionaireis at risk for payment retentions and performancepayment reductions.

Penalties and Deductions for Noncompliance PointsIf a nonconformity report is not removed fromthe system and is related to poor asset condition,

the concessionaire is subject to payment retentionsaccording to the payment retentions process. If thereport relates to the operation or maintenance of theproject facilities, it will be taken into account in thecalculation of annual and monthly performancedeductions. Any outstanding nonconformity reportsrelated to operations and maintenance in the trackingsystem will be allocated points according to a noncon-formity report points (NCRP) table (see table 13). Thetable reveals repeat nonconformities and the failureto identify and record defects in the project to be themost costly for the concessionaire in terms of NCRPs.

After a nonconformity is assessed with an NCRP,the performance and safety deductions are calculatedusing the formula in gure 16. The deductions for thecontract year depend on the monthly deductions, andthe monthly deductions depend on the nonconformityreport points collected by the concessionaire in a30-day period.

The concessionaire is responsible for investigatingall nonconformity reports and initiating correctiveactions to remedy reported issues. The concessionairehas 7 days to respond to any issued nonconformityreports and either accept the report and provide acorrective action plan or appeal the report, in whichcase the matter will be solved according to the agree-ment’s dispute resolution procedures. It is the conces-sionaire’s responsibility to maintain records of eachinstance of noncompliance, the nonconformity reportpoints allocated, the proposed corrective action plans,the times the nonconformities were identied, and thetime the nonconformity report was rectied if thedispute resolution procedure was used.

EastLink

Calculation and Allocation of KPI Credits The EastLink agreement applies KPI credits. KPI pointsaccumulate during each year, and once the total KPIthreshold is reached in a year, it triggers a correspond-ing KPI credit to be applied to eligible customers. Inthe rst and second years after the rst date of tollingcompletion, the maximum credits (with the total KPIscore exceeding 2,000 points) are $5 million. In thethird year, it is $10 million, and in each subsequentyear it is $15 million. Table 14 (see page 52) providesan example of the EastLink KPI credit approach.



51


TABLE 12.I-595 noncompliance point notication approach.

Notication Category Percent Assessed Before

Expiration of ApplicableCure Period

Remaining Percent Assessed If No Cure Period or

After Expiration of Applicable Cure Period WithoutFull and Complete Cure (totaling 100%)Notication initiated by concessionaireunder Section 7.2.1 0% 100%

Notication initiated by FDOT underSection 7.2.2 100% 0%

TABLE 13.Kicking Horse Canyon nonconformity report point approach.

Item Standard NonconformityReport Points

Repeat nonconformity report Four or more nonconformity reports relating to the sameoccurrence in a rolling 12-month period 6

Failure to identify and record defects Inspection regimes are specied in Highway Maintenance Specication8-830 to 8-850, including amendments. Compliance with the requirementsfor snow avalanche program, weather-monitoring program, and unstableslope mitigation program

6

Operational performance measureswithin the limits of the traveled lanesand sealed shoulders

As specied in the OM&R output specications and OM&R requirements3

Records and reporting As specied in the reporting specications and local area specications 2

All other nonconformities Any OM&R output specications and OM&R requirements not covered

above, or any other obligations relating to the operation andmaintenance of the project facilities not covered above 1

Performance/safety deductions ($) for the contract year n (PSD n ”) are calculated as follows:

PSD n = Σ {PSD m * [1 + (1F EASP * PPI n )]}

Where:q = The number of months in contract year n, rounded to the nearest four decimal placesPSD m = The performance/safety deductions ($) for month or part of a month m in contract year n , determined in accordance with the following formula:

Where:dm = The number of days in month or part of a month m in the contract year n NCRPR d = Nonconformity report points rate ($) for day d in month or part of a month m in the contract year n determined inaccordance with the following:

Aggregate NonconformityReport Points 0–10 11–15 16–25 26–35 >35

NCRPR d ($) Private Private Private Private Private

FIGURE 16.Kicking Horse Canyon payment reduction formula.

q

n=1

dm

d=1

PSD m = Σ NCRPR d



53


TABLE 15.Capital Beltway performance point approach.

Category Cure Periods Assessment of Performance Points

A

Cure period shall be deemed to start on the date theconcessionaire rst obtained knowledge of, or rst reasonablyshould have known of, the breach or failure. For breach orfailure no later than the date of delivery of the initial notice to the concessionaire, as described in § 8.16(a) of the agreement.

Provided that the breach or failure is not cured,performance points shall rst be assessed at the end of the rst cure period, and shall be assessed again at the end of each period of the agreement, asdescribed in § 8.16 of the agreement.

B

Cure period shall be deemed to start from the date on which the breach or failure occurred, whether or not an initial noticehas been delivered to the concessionaire, as describedin § 8.16(a) of the agreement

Performance points shall rst be assessed on the date of the initial notication under § 8.16 of the agreement(the start of the rst cure period). Provided that the breachor failure is not then cured, performance points shall beassessed again at the end of the rst and eachsubsequent cure period.

C No cure period applicable Performance points shall be assessed on the date of theinitial notication under § 8.16 of the agreement.

Renancing

Operations and maintenance contractor

Maintenance budgetDepartment access and inspection

Operations

Incident management

Information sharing

Systems control

Work zone management

Inspections

Qualication of inspection

MaintenancePerformance requirements

Level of service

Degradation of the facility

The total of uncured performance points assessedby VDOT shall be monitored by the department orits designee for the duration of the operating period.The cumulative total of cured and uncured perfor-mance points assessed by VDOT shall be monitoredin rolling 365-day cycles from the time the breachhas been cured for breaches in categories A andB and from the time the breach has occurred forbreaches in category C. At the end of each 365-day

cycle, the performance points assessed for thatspecic breach will be subtracted from thecumulative total number of performance points

the concessionaire has been assessed.

Penalties and Deductions for Noncompliance Points If the concessionaire is assessed 135 or more perfor-mance points during any 365-day cycle or has 30 ormore uncured performance points at any time, VDOTmay increase the level of project monitoring. Theconcessionaire shall compensate VDOT for allocablecosts incurred as a result of such increased monitor-ing. The concessionaire may submit a cure plandescribing specic actions the concessionaire willundertake to improve its performance and avoid theneed for increased monitoring, which VDOT mayaccept or reject.

If the concessionaire is assessed 200 or moreperformance points during any 365-day cycle orhas 45 or more uncured performance points, VDOTmay require the concessionaire to prepare andsubmit a remedial plan for VDOT’s approval. Theremedial plan shall be delivered within 45 days of itsrequest. The plan shall set a schedule and describespecic actions the concessionaire will undertake toimprove its performance, demonstrated by incurringno additional performance points and reducing thenumber of uncured performance points. Such actionsmay include, but are not limited to, improvements inthe concessionaire’s quality management practices,plans and procedures; changes in its organizational



54


TABLE 16.Capital Beltway performance point examples.

Heading Subheading Breach or Failure Category CurePeriods

MaximumPoints

Tolling Transactions The concessionaire transmits duplicate transactionsor incorrect toll amounts to the Customer Service

Center (to be determined on a per transmission basis).

C None 5

Communications Publicinformation

The concessionaire issues information to the public orin news releases through variable message signs

or other means that is factually incorrect.

C None 5

Customerservice

The concessionaire fails to respond within 7 days tocustomer inquiries and complaints about HOT lanes

when contact details of customers have beenprovided, no matter whether the complaint is receiveddirectly from customers, the customer service center,

or the department.

A 2 days 5

Projectmanagement

Project plans The concessionaire fails to produce, review, and, ifnecessary, update plans during the operating period in

accordance with the agreement including, but notlimited, to (1) the concessionaire management plan;

(2) the hazardous substances management plan;(3) the communication, public outreach, and commu-

nity education plan; (4) the life-cycle maintenanceplan; and (5) the operations and maintenance plan.

A 30 days 5

Operations Work zone

management

The concessionaire fails to meet requirements of I&IM

241 on work zone safety, management, maintenanceof trafc, and diversion routes for regularmaintenance during operations.

B 60 minutes 5

Inspections Quality ofInspection

The concessionaire fails to identify material defectsin the inspection reports, life-cycle maintenance

plan, or work currently undertaken.

C None 5

Maintenance Performancerequirements

The concessionaire fails to meet the performancerequirements for each asset in cycles adopted

in the industry for each asset.

A 30 days 5

Level of service Degradation of the facility

The concessionaire fails to appropriately manage thedynamic tolling mechanism to ensure the level of

service of the HOT lanes project does not becomedegraded, as required by law. In addition, and tobe measured separately, upon receiving notice of a

problem with the dynamic tolling mechanism, the concessionaire fails to submit a rectication

plan to the department for approval.

B 7 days 5

Concessionaireobligations

Subcontracting The concessionaire fails to include provisions in allof its subcontracts requiring its subcontractors

to refrain from discrimination.

C None 5



55


and management structures; increased monitoringand inspections; changes in key personnel; andreplacement of subcontractors.

If the concessionaire fails to deliver the remedial planwithin 45 days of the department’s request, fails tocomply with the course of action in the plan, andincurs 245 performance points during any 365-daycycle or maintains 68 or more uncured performancepoints, VDOT may notify the concessionaire in writingthat such failure is a breach of a material obligationunder Section 17.01(c).

Performance points will accumulate and when theyreach certain thresholds, the department will begranted certain rights, shown in table 17.

CLEM7 North-South Bypass Tunnel

The operating company must set up a KPI assessmentsystem to measure how well the operations andmaintenance concessionaire is meeting the KPIs. Thesystem must identify each instance in which a KPI isnot met and identify the remediation steps necessaryto correct it. A quarterly KPI performance report isrequired to be given to the council. All reports anddata must be kept for 7 years. Any time the councilchooses, it can request an audit of the KPI data andthe KPI assessment system.

Demerit Points As indicated in the KPI demerit point column (seeAppendix C, tables 36 and 37, for KPI examples fromthe language in the agreement), both positive andnegative points can be accumulated. Negative pointsare actually positive to the concessionaire and canbe used to offset other penalty points. Penalties areassessed at a rate of AU$1,000 for every point.The penalties are used to reduce the concessionaire’sincome, so they serve as a credit to the owner. The

owner can decide if the credits will be refunded to tollusers, used for other projects, or used to correct theconditions that led to the penalty.

M25Payment Mechanism The payment mechanisms for this project are used toboth reward and penalize the DBFO contractor basedon its level of performance in ve categories:

Lane availability

Route performance

Condition criteria

Safety performance

Proactive management

Lane availability, correlated with the “reliablejourneys” goal, evaluates the adequacy of trafcow and the availability of travel lanes. Monthlyadjustments to this payment mechanism elementare made for delays to the traveling public due totrafc management actions during planned mainte-nance and repair activities. The idea is to incentivizethe DBFO contractor to plan and execute mainte-nance and repair actions when the impact ontravelers is minimal.

Route performance, also correlated with the “reliablejourneys” goal, assesses the reliability of trip timesand the impacts of incidents. Monthly bonuses aremade when trip times are highly reliable, and monthlydeductions are made when trip times show signicantvariance from the norm.

Condition criteria, correlated with the “safe roads”and “informed travelers” goals, assess ride quality,roadway defects, and technology systems. Monthlydeductions are made for failure to meet ride quality

TABLE 17.Capital Beltway performance point implications.

Total Cumulative Numberof Uncured Points

Total Cumulative Number ofCured and Uncured Points

Implications

30 135 Increased monitoring by the department

45 200 Remediation plan to be submitted to the department

68 245 VDOT may exercise its right under Section 1701 of the agreement



56


standards or correct serious roadway deciencies, aswell as for any loss in technology systems that are inplace primarily to inform the public or assist with

roadway management.

Safety performance, associated with the “safe roads”goal, assesses roadway safety. Annual bonus pay-ments or deductions are made if the roadway showseither positive or negative trends on the identiedsafety metrics.

Proactive management is linked with all three goals.The intent of this element is to reward the DBFOcontractor for actively and productively workingwith HA to achieve its overall objectives and engagingwith the agency as priorities or objectives change.

Airport LinkAs with the CLEM7 North-South Bypass Tunnelproject, the KPIs in the project deed are outcomeoriented and focus on project aspects importantto the everyday project user. KPIs focus on issuessuch as prompt response to customer calls, laneavailability, air quality in and next to the tunnel, waterrunoff quality, operability of tunnel communicationand safety systems, response times to incidents,and aesthetic appearance of the facility.

Demerit Points The KPIs in the Airport Link project are very similarto those in the North-South Bypass Tunnel, whichhas been renamed the Clem Jones M7 Tunnel. Theprojects are contiguous, share many similar environ-mental and social impacts, and have similar DBFOstructures. The Airport Link project uses a KPIassessment system to monitor performance. If thecontractor fails to attain any of the major performancemetrics, demerit points are applied. At the end of anynancial year, the number of demerit points is multi-plied by $1,000 from a base year of 2008. The cost of

the demerits rises over the life of the contract by theconsumer price index.

The KPI assessment system is intended to recordand report on the PPP company’s performanceagainst those benchmarks. The assessment systemmust be adequate to determine whether the bench-marks have been made, each separate occurrence,the accumulation of demerit points, and all sourceinformation necessary to assess the issues surround-ing achievement or nonachievement of the KPIs.

A quarterly report on KPI compliance must begenerated.

5.2.4 Remedies and Dispute ResolutionProcedures for Poor Operations andMaintenance PerformanceRemedial procedures for poor operations andmaintenance performance were included in the casestudy PPP agreements. Executing remedies for poorwork is directly linked to performance point-trackingsystems. If the concessionaire exceeds a set numberof performance points in a given period, it is suscep-tible not only to monetary punishment, but also tothe owner’s remedial rights. These rights allow theowner to continue operations and maintenancework on the project or repair project elements whenthe concessionaire fails to do so. The most commonremedial right in a PPP contract that might beexecuted by the owner is the step-in right, in whichthe owner may take up any of the concessionaire’sresponsibilities that are being neglected or hireanother independent party to do so. The concession-aire is held responsible for reimbursing the ownerfor all costs incurred in such a step-in. The secondmost common remedial right is work suspension,in which the owner has the right to suspend anyconcessionaire operations and maintenance workit deems unsatisfactory until the concessionairedevelops an approvable remedial plan. Since theconcessionaire is typically charged for each daythe project runs over schedule, work suspensioncan be extremely motivating.

Each PPP agreement also includes a dispute resolutionprocedure to solve issues that may arise betweenthe owner and concessionaire on the operations andmaintenance work. In the case study projects, theseprocedures begin at the lowest level of managementbefore escalating to senior management and thirdparties. Contract procedures also leave room forlegal entities and court cases to resolve issues. The

purpose of these resolution procedures is to ensurethat the owner and concessionaire can resolve theirdifferences and continue the project work in unisonbefore resorting to the more drastic measures ofwork suspension, step-in, default, or termination.

Table 18 summarizes the KPIs and related contractprovisions for remedies and dispute resolutionprocedures for poor operations and maintenanceperformance. Example contract language is in thetext that follows.



57


I-595 Corridor Improvements

Remedies for Poor Work

As stated in the I-595 agreement, persistent conces-sionaire operations and maintenance noncompliancewill result in the department exercising its remedialrights. It is imperative that noncompliance issues areremedied because repeated or numerous instancesof noncompliance will undermine the condence andtrust essential to the success of the public-privateagreement. If the concessionaire collects 100 NCPsin a 1-year period or 200 NCPs in a 3-year period,the department may exercise its right to suspend,in whole or part, the concessionaire’s operationsand maintenance work. During this suspension, theconcessionaire will have no right to extra work costs,delay costs, time extensions, or other relief costs.Before having work suspended, the concessionaireis likely to receive a warning notice from the depart-ment stating in detail the matters causing the noticeand, if applicable, the amounts due from the conces-sionaire as penalty. On receiving a notice, the conces-sionaire is required to prepare and submit a remedialplan describing a schedule and specic actions it willtake to correct the issue. Another common remedialright the department may exercise is the step-in right.This gives the department the right to pay anotherentity to perform all or any part of the concession-aire’s obligations and work that relate to the conces-sionaire default. In turn, the concessionaire will beheld responsible for reimbursing the departmentfor all costs in connection with this step-in. Examplefaults that may result in these consequences for thisproject are in table 19 (see next page). The conces-sionaire’s failure to meet the minimum performancerequirements acts as a trigger for remedies to beput into action.

