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Promoting Innovation in Transportation Infrastructure Maintenance: Incentives Contracting and Performance Based Specifications
KTH, School of Architecture and the Built Environment (ABE), Civil and Architectural Engineering, Structural Design and Bridges (name changed 20110630).
2007 (English)Doctoral thesis, comprehensive summary (Other scientific)
Abstract [en]

Knowledge of what action that is needed to drive innovation at a desired speed is in demand in civil engineering and its related maintenance. 1. What measures to stimulate innovation have been tested? 2. How much innovation has been achieved by contracting? 3. How much innovation was achieved by performance-based specifications? 4. How can cost models contribute to innovation? Methods include qualitative and quantitative methods that have been timed and mixed to optimize their merits. Sweden, France, USA and Canada have used as research ground.

Technology transfer, multi-criteria evaluation, variant bidding, idea mailbox, weatherregulated payment, contests and earmarked funds for innovative projects were some of the method beside and within contracting and performance-based specifications that have been tested.

Contracting as such has cut costs in Sweden but not in North America. Neither Sweden nor North America has noticed any increase of innovation, rather the contrary. The savings have primarily been achieved by cuts on staff and by using standardized, less expensive and less advanced machinery. Contracted highway maintenance provinces in Canada and Sweden on average had about 50 % higher costs than inhouse provinces and Washington State. The difference is reduced to 26 %, when corrected by weather and the higher traffic in the contracted provinces. Prestige, politics and competitivity made it difficult to extract economic data from private contractors, and even from the public owners and may explain the contradictory results in previous studies. The internally driven innovation appears small and incentives to innovation weak in inhouse systems, but contrary to expectation even less in contracted systems.

Performance-based specifications (PBS), such as Design-Build (DB), have reduced delivery times and kept the budget better than traditional contracts, but quality, lifecycle cost and technical progress was rarely analyzed and even less confirmed in the literature, why a multiple case study was carried out. The result was that three out of four PBS cases delivered lower quality in the long run or showed higher costs already on the opening day, when compared to a traditional contract alternative.

Cost models contribute to innovation by making regions with different conditions comparable and provide tools for rational planning and decision making. One model for how highway maintenance costs depend on snow, bridges and traffic and one model for how bridge maintenance costs depend on size and age were elaborated. Models included in contracts, e.g. to allow a contractor to reduce the weather risk, appear to have contributed to a more successful contracting rollout in Sweden than in Canada.

France provides experience of how inhouse innovation contests and industry-own patent-like routines can promote innovation. After the first two years with an incentive contract, Banverket received 10 % better quality measured as train delay and 20 % better quality measured as the number of technical errors at no cost. A lesson learnt is that the success of performance-based specifications depends on how well the owner can describe and define the contracts, how compliance is measured and how deviations are handled, i.e. how the contractor is penalized for non-fulfillment or awarded for excess delivery

Place, publisher, year, edition, pages
Stockholm: KTH , 2007. , 32, 13 p.
Series
Trita-BKN. Bulletin, ISSN 1103-4270 ; 2007:91
National Category
Building Technologies
Identifiers
URN: urn:nbn:se:kth:diva-4311OAI: oai:DiVA.org:kth-4311DiVA: diva2:11742
Public defence
2007-03-23, Sal F3, KTH, Lindstedtsvägen 26, Stockholm, 10:00
Opponent
Supervisors
Note
QC 20100819Available from: 2007-03-15 Created: 2007-03-15 Last updated: 2012-02-21Bibliographically approved
List of papers
1. Effects of outsourcing and performance-based contracting on innovations
Open this publication in new window or tab >>Effects of outsourcing and performance-based contracting on innovations
2006 (English)In: Management and delivery of maintenance and operations services / [ed] TRB, 2006, 3-8 p.Conference paper, Published paper (Refereed)
Abstract [en]

A savings of 13% to 28% was recorded as outsourcing and performance-based contracting were introduced in Swedish highway maintenance, in line with 21% gained in Massachusetts and 12% in Virginia. Few negative effects on service, invironment, and quality were noted. However, there is concern that a slowdown of research and development (R&D) and innovations may lead to higher costs and a less effective transport system in the long run. France has used a benchmark for the effects on technical development, with an in-house policy similar to Sweden's before the reform. Initial results of an explorative study are that France has continued to produce technical development in the same period while it seems to have stalled in Sweden. This international comparison tends to support that outsourcing has lowered the pace of R&D compared with a situation if the in-house production system prevailed. However, innovation frequency is not a goal itself, so further study is needed to find the optimal mix of measures to develop an effective transport system. Professionals and politicians representing the Swedish taxpayers are reluctant to return to in-house production just to produce perhaps unnecessary technical development. Instead, the policy to develop complementary innovation promotion within the outsourcing model will continue. Measures within or complementary to the model are multicriteria bid evaluation, alternative bids, on-line monitoring, bonus, penalties and profit sharing, competence development, partnering, and weather-regulated performance-based con tracting. Such measures are used and evaluated continuously.

