Transport Papers
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Publication
Review of Performance Based Contracting in the Road Sector : Phase 2. Review of Training Materials and Resources
(World Bank, Washington, DC, 2014-03)Performance Based Contracts (PBC's) are not new to the transport sector, with many variants in use in different countries for close to two decades. International lending institutions, such as the World Bank, have played a significant role in pushing PBCs into developing nations as part of loan assistance packages. However, there has been a tendency for a 'one-size-fits-all' approach to the implementation, with the result being a variation in the success of any implemented PBCs, as well as a significant proportion of the proposed PBCs not making it to the contract award stage. To address these issues, the World Bank has commissioned a review of performance based contracting in the road sector (contract number 7158253) led by Opus International Consultants Limited. Outputs from the project to date include: phase one report covering the review of previous PBCs (Opus 2011); a guide for the application of PBCs (Opus, 2012a); points to guide Bank implementation of PBCs (Opus, 2012b); and this review of existing training materials and resources. -
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A Guide to Delivering Good Asset Management in the Road Sector through Performance Based Contracting
(World Bank, Washington, DC, 2014-03)The road sector represents a significant asset to any country both in terms of the physical cost to build it, and the social and economic benefits that it facilitates. Good asset management in the road sector is about obtaining the desired benefits at the least whole-of-life cost, and it is therefore natural to seek to implement a robust asset management approach on what is typically a nation's largest asset. Implementation of performance based contracting (PBC) necessitates the identification of many of the cornerstones to asset management, such as knowing the asset, managing risks, and determining the sustainable level of service for the funds available. The aim of this guide is to help understand: (1) what asset management is and why it is important; (2) how performance based contracting delivers good asset management; and (3) the issues and challenges associated with successful implementation of a performance based contract. This guide is focused on PBCs with a significant contract term. This guide draws extensively on the report, review of performance based contracting in the road sector, phase 1: tasks 1 to 6 which examined 35 projects across 27 countries, combined with the knowledge of an international project team. -
Publication
Review of Performance Based Contracting in the Road Sector : Phase 1
(World Bank, Washington, DC, 2014-03)There has been a tendency for a one-size-fits-all approach to the implementation, with the result being a variation in the success of any implemented performance based contracts (PBCs), as well as a significant proportion of the PBCs not making it to the contract award stage. To address these issues, the World Bank (WB) has commissioned a review of PBC in the road sector. PBC involves a significant shift away from more traditional approaches to the delivery and maintenance of road infrastructure and associated services by departing from the client's having responsibility for the design and supervision of construction and maintenance activities, to focus upon the key outcomes that the client wishes to achieve. There are two objectives for this study including: (1) to produce a strategy that will guide the WB's future engagements in PBC projects; and (2) to improve the WB's service to clients by offering a variety of PBC options, to suit different operating conditions and client needs. The report details phase one, review and synthesis of existing practices and its following six tasks: task 1, taking stock of various types of PBC projects; task 2, defining various types of PBC methodologies; task 3, outlining PBC's strengths and weaknesses; task 4, clarifying both various types of PBCs and federation internationale des ingenieurs-conseil (FIDIC)-type (input and bill of quantities) contracts; task 5, discriminating between successful and less successful factors of PBC projects; and task 6, developing a work program on how to move the second phase forward. -
Publication
Performance-Based Road Rehabilitation and Maintenance Contracts in Argentina : A Review of Fifteen Years of Experience (1996-2010)
(World Bank, Washington, DC, 2011-09)The road sector is the dominant mode of transport in Argentina carrying nearly 80 percent of total freight volume. The road network has a total length of about 630,000 km (11 percent paved), divided in three administrative levels: national, provincial, and municipal. However, more than 70 percent of total traffic volumes are concentrated on the paved national and provincial network, with the municipal network consisting of unpaved roads, access roads to farms and feeder roads with very low traffic volumes. A survey carried out in 1992 confirmed that only 44 percent of the national paved network was in good condition, with a high 35 percent of roads in poor condition. Rehabilitation works for the non-concessioned portion were contracted to the private sector under the traditional ad-measurement type or unit price-based system while maintenance activities continued to be carried out by force-account. In 1993 a loan from the World Bank was approved to finance, for the first time, high priority rehabilitation and maintenance works on the non-concessioned paved network, leading to the development of a long-term maintenance strategy based on the gradual expansion of performance-based contracts, a modality that is currently being replicated in other countries around the world. This paper is organized as follows: chapter one presents the national road network of Argentina; chapter two gives origins and definition of the Contrato de Recuperacion y Mantenimiento (CREMA) contracts; chapter three gives evolution in the procurement and the design standards of the CREMA; chapter four presents the market's response to the CREMA system; chapter five presents impact of the CREMA on the condition of the national road network; chapter six deals with cost effectiveness of the CREMA system; chapter seven presents Bank's strategy and role in the road sector in Argentina; and chapter eight gives lessons learned. -
Publication