Dispute Resolution Procedures The dispute resolution procedures for this contractbegin with both the concessionaire and the depart-

ment agreeing to resolve disputes as quickly aspossible without involving a third party. However,if a dispute cannot be resolved at this lowest levelof management, the issue will move to the disputesreview board elected for the contract by both parties.The review board will be given all evidence anddocumentation necessary from both parties to makea fair and accurate solution recommendation. Theevidence will be circulated to all players involved inthe dispute. After the board recommends a resolution,each party will determine whether the board’s recom-mendation is suitable. If either party decides to appealthe review board’s recommendation, subsequentproceedings will take place with the initial recommen-dation admissible as evidence. The dispute resolutionboard will not be responsible for handling disputesrelated to nal acceptance or the performance ofvalue added. The Regional Disputes Review Boardand Statewide Disputes Review Board will handlethese issues, respectively. During the course of anydispute resolution, the concessionaire is required tocontinue performing all work, even in the subjectarea of dispute, as directed by the department.

Golden Ears BridgeRemedies for Poor Work This contract agreement exhibits remedies for conces-sionaire default related to poor operations and main-tenance performance. The concessionaire is subjectto operations and maintenance default if it fails toperform any of its obligations under the operations,maintenance, and rehabilitation (OMR) agreementand does so in a manner that jeopardizes the safety

TABLE 18.KPI information for remedies and dispute resolution procedures for poor operations and maintenance performance.


Golden EarsBridge

Kicking HorseCanyon

East Link CapitalBeltway

North-SouthBypass

M25 AirportLink


5.2.3 Remedies and Dispute Resolution Procedures for Poor O&M Performance

Remedies for PoorWork

✓ ✓ ✓ ✓ ✓ ✓

Dispute ResolutionProcedures

✓ ✓ ✓ ✓ ✓

Bond Safeguards ✓ ✓



58


of the public, the facility lands or assets, or any facilityoccupiers. In any calendar quarter during the conces-sion term, if the concessionaire receives three or morewarning notices for the same failure to perform underthe OMR agreement or in two consecutive calendarquarters it receives one or more warnings for thesame failure, it will be subject to contractor default.

The remedial procedure for operations and mainte-nance default is as follows: The ministry may requirethe concessionaire to develop a reasonable scheduleand plan for rectifying the default with details on theapproach and the latest date it will be corrected. If theplan is considered unacceptable, the ministry and

concessionaire will work together to develop a newstrategy. When a plan is approved but the concession-aire does not remedy the default within the allottedtime period, the ministry may move to correct thedefault itself or engage an independent third party todo so with the concessionaire fully reimbursing theministry for all costs associated with the remedialprocedure. Ultimately, the ministry may move toterminate the contractor and agreement if the contrac-tor is unwilling to correct any defaults according to areviewed and accepted remedial plan.

Kicking Horse Canyon Phase IIRemedies for Poor Work If the concessionaire stops maintaining or operatingthe project facilities in accordance with the agree-ment, it will be subject to default. If the concessionairedefaults, the province has the option to apply thefollowing remedies: First, the province may make anypayment retentions in accordance with the agreementor suspend the concessionaire’s work (specically thefunctions subject to default) until the concessionairecan demonstrate to the province’s satisfaction thatit is has the capability and willingness to performits obligations under the OM&R agreement correctly.

If the concessionaire’s work is suspended, theconcessionaire is required by contract to reimbursethe province for all costs incurred to perform orengage others to perform the functions of the conces-sionaire under suspension. The concessionaire is alsorequired to develop a program to rectify the defaultand submit it to the province for review. If the pro-gram is deemed acceptable, it will be allowed forimplementation and the suspension will be released.However, if the province and concessionaire cannotagree on an appropriate program to correct the

TABLE 19.I-595 operations and maintenance availability faults examples.

Availability

Faults

Minimum Performance Requirements Availability

Classication

Cure

Period

Interval of

RecurrenceIncidentResponse

Respond to and secure sites of incidents, emergencies, crashes, andother events that that result in a condition that is unsafe or maypresent a life-threatening condition, such as, but not limited to, fuelspills, debris, pavement failure (e.g., potholes), ooding,guardrail failures, attenuator faults, and other elementsas detailed in this matrix.

B 15minutes Hourly

Flexible PavementPotholes

Pavement section meets the requirements in Division II,Section 6 of the Technical Requirements. B 60

minutes Hourly

Signs Sign (single or multipost) on a given segment meets the temporarymitigation performance requirements in Section 4.6.2. B 30

minutes Hourly

Toll Gantry Toll gantry on a given segment meets the temporary mitigationperformance requirements in Section 4.6.2. This availability fault doesnot apply if a failure to meet the performance requirements interrupts toll collection on the express lanes, in which case it shall bedeemed a toll collection interruption availability fault.

D 60minutes Hourly

Rapid IncidentScene Clearance

Respond to and provide the necessary equipment and personnel,as specied in Section 4.3.4.1. E 60

minutes Hourly



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default, the matter is subject to the dispute resolutionprocedure. In that case, termination of the agreementis the ultimate, worst-case possibility.

Dispute Resolution ProceduresThe dispute resolution procedure for operations andmaintenance starts with resolution at the lowest levelof management before reaching an independentcertier or senior executives. If these three levels ofresolution do not yield an acceptable decision on thedispute, a trio of experts, identied as the operationsand maintenance panel, will be selected by theprovince and concessionaire to resolve the dispute.The panel’s decision is considered nal and bindingunless the consequences total more than $250,000 foreither party, in which case the dispute can be referredto the arbitration procedure.

Arbitration Procedures Either a single arbitrator or a panel of arbitratorsselected by both parties will perform the arbitrationprocess. The arbitrators will be provided with all thenecessary documents required to resolve the dispute,and both parties will be eligible to be represented bylegal counsel. Any witnesses selected for questioningmay be examined, reexamined, and cross-examinedby either party at the arbitration. Within 30 days of thearbitration, a written conclusion of the hearings willbe sent to both parties. The decision will be nal andbinding unless the result awards either party morethan $5 million, in which case the decision may beappealed and the process repeated.

EastLinkActions and Remedies Available to StateThe agreement provides the state broad and specicrights on actions it can take in the event of poorperformance by the concessionaire. Broadly, if aconcessionaire fails to comply with the terms of thedeed at any time after the rst date of freeway

section completion, the state may issue a notice tothe concessionaires specifying the noncomplianceand requiring that it be corrected as soon as practi-cable but, in any event, within 12 months of the dateof the notice. If the noncompliance is not corrected,the state may issue a further notice requiringConnectEast to replace the operation phase bond.

In addition, the state has rights to audit the operator,outside of the normal reporting and auditing require-ments, any time up to 12 months after the end of the

concession period. It may give notice (KPI auditnotice) to ConnectEast requiring an audit of the KPIdata, quarterly KPI reports, or KPI assessment system

to verify their accuracy, correctness, completeness,and tness for the intended purpose.

If the state gives a KPI audit notice, it will appoint andnotify ConnectEast of the entity to conduct the auditat the state’s expense. The concessionaires must,within a reasonable period, make the KPI data,quarterly KPI reports, and KPI assessment systemavailable for the audit.

If the report of the KPI auditor concludes that theKPI data or a quarterly KPI report is not accurate,complete, or correct or that the KPI assessmentsystem is not t for its intended purpose, ConnectEastmust (1) x the inaccuracy, incorrectness, incomplete-ness, or lack of tness for intended purpose in theaffected data, report, or system and reissue the dataor report to the state or advise the state of any changeto the system; (2) reassess any KPI affected by theinaccurate, incorrect, or incomplete data or report orlack of tness for intended purpose in the affectedsystem, and notify the State of and pay any necessaryadjustment to the KPI points or KPI credit; and (3) paythe costs of the KPI auditor or reimburse the state forany costs. If the KPI auditor’s report concludes that theKPI data or a quarterly KPI report is materially inaccu-rate, incomplete, or incorrect or that the KPI assess-ment system is not t for its intended purpose, thestate may require ConnectEast to pay $500,000(indexed) within 5 business days.

Dispute Resolution Procedures The concession agreement has a number of instancesin which it refers to potential disputes. Typically, anydispute between the state and a concessionaire thatrelates to the deed or the concessionaire’s obligationsunder this deed (including if the state or concession-aire disagrees with the decision of the independent

reviewer) shall be resolved through negotiation andsubsequent expert determination, unless the contractexpressly provides that the dispute is to be referreddirectly to expert determination. Under certaincircumstances, resolution may also involvearbitration proceedings.

In the event of expert determination, the state and theconcessionaires must exchange written lists of at leastthree qualied persons, in order of preference, within7 business days of the notice date. Any person who



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appears on both the state’s and the concessionaires’lists will be appointed as the expert to determine adispute. If more than one person appears on each list,

the person given the highest order of preference bythe party that gave the notice will be appointed. If noperson appears on both lists, the party that gave thenotice must ask the national president of the Instituteof Arbitrators & Mediators Australia to nominate aperson to act as the expert. The expert may meet orhave discussions with the parties together, but notseparately.

Bond Safeguards The concessionaire must procure an operation phasebond of $5 million (indexed to ination) within 10business days of the issue of the rst certicate offreeway section completion. If the concessionaire failsto comply with the contract terms at any time afterthe rst date of freeway section completion, the statemay issue a notice specifying the noncompliance andrequiring that it be corrected as soon as practicable,but in any event within 12 months of the date of thestate’s notice. If the noncompliance is not corrected,the state may issue a further notice to the concession-aires requiring ConnectEast to replace the operationphase bond with a replacement bond of $20 million(indexed) within 10 business days.

Capital BeltwayRemedies for Poor Work If the concessionaire does not meet the minimumstandards for operations and maintenance work, thedepartment may require the concessionaire to pre-pare and submit a remedial plan for the department’sapproval. The remedial plan shall set a scheduleand describe specic actions the concessionaire willundertake to improve its performance as demonstrat-ed by incurring no additional performance points andreducing the total number of uncured performancepoints it has accumulated. Such actions may include,

but are not limited to, improvements in the conces-sionaire’s quality management practices, plans, andprocedures; changes in its organizational and man-agement structures; increased monitoring and inspec-tions; changes in key personnel; and replacement ofsubcontractors. If, 180 days after the implementationof the remedial plan, the concessionaire can demon-strate that (1) the remedial plan has reduced thenumber and frequency of performance pointsassessed compared to the period before the imple-mentation of the remedial plan, (2) the concessionaire

is complying with the course of action describedin the remedial plan, and (3) the concessionaire hasno uncured performance points, the total number of

performance points assessed over the 180-day periodshall be reduced by 50 percent. If the rolling 365-daycycle ends during the 180-day period, the numberof performance points the concessionaire has curedduring that 365-day cycle shall carry over to thenext 365-day cycle. However, if the total number ofperformance points assessed over the 180-day periodis reduced by 50 percent as described above, thenumber of previously cured performance points thatwere carried over also shall be subtracted from theconcessionaire’s cumulative total of assessedperformance points.

If the concessionaire fails to deliver the remedial planwithin 45 days of the department’s request, or failsto comply with the course of action in the remedialplan and incurs a total of 245 performance pointsduring any 365-day cycle, or maintains 68 (or anyhigher applicable number during the phase-in period)or more uncured performance points at any time, thedepartment may notify the concessionaire in writingthat such failure is a breach of a material obligation.Such failure shall become breach of a concessionairedefault unless cured within the time period specied.

Dispute Resolution Procedures In the event of a disagreement or dispute relating toa life-cycle maintenance plan, VDOT and the O&Mcontractor shall try to resolve it within 60 days. Anydisagreements or disputes raised by VDOT on thelife-cycle maintenance plan must be based on wheth-er the assessment and the underlying assumptionsare reasonable, realistic, and consistent with goodindustry practice, project experience and condition,technical requirements, and applicable law. If noagreement is reached in 60 days, either partymay submit the dispute to the dispute resolutionprocedures in Section 17.06 of the agreement. Until

resolution of any disagreement, the treatment of thedisputed tasks in the most recently approved life-cyclemaintenance plan shall remain in effect and governthe requirements relating to such tasks.

The parties shall attempt in good faith to resolve adispute within 15 days or other time period speciedin the agreement. If the parties are unable to resolvethe dispute within that timeframe, the dispute shall bereferred to mediation or any other form of alternativedispute resolution acceptable to both. They must



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share equally the expenses of the mediator or otheralternative dispute resolution process. If after 180days (or 60 days in the case of disputes relating to

the I-495 HOT lanes in Virginia project arising beforesubstantial completion) following the date of thereferral the dispute remains unresolved, either partymay litigate the matter in court. All litigation betweenthe parties arising out of the agreement or its breachshall be led in the Circuit Court for Richmond, VA,Division I, which shall have exclusive jurisdiction andvenue. Each party shall bear its own attorneys’ feesand costs, and no party shall seek or accept an awardof attorneys’ fees or costs, except as expressly setforth in the agreement.

CLEM7 North-South Bypass TunnelBond Safeguards In the CLEM7 North-South Bypass Tunnel, theoperations and maintenance bond is for an ination-adjusted $20 million. If after 12 months of notice theoperations company fails to correct documentedmaintenance deciencies, the council has the optionof calling the bond and using the proceeds to correctthe deciencies. The operations and maintenancerequirements demand that the operating companyperform the following:

Keep all lanes of trafc open at all times, exceptas permitted for planned maintenance andincidents.

Meet the roadway and bridge performancespecications.

Meet the required design life.

Meet the handover requirements, which requireat least 50 percent remaining design life for eachelement of the facility.

Correct defects as soon as possible.

Operate and maintain the tollroad in accordance

with operations and maintenance best practices.Operate the project in accordance with theproject deed.

5.3 Design and Construction

Agencies use design and construction KPIs to setperformance expectations during facility construction.The use of design and construction KPIs is not asprevalent as operations and maintenance KPIs

because of the nature of the design-build contract inthe concessionaire agreement and the fact that theconcessionaire operates the facility for such a signi-

cant period before its eventual handback. However,agencies do use high-level design and constructionKPIs to align design and construction operations withoverall agency performance measures. The KPIs fordesign and construction are presented in thefollowing subcategories:

Organizational structure for monitoring designand construction

Remedies and dispute resolution proceduresfor poor design and construction performance

5.3.1 Organizational Structure forMonitoring Design and ConstructionSimilar to the monitoring structure for operations andmaintenance, PPP agreements require a formalizedand structured method for monitoring the design andconstruction processes of a project. In the case studyprojects, this is done using a design quality manage-ment plan and a construction quality managementplan, both of which are developed by the concession-aire and submitted to the owner for review. Becausethe concessionaire has the freedom to develop theseplans, each is unique to the project, the project’sobjectives, and the concessionaire’s procedures.Although unique, these plans must have basic com-ponents that include important monitoring elements,such as inspection, investigation, and auditing tech-niques and procedures. The general concept for thesemanagement plans is the same as those used foroperations and maintenance.

In contrast to the operations and maintenance moni-toring structure, the design and construction structureoften involves the use of quality milestones as bothmonitoring and incentive tools. The project owner andits representatives commonly set a number of mile-

stones for project design and construction. Specicincentive amounts are set aside to reward the conces-sionaire for meeting these milestones. Before givingthe concessionaire an incentive for meeting a qualitymilestone on time, the owner will either inspect theproject’s progress itself or hire a third party to do so.If the concessionaire has completed quality work bythe milestone deadline, it will receive a specicamount of the overall bonus proportional to thesignicance, effort, and difculty in achieving themilestone. This system aims to keep the project



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progressing on time by offering the concessionaireopportunities to be rewarded for ontime, high-qualitywork.

