Transport Papers

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    Performance Based Contracts in the Road Sector : Towards Improved Efficiency in the Management of Maintenance and Rehabilitation - Brazil's Experience
    (World Bank, Washington, DC, 2010-03) Lancelot, Eric
    This note aims at providing feedback on Brazil's successful experience in using performance based contracts in the rehabilitation and maintenance of the road networks. Since its introduction in the early 2000's, the use of this contract management model has progressively spread to reach, as of today, one third of the federal network and more than 10 percent of the states' networks, and expectations are for higher figures in the short run. The note highlights the context which led to the introduction of these contracts in the road sector and the strategic orientations adopted in their structuring. The model was notably expected to bring rationalization, accountability and credibility to the sector at a moment when road maintenance, though a crucial issue when considering the networks' characteristics and conditions, was not given sufficient consideration by the road administrations. The note then provides an evaluation of the positive achievements resulting from these contracts. The evaluation, comparing objectively performance based contracts to the traditional input-admeasurements approach, shows that these contracts brought an overall improved efficiency to the sector which translated to better road conditions at lower costs for the governments and reduced management burdens on the administrations. Finally, the note provides insights, gained from ten years of continuous learning, on the main lessons learnt, and perspectives on desirable evolutions in the future, while a balanced share of responsibilities and initiatives between the public and the private sectors is essential, strengthened administrations, fully accountable for preserving public interests, remain key to success; better articulating contract duration and rehabilitation works service life, which would lead to extended contract duration, is also one of the possible orientations for future performance-based contracts in Brazil.
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    Private Participation in the Road Sector in Brazil : Recent Evolution and Next Steps
    (World Bank, Washington, DC, 2010-03) Véron, Adrien ; Cellier, Jacques
    Today, Brazil has the second longest highway network under private concessions in the world. This paper analyzes Brazil's experience under the two first phases of the federal road concession program, and highlights some of the program's strengths and areas for further development. Despite the unfolding world financial and economic crisis, the potential for further private participation in the sector appears very good. This paper essentially argues that it may be time for Brazil to revamp its current models for private participation in the sector, which may soon reach their limit in terms of being able to meet efficiently the needs of a growing economy. In summary, Brazil could: 1) diversify its toll road model to allow for more innovative public-private partnership structures; 2) update its toll regulatory and contractual framework to overcome some of the design problems that have led to relatively inefficient tolling; 3) consolidate the institutional framework for road concessions to give a stabilized basis for further developments; 4) develop a policy framework adapted to the current Brazilian environment, taking into account the need to ensure harmonized levels of service and tolls across the country; and 5) adapt the sector financing framework to the rising capacity of private markets.
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    Brazil - Improving the Appraisal Framework for Road Transport Infrastructure Investments : Elements for Consideration
    (World Bank, Washington, DC, 2010-03) Véron, Adrien
    The main purpose of an appraisal framework for transport infrastructure projects and programs is to provide an objective and transparent basis for decision-makers to ascertain the feasibility and levels of priority of major transport projects and policies. An appraisal framework also serves a second, more general, purpose: to contribute to upgrading internal management processes aimed at improving the quality of expenditure. An adequate appraisal framework needs to: 1) strike a balance between an objective economic evaluation and a broader multi-criteria evaluation; and 2) provide clear methodologies and norms to guide appraisers, and ensure comparability among project appraisals, when time comes to prioritize the projects. To ensure that an appraisal framework can deliver on the two above-mentioned purposes, it is important to raise public awareness as to the basic principles and objectives of appraisals, and to structure public sector capacity to undertake or lead, as well as review appraisals, to ensure that they are reliable and of adequate quality. Appraisal frameworks are at different stages of development in different countries, with the most advanced frameworks. Brazil has made a lot of progress in that area since the end of the 1990s. Today, the legal framework is conducive to the systematic undertaking of appraisals. While progress has been made on structuring a series of norms and guidelines to allow for the implementation of the framework's directives, the normative body, overall, is still relatively vague and incomplete.