1. The main rationale behind developing the warranty clause template is to make the prospective contractors implement a maintenance philosophy which would provide improvement in the overall condition of each of the asset items they maintain during the contract term rather than just maintaining them to meet the performance targets specified in the contract. This would make it possible for those asset items to possess better long term performances. Although the scope of this research is limited to VDOT-issued contracts, some of the principles and approaches used during the development of the warranty clause template can also be referred to by the other state DOTs. Following issues need to be considered before proceeding with the implementation of warranties: 1.Type of projects appropriate for warranty implementation 2.Length of the warranty period 3.Criteria to be used in evaluating warranty compliance 4.Evaluation of proposals and award of the contract 5.Evaluating warranty compliance and implementation of remedies 6.Bonding issues 7.Cost issues 8.Quality issues 9.Disputes and litigation 10. Quality assurance/quality control 11. Data collection and inspection by the state DOT It can be concluded that the warranty concept in highway maintenance contracting is a rather new concept which still needs a substantial amount of evaluation and which deserves much attention from interested parties. July 1995: Public-Private Transportation Act of Virginia was passed October 1995: An unsolicited proposal was submitted to VDOT December 1996: VDOT has initiated the first performance-based asset management project to in Virginia Development of Performance Warranties for Performance-Based Road Maintenance Contracts by Mehmet Egemen Ozbek (meozbek@vt.edu) and Jesús M. de la Garza (chema@vt.edu), Virginia Tech Sponsored By: Virginia Department of Transportation (VDOT) 1) Background Fence to fence maintenance Incident management Snow removal “…acquire, construct, improve, maintain, and/or operate one or more transportation facilities…” (PPTA 1995) “A performance-based highway maintenance contract is a contract under which the contractor undertakes to plan, program, design, and implement maintenance activities in order to achieve specified short and long term road condition standards…” (Frost and Lithgow 1998, p. 2) “Asset management is a systematic process of maintaining, upgrading, and operating physical assets.” (Falls et al. 2001, p. 2) 2) Problem  Increased control of the contractor  Possible innovative construction techniques implemented by the contractor  Greater assumption of liability by the contractor WARRANTY Figure 1: Possible outcome of a performance-based road maintenance contract without warranties 3) Benefits THE WARRANTY CONCEPT Improvement of the overall condition of assets Long term performance of assets Figure 2: Performance-based road maintenance contract with warranties 4) Warranty Criterion