Series
Transportation research record, ISSN 0361-1981 ; 1948
Keyword
Engineering, Civil; Transportation; Transportation Science & Technology
National Category
Building Technologies
Identifiers
urn:nbn:se:kth:diva-24151 (URN)000241635200001 ()2-s2.0-33750312830 (Scopus ID)3-309-09957-9 (ISBN)
Conference
85th Annual Meeting of the Transportation-Research-Board Washington, DC, Jan. 22-26, 2006, Transportat Res Board
Note
QC 20100819Available from: 2010-08-19 Created: 2010-08-19 Last updated: 2010-08-19Bibliographically approved
2. Bridge Budget Model: Further Maintenance or Replacement?
Open this publication in new window or tab >>Bridge Budget Model: Further Maintenance or Replacement?
2007 (English)In: TRB 86th Annual Meeting Compendium of Papers CD-ROM: Paper #07-0110, 2007, 07-0110-1-07-0110-11 p.Conference paper, Published paper (Refereed)
Abstract [en]

Equations clarifying how costs depend on site-specific conditions and technical criteria is needed for planning and technical optimization. Knowledge about approximate costs is also needed to build incentive models that spur innovation within contracts in a natural and effective way. The amounts involved are substantial why at least an annual update of the models by researchers or practitioners is reasonable. This paper comment and update previous models and discusses life-cycle-cost aspects of bridge maintenance versus replacement issues.

Keyword
Bridge design; Bridge engineering; Bridge maintenance; Bridge superstructures; Bridges; Budget constraints; Budgeting; Life cycle analysis; Maintenance; Maintenance of specific facilities; Maintenance practices; Rehabilitation (Maintenance); Replacement (Bridges)
National Category
Building Technologies
Identifiers
urn:nbn:se:kth:diva-24152 (URN)01045998 (Local ID)01045998 (Archive number)01045998 (OAI)
Conference
Transportation Research Board 86th Annual Meeting, Washington DC, 2007-1-21 to 2007-1-25
Note
QC 20100819Available from: 2010-08-19 Created: 2010-08-19 Last updated: 2010-08-19Bibliographically approved
3. Budgeting performance-based winter maintenance: snow influence on highway maintenance cost
Open this publication in new window or tab >>Budgeting performance-based winter maintenance: snow influence on highway maintenance cost
2009 (English)In: Journal of Infrastructure Systems, ISSN 1076-0342, E-ISSN 1943-555X, Vol. 15, no 3, 251-260 p.Article in journal (Refereed) Published
Abstract [en]

Swedish contracting of winter maintenance is combined with weather-regulated payment since the beginning of the 1990's. It reduces the weather risk for the contractor and has helped performance-based specifications to find acceptance. The performance-based approach was introduced to save costs and create incentives for innovation. Theory and practice are often unconnected since the mathematical links are lacking behind the political rhetoric around performance-based contracting. This study attempts to bridge some of the gap between theory and practice by linking a climate factor, snow, to highway maintenance costs. To handle the complexity of weather, an iterative process was assumed necessary, with simplification as a first step. An answer was achieved to the two research questions: which stations correlated best with costs and what the winter maintenance cost would be, given the snowfall at these stations. Once having achieved this answer under simplified circumstances (one weather parameter, one region, few observations, linear relationship), the assumptions were relaxed, one after the other, in second and third iterations, to increase the generalizeability of the method and the results. Maintenance cost and weather data of Washington state were used. The method can be used anywhere where the actual costs of the maintenance are known. In countries and regions with privatized highway maintenance, like in Sweden, British Columbia, Alberta, and Ontario, the actual costs are not public. The lessons learned from this study may therefore be of particular interest to such privatized systems. The study supports that the Swedish road weather information system stations are in the right spots and proposes snowfall to weather regulate the payment to the contractor.