Table 20 summarizes the KPIs and related contractprovisions for organizational monitoring structures fordesign and construction. Example contract languageis in the text that follows.

I-595 Corridor ImprovementsSchedule and Progress Meetings Monitoring of the concessionaire’s design and con-struction performance begins in the early stages ofthe project with the department requiring a projectschedule for both design and construction work tobe submitted for approval. This project schedule isupdated and continually submitted to the department

for approval throughout the entire design andconstruction process, and all design and constructionwork must comply with the set schedule at all times.

Progress meetings, attended by both the concession-aire and the department, are conducted once a monthduring the construction period to ensure the work isconducted properly. If either party believes additionalmeetings are necessary to resolve any design andconstruction issues, they are scheduled on request.The contract agreement also requires the concession-aire to submit design and construction work reportsto the department to be used as a supplementaryevaluation tool.

Interim Milestones During the course of the design and constructionwork, interim milestones were set for the projectunder Appendix 3 of the agreement. A total of

TABLE 20.KPI information for organizational structures for design and construction.

KPICategory

I-595Corridor

GoldenEars Bridge

Kicking HorseCanyon

EastLink

CapitalBeltway

North-SouthBypass

M25 AirporLink

5.3 Design and Construction (D&C)

5.3.1 Organizational Structure for Monitoring D&C

Schedule and Progress

Meetings ✓ ✓ ✓

Quality ManagementSystem Audits

✓ ✓ ✓ ✓

Design QualityManagement Plan

✓ ✓ ✓ ✓ ✓ ✓

Construction QualityManagement Plan

✓ ✓ ✓ ✓ ✓

Road Safety Audits ✓ ✓ ✓

Design and ConstructionProgram

✓

Review of Construction ✓ ✓ ✓

Inspection and Test ✓ ✓

Milestones ✓ ✓ ✓

Construction Managementand Coordination

✓ ✓ ✓

Management Systemsand Plans

✓ ✓

Design Requirements ✓ ✓ ✓

Monthly Progress andWork Reports

✓ ✓ ✓ ✓ ✓



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$50 million in potential bonuses, labeled “interimmilestone works bonus,” is included in the rst nalacceptance payment. This incentive works when the

concessionaire noties the department it has achievedthe completion of an interim milestone. The depart-ment will assess whether the milestone conditionshave actually been met and notify the concessionaireof the assessment results. If the milestone has notbeen achieved by the milestone deadline, the resultwill be reductions from the milestone work bonus.The milestone deadlines are concrete unless theconcessionaire can prove it was persistently workingtoward meeting a deadline, but was precluded by anuncontrollable event. In this case, the nal milestonedate or bonus may be modied.

Other signicant milestones to assess design andconstruction progress are substantial completionand nal acceptance. Two months before the sched-uled substantial completion date, the departmentwill review the condition of the constructed works todetermine if all design and construction criteria havebeen met for standard completion approval. Therst 2 weeks of these 2 months are dedicated to thedepartment conducting inspections of the project,components, nal design documents, constructiondocuments, and other submittals necessary to evalu-ate whether substantial completion will be achieved.After these 2 months expire, the department willeither issue a substantial completion certicate tothe concessionaire or notify the concessionaire whyit has decided not to issue the certicate (e.g., incom-plete work found, repairs needed). Twenty days beforenal acceptance of the project, the department willconduct inspections of punch list items, as-built plans,and other submittals required for investigation. Theseinspections and investigations will determine whethera nal acceptance certicate is issued to theconcessionaire.

Kicking Horse Canyon Phase IIQuality Management System: Audits A design and construction quality managementsystem submittal from the concessionaire to theministry is the basis for monitoring the design andconstruction performance of the project. Quality auditplans are required for the management system andare a primary monitoring tool. The audit plans requireconcessionaire acceptance and scheduling of threeaudit types: concessionaire audits, province audits,and third-party audits.

The concessionaire’s audit plans detail the internaland external audits the concessionaire will conducton the performance of its own contractors and

subcontractors. The purpose is to conrm that allactivities comply with those documented in thequality management plans previously submitted tothe province and are in accordance with the designand construction output specications and criteria.Internal audits are conducted on behalf of the conces-sionaire, while external audits are conducted byindependent parties with an interest in the project.The province audits required in the quality manage-ment system are conducted by the province’s repre-sentative using two categories of auditing: surveil-lance and quality system management. Surveillanceaudits are performed by the ministry on an unsched-uled, random basis to monitor the concessionaire’swork, workmanship, and general quality of materials.In contrast, quality management system audits arescheduled audits to assess the concessionaire’sperformance and compliance with the previouslysubmitted and accepted quality management system.Finally, third-party audits are conducted by externalindependent organizations, such as certication orregistration bodies, on a scheduled basis. These auditreports are made available to the ministry on request.All audit plans must be implemented into the projectwithin 90 days of the commencement date.

Design Quality Management Plan A quality design management plan is developed bythe concessionaire and submitted to the province’srepresentative to monitor the design of the projectand ensure all the design criteria are fullled. Thedesign management plan identies procedures andprocesses for design input review, output review,verication that all input requirements are met,design changes, external and internal quality audits,and corrective and preventive action plans. Thedesign management plans also contain importantdesign documents, including drawings, notes,

reports, and computations showing the designdecision process, criteria, and assumptions used todevelop the design, along with quality control reports,test results, and nal record drawings detailing howthe process complies with the design and construc-tion output specications. According to the designand certication procedure, the concessionaire isrequired to submit these design data documents inthe form of progress reports for review by the prov-ince’s representative at 50 percent and 100 percentof detailed design completion to identify and address



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any nonconforming design elements. The province’srepresentative will question or comment on thedesign, and the concessionaire is required to address

these comments to the satisfaction of the provincebefore the design is approved. The representativerequires the concessionaire to have all design draw-ings and materials prepared and certied by a profes-sional engineer of the appropriate discipline licensedto practice in British Columbia before they aresubmitted.

Construction Quality Management Plan The concessionaire is required to submit a construc-tion quality management plan describing how itintends to manage the construction process. Theplan will include procedures and processes for con-struction safety audits; construction inspections andtesting; contractor, subcontractor, and supplier of anytier quality assessment and procurement; externaland internal quality audits; control of nonconformingproducts; and corrective and preventive action plans.These elements of the management plan will docu-ment who does the work, what they do, and whatevidence is generated that they do it correctly. Also,the province’s representative and any contractors orconsultants afliated with the representative are givenunrestricted access during normal construction hoursto inspect the works and the project site. The conces-sionaire is also obligated to provide an updated worksschedule to the province’s representative on a month-ly basis reecting the progress to date, a comparisonto the previous works schedule, and a forecast tocompletion, whether changed or unchanged, as amethod for monitoring construction performance.

Trafc Quality Management Plan A trafc quality management plan is also an integralpart of monitoring the concessionaire’s constructionprocedures because managing trafc during construc-tion is essential for completing the project safely andon time. The concessionaire is required to submit a

trafc management plan to the province’s representa-tive for review to ensure construction is done safelyand efciently. The plan identies the concessionaire’squalied trafc management personnel, including atrafc control supervisor (TCS), trafc engineer, andtrafc manager who will monitor different aspects ofthe construction process. The TCS is responsible foroverseeing all requirements of the agreement thatcontribute to the convenience, safety, and orderlymovement of trafc during construction. The trafcengineer is responsible for signing off on the pro-

posed trafc management plan and ensuringall trafc engineering issues and requirements areaccounted for. The trafc manager is appointed by

the concessionaire and approved by the province’srepresentative to nalize proposed trafc controlmeasures and direct the application of the plan whilecommunicating updates on trafc management to theprovince’s representative. The manager reviews theTCS’s daily activity and trafc control reports to makeeld modications to submit to the province’srepresentative.

Monthly Progress Reports In addition to the quality management systems tomonitor design and construction, the concessionaireand the province’s representative agree that until thenal completion certicate is issued, the concession-aire will submit monthly progress reports to theprovince’s representative describing all relevantaspects of the works. These progress reports willinclude all actual or potential departure from thedesign and construction output specications, theconstruction requirements, and the project and worksschedules in the project agreement. The progressreports contain the concessionaire’s new predictionfor the substantial and nal completion date of theworks if the schedule is affected by the previousmonth’s performance. The substantial and nalcompletion date certicates will be issued only afteran independent certier has inspected and investi-gated the project on the quality and safety of theconcessionaire’s works. This independent certiercannot be a partner or joint venture of any party inthe agreement and must warrant to each party that ithas expert and professional staff who are competent,experienced, and qualied to perform the inspectionsand investigations of the project construction.

Road Safety Audits Road safety audits are required elements in monitor-ing the design and construction processes. These

audits are performed by a safety audit team retainedat the concessionaire’s expense, but are completelyindependent of the concessionaire’s design team toensure that designs and constructed works meeta high safety standard. Audits occur at ve stages:(1) on completion of the preliminary design, (2) at50 percent of detailed design, (3) at 100 percentcompletion of detailed design and before constructionbegins on the relevant works, (4) as part of any designchanges during construction, and (5) immediatelybefore any of the concessionaire’s works are opened



66


personnel (including the design consultant or proofengineer and construction verier) to explain itsdesign documentation or to provide the requested

information.

Construction Review In the EastLink project, the reviewer reviews theprogram and the construction works and temporaryworks. If required, the concessionaire must makeavailable the appropriate personnel (i.e., proof engi-neer and construction verier) to explain or provideinformation on the review matters. If the reviewerbelieves the works are not being constructed inaccordance with the agreement, it may notify thestate and the concessionaire of its opinions. Within5 business days of receiving the notice, the conces-sionaire must notify the state and the reviewer ofany matters on which it disagrees with the reviewer’sopinions or provide a plan for remediation if it agreeswith the opinions. Within 7 business days of receivinga remediation plan, the reviewer may notify the stateand the concessionaire whether the plan addressesits concerns.

Inspection and Testing The state and any authorized person may, upon givingreasonable notice to the concessionaire (except in anemergency, when no notice is required), inspect thelicensed area (any land over which a land license hasbeen granted) and any other place where constructionactivities are performed or materials are prepared orstored, and inspect or test any part of the works ortemporary works at any time. All costs of uncoveringor making accessible the works must be borne bythe concessionaire.

Milestones The concessionaire must notify the state and thereviewer at each relevant milestone date whether themilestone has been achieved. If a milestone has notbeen achieved, the state and the concessionaire must,

within 5 business days of the passing of that mile-stone date, enter into discussion. The concessionairemust do the following:

Provide a detailed explanation of the reasonfor the failed milestone.

Identify the action it will undertake.

Develop a revised program.

Identify any necessary reporting of theprogress of the construction activities.

Identify any consequential changes to any otherconstruction milestone dates.

Defect Correction If a concessionaire identies any defect in construc-tion activities, it must notify the state and the indepen-dent reviewer immediately and expeditiously correctthe defect. If the state identies any defect, it maynotify the concessionaires and require them to correctthe defect. If the defect could cause the works to beunsafe to the public or workers or relates to a freewaysection or bypass open for public use, the state mayspecify a reasonable time by which this must becarried out. The concessionaire must expeditiouslycorrect the defect and comply with any reasonabletime for correction the state species.

Capital BeltwayDesign and Construction Quality Management The concessionaire shall provide oversight andmanagement of the project to control its scope, quality,cost, and ontime delivery. If the work does not satisfyapplicable performance or quality standards, theconcessionaire shall increase its management andoversight efforts so that repair or replacement ofnonconforming items does not require any increasein VDOT’s limited oversight of the project.

The concessionaire will develop and provide to thedepartment its quality management plans, manuals,and procedures for design and construction. Theplans, manuals, and procedures shall be consistentwith VDOT’s quality assurance and quality controlrequirements, as well as the procedures andprocesses in the technical requirements.

The concessionaire will require each contractor,subcontractor, and supplier to comply with therequirements of the quality management plans.VDOT has the right to review the concessionaire’s

quality management system, including the right toinspect work and verify the accuracy and adequacyof quality management documentation. The conces-sionaire will require its contractors and subcontrac-tors to provide any assistance VDOT reasonablyrequires in conducting such reviews.

Construction Management and Coordination The project agreement for the Capital Beltwaycontains key performance requirements betweenthe concessionaire and VDOT:



67


The concessionaire and VDOT representativesshall be reasonably available to each other andshall have the necessary authority, expertise,

and experience required to oversee andcommunicate.

VDOT, the concessionaire’s project managerand senior representatives, and other pertinentrepresentatives of the parties shall meet within7 days after the closing date to discuss issuesaffecting the administration of the work andimplement necessary procedures, includingthose relating to submittals and approvals.

The concessionaire shall hold monthlyprogress meetings with VDOT to reviewprogress during the prior month. The conces-

sionaire shall collect information from any keysubcontractors and subconsultants responsiblefor work completed during the month andwork scheduled during the upcoming month.The concessionaire shall be responsible forpreparing and distributing meeting minutesto all attendees for review within 2 calendardays after the meeting.

The initial baseline schedule shall be thebasis for monitoring the concessionaire’swork performance until VDOT has approveda baseline schedule. The baseline schedule

shall provide for a guaranteed substantialcompletion date.

Within 60 days of the date work commencementis approved, the concessionaire shall submit toVDOT a critical path method schedule. Thisschedule shall be resource-loaded, be brokendown into work packages and deliverablesgenerally completed within 30 days, identifythe dollar value of each deliverable, and complywith the technical requirements of and in aform acceptable to VDOT.

The concessionaire shall provide VDOT with

any proposed update of the baseline schedulefor the department’s review and approval.It shall also provide a progress narrative thatdescribes the overall progress for the preced-ing month; a critical path analysis; a discussionof problems encountered and proposedsolutions; work calendars; constraints; delaysexperienced and any pending time impactanalysis; oat consumption as a result ofdepartment, concessionaire, or design-buildcontractor delays; and documentation of any

logic, duration, resource, or other relevantchanges.

If VDOT believes the baseline schedule needsa revision in logic, activity duration, manpower,or cost, it will request it from the concessionairein writing. The concessionaire shall respond inwriting within 7 days, either agreeing with thedepartment’s proposed revision and includingit in the next baseline schedule update orjustifying why it should not be accomplished.

The concessionaire shall submit two copiesin electronic format of the baseline schedule,including updates and narratives.

Whenever VDOT requires, the concessionaireshall provide in writing a general descriptionof the arrangements and methods it proposesto adopt to execute the work.

Inspection and Testing VDOT, its authorized agents, and the independentengineer have unrestricted access at all times toinspect, sample, measure, and physically test anypart of the project or rights-of-way. VDOT also hasthe right, upon reasonable written notice to theconcessionaire, to inspect nancial or other recordsrelating to the project. If the concessionaire has failedto perform any of its construction, operating, ormaintenance obligations, VDOT is entitled to increasethe level of its monitoring during the work or operat-ing period of the project until the concessionaire hasdemonstrated to VDOT’s satisfaction that it is capableof performing its obligations. The concessionaireshall compensate VDOT for all costs of increasedmonitoring levels.

Clem-7 North-South Bypass TunnelManagement Systems and Plans The contract requires the concessionaire to ensurethat all aspects of the nancing, design, construction,

operation, maintenance, and repair of the project;collection of tolls; and interactions with the commu-nity meet the contract provisions. In many cases,the contract provisions are general statements, suchas that the design of the project must comply withappropriate Austroads or Queensland Department ofMain Roads standards. The contract lacks voluminousor detailed performance measures for many aspects,such as design and construction. Instead, the contractapproach is to require the concessionaire to designand build the project according to professionally



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recognized standards and to rely on the independentverier and auditors to ensure that the project meetsthe standards.

Through the various contract stages, the independentverier is to control the adequacy of the concession-aire’s efforts by issuing or not issuing a series ofcerticates. Approval and certication occurs at thefollowing stages:

At the acceptance of design documentationif the design plans meet the terms of theperformance specication

During and after construction to ensurethat the construction meets the terms of

the performance specicationAt the completion of the tolling system toensure that it operates with the accuracy andspeed required under the performancespecication

After the resolution of any disputes over defects

When the customer service rollout program issufciently advanced to allow the operatingcompany to comply with its obligations underthe customer services and complaint provisionsof the contract when customer audits areperformed

The independent verier acts independently of thecity council, the security trustee, the concessionaire,and their associates.