Road Asset Governance Filter : Case Study of Kazakhstan and Armenia
(World Bank, Washington, DC, 2011-02)Building upon the transport governance filter developed by the Europe and Central Asia (ECA) transport team, which identified several thematic principles and actionable indicators on the governance of the transport sector at large, this paper seeks to assess the overall governance performance of the road sector as well as the concrete issues that road administrations should address in order to improve sector governance. A pilot survey was conducted in Armenia and Kazakhstan, in which road sector stakeholders were asked to evaluate more than seventy questions structured along four governance dimensions: (i) transparency, disclosure and accountability of the road agency; (ii) transparent and accessible procurement processes; (iii) financial management system; and (iv) administrative procedures and anticorruption effort. This report starts with an overview of the existing approaches to governance and corruption with a particular focus on the road sector. It then outlines the methodological framework developed under the study to assess the governance challenges facing the road sector, and report the governance challenges in Armenia and Kazakhstan using the methodology developed. The report will conclude with an assessment of the strengths and weaknesses of the methodological approach used and concrete suggestions to strengthen governance in the road sector of Armenia and Kazakhstan. -
Publication
Monitoring Road Works Contracts and Unit Costs for Enhanced Governance in Europe and Central Asia
(World Bank, Washington, DC, 2011-01)The present study generates a specialized dataset of road sector contracts for Bank-financed projects in 14 countries of Europe and Central Asia. The data sample covers 200 completed or ongoing road works contracts signed between 2000 and 2010. Trends for each country are captured through the following indicators: (i) difference between contract values and their engineers' estimates; (ii) cost overruns; (iii) time overruns; (iv) bidding indicators for contracts with and without prequalification: number of firms that applied for prequalification, number of prequalified firms, number of firms that bought bidding documents, number of bidders, number of disqualified bidders; (v) time elapsed between bid opening and contract signing dates; (vi) cost per kilometer of similar works; (vii) road works unit costs; and (viii) ratios between supervision contract values and the related road works contract values. An inventory of risks is developed for each road works contract using a checklist of possible entry points of corrupt activities or red flags. The frequency of observations is measured for the selected types of red flags from a sample of 200 road works contracts surveyed. The contracts with complaints received by the Bank's Integrity Vice Presidency (INT) are examined separately to check if they exhibit a pattern of indicators consistent with the presence of allegations of corruption or fraud. The study looks further into the determinants of road rehabilitation and reconstruction costs. It concludes with selected recommendations to sustain the platform fostering governance and integrity in the procurement and implementation of road sector contracts under Bank-funded operations. -
Publication
A Review of Institutional Arrangements for Road Asset Management : Lessons for the Developing World
(World Bank, Washington, DC, 2010-04)The type of institutional arrangement for managing roads adopted by a country depends on the objectives and performance that it sets for its road networks. This paper reviews such arrangements for selected countries; China, Brazil, Slovenia, New Zealand, United Kingdom, and the Slovak Republic. These countries have adopted different approaches in several dimensions, such as decentralization, sources of financing, management structure, and modal responsibility. This paper reviews main factors affecting the efficiency of road agencies and describes the steps taken in creating a new institution, or transforming an existing one, and assesses the effort required to achieve such results. In all countries reviewed, the ministry responsible for the transport sector remains the authority responsible for the overall transport policy and for putting in place checks and balances for good governance and management of fiscal risk. The main aspects of institutional reforms that can contribute to increase the efficiency of road and transport agencies include: improved institutional structures, separation of the client and supplier functions, separation of client and supplier organizations, privatization of the supplier organizations, establishment of an executive agency or a commercialized (client) organization, user participation through oversight boards, improving management information systems, and seeking additional sources of financing. -
Publication
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)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. -
Publication
Private Participation in the Road Sector in Brazil : Recent Evolution and Next Steps
(World Bank, Washington, DC, 2010-03)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. -
Publication
Private Participation in the Transport Sector : Lessons from Recent Experience in Europe and Central Asia
(World Bank, Washington, DC, 2009-06)This report was commissioned to draw lessons from the experiences with public private partnerships (PPPs) in the transport sector in Europe and Central Asia (ECA) countries. The report will review experiences to date with private participation in the transport sector with a primary focus on experiences in the ECA countries and Europe. To carefully prepare and select the most desirable PPP projects during the most severe economic downturn since the Second World War, availability of regional best practices would be helpful. This report will provide guidance for successful PPP implementation and will hopefully encourage public authorities to critically evaluate their project designs. The lessons from this study apply regardless of the financial crisis. While the dire economic environment will considerably impact the current PPP pipeline, the fundamental success factors for these projects will remain the same. During times of economic turmoil, evaluating past investment projects can provide lessons for stimulating the next period of economic growth. The report discusses the impact of the financial crisis separately in annex B.