Framework for Introducing OPRC Christopher R. Bennett Sr. Transport Specialist EASTE

2 Success of OPRC OPRC will be successful only if:  Business objectives met  Service levels met Requires that:  All parties involved have appropriate skills  Good foundation (legal/technical)  Tender and contract is properly conceived and executed This Presentation

3 Meeting Service Level and Business Objectives

4 Introducing OPRC Separate studies undertaken by consultants in China (expressways), Egypt, Indonesia Objective: establish an appropriate framework for introducing OPRCs  Industry issues  Management issues  Legal issues

5 Overview of Capacity

6 Commonalties Issues  Overloading  How to handle cost escalation  Ensuring adequate data Success factors  Training to understand OPRC  Capable local consultants

7 Overloading Issue in all three countries Enforcement lacking Risk to contractor Challenge  Those who control overloading (government) must take the risk for failure to control  Tender documents may need to recognize traffic loading

8 Overloading Options Government Authority  Government all weighing and fining powers  Contractor all records to ensure compliance Contractor Authority  Contractor full authority to control  Requires support of police Contractor Compensation  Contractor operates weigh bridges  Compensation for additional overloading from initial levels

9 Cost Escalation Indices for escalation exist Questions about suitability  Do not properly reflect maintenance activities - especially OPRC elements  Data supplied by government - not independent  Can be large time lag in updating so contractors carry additional costs

10 Framework Challenges Varied by country Principal ones:  Policy  Legislative  Contractual Establishing key performance indicators Options for innovation (eg flexibility with design standards) Industry training and knowledge transfer

11 China - Key Issues Few expressway companies concerned about operational efficiency  Operational and engineering issues drivers  Without profit motive do not see value in OPRC Potential benefits of OPRC weighted against negative labor impacts

12 Egypt - Policy Issues Utility services:  Need to manage crossings to ensure no impact on contractor Price escalation:  Only included materials, not labor and fuel

13 Egypt - Legislative Issues No legal impediment to multi-year contracting Need to ensure prompt payment of contractors Overloading  Currently have a penalty of EL20/t - should be proportional to overload  No power to remove vehicles < 40% overloaded from road

14 Egypt - Contractual Issues No major contractual issues Use of World Bank’s SBDs appropriate - if in Arabic

15 Indonesia - Policy Issues Utility services:  Need to manage crossings to ensure no impact on contractor Bond requirements:  Construction bond provisions insufficient for OPRC Cost Escalation:  Need sound index reflecting contract inputs: o Industry confidence o Impact on ability to obtain bonds

16 Indonesia - Legislative Issues Financing Arrangements:  MOF support for multi-year contracts Overloading:  How to control overloaded vehicles to share risk between contractor and government

17 Indonesia - Contractual Issues Provision of benchmarking data Relationship between contract parties  Role of contractor/consultant/client  Use of management board Appropriate tendering process How to treat initial improvement works Use of World Bank’s SBDs appropriate

18 Major Conclusions China: Most expressway companies not managed to maximize profit so little incentive for OPRC Egypt: No major impediments to OPRC beyond lack of experience Indonesia: With legislative reforms to allow multi-year contracts OPRC viable

19 Most Important Success Factor In all cases there is a need to provide support and upskilling of  Government  Consultants  Contractors PPIAF have financed OPRC training course which can help with this