The concessionaire’s project management plan mustdetail how the concessionaire will ensure the deliveryof the project by implementing a supervisory team,creating and updating a design and construction plan,managing resources, managing risk, ensuring projectreporting, managing labor issues, engaging thecommunity, and interfacing with key stakeholders,

such as the Queensland Department of Main Roads orthe adjacent railroad. The project management planincludes 17 components, such as trafc management,construction management, environmental manage-ment, and human resources management plans.In short, the project management plan requires acomprehensive and self-correcting series of plans,compliance checks, and corrective actions to ensurethat the many phases of construction and operationsmeet the general statements of desired quality inthe performance specication.

Each concessionaire must have its quality manage-ment, environmental management, and safety andhealth management plans audited every 6 months

during the design and construction phase and every12 months thereafter. The audits will be conducted byan independent auditor, acceptable to the city councilbut paid by the concessionaire. The independentverier is to be present during the audits.

Design Requirements In keeping with the other approaches to the project,the contract does not include KPIs, per se, for tollfacility design. The contract documents include onlygeneral engineering details that must be met, suchas lane width, shoulder width, superelevation, grades,and sight distances. For the most part, general lan-guage is used to describe project details, such as thatthe project must be constructed in a general location,connect existing named routes, accommodate anestimated 95,000 vehicles per day with sufcient lanesfor adequate peak-time travel speeds, and provideservice levels to prevent queuing at the terminals andconnections. Table 21 summarizes the required designlife for the named features, with a residual design lifeat handover of about 50 percent of each design life.

Durability requirements must be addressed through-out the design, construction, operation, and mainte-nance of all assets and must be reected in the projectplans and the operations and maintenance manual.The durability elements must describe how thedesign, construction, materials, operation, and main-tenance will meet the durability requirements, ongo-ing condition requirements, and handback conditionrequirements. The plans must include the following:

Describe the characteristics of the environment.

Describe the potential deterioration mecha-nisms in the environment.

Determine the likely rate of deterioration.

Assess the material life.Dene the material performance.

Assess the need for further protection.

Develop procedures for the replacement ofassets at appropriate intervals.

Determine inspection and monitoringrequirements.

Outline remedial procedures.



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In addition to durability requirements, reliabilityrequirements also are stated. For instance, the reand life safety systems must be reliable at least 99.995

percent of the time and the electrical system must bereliable 99.971 percent of the time. The facility controlsystems must have total redundancy and have avail-ability of 99.995 percent. The communication systemsmust have 99.99 percent availability and the ventila-tion system at full capacity must be reliable 99.954percent of the time. Outages within those limits arenot allowed to exceed 1 hour.

Safety Audits Safety audits are required by a qualied independentparty. They must be performed during the designphase, immediately before the project is opened totrafc, and every 2 years during the operations andmaintenance phase. The concessionaire must imple-ment the recommended corrected actions or justify tothe independent verier why the actions cannot beimplemented.

Considerable detail is provided for the technicalperformance of tunnel ventilation. Neighborhoodconcerns about localized air quality from the exhauststacks prompted considerable discussion duringthe environmental review and planning phases ofthe project. Internal air quality standards are setfor carbon monoxide, nitrogen oxide, andparticulate matter.

In addition, there are design requirements for thecommunication systems, trafc monitoring system,plant monitoring and control, and tolling system.

Airport LinkQuality Management System The design and construction contractor is required toimplement a quality system for the management of allaspects of its obligations under the contract. Again,the overall quality plan must be ISO compliant andmeet the quality management system requirementsof the Queensland Department of Main Roads. “Holdpoints” and “witness points” are points at which thecontractor delays work to allow inspection by theowner and the owner’s surrogates, such as the inde-pendent verier. The contract species the notice thatmust be given before the achievement of those pointsto allow the owner’s inspectors to review the work.The quality system plan must detail the contractor’ssystem for the following:

Appointing and empowering personnel tooversee the quality system

Identifying roles and responsibilities

Identifying interfaces with other organizationsthat may need to be involved

Process for risk management

TABLE 21.CLEM7 North-South Bypass Tunnel required design life for named features.

Required Design Life (Years)

100 50 40 30 25 20 10

Tunnel structures Buildings Drainagestructures State pavements Mechanical

equipment Lighting Tolling hardware

Bridge structures Tunnel, ramp

pavementsCity pavements Local streets Sign faces

Embankments,retaining walls

Architecturalpanels Shared paths Wearing

surfaces

Buried elements Noise barriers Trafc controlsystems

Signage support,barriers

Tolling structures



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Process for liaison with the independent verier

The designer’s methodology and scope forreviewing and inspecting the construction

Procedures for addressing nonconformancewith the quality plan

Independently certifying the effectiveness of thecontractor’s quality system and conformance tothe project deed

Having an independent auditor audit thequality plan on a 6-month basis throughoutthe construction phase

Design and Reliability Standards The project deed and its addenda, known as annex-ures, have many implicit KPIs in addition to thehandful of explicit ones mentioned above. The projectis required to meet all design standards in effect inAustralia. While in its design phase, the project alsomust undergo a safety-in-design assessment toreduce or eliminate hazards. Issues that must beassessed include roadway hazards, workplace healthand safety, community health and safety, environmen-tal issues, and the protection of the asset during allstages of its life.

The project design must accommodate the samedesign life standards as required in the North-SouthBypass project. They include the following:

One-hundred years for tunnel structures, bridgestructures, reinforced embankments, andinaccessible elements, such as conduits fordrainage, re protection, and mechanical andelectrical systems

Fifty years for buildings

Forty years for accessible drainage elements,pavements, architectural panels, noise barriers,tolling system structures, and signage supportstructures

Thirty years for local road pavements

Twenty-ve years for mechanical and electricalsystems

Twenty years for lighting systems, trafc controlsystems, and busway station furniture

Ten years for ITS equipment, tolling systemhardware, xed sign faces, and pavementwearing surfaces

The project deed design addenda require designs andcontinued operation of facility assets to ensure a highdegree of reliability. Failure to meet the reliability

standards can trigger audits, demerits, or even thecalling of a performance bond to ensure that reliabilitystandards are met. Because the facility is a tunnel withall of its associated safety concerns, the electrical,mechanical, and communication systems are requiredto operate with a signicant degree of reliability. Thefollowing standards are required in the design andconstruction and the operations and maintenancedocuments:

Electrical power supply —99.995 percentavailability

Fire detection and suppression systems —99.995 percent availability

Communication and closed-circuit televisionsystems —99.99 percent availability

All control systems —99.995 percentavailability

Ventilation system —99.95 percent availability

Lighting systems —99.95 percent availability

The standards are intended to lead to designs thathave redundancies and no single-point-of-failurecomponents, as well as robust maintenance practicesthroughout the life of the concession. The systemsmust also comply with the Australian versions of ISOrequirements for safety and risk management sys-tems. Maintenance schedules and managementsystems for these components are required.

Independent Verier The contract calls for the appointment of an indepen-dent verier jointly engaged by the owner and the

design and construction contractor. The role of theindependent verier is to assure that the designdocumentation the contractor submits complieswith the performance deed. The independent verierissues a formal certication after reviewing thedesign plan for conformance with the project deed.The verier performs a similar function duringconstruction when the rm conducts inspections andissues a certication that construction conforms withthe deed. The verier also reviews payment claimsand the value of work completed by the contractor.



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The rm also is involved in settling disputes betweenthe owner and contractor, and it certies whether allmajor milestones have been met and time exten-

sions are warranted. The verier is required to actindependently of the owner, the contractor, thesecurity trustee, and their associates.

The design of the tunnel and its communications,ventilation, and re suppression systems are re-quired to receive an independent assessment duringthe design phase of the project. The independentassessment by a competent safety assessment rmis intended to certify that the re identication,suppression, and evacuation systems meetstandards for safe facility operation.

5.3.2 Remedies and Dispute Resolutionfor Poor Design and Construction WorkRemedies for poor design and construction workserve the same purpose as those used for pooroperations and maintenance work: to keep theproject on schedule and repair damaged orproblematic work. Because failing to meet designand construction standards has a severe impact onproject schedule and budget, applying remedies tothis phase of the project is a serious issue. Becauseof this, it is common to nd an owner executingthese remedies sooner and more strictly than in theoperations and maintenance phase of the project.Some remedies the owner is able to execute changeacross project and country, but the common remedyis the step-in right of the owner. Because problemsand issues may surface on project work or theexecution of these remedies, each contract providesa dispute resolution procedure for design andconstruction to resolve issues to a level that

both parties can agree on to keep the project onschedule and on budget.

Table 22 summarizes the KPIs and related contractprovisions for remedies and dispute resolutionprocedures for poor design and construction work.Example contract language is in the text that follows.

I-595 Corridor ImprovementsDispute Resolution Procedures The dispute resolution procedure for the I-595agreement begins with both the concessionaire andthe department agreeing to resolve disputes as quicklyas possible without involving a third party. However,if a dispute cannot be resolved at this level, the issuewill move to the disputes review board elected for thecontract. The review board will be given the evidenceand documentation necessary from both parties tomake a fair and accurate recommendation. Anyevidence given to the board will be circulated to allplayers involved in the dispute. After the board recom-mends a resolution, each party will determine whetherit wishes to appeal the recommendation. If either partydecides to appeal the review board’s recommendation,subsequent proceedings will take place with the initialrecommendation admissible as evidence. The disputeresolution board will be responsible for handling anydisputes not arising from or related to nal acceptanceor the performance of value added, in which cases theRegional Disputes Review Board and Statewide Dis-putes Review Board will handle the issues, respective-ly. During any dispute resolution, the concessionaire isrequired to continue performing all work, even in thesubject area of dispute, as directed by the department.

TABLE 22.KPI information for remedies and dispute resolution procedures for poor design and construction work.

KPI Category I-595

Corridor

Golden Ears

Bridge

Kicking Horse

Canyon

EastLink Capital

Beltway

North-South

Bypass

M25 Airport

Link5.3 Design and Construction (D&C)

5.3.2 Remedies and Dispute Resolution Procedures for Poor D&C Work

Dispute ResolutionProcedures

✓ ✓ ✓

Remedies for PoorWork

✓ ✓ ✓ ✓ ✓

Bond Safeguards✓ ✓ ✓



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Golden Ears BridgeRemedies for Poor Work

The contract agreement offers remedies the ministrymay execute if the concessionaire does not meet theminimum requirements in its design and construc-tion processes or performance. If the contractor failsto perform or observe any of its obligations underthe agreement, or does so in a manner that compro-mises the safety of the public, adjacent property,facility assets, or occupiers, the ministry issues adefault notice to the contractor. Following the notice,the ministry may require the contractor to providewithin 20 business days a reasonable plan andschedule for correcting the default, including detailson the exact process to be used and latest datethe correction will be achieved. The plan must besubmitted to the ministry and approved beforethe program can begin because a plan may not bedeemed acceptable. In this case, the ministry andconcessionaire will work together to create a newcorrection plan. If the concessionaire does notcorrect the default according to or by the timeallotted in an accepted default correction plan, theministry may move to rectify the default itself or hirea third party to do so. In this case, the ministry hasthe authority to suspend any concessionaire work tobegin corrective work while holding the contractorresponsible for reimbursing the ministry for all costsincurred in this process. These costs include admin-istrative fees and any legal expenses. However, if theministry elects not to pursue such a process and theconcessionaire is unwilling to correct the defaultsaccording to plan, both the concessionaire andagreement are eligible for complete terminationunless there is an objection, in which case thetermination issue will be settled according to thedispute resolution procedure in the agreement.

An example of the ministry implementing suchmeasures may be seen in a concessionaire’s failure to

meet the substantial completion date for the project.If substantial completion of the facility is not achievedby the target date, the ministry may require theconcessionaire, within 20 business days, to providea written plan and schedule for achieving substantialcompletion with details on the precise manner andlatest date it will be realized. This plan and schedulemust be reviewed and approved by the ministry.The concessionaire also is subject to a weekly fee of$20,000 for each day the project exceeds the substan-tial completion target date. Furthermore, if the

concessionaire fails to achieve substantial completionon or before the longstop date established in theagreement, the ministry is given the authority to

terminate the agreement in full unless the concession-aire elects to have the issue reviewed by the contract’sdispute resolution procedure.

Kicking Horse Canyon Phase IIRemedies for Poor Work If any inspections, audits, or investigations of thedesign or construction reveal a defect in the worksor at any time the concessionaire’s performance doesnot meet the obligations in the concession’s agree-ment, the concessionaire is responsible for notifyingthe province’s representative about such failures.Upon notication, the province’s representative mayissue a default notice to the concessionaire requiringit, at its own cost, to remedy the failure and anyresulting damage. The remedial period for the conces-sionaire is 30 days. The concessionaire must show theprovince its plan for corrective action and implementthe plan within the 30-day period. If the concession-aire continually fails to meet obligations set in theagreement, the province’s representative may issuea warning notice to the concessionaire, which mayresult in performance payment deductions. If eithernotice is issued, the province’s representative mayincrease the monitoring of the design and construc-tion until the concessionaire can demonstrate it iscapable of performing all of its obligations underthe agreement.

Furthermore, if the concessionaire foresees anyevent that may delay or impede the constructionprocess and meeting of construction milestones,it is required to notify the province’s representativeimmediately. Upon notication, the concessionairemust detail the reasons for delay and the measures ithas taken to mitigate the delay consequences, whilealso supplying the province’s representative with

reasonable facilities to investigate the delay’s effecton the project schedule. These investigations arelikely to include onsite inspections and meetingshosted by the province’s representative. If the delayis a result of a force majeure, province change, orcompensation event, the concessionaire may beentitled to compensation payments for the delay.However, if the delay is a consequence of theconcessionaire’s own performance failures, theconcessionaire may be subject to a reduction inthe performance payments.



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Dispute Resolution ProceduresBoth parties involved in the agreement have agreedto make bona de efforts to resolve all disputes at the

lowest level of management before engaging in theformal dispute resolution process. If an issue cannotbe resolved at this level, either party has the authorityto write a notice of dispute for review by the indepen-dent certier identied in the agreement. The certierwill be provided with all records and documentsnecessary to make an accurate and fair decision onthe dispute. If the issue is not within the authority ofthe independent certier or cannot be resolved at thislevel, it is brought before senior executives from bothparties. If the dispute is resolved by the senior execu-tives, the decision is nal and will be signed by anauthorized representative of both parties. However,if the senior executives are unable to resolve thedispute within 5 working days, the dispute will bereferred to an expert.

For design and construction disputes that exceedresolution by the parties’ senior executives, theprovince and concessionaire will jointly appointa construction panel of three experts. The expertsselected will determine the appropriate processfor a timely and cost-effective resolution of thedispute and have the authority to inspect any projectfacilities to make an accurate decision. Each agree-ment party will bear its own cost of the resolutionprocess by an expert. The decision made by theexpert panel is nal and binding and is not subjectto appeal or arbitration unless the decision has amonetary consequence totaling more than $250,000,in which case referral to resolution by arbitrationmay be considered.

Arbitration Procedures The arbitration will be performed by a single arbitra-tor or panel of arbitrators selected by both partiesand is similar to the operations and maintenancearbitration procedures for this project. The arbitra-

tors will be provided with the necessary documentsrequired to resolve the dispute, and both parties willbe eligible to be represented by legal counsel in anyof the meetings for resolution. Any witnesses select-ed for questioning may be examined, reexamined,and cross-examined by either party at the arbitration.Within 30 days of the arbitration, a conclusion inwriting of the hearings will be sent to both parties.The decision will be nal and binding unless theresult awards either party an excess of $5 million,in which case the decision may be appealed.