Keyword
Budgets; Contracts; Costs; Highway and road management; Infrastructure; Maintenance; Snow; Actual cost; Alberta; British Columbia; Budgets; Climate factors; Highway and road management; Highway maintenance; Infrastructure; Iterative process; Lessons learned; Linear relationships; Maintenance cost; Ontario; Performance based specifications; Research questions; Road weather information system; Theory and practice; Washington State; Weather data; Weather parameters; Winter maintenance; Budget control; Contractors; Costs; Highway administration; Highway engineering; Privatization; Risk perception; Roads and streets; Snow; Snow and ice removal; Transportation; cost; infrastructure; maintenance; motorway; snow; weather station; winter
National Category
Building Technologies
Identifiers
urn:nbn:se:kth:diva-24153 (URN)10.1061/(ASCE)1076-0342(2009)15:3(251) (DOI)000269061200012 ()
Note
QC 20100819Available from: 2010-08-19 Created: 2010-08-19 Last updated: 2017-12-12Bibliographically approved
4. A Highway Design-Build-Maintain-Warranty Case Study
Open this publication in new window or tab >>A Highway Design-Build-Maintain-Warranty Case Study
(English)In: Journal of performance of constructed facilities, ISSN 0887-3828, E-ISSN 1943-5509Article in journal (Other academic) Submitted
National Category
Building Technologies
Identifiers
urn:nbn:se:kth:diva-24154 (URN)
Note
QC 20100819Available from: 2010-08-19 Created: 2010-08-19 Last updated: 2017-12-12Bibliographically approved
5. Quality and Life-Cycle Costs in Performance-Based Contracts: Multiple Case Study
Open this publication in new window or tab >>Quality and Life-Cycle Costs in Performance-Based Contracts: Multiple Case Study
(English)In: Journal of performance of constructed facilities, ISSN 0887-3828, E-ISSN 1943-5509Article in journal (Other academic) Submitted
National Category
Building Technologies
Identifiers
urn:nbn:se:kth:diva-24155 (URN)
Note
QC 20100819Available from: 2010-08-19 Created: 2010-08-19 Last updated: 2017-12-12Bibliographically approved
6. Incentives, Results and Possible Success Factors for Rail Maintenance Performance-Based Contracting: Case Study
Open this publication in new window or tab >>Incentives, Results and Possible Success Factors for Rail Maintenance Performance-Based Contracting: Case Study
(English)In: Construction Management and Economics, ISSN 0144-6193, E-ISSN 1466-433XArticle in journal (Other academic) Submitted
National Category
Building Technologies
Identifiers
urn:nbn:se:kth:diva-24156 (URN)
Note
QC 20100819Available from: 2010-08-19 Created: 2010-08-19 Last updated: 2017-12-12Bibliographically approved
7. Quantifying effects of incentives in a rail maintenance performance-based contract
Open this publication in new window or tab >>Quantifying effects of incentives in a rail maintenance performance-based contract
2008 (English)In: Journal of construction engineering and management, ISSN 0733-9364, E-ISSN 1943-7862, Vol. 134, no 4, 265-272 p.Article in journal (Refereed) Published
Abstract [en]

Methods to quantify and evaluate quality become important when lump sum and performance contracts replace traditional unit-price or cost-plus contracts. Here, a combined graphical and mathematical method is described along with its results when applied on a Swedish rail maintenance contract with incentives. The regression analysis tools in the Excel software were used. The result of the incentives was that train delay decreased about 10% and the number of technical errors decreased about 20%. The improved quality took place without cost increase. The good relation between the owner and the contractor did not suffer from the rise of efficiency. On the contrary, it was improved. With minor modifications and clarifications the owner now intends to use it for in-house contracting, as the case studied, as well as when outsourcing to private companies. With other performance indicators, the elaborated method and lessons learned should be applicable also for other sectors, where a contractor assuring a specified service level during a period of time is paid a bonus depending on degree of fulfillment.

Keyword
Contract management; Contracts; Incentives; Maintenance; Monitoring; Quality control; Railroad engineering; Condition monitoring; Contracts; Industrial management; Maintenance; Quality control; Railroad engineering
National Category
Building Technologies
Identifiers
urn:nbn:se:kth:diva-24157 (URN)10.1061/(ASCE)0733-9364(2008)134:4(265) (DOI)000254485100004 ()
Note
QC 20100819Available from: 2010-08-19 Created: 2010-08-19 Last updated: 2017-12-12Bibliographically approved
8. Highway Maintenance Costs and Contracting Policy
Open this publication in new window or tab >>Highway Maintenance Costs and Contracting Policy
(English)In: Evaluation and Program Planning, ISSN 0149-7189, E-ISSN 1873-7870Article in journal (Other academic) Submitted
National Category
Building Technologies
Identifiers
urn:nbn:se:kth:diva-24158 (URN)
Note
QC 20100819Available from: 2010-08-19 Created: 2010-08-19 Last updated: 2017-12-12Bibliographically approved

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  • Other locale
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Output format
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