EastLinkRemedies for Poor Work

If the independent reviewer believes that a designand construction program is not in accordance withthe contract, the independent reviewer may notifythe concessionaires and the state of that opinion andthe reasons for it. On receipt of a notice, the conces-sionaires must, as soon as practicable, revise thedesign and construction program to address theindependent reviewer’s concerns and resubmit it tothe state and the independent reviewer. An updatedprogram must incorporate all changes in activities,methods, times, or sequence of activities and theconcessionaires’ planned progress toward thefreeway section completion date or late completiondate with the same level of detail as the originaldesign and construction program.

Dispute Resolution ProceduresSee the dispute resolution procedures described insection 5.2.3 on the operations and maintenancephase.

Bond Safeguards The project’s trustee must deliver to the state up totwo bonds totaling $87.5 million. Without limitingthe unconditional nature of the construction bond,the state may demand any amount that (1) the stateconsiders, or at any time may become, due from theconcessionaire under a project document or (2) thestate has incurred in connection with any default,wrongful act, omission, or failure to comply withan obligation or liability.

Capital BeltwayGenerally, the concessionaire is responsible formonitoring and managing design and constructionactivities in accordance with the comprehensiveagreement’s conditions and standards and the condi-

tions and standards established in the separate design-build agreement between the concessionaire and itsdesign-build contractor. The agreement between VDOTand the concessionaire is the principal contract, andthe design-build agreement is a subcontract betweenthe concessionaire and its design-builder. VDOT hasspecic remedies for design and construction decien-cies, spelled out in Section 7.19, Section 8.07, Section14.01, Section 14.04, and Articles 16 and 17 of itsagreement with the concessionaire, and a disputeresolution process, delineated in Section 17.06.



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Remedies for Poor Work In the design-build agreement between the conces-sionaire and its design-builder, the concessionaire has

a variety of remedies available to handle defects orpoor work during design and construction. Theseinclude, but are not limited to, performance guaran-tees, warranty periods, and termination for cause.

Dispute Resolution ProceduresThe design-build agreement has its own disputeresolution process. Any unresolved dispute betweenthe concessionaire and the design-builder exceeding$1 million shall be submitted to binding arbitration,as detailed in Section 19.1 of Exhibit F of thecomprehensive agreement.

If any issue in dispute between the parties to thedesign-build agreement is also the subject of a con-current dispute under the comprehensive agreement,the parties shall consolidate the dispute with thedispute resolution process occurring under thecomprehensive agreement. If consolidation does notoccur, any ongoing proceeding on the dispute shall bestayed pending nal resolution of the dispute underthe comprehensive agreement.

Letter of Credit The design-build contractor must provide theconcessionaire with a letter of credit from a qualiedissuer equal to 7.5 percent of the contract sum asadditional security for the contractor’s performanceof its obligations. Adjustments in these terms occurat substantial completion of the new HOT lanesand substantial completion of the entire project,as detailed in Section 4.9 of Exhibit F of thecomprehensive agreement.

CLEM7 North-South Bypass TunnelBond Safeguards In addition to the management systems, management

plans, independent verier, and audits, the contractsrequire performance bonds for the design and con-struction, operations and maintenance, and projecthandover phases. The design and construction bondis $5 million. The concessionaire agrees not to enjointhe council from collecting on its bond and the councilcan use the proceeds of the bond as it desires if thedesign and construction plans are not produced orare decient after a period of notice and opportunityfor correction.

5.4 Handback Requirements andKPI Evolution

Public-private partnership agreements involve ahandback requirement section to ensure the projectwill be handed over to the owner in a functional andhealthy state after a long concession. These require-ments generally target the remaining design life ofdifferent project elements, such as pavement andstructure condition and ITS equipment functionality.Owners set a standard in these requirements thatwork will not have to be done on the handed-backproject for a certain time period, generally 5 years.These requirements hold the concessionaire account-able for the operations and maintenance performancemeasures included in the contract during the conces-sion period. The project will not be accepted forhandback unless the concessionaire meets all thedesign life requirements. If not, the concessionaireis required to remedy the design life issues.

Table 23 summarizes the KPIs and related contractprovisions for the handback requirements and KPIevolution. Example contract language is in the textthat follows.

I-595 Corridor ImprovementsHandback Management Before the project is handed back to the departmentafter the concession term, the concessionaire mustguarantee that it will be returned in a good andoperable condition. This means all project elementsin the operations and maintenance limits mustcomply with all handback requirements. One require-ment is for the concessionaire to develop a capitalreplacement plan for all project equipment, systems,and assets to be replaced, overhauled, refurbished,or rehabilitated over the term. As part of the plan,the concessionaire must rehabilitate any asset thathas reached the end of its design life or no longer

functions correctly. The capital replacement plan willbe developed jointly by the concessionaire and thedepartment using the as-built drawings and inspec-tion results during the last 5 years before handbackto determine the performance of all project compo-nents. Moreover, the two parties will also workjointly to develop a handback evaluation planthat will be used to determine the condition,performance, and residual life of project assets.This determination process involves inspection



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and testing processes. These processes and criteriaare prepared by the concessionaire using a tableprovided in the contract as a guideline (see table 24).

Finally, a handback renewal work plan will also bedeveloped 5 years before the end of the term.This plan identies the concessionaire’s plan forrepairing, replacing, or renovating assets in responseto the testing and inspection criteria results.

One handback requirement for this project is thatthe concessionaire must provide maintenance trainingto the department personnel who will take over

operations and maintenance responsibility after theconcession term ends. The concessionaire also mustalso provide all software, special tools, special equip-ment, and ITS spare parts and assemblies purchasedto support the operations and maintenance work.

TABLE 23.KPI information for handback requirements and KPI evolution.


Golden EarsBridge

Kicking HorseCanyon

East Link CapitalBeltway

North-SouthBypass

M25 AirportLink

5.4 Handback Requirements and KPI Evolution

HandbackManagement

✓ ✓ ✓ ✓ ✓ ✓ ✓

Handback Bond ✓ ✓ ✓

Changing KPIsThroughout theAgreement Term

✓ ✓

TABLE 24.I-595 example handback requirements.

AssetDescription

Asset SubsystemDescription

Handback EvaluationTasks

Handback EvaluationCriteria

Life Remaining atHandback (Years)

RigidPavement Pavement sectionwithin O&M limits(operating period)

Inspection is in accordance with FDOTPerformance-Based Specication 355(value-added portland cement concretepavement and FDOT’s Rigid PavementDesign Manual and Rigid PavementCondition Survey Handbook).

Perform rehabilitation of thepavement to obtain a rigid distressrating of greater than 8.5 and rigidride rating of greater than 7.5.

N/A

Bridges Within O&M limits(operating period)

Pending the results of the testing andinspection criteria, each bridge under the responsibility of the concessionaireshall have an overall condition rating ofsix or better. This condition rating is inaccordance with the National BridgeInspection Standards and procedure

850-010-030 (Bridge and OtherStructures Inspection and Reporting)or its successor.

If any bridge structure under theresponsibility of the concession-aire is found to have an overallcondition rating of less than six, the concessionaire shall beresponsible for making any repairsnecessary to improve the condition

rating to six or better. All repairsshall be of a substantial andpermanent nature.

N/A

ITS Includes all ITSsubsystems,communication,and ancillarycomponentsof O&M

The concessionaire shall purchasenew hardware in the nal year of theprogram and congure, test, deploy,and deliver it for handback. Thedepartment will retain manufacturerwarranties (minimum of 4-yearwarranty) on the hardware.

99.99% of all ITS devices areoperational.

4



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Golden Ears BridgeHandback Management

For project handback, the ministry requires that norehabilitation work be needed on project assets for aminimum of 5 years. This requirement is intended toprotect the ministry from asset consumption duringthe project term and ensure that the concessionairehas met all operations and maintenance performancecriteria in the agreement. The contractor must demon-strate throughout the project term, through thesubmittal and reviews of OMR quality managementsystems, that it will achieve or exceed these handbackrequirements.

The ministry constructed a table of handback require-ment standards that the concessionaire must meet. Asample section is in table 25. It lists project assets andthe required remaining life for each at handback. Theremaining life for an asset included in this project iscalculated by multiplying the expected service life bythe life adjustment rate and subtracting the age ofthe asset from this value. It is intended to ensure arelatively consistent forward workload beyond theend of the project term.

Kicking Horse Canyon Phase IIHandback Management Within 40 to 43 months of the expiry date for theconcession of the project, both the concessionaireand the province’s representative will conduct a jointinspection termed “the initial inspection” of allelements of the project and its facilities, includingpavement and structure condition. Within 60 days of

the initial inspection, the concessionaire will providethe province’s representative with a report on thecondition of the project, including its proposal for

renewal works, a renewal schedule, and an estimateof the renewal amount to maintain the assets of theproject. The concessionaire will then begin work onrenewing the project and provide progress reportsto the province.

After these renewal works and within 16 to 19months of the expiry date, the concessionaire andprovince’s representative will conduct anotherinspection termed “the second inspection” of allproject elements identied in the initial inspection.Within 60 days of the second inspection, the conces-sionaire will provide the province’s representativewith revisions or additions to the renewal works inprogress. These additions or revisions must beapproved by the province’s representativebefore they are applied.

Both the initial and second inspections set the founda-tion for the end-of-term inspection required before theconcessionaire can receive its end-of-term certicate.Within 30 days of the expiry date, the concessionaireand the province’s representative will conduct a naljoint inspection of all elements of the project and itsfacilities. This inspection will determine if the conces-sionaire has met all the renewal program agreementsand if the project meets all end-of-term requirementsset in the agreement. If the inspection reveals theconcessionaire has complied with the renewalprogram, the province’s representative will issue thecerticate and distribute the end-of-term paymentwithout any deductions.

TABLE 25.Golden Ears example handback requirements.

InfrastructureComponent/

Detail

MinimumExpected

Design Life

Condition RemainingLifeAsset Preservation

Performance MeasuresDocument 3-7

Operations and MaintenanceSpecications Document 3-8

SpecialProvisions

Roadway Surface—Asphalt Surface 14 II 1–100 PQI >7.5**

rutting <20 mm 10

Shoulders—Paved 14 II 1–100 PQI >7 .5**rutting <20 mm 10

Drainage—Ditches,Watercourses 75 II 2–250 35



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Contractual Provisions for KPI Evolution Schedule 13 of the contract documents sets thegeneral conditions and requirements for a contract

change procedure. A change in performance mea-sures or KPIs is relevant to these change procedures,so Schedule 13 gives both the ministry and theconcessionaire the ability to suggest and implementdifferent measures and indicators as the concessionterm advances. Technology and societal standardschange with time, and a 25-year concession contractneeds provisions on changing how concessionaireperformance is measured. The schedule calls fornegotiations on the submittal and acceptance of anew measure and price. The larger and more complexthe changed measures and indicators are, the morecostly and time-consuming the change procedure is.

EastLinkHandback Management If the state requires, the concessionaire must carry outa joint inspection with the state at least 3 years beforethe expected expiry of the concession period andevery 6 months after the initial inspection until theend of the concession period.

ConnectEast must carry out the works and implementthe program agreed on under the program and costsclause to achieve proper handover or determined ina dispute resolution. It must deposit into the handoverescrow account all revenue it receives (after deductingoperating and maintenance expenses of the project,payments, scheduled capital expenditure, and taxes)for the last 3 years of the concession period until thehandover escrow account balance equals or exceedsthe estimated total cost of the works. It also mustprovide a bond with a face value equal to theestimated handover costs.

During the nal 3 months of the concession period,ConnectEast must train personnel nominated by the

state in all aspects of the operation, maintenance,and repair of the freeway and maintenance andrepair of the maintained off-freeway facilities.

Handback Bond ConnectEast must carry out the agreed-on handoverprogram and either (1) deposit into the handoverescrow account all revenue it receives (after deductingoperating and maintenance expenses of the project,payments, scheduled capital expenditure, and taxes)during the last 3 years of the concession period until

the balance of the handover escrow account equals orexceeds the estimated total cost of the work identiedin the program or (2) provide to the state a bond with

a face value equal to the estimated handover costs.

Capital BeltwayHandback Management At the end of the term, the concessionaire shall handback the HOT lanes project to VDOT, at no charge tothe department, with asset condition having a remain-ing life of greater than 5 years or life within its normallife cycle. If VDOT requests, the concessionaire mustdismantle the HOT lanes toll system to convert thelanes back to general-purpose lanes, provided VDOTnoties the concessionaire at least 1 year before theend of the term that the HOT lanes are to be convert-ed. Any dismantling of the HOT lanes toll systemshall be at the concessionaire’s cost.

Beginning 20 years before the expiration of theterm and every 5 years thereafter, the concessionaire,VDOT, and the independent engineer will jointlyconduct inspections of the HOT lanes project to(1) determine and verify the condition of all assetsand their residual lives and (2) determine and revisethe life-cycle maintenance plan. Beginning 5 yearsbefore the expiration of the term, the concessionaire,department, and independent engineer will jointlyconduct annual inspections of the HOT lanes toensure that the handback requirements will be met.

Handback Bond Starting 5 years before the expiration of the term,the concessionaire shall post a 10-year irrevocablestandby letter of credit or performance bond to VDOTfor a period of 5 years after expiration of the term. Theletter of credit or performance bond must be equal to50 percent of the nominal life-cycle cost expended inthe previous 5 years under the most recent life-cyclemaintenance plan approved by VDOT. The agency

would draw on the letter of credit or performancebond only if, after termination or expiration of theterm, the HOT lane assets fail to address the handbackrequirements and in the amount required to addresssuch failures up to the full amount of the letter ofcredit or performance bond.

VDOT will determine whether the HOT lane assetsmeet the handback requirements based on routineinspections up to 5 years after termination orexpiration of the term (handback period). If the



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the facility begins operation, the operator and thestate are allowed to renegotiate the KPIs to recalibratethem. For the rst 6 months of operations, demerit

points are discounted by 50 percent. They are dis-counted 25 percent in months 7 through 12 and arein effect 100 percent 12 months after opening.

5.5 ConclusionsChapter 5 of this report summarized the data collectedfrom the content analysis of the PPP case studyagreements and interviews with the project teammembers. The operations and maintenance datapresent the richest set of KPI examples. While KPIexamples are also included for design, construction,and handback requirements, the majority of informa-tion in these analyses stems from performancerequirements in the contract agreements and are notKPI examples per se. The information is helpful indetermining trends across the case studies. Chapter 6presents the interpretation of the overall results andconclusions from the ndings.



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Chapter 6: CONCLUSIONS

6.1 IntroductionThe literature review, case studies, and interviewswith agency and private sector personnel providedthe basis for the research results and conclusions. Thecentral theme of the results focuses on the alignmentof broad agency performance measures with PPPproject KPIs. All of the agencies involved in this studyare evolving and working toward this goal, but noone model for ultimate achievement exists.

This section presents the conclusions, which areaimed at summarizing the state of practice in applyingKPIs on PPP projects. A concise set of recommenda-tions is also provided to help agencies apply perfor-mance-based management systems to align thesePPP projects with their long-term network manage-ment strategies.

6.2 Conclusions6.2.1 Alignment of Agency Goals WithPerformance Measures and PPP Project KPIs

Ideally, agencies will be able to link their higher levelgoals with performance measures and individualPPP KPIs. These higher level performance measurestypically deal with network operations and societalgoals. For example, AASHTO strongly promotesreform for the entire U.S. highway system centeredon reaching six key national interests. (6) AASHTO isin the process of developing and establishing thesebroad agency goals on construction safety, mobility,and stewardship of the entire U.S. highway system.These six key national interests appear to reect theinterests of American society and address the public’s

major concerns about and views of the transportationsystem. If the reform is accepted and implemented,AASHTO believes that every highway agency in theUnited States will be capable of and held accountablefor producing results that reect and work towardrealizing these goals. For the system to be effective,accountability has been established as the drivingforce behind performance management. Therefore,accountability must be transferred from the conces-sionaire to the agency via PPP contracts, and fromthe agency to society via public outreach tools and

achievement of positive results. The challenge foreach PPP is to link project KPIs to these higher levelagency goals.

In general, none of the agencies or projects hascompletely achieved a seamless alignment of projectperformance measures and KPIs with its overarchingagency goals. The largest challenge in this alignmentis the evolving and dynamic nature of both the agencygoals and the project performance measures. Theevolving nature of performance measures is mostapparent in the United States, where only a fewagencies have mature performance measurementsystems. In Australia and England, where the use ofperformance measures and PPP contracts is moreevolved, the alignment of these measures is moreapparent. The Highways Agency in the United King-dom is perhaps the most progressive. It is movingtoward negotiating KPI terms in agreements insteadof mandating them in procurement documentsthrough prescriptive means.

The Highways Agency provides one of the moreadvanced examples of linking agency performancemeasures to PPP KPIs. As the network’s manager, theHighways Agency conducts its business differentlythan a typical U.S. department of transportation. Quitesimply, the Highways Agency’s principal focus is onits customers. Accordingly, its aim is “safe roads,reliable journeys, informed travelers.” These threeprinciples guide all agency efforts. This aim ismanifested in several agency objectives:

Reduce congestion and improve reliability.

Improve road safety.

Respect the environment.Seek and respond to feedback from customers.

To deliver on its aim and objectives, the HighwaysAgency has established seven key program-levelperformance measures:

Reliability —Implement a program of deliveryactions that tackle unreliable journeys on thestrategic road network.



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Chapter 6: Conclusions

Major projects —Deliver on time and budgetthe program of major schemes on the strategicroad network.

Safety —Deliver the Highways Agency’sagreed proportion of the national road casualtyreduction target.

Maintenance —Maintain the strategic roadnetwork in a safe and reliable condition, anddeliver value for money.

Carbon emissions —Contribute to national andinternational goals for reducing carbon dioxideemissions by lowering the Highways Agency’semissions.

Customer satisfaction —Deliver a high level ofroad user satisfaction.

Efciency —Deliver the Highways Agency’scontribution to the Department for Transport’sefciency target.

Across its network, the Highways Agency has enacteda number of initiatives to deliver on its aims andobjectives, and it uses the performance measures toguide and monitor its actions at both programmaticand project levels. Figure 17 provides an overviewof how the Highways Agency translates its broadergoals into PPP project performance measures andlinks them with the payment mechanisms used inthese contracts. This gure indicates the most currentthinking because it corresponds to the structure of theperformance measures and the payment mechanismin the agency’s most recent (and largest) PPP project,the M25 enhancement.

6.2.2 Dynamic Nature of PerformanceMeasures and KPIs Over TimeSome cases illustrate the necessity of a dynamicapproach to performance measurement becauseservice or asset requirement expectations are likelyto change over time. In some instances, the measureand the indicator used have an inherent ability toevolve because the indicator is oriented towardtrends in particular measures, while in other instancesprovisions are put in place to modify measures overthe contract period.

In the CLEM7 North-South Bypass project, forexample, the owner’s complex obligations understate and federal environmental laws are effectivelyshared with the PPP because of a requirement thatthe PPP develop a comprehensive environmentalmanagement plan that conforms to ISO environmen-tal certication practices. The plan must include KPIsto indicate ISO compliance. In addition, the PPP isrequired to abide by the requirements of and toconsult with the numerous environmental agencieswith which the owner would normally interact.

Compliance with environmental statutes and commit-ments is among the environmental performanceindicators that the PPP must enumerate in itsenvironmental compliance plan.

The system must be exible at the performancemeasurement level. In British Columbia, the Ministryof Transportation developed a clear set of strategicgoals to (1) maintain highways to a high standardthrough contracts with private sector road mainte-nance providers and (2) manage funding for

FIGURE 17.Linkage between agency goals, performancemeasures, and KPIs in the Highways Agency.

Reduce Casualties

Maintain Project Road in Safeand Serviceable Condition

Minimize Delay and DisruptionFrom Planned Maintenance

Minimize Delay and DisruptionFrom Incidents

Ensure Technology SystemsAre Kept Operational

SafeRoads

ReliableJourneys

InformedTravelers

Work Proactively With the Agency to ImproveOperational Performance on the Project Road



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high-quality, modern public infrastructure thatsupports the development of strong communitiesby contributing to long-term economic growth and

a clean environment. However, these goals wereestablished after the execution of the Kicking HorsePPP agreement. For example, the transportationsector goal on reducing greenhouse gas emissionswas not contemplated in the original project KPIs.

However, the contract does have provisions to makechanges in the project KPIs so these goals can be met.

The system must also be exible at the KPI level. TheFlorida I-595 project provides numerous examples ofhow PPP project data are tied to agency performancemanagement systems. Table 26 is an excerpt from theKPI tables in the PPP agreement. The measurements

TABLE 26.Examples from FDOT I-595 KPI table.

Element Category Required Task Minimum PerformanceRequirements

CurePeriod

Interval ofRecurrence

Highway Running Surfaces: Pavement

Category 1 Pavement(0–3 Years AfterSubstantial Completion)

Maintain exible pavement atacceptable level of safety for traveling public.

Meet the performance requirementsset forth in Division II, Section 6 of theTechnical Requirements for the following:

Rutting maintained at less than a depth•

of 0.25 inches90 days Every 5 days

Ride maintained at a ride number (RN)•

greater than 3.590 days Every 5 days

Settlement/depression at maximum•

depth of 0.5 inches7 days Daily

Cumulative length of cracking >30 feet•

for cracks >0.125 inches in a 0.1-mile lot90 days Every 5 days

Raveling and/or delamination of•

the friction course as dened anddetermined by the department inaccordance with the examples atwww.dot.state..us/specicationsofce/pavement.htm or its successor

90 days Every 5 days

Potholes and slippage areas no greater•

than 0.5 square feet in area and 1.5inches deep

24 hours Hourly

Intelligent Transportation Systems

ITS Operations Monitor time required forroadway clearance.

I-595 express lanes quarterly averageroadway clearance duration (in minutes)

must be no more than 90% of FDOTDistrict Four’s ITS performancemeasures published quarterly atwww.smartsunguide.com.

0 N/A

Monitor time required for incidentclearance.

I-595 express lanes quarterly averageIncident/event clearance duration(in minutes) must be no more than 90%of FDOT District Four’s ITS performancemeasures published quarterly atwww.smartsunguide.com.

0 N/A



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for the raveling and/or delaminating of the frictioncourses for the running surfaces are tied to onlinespecications. These items will change over time,

and the PPP project will therefore be aligned withthe other elements of the FDOT network. Similarly,the ITS KPIs are tied to a larger ITS programacross Florida.

6.2.3 Alignment of Performance Data WithAgency Performance Management SystemAs U.S. highway agency performance managementsystems continue to mature, PPP performance datawill need to be integrated with these systems toensure optimal network operations. It is importantto collect performance data during the concessionperiod in a manner consistent with the agency’snetwork management approach. This implies thatthese data will also be used to verify PPP perfor-mance. The alignment of these measures is challeng-ing. As these systems evolve, PPP project data collec-tion formats and reporting structures will also needto evolve to be consistent with the overall networkmanagement approach.

An example can be found in the operations, mainte-nance, and rehabilitation Schedule 2 of the GoldenEars Bridge contract. The ministry requires an explicitstandard for the concessionaire in collecting assetcondition data as follows:

The Concessionaire is responsible for collectingannual pavement condition data for the purposesof asset management and measuring perfor-mance achievement. The annual data collectionis required to be conducted in accordance withMinistry specications for network level auto-mated pavement surface condition surveys. Allcollected data must be provided to the Ministryfor input into their pavement managementsystem as per the prescribed Ministryspecied data le formats.

6.2.4 Use of Asset Management Plans inAddition to KPIsWhile specic performance measures or key perfor-mance indicators are used to categorize and track thequality of operations and maintenance services, theasset management plans proposed at selection time,agreed to at contract close, and modied (per con-tract provisions) over the contract period are clearlya signicant dimension of the overall approach toasset management in a PPP arrangement.

In the Kicking Horse Canyon Phase II PPP, for example,the asset management plan includes elements suchas a description of the how the KPI will be achieved,

the intervention criteria for each indicator, and theapproach for asset condition inspection and workidentication. The plan is used to track all routinemaintenance activities and the condition anddisposition of the highway pavement assets.

The Airport Link and CLEM7 North-South BypassTunnel projects provide good examples of assetmanagement plan application. While priority concernsfrom the state transportation plans are mirrored inthe contract documents for the projects, the contractdocuments do not rely solely on a set of KPIs toensure that the concessionaire fullls the state’sstrategic objectives for the project. Instead the con-tracts rely on a more comprehensive approach thatrequires the concessionaire to develop managementplans and systems for all major aspects of the proj-ects’ planning, design, construction, maintenance,operation, toll collection, and community relations. Atleast 28 management systems or management plansare required for the projects, while only 19 individualKPIs are explicitly stated in the contract documents.Outside audits and an independent verier are

required as part of the contract to attest to theBrisbane City Council and Queensland that the manyprovisions of the management systems and plansare being followed. At least three managementsystems—project, environmental, and health and

safety—must comply with the Australian provisionsof ISO for the management systems. Also, a mini-mum of three performance bonds are required toensure adherence to the performance specications.These include bonds for design and construction,operations and maintenance, and tollroad conditionat handover. Although KPIs are included in theproject contracts, they comprise only a small partof the oversight framework for the complex, multi-phased projects. For example, all 19 KPIs explicitlyreferenced in the contract documents relate to the

A t least 28 management systems ormanagement plans are required for the projects, while only 19 individual

KPIs are explicitly stated in the contractdocuments.



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operations phase, and none relate to the design andconstruction phase.

6.2.5 Focus on Outcomes RatherThan OutputsThe agencies are evolving performance measuresto use in internal operations and with contractors’measures. Increasingly, these measures focus onoutcomes rather than outputs. In some cases, thisevolution has shifted from the agency promulgatinga lengthy set of prescriptive measures to negotiatingkey outcomes. This negotiation provides the localgovernment or contractor more latitude in how toachieve results, as opposed to dictating that thecontractor or local government achieve many detailedperformance indicators. The consensus is that simplymeasuring and collecting data outputs do not achieveresults. This is because performance measures andindicators must be developed, measured, and under-stood with a strong motivation to apply the data toachieve outcomes that signicantly impact agencygoals. Data application comes through development(and in some cases redevelopment, depending onperformance data collection) of effective assetmanagement plans that reect the indicator results.

For example, travel time reliability appears to be acentral performance outcome desired by the ownersof these projects. While in the early years of PPPprojects contractors may have been compensatedfor asset condition and travel volumes, now travelreliability has become a prime consideration. Reliabil-ity is measured through hourly, real-time calculationsof not just travel speed, but also variability in travelspeed. The contracts appear to incentivize advancedoperations strategies to avoid delays during mainte-nance and respond quickly to incidents.

6.2.6 Emphasis on Service RequirementsVersus Asset ConditionSpecic performance measures and KPIs used across

the cases vary, but more recent cases illustrate moreemphasis on service requirements than asset condi-tion. In the CLEM7 North-South Bypass Tunnel proj-ect, for example, the project deed includes genericperformance requirements, but requires the conces-sionaire to develop service plans, maintenancemanuals, and quality plans to ensure acceptableservice levels. In the communication and consultationmanagement plan, the concessionaire is requiredto develop and implement an ongoing process forcommunity consultation. The plan calls for “open

and individual” response to community informationneeds as those needs evolve over the 35-year conces-sion period. The plan includes not only communica-

tion channels, but also an oversight panel tasked withupdating the communication process throughout theproject’s life.

6.2.7 Use of Incentives (Positive and Negative)Incentives used are positive and negative, with thelatter appearing to be more prevalent. In general,positive incentives are more associated with overallcontractor performance, whereas negative incentivesare more associated with compliance with speciedservice or asset requirements. Some projects includea strong emphasis on incentives for outcomes, suchas rewarding the availability of travel lanes. Penaltiesand payment deductions are also included, but thecontract emphasizes rewards for performance abovenegotiated minimums.

For example, the Highways Agency has movedtoward the use of incentives to align the PPP contrac-tor with overall agency goals. The overall intent of theKPIs in the M25 PPP is to incentivize the contractor toexceed minimum conditions of safety, condition, andreliability. As previously described, the three keyoutcomes the department seeks are safe roads,reliable journeys, and informed travelers. The incen-tives are tied to achieving these strategic outcomes.

While the Highways Agency has moved toward theuse of positive incentives, the majority of case studiesshowed the application of negative incentives. Table27 (see next page) is an example from the CapitalBeltway performance point approach. The accumula-tion of performance points will result in the negativeincentives of increased monitoring by the department,development of a remediation plan to be submitted tothe department, or more serious legal actions.

6.2.8 Creating an Asset Management

CultureA theme in all of the case studies is to create anongoing asset management culture in the PPPorganization that seeks to provide a high level ofservice during the life of the contract and that appearsto preserve a substantial remaining service life atthe handback point. For example, the state and theBrisbane City Council ensure that sound infrastructureconditions are maintained by the concessionaires onthe CLEM7 North-South Bypass Tunnel, but they donot achieve that assurance by imposing a lengthy list



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specication. This practice introduces a tremendousauditing effort at the end of the contract and thepotential for disputes. The nature of these provisions

also tends toward negative, compliance-orientedincentives. Table 29 provides an example of handbackprovisions from the Golden Ears agreement.

Handback requirements generally require theconcessionaire to develop a capital replacement planfor all project equipment, systems, and assets to bereplaced, overhauled, refurbished, or rehabilitatedover the term. As part of the plan, the concessionairemust rehabilitate any asset that has reached the endof its design life or does not perform correctly. Thecapital replacement plan will be developed jointly bythe concessionaire and the department using theas-built drawings and inspection results duringthe last 5 years before handback to determine thefunctionality of all project components.

6.3 Application of Key Findings toOther Delivery Methods

Although the results of this research focus on PPPdelivery, the results have potential application tomultiple delivery methods. Table 30 (see next page)conveys how the key ndings from this researchrelate to three other project delivery methods: design-build, design-bid-build, and maintenance contracting.The majority of the ndings apply to all four deliverymethods. The ndings that do not apply to design-build and design-bid-build are those that are mostapplicable to long-term projects.

The delivery of maintenance through term mainte-nance contracts is relatively new in the United States.The majority of ndings from this project applydirectly to term maintenance contracts. The alignmentof agency goals, alignment of performance data, use

TABLE 28.Capital Beltway performance point examples.

Heading Subheading Breach or Failure Category Cure Periods Max PointsCommunication Public

informationThe concessionaire issues information to the public orin news releases, through variable message signs orother means, that is factually incorrect.

C None 5

Operation Work zonemanagement

The concessionaire fails to meet requirements ofI&IM 241 on work zone safety, management, mainte-nance of trafc, and diversion routes for regularmaintenance during operations.

B 60 minutes 5

Inspection Quality ofinspection

The concessionaire fails to identify material defects in the inspection reports, life-cycle maintenance plan, orwork currently undertaken.

C None 5

TABLE 29.Golden Ears example handback requirements.

Infrastructure

Component/Detail

Minimum Expected

Design Life

Condition Remaining Life

Asset PreservationPerformance Mea-sures Document 3-7

Operations andMaintenanceSpecicationsDocument 3-8

Special Provisions

Roadway Surface—Asphalt Surface 14 II 1–100 PQI >7.5** rutting

<20mm 10

Shoulders—Paved 14 II 1–100 PQI >7.5** rutting<20 mm 10

Drainage—Ditchesand Watercourses 75 II 2–250 35



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of asset management plans, and creation of anasset management culture are the ndings that mostobviously translate from PPP to maintenance contract-ing situations. Similar to long-term concessionaires,maintenance contractors are vital to network opera-tions and their agreements should reect this integra-tion. If the lengths of maintenance contracts aresignicant (i.e., more than 5 years), the dynamicnature of KPIs and handback provisions should beconsidered in the maintenance contracts as well.

Although design-bid-build and design-build contractsare much shorter in duration and do not have main-tenance components, the majority of the PPP re-search results apply. During design and construction,engineers, contractors, and design-builders impactthe network. To the most reasonable extent, the

goals of the design and construction team should bealigned with the goals of the agency. Their work willlikely be done on highway assets that are in opera-tion. The use of KPIs during design and constructioncan help mobility during construction and feed theagency’s performance management system in realtime. As projects grow and builders are providedwith more control over design and construction(i.e., through design-build delivery and performancespecications), the results of this research becomemore applicable.

6.4 Recommendations

This study offered considerable insight into theevolution and application of performance measure-ment for PPP projects. Obvious trends toward theapplication of performance-based managementsystems were found in many sectors, includingtransportation. Examination of the PPP agreementsshowed trends in how agencies mandate perfor-mance measures and KPIs while allowing for exibil-ity in changes that will occur over the agreementterm. The case studies demonstrate the viability ofPPP projects for meeting critical infrastructure needs.The interviews with agency ofcials also providedinsights into how agencies and projects have evolvedover time to better meet the goals of their customersand society.

The results of this study can be summarized in thefollowing recommendations gleaned from literature,case study document analysis, and interviews:

1. Align project performance measures and KPIswith overarching agency goals.

2. Plan for the dynamic nature of performancemeasures throughout the PPP life cycle andhandback.

TABLE 30.Application to other delivery methods.

Key Findings Public-Private

Partnerships

Maintenance Design-Build Design-Bid-

BuildAlignment of agency goals with performance measures andproject KPIs

✓ ✓ ✓ ✓

Dynamic nature of performance measures and KPIs over time ✓ ✓

Alignment of performance data with agency performancemanagement system

✓ ✓ ✓ ✓

Use of asset management plans in addition to KPIs ✓ ✓ ✓ ✓

Focus on outcomes rather than outputs ✓ ✓ ✓ ✓

Emphasis on service requirements versus asset condition ✓ ✓

Use of incentives (positive and negative) ✓ ✓ ✓ ✓

Creation of an asset management culture ✓ ✓

Opportunity for more use of KPIs in design and construction ✓ ✓ ✓ ✓

Focus on handback provisions ✓ ✓



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3. Do not rely completely on KPIs to align agencygoals and project performance, but strive tocreate an asset management culture through

asset management plans that are continuouslyimproved throughout the concession period.

4. Similarly, keep the number of programmaticand project-level measures and indicators to amanageable number. Focus on measures andindicators that result in outcomes rather thansimply data outputs.

5. Consider asset management plans duringprocurement and concession agreementnegotiation.

6. Continue to develop and apply KPIs duringdesign and construction to help align alltypes of projects to agency goals.

7. Explore outcomes-based handback provisionsrather than compliance-oriented means.

8. Recognize that KPIs are not the only means ofensuring contract compliance during decadesof design-build-operate-and-maintain projects.

9. Focus on customer needs and societal goals inaddition to asset condition.

10. Unique agency locations and user demandsnecessitate unique agency goals, performancemeasures, and strategies, which are developedmost effectively by involving upper manage-ment, stakeholders, community, and end usersin the process.



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Endnotes

1 MacDonald, Douglas, Yew, Connie, Arnold, Robert,Baxter, John, Halvorson, Randall, Kassoff, Hal,Meyer, Michael, Philmus, Ken, Price, Jeffrey, Rose,Douglas, Walton, Michael, and White, William(2004). Transportation Performance Measuresin Australia, Canada, Japan, and New Zealand(FHWA-PL-05-001). Federal HighwayAdministration, Washington, DC, 1–84.

2 Measurement Working Group (2007). AreaPerformance Indicator (API) Handbook. Highways Agency, England, 1–60.

3 California Department of Transportation, Divisionof Transportation of Planning and Ofce of StatePlanning (2006). California Transportation Plan2025. California Department of Transportation,Sacramento, CA, 1–75.

4 Transportation Research Board (2003). A Guidebookfor Developing a Transit Performance-Measurement System. Washington, DC, 1–383.

5 Booz, Allen, Hamilton (2008). Relationships BetweenAsset Management and Travel Demand. FederalHighway Administration Ofce of AssetManagement, Washington, DC, 1–99.

6 American Association of State Highway andTransportation Ofcials (2008). AASHTOAuthorization Policy Topic I PerformanceManagement. Washington, DC, 1–230.

7 American Society of Civil Engineers (2009).Report Card for America’s Infrastructure,

www.infrastructurereportcard.org/report-cards.8 American Association of State Highway and

Transportation Ofcials (2007). State DOTPerformance Management Programs:Select Examples. Washington, DC, 1–28.

9 Simeone, Ronald, Carnevale, John, and Millar, Annie(2005). “A Systems Approach to Performance-Based Management: The National Drug ControlStrategy.” Public Administration Review, 65(2),191–202.

10 Watson, Gregory H. (2005). “Design and Executionof a Collaborative Business Strategy.” Journal forQuality and Participation, 28(4), 4–9.

11 Missouri Department of Transportation (2009).Tracker: Measures of Departmental Performance.Jefferson City, MO, 1–233.

12 Gunaratne, Asoka K., and Plessis, Andries J. du(2007). “Performance Management System:A Powerful Tool to Achieve Organizational Goals.”Journal of Global Business and Technology, 3(1), 17–28.

13 Zwan, J. Th. van der (2003). “Functional Specica-tions for Road Pavements—A Question of RiskAssignment.” XXIInd PIARC World RoadCongress Proceedings, Durban, South Africa,October 19–25, 2003.

14 Miller, John (2005). “A Practical Guide to Perfor-mance Measurement.” Journal of CorporateAccounting and Finance, 16(4), 71–75.

15 Page, Sasha, and Malinowski, Chris (2004).“Top 10 Performance Measurement Dosand Don’ts.” Government Finance Review,20(5), 28–32.



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Appendix A: ANNOTATED BIBLIOGRAPHY

» Journal ArticlesGunaratne, Asoka K., and Plessis, Andries J. du

(2007). “Performance Management System:A Powerful Tool to Achieve Organizational Goals.”Journal of Global Business and Technology,3(1), 17–28.

The authors reveal performance manage-ment as a system and not simply a once-a-year meeting to review the past year’sperformance and set goals for the next year.This article discusses a performance man-agement system employed by a Fortune500 company, how its employees rated theindividual facets of the system, and theiroverall satisfaction with the total systemafter 5 years of implementation. It elucidateshow the organization aligned the perfor-mance management system and articulatedthe company business objectives toindividual goals.

Miller, John (2005). “A Practical Guide to PerformanceMeasurement.” Journal of Corporate Accountingand Finance, 16(4), 71–75.

The author emphasizes the role controllers,chief nancial ofcers, and cost managersplay in setting the overall performancemeasurement requirements in an organiza-tion and providing guidance in developinguseful performance measures. Also present-ed is a generic performance managementcycle consisting of (1) strategic planning andmanagement to develop longer term busi-

ness objectives and (2) short-term planningand budgeting to execute strategy andachieve strategic goals and accountabilityduring the scal year.

Page, Sasha, and Malinowski, Chris (2004).“Top 10 Performance Measurement Dos andDon’ts.” Government Finance Review, 20(5), 28–32.

From New York City to government entitiesof all shapes and sizes, the authors revealthat performance measurement continues toincrease in popularity. To help governmentsmake the most of their performance mea-surement efforts, the authors have compileda top-10 list of performance measurementdos and don’ts, illustrated by case studies.

Simeone, Ronald, Carnevale, John, and Millar, Annie(2005). “A Systems Approach to Performance-BasedManagement: The National Drug Control Strategy.”Public Administration Review, 65(2), 191–202.

The authors examined efforts by the Ofceof National Drug Control Policy to develop aNational Drug Control Strategy. A theoreticalmodel of performance-based managementis developed within this context that allowedthem to identify tensions inherent in anysystem of this kind. Given the generality ofthe model, it is possible the observationsoffered here are relevant to other policyproblems requiring multiagencycoordination.

Watson, Gregory H. (2005). “Design and Executionof a Collaborative Business Strategy.” Journal forQuality and Participation, 28(4), 4–9.

The author argues that organizations thatachieve their goals in the long term plan theirwork and work their plan. Realization ofstrategy—the long-term vision of an organi-zation—is achieved by a disciplined approachto setting direction and executing thatdirection through the effective use of anorganization’s resources—its processes,capital, and people.



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Missouri Department of Transportation (MoDOT)(2009). Tracker: Measures of DepartmentalPerformance. Jefferson City, MO, 1–233.

Tracker is the public window into MoDOT.The Tracker document is posted on thedepartment’s Web site and available inprinted format as a tool for the public toassess the department’s performance prog-ress. It reveals the measures the departmenthas established to gauge this progress andprovides information on what the depart-ment does well, what it does not do well,and what it is doing to improve.

» Transportation Research Board andAmerican Association of State Highwayand Transportation Ofcials Publications

American Association of State Highway andTransportation Ofcials (2007). State DOTPerformance Management Programs: SelectExamples. Washington, DC, 1–28.

State transportation agencies successfullyuse performance measurement to solvecomplex management challenges. Thisreport illustrates the use of performance-based management approaches in selectState DOTS.

American Association of State Highway and Transpor-tation Ofcials (2008). AASHTO Authorization PolicyTopic I: Performance Management. Washington, DC,1–230.

A report on U.S. transportation fundingreauthorization, which supports an increasein Federal transportation investment, butcouples that recommendation with support

for reforms. A specic reform area AASHTOproposes is implementing the methodologyof performance management in transporta-tion agencies.

American Association of State Highway andTransportation Ofcials Task Force on PerformanceManagement (2008). A Primer on Performance- Based Highway Program Management: Examplesfor Select States. Washington, DC, 1–32.

This report by the AASHTO Performance-Based Highway Program Task Force exam-ined performance-based surface transporta-

tion programs now being implemented inState DOTs. This report describes the basicprinciples involved in applying performancemeasurement to the State budgeting andprogram delivery process, and proles how11 States have applied these principles toimprove performance and accountability.

Fishman, Edward, Kirkpatrick, Esquire, and Ellis,Lockhart Preston Gates (2009). “Major Legal Issuesfor Highway Public-Private Partnerships.” LegalResearch Digest 51. Transportation Research Board,1–40.

The amount of public funding available toState and local transportation agencies hasfailed to keep up with the increasing need toinvest in highway construction, operation,and maintenance projects. Governmentagencies are constantly searching for waysto fund or facilitate highway constructionprojects. This report presents public-privatepartnerships as one way to increase theavailability of funds while also describinglegal issues associated with this type ofdelivery.

Transportation Research Board (2003). A Guidebookfor Developing a Transit Performance-MeasurementSystem. Washington, DC, 1–383.

The guidebook provides a step-by-stepprocess for developing a performance-measurement program that includes bothtraditional and nontraditional performanceindicators that address customer-orientedand community issues.

Transportation Research Board (2009). An Asset-Management Framework for the Interstate HighwaySystem. Washington, DC, 1–82.

This report presents a practical framework forapplying asset-management principles andpractices to managing Interstate HighwaySystem (IHS) investments. A major challengein managing these assets lies in developingusable management principles and strategiesthat can be accepted and applied by the



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Appendix A: Annotated Bibliography

varied government agencies that shareresponsibility for the IHS. The reportdescribes the scope of the challenge

and presents specic asset-managementpractices that may be adapted to IHSmanagement.

Transportation Research Board (2009). Public-SectorDecision Making for Public-Private Partnerships.Washington, DC, 1–138.

Public sector agencies are increasinglyexploring the use of public–privatepartnerships to increase funding availablefor infrastructure improvement. This studyexamines the information available toproperly evaluate the benets and risksassociated with allowing the private sectorto have a greater role in nancing anddeveloping highway infrastructure.

» Web Site Gateways to PerformanceInformation

American Society of Civil Engineers (2009). “ReportCard for America’s Infrastructure.” ASCE ReportCard for America’s Infrastructure, www.asce.org/ reportcard/2009/grades.cfm.

This report is a summary written by ASCEmembers grading all aspects of the U.S.infrastructure system. According to ASCE,the current grade point average of America’sinfrastructure is a “D,” and the estimatedinvestment needed to raise this grade isabout $2.2 trillion. The report states whichareas need improvement and offers ve keysolutions to raise the system’s grades.

American Road & Transportation Builders Association

(2008). “Highways Policy.” Government Affairs,www.artba.org/advocacy/government-affairs/ policy-statements/highways.

This association policy statement presentsthe issues with the current state of theNational Highway System and possiblesolutions to address them. The associationproposes a variety of possibilities as partialsolutions, including pay-for-performancecontracts, promotion of innovative

technologies and materials testing, FederalHighway Administration accountability,incentive and disincentive clauses in highway

construction contracts, and use of public-private ventures.

Blain, Larry (2009). “Public-Private Partnerships inBritish Columbia.” Presentation, slides 1–55.

Partnerships British Columbia Chief Execu-tive Ofcer Larry Blain presented the benetsand process of implementing PPP projects ata conference in Moscow, Russia. The presen-tation gives a broad overview of such part-nerships and examples of successful PPPproject case studies, specically those inCanada.

» Government Articles

U.S. House of Representatives Committee onTransportation and Infrastructure (2007).Government Hearing, Washington, DC, pp. 1–8.

The purpose of this hearing was to receivetestimony on innovative contracting andprocurement techniques under PPP arrange-ments. The subcommittee heard fromofcials of FHWA, the Federal Transit Admin-istration, the Utah Department of Transporta-tion, TriMet (a transit agency in Oregon),and representatives of the engineering andconstruction industries and a transportationemployee union.



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The research team developed a case study protocol with three primary categories: (1) design and constructionof the facility, (2) operation of the facility, and (3) maintenance of the facility. These categories formed the basisfor a questionnaire and served as categories for the content analysis of the literature and PPP agreements.

Key Performance Indicators Case Study Questionnaire

Appendix B: CASE STUDY PROTOCOL

Background

The U.S. Federal Highway Administration (FHWA)is conducting research to develop a state-of-the-practice document to contrast and evaluate existingdomestic and international practices for key perfor-mance indicators (KPIs). The purpose of this casestudy questionnaire is to collect information frominternational partners on their use of KPIs toimprove transportation network constructionand performance.

The denitions of performance measures differ fromcountry to country and even in a single country. Forpurposes of this document, please relate your agencyterminology the following two denitions.

Performance measures are derived fromthe programmatic levels of service sought bythe transport agency and imposed contractuallyas broad classications of desired outcomesrequired of the contractor.

Key performance indicators are more specicmilestones or components of performance mea-sures that serve as precursors to indicator progress

toward the eventual achievement of the desiredperformance measures.

The research will examine public-private-partnershipprojects. This study denes a public-private partneras a contract between the public and private sector forthe delivery of a project or service in which the privatepartner has responsibility for acquiring the majorityof the necessary nancing. Therefore, the team islooking for KPIs that relate to the following:

Design and construction of the facility

Operation of the facility

Maintenance of the facility

This research focuses on KPIs at the project level,but an understanding of how these KPIs relate toand support each agency’s strategic performancemeasures is essential. Therefore, the research teamseeks to conduct case studies of specic projects,but a number of questions will be asked abouteach agency’s strategic performance measures.

The questionnaire is divided into two main sections:

Part I: performance measure evolutionand current state

Part II: key performance indicators forcase study project

Performance Measure Evolution andCurrent StateThe intent of the questions that follow is to gainan understanding of what connections, if any, existbetween the performance measures your agency uses

to monitor its performance and the key performanceindicators you agency uses to measure the perfor-mance of contractors in public-private partnerships.

1. Please describe briey the issues and challengesthat were encountered in the original develop-ment of your agency performance measures.

a. What were the original motivations fordeveloping performance measures?



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b. What major issues did your country or agencyneed to confront to develop the performancemeasures?

2. How have your original performance measureschanged over time?

3. Can you provide us with a list and denitionsof your current performance measures for thefollowing?a. Design and constructionb. Operationsc. Maintenance

4. Can you share any reports or documents on yourcurrent performance measures that describe howthey are collected or maintained?

Public-Private Partnership ProjectThe research team intends to develop a detailedcase study on one of your public-private partnershipprojects that is now in the operations phase.This project should have components of design,construction, operations, and maintenance.

The research team will need a copy of the projectagreement to complete the case study. Please referthe team to the contract agreement on the questionsbelow if appropriate.

Project Information 5. Please provide the following project information:

a. Project nameb. Project locationc. Project duration (contract award to handback)d. Size of project (length, dollar amount, etc.)e. Major partners and organizational structure

Design and Construction KPIs

6. Please describe the KPIs used to measure andmonitor design and construction of the project.a. What KPIs did you include in your procurement

documents?b. What was the organizational structure for

monitoring design and construction (e.g.,independent engineers)?

c. Were performance points used to track theprogress of design and construction? If so, howdid the system work?

d. What measures were taken if the

concessionaire’s designer-builder did not meetquality milestones? For example, do you usenoncompliance points?

e. What were your dispute resolution orarbitration procedures relating to designand construction?

Operations KPIs 7. Please describe the KPIs you measure and

monitor during operations.a. What KPIs are included in the contract to

measure operational performance?b. What is the organizational structure for

monitoring operations?c. Are performance points used to track

operations? If so, how does the system work?d. What are the remedies for poor service?e. What are your dispute resolution or arbitration

procedures relating to operations?

Maintenance KPIs 8. Please describe the KPIs you measure and

monitor on maintenance procedures.a. What KPIs are included in the contract?b. What is the organizational structure for

monitoring maintenance procedures?c. Are performance points used to track the

maintenance procedures? If so, how doesthe system work?d. What are the remedies for poor work?e. What are your dispute resolution or arbitration

procedures?

Changes to KPIs and Handback Requirements 9. What is the mechanism to change KPIs during

the life of the concession contract?

10. What handback requirements are included in theproject and how do they relate to the KPIs?

Appendix B: Case Study Protocol



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Appendix C: EXAMPLE SUMMARY OPERATIONSAND MAINTENANCE KPI TABLES

Every public-private partnership (PPP) contractanalyzed in this study implemented a performancemeasurement system. In the performance manage-ment system, performance measures are used toassess the progress and effectiveness of the conces-sionaire in meeting contract requirements. Some ofthese contracts contained specic sections with tablesof key performance indicators (KPIs) attached to eachmeasure to be used as a performance marker for thatmeasure. Generally, these indicators include elementssuch as percentages, ratios, indexes, and conditionstates to verify if and when the concessionaire hasmet the required performance standards. Thesemeasures and indicators exist for a variety of projectelements, including safety, environmental steward-ship, design, construction, operations, and mainte-nance, but the focus here is on operations andmaintenance KPIs. Some common examples inthis category include pavement condition, incidentresponse time, and tollway inspection ratings.

KPIs are only the tip of a much larger pyramidconsisting of performance mechanisms such asquality management plans, audits, inspections,and independent veriers. However, it is importantto understand how these specic mechanismswork because they set the benchmarks the audits,inspections, and veriers use for comparisonand assessment.

This appendix contains tables of KPIs found in thePPP agreements. It is important to note that specicmeasures and indicators were extracted from thecontract language to create each table. These tablesare not a complete set of the measures and indicatorsfor the contracts, but reveal details of a few, hand-selected measures and indicators. However, acomplete list of the measures and indicators inthe contract is provided for reference.



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Appendix C: Example Summary Operations and Maintenance KPI Tables

TABLE 31.I-595 categories for operations and maintenance performance measurement.

Operations and Maintenance Requirements

(Construction Period)


(Operating Period)• Incident response• Fuel spill and contamination• Mowing, litter removal, road and bridge sweeping, reworking

of shoulders, slopes, and roadside ditches• Flexible pavement• Raised pavement markers• Pavement markings• Pavement symbols• Guardrail• Attenuators• Signs• Drainage systems• National Pollutant Discharge Elimination System (NPDES)• Lighting• Bridges and bridge maintenance• Mast arm structure• Overlane sign structure• High mast light poles• Fence• Concrete sidewalk• Grafti• Intelligent transportation systems (ITS) operations• Deliverables• ITS maintenance services• Backbone ber network• ITS reliability• Transportation management center (TMC) operations• Severe incident response vehicle operations• Road Ranger operations

• Maintenance rating performance• Flexible pavement• Rigid pavement• Fuel spills and contamination• Guardrail• Attenuators• Fence• Signs• Drainage systems• NPDES• Concrete sidewalk inspection• Barrier wall• Toll gantry system inspection• Toll equipment building and ITS hubs• Clear zone obstructions• Highway lighting• Navigation lighting• Mast arm structure• Overlane sign structure• High mast light poles• Bridges• Bridge maintenance• Painting steel structures• Grafti• Pressure cleaning concrete surfaces• Vegetation control on concrete slopes and surfaces• Landscape areas• Chemical vegetation control• Fertilizer• Sound barriers• Roadway characteristics inventory• Customer service staff• ITS operations• TMC operations• Emergency access gates• Deliverables•

ITS maintenance services• Backbone ber network• ITS reliability• TMC operations• Trafc incident management operations• Road Ranger operations



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TABLE 32.Golden Ears Bridge/Kicking Horse Canyon Phase II asset preservation performance measure categories.

Asset Preservation Performance Measures

Highway Running Surfaces • Paved trafc lanes• Paved medians• Paved pullouts, rest stop areas, side roads, and ramps

Structures • Component condition• Structure condition• Stock condition• Network components: bridges• Network components: retaining walls• Network components: major culverts• Network components: tunnels• Network components: major signs

Drainage and Debris-Control Structures•

Structure condition• Network condition: on roadway• Network condition: adjacent roadway• Network condition: under roadway• Network condition: debris-control structures

Electrical Systems • Ministry performance-based electrical maintenance specications



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ElementCategory RequiredTask Minimum PerformanceRequirements O&M ViolationClassication CurePeriod Interval ofRecurrenceMonthly Maintenance Performance Rating (MPR)

MaintenanceRatingPerformance(MRP)

Conduct a monthlyMRP cycle inaccordance with the FDOT MRPHandbook.

Meet a minimum quarterly overall MRP rating asrequired in FDOT Procedure No. 850-000-015—Roadway and Roadside Maintenance.

D O N/A

Meet a minimum quarterly rating as required in FDOTProcedure No. 850-000-015—Roadway and RoadsideMaintenance for individual elements.

C 0 N/A

Meet a minimum quarterly rating as required in FDOTProcedure No. 850-000-015—Roadway and RoadsideMaintenance for individual characteristics.

B 0 N/A

Highway Running Surfaces: PavementCategory 1Pavement (0–3years aftersubstantialcompletion)

Maintain exiblepavement atacceptable level ofsafety for travelingpublic.

Meet the performance requirements in Division II,Section 6 of the technical requirements for thefollowing:• Rutting to be maintained less than a depth of 0.25 in B 90 days Every 5 days• Ride to be maintained at RN greater than 3.5 B 90 days Every 5 days• Settlement/depression maximum depth of 0.5 in B 7 days Daily• Cumulative length of cracking >30 ft for cracks >0.125 in a 0.1-mi lot B 90 days Every 5 day

• Raveling and/or delamination of the friction courseas dened and determined by the department inaccordance with the examples at www.dot.state..us/specicationsofce/pavement.htm or its successor

C 90 days Every 5 day

• Potholes and slippage areas cannot be greater than0.5 square feet in area and 1.5 in deep C 24 hours Hourly

• Bleeding as dened and determined by thedepartment in accordance with the examples atwww.dot.state..us/specicationsofce/pavement.htmor its successor

B 90 days Every 5 day

Guardrail

Guardrail Maintain guardrailat acceptable levelof safety for the traveling public.

Meet the performance requirements in FDOT DesignStandards, Section 536 of Standard Specications forRoad and Bridge Construction, Standard MaintenanceSpecial Provisions—ME536 or per the concession-aire’s design criteria.

B 3 days Daily

Inspect theguardrail system.

Complete the inspection in accordance with FDOTProcedure 850-050-003 or its successor. A 0 Daily

Complete repairs identied in the inspection report. B 30 days Daily

TABLE 33.I-595 corridor improvements example operations and maintenance KPIs.



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Signs

Overlane SignStructure

Maintain overlanesign structures atacceptable level ofsafety for travelingpublic.

Meet the performance requirements set forth in the FDOT Design Standards and the StandardSpecications for Road and Bridge Constructionor per the concessionaire’s design criteria.

B 7 days Daily

Perform overlanesign structureinspection.



Toll System

Toll GantrySystem

Inspection

Maintain toll gantryat acceptable level

of safety for the traveling public.

Meet the performance requirements in theconcessionaire’s design criteria. B 5 days Daily

Inspect toll gantrysystem.



Bridges

BridgeMaintenance

Perform repairsgenerated frombridge inspections.

Routine: Complete repairs required to maintain anexisting level of performance and to prevent additionaldeterioration or extend the service life of the structure.

B 180days

Every 10days

Urgent: Complete repairs required to correct decien-cies or defects to protect the integrity of the structure

or maintain a desired level of performance.

C 90 days Every 5 days

Emergency: Repairs must begin immediately to repaircritical damage on the structure and to insure thesafety of the traveling public. Work is initiatedimmediately and work shall be completed as soonas possible.

E 30 days Daily

(continued)



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TABLE 34.Golden Ears Bridge/Kicking Horse Canyon Phase II example asset preservation performance measures.

PerformanceMeasure

Intervention Criteria:KPI

Action MaximumResponse Time

Basis of Measure

Highway Running Surfaces: PavementPaved TrafcLanes—Roughness

Where roughness exceeds an IRI(International Roughness Index)value of 2.5 over any 50-m lengthof trafc lane, excluding concretebridge deck wearing surface, butincluding abutments

1. Conrm that high-speed datareect actual site conditions.2. Where roughness isconrmed, undertake physicalworks to addressnoncompliance.

12 months Longitudinal proleroughness measurements,expressed as IRI, collectedfor each wheel path as perministry survey specications and averaged

Paved TrafcLanes—SurfaceDeterioration

Where pavement surfacedeterioration over any trafclane exceeds the limits shownin the Concession Local AreaSpecication—Cumulative

Distribution Curve for PDI

Undertake physical works toaddress noncompliance.

12 months Pavement surface distressratings performed inaccordance with the ministryPavement Surface ConditionRating Manual and the

Pavement Distress Index(PDI) calculated according to the Ministry PavementDistress Index model

Paved TrafcLanes—Rutting

Where pavement rutting deterio-ration exceeds 20 mm in depth forany 50-m length of trafc lane

Undertake physical works toaddress noncompliance.

12 months Transverse prole roughnessmeasurements, expressedas calculated rut depth inmillimeters for each wheelpath as per the ministrysurvey specication andaveraged

Signs

Major Signs—Painted orGalvanizedSurfaces

Where more than 10% of the totalnumber of major overhead signstructures has a condition stateworse than poor

Undertake physical remedialworks to address painted orgalvanized surfaces that arenot in sound condition and/orfree of corrosion.

12 months Visual assessment

BridgesBridges—Coating Where more than 10% of the total

number of steel bridge girders,assessed by total deck area, hasa condition state worse than poor

Undertake physical works toaddress painted surfaces inpoor condition, includingcorrosion.


Bridges—WearingSurface

Where more than 1% of thewearing surface, assessed by

total deck area, has a conditionstate worse than poor

Undertake physical works toaddress unsound wearing

surfaces, cracks, and deterio-ration affecting structurefunctional life.


Where more than 5% of thewearing surface, assessed by total deck area, has a conditionstate worse than fair

Develop a remediation strategyor undertake physical works.

(continued)



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TABLE 36.CLEM7 North-South Bypass Tunnel example project deed KPIs.

No. KPI

Description

KPI

Benchmark

Level of

Service

KPI Demerit

Points

Assessment

PeriodReporting Requirements

1 Target level of service—A report to council every 3months on the performance of KPIs

100% <20 business daysafter quarter20–40 business days>40 business days

0

24

Quarterly

Customer Service and Satisfaction

2 Target level of service—Customer calls answeredwithin 20 seconds

90% 1 point for every 100calls not answeredwithin KPIbenchmark

1 point for every100 calls notanswered

Monthly

3 Target level of service—Customer accounts withnancial institutions credited or debited with thecorrect accounts

99.999% > 99.999%99.99–99.999%99.95–99.99%<99.99–99.95%<99.9%

05102050

Monthly

4 Complaint resolution target level of service—Cus- tomers contacted by the customer service staffwithin 2 business days of a customer complaint

90% 10 points peroccurrence outsideof KPI benchmark

10 points peroccurrence

outside of KPIbenchmark

Monthly

5 Transaction accuracy target level of service—Timeframes for charging transactions to real-timeaccurate reading customers’ account

99% within 2days

>99%97%–98%<97%

01015

Monthly

6 Accounts not overcharged 0% 0.1%–0%0.2%–0.1%0.3%–0.2%>0.3%

10203040

Monthly

7 Correct toll or fee assigned to correct account ofcomplying vehicles

0.1% variance 0.2%–0.1%0.3%–0.2%0.4%–0.3%>0.4%

10406080

Monthly

8 Applications for toll account correctly responded to in 5 days

99% 1 point for everyoccurrence outsideof KPI benchmark

1 point for everyoccurrence

outside of KPIbenchmark

Monthly

Communication, Community Relations, and Consultation Management Obligations

9 Weekly council “Issues and Activities Report”addressing issues, response times, complaints,and corrective actions

100% <1 business day2 business days>2 business days

012

Monthly

10 Free community enquiry line 99% 90%–100%80%–90%<80%

0510

Monthly

11 Project Web site 99% 90%–100%80%–90%<80%

0510

Monthly



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12 Annual calendar of planned maintenance closures 100% 2 hours of additionalclosures

1 per additional 2hours

Monthly

13 Maintenance at all times of ability of tunnel center to communicate with emergency services

99.99% >99.9999.9%–99.99%99.8%–99.9%99.7%–99.8%

0246

Quarterly

14 Tunnel air quality (CO, NO2) <2 <2 instances2–3 instances4–5 instances>5 instances

051015

Quarterly

15 Ambient air quality (CO, NO2, PM, TSP) 0 No violations1 violation2 violations3 or more

051015

Quarterly

16 Water from treatment plan at acceptable levels 100% 0–1 violation2–5 violations6–9 violations10 or more

-1001020

Yearly

Incident Response

17 Initial response time to detect incidents byoperator

1–2 minutes <1 minute1–2 minutes2–3 minutes3–4 minutes>7 minutes

-100102030

Monthly

18 Service crew response time to incidents 10–13 minutes <8 minutes8–10 minutes10–13 minutes13–16 minutes16–19 minutes>19 minutes

-20-100102030

Quarterly

Aesthetics

19 Rapid response time to nominate defects thatimpact aesthetics or public perception of tollroador landscaping

0–2 days <2 days0–2 days2–4 days>4 days

-20-101020

Yearly



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TABLE 37.CLEM7 North-South Bypass Tunnel example operating company KPIs.

KPI Area KPI Measures Target Frequency

Asset Condition All managementsystems operating

Asset management response timesAsset management inspections and routinemaintenance

Improvement initiatives investigated andproactive procedures and systemsdeveloped

To be based onequipment andmaterials selectedin nal design

Monthly

Compliance Meet environmentalcoordinator general’sconditions

Nonconformity with environmentalmanagement plan

Environmental issues investigated andremediated

Nil

Targets to beestablished

MonthlyQuarterly

Commercial Manage O&M costs Achieve budgetBenchmark top ve expenditure rms

Nil

Targets to beestablished

MonthlyYearly

Stakeholders O&M relationship Assessment against preagreed criteria:• Daily cooperation with emergency services• Handling of public complaints• General facility appearance• Handling of environmental issues• Proactive approach to safety

Assessmentmatrix to bedeveloped

Quarterly

Employees SafetySatisfactionEngagement

Level of compliance to workplace safety TBD TBD




OFFICE OF INTERNATIONAL PROGRAMS

FHWA/US DOT (HPIP)

1200 New Jersey Avenue, SE

Washington, DC 20590Tel: (202) 366-9636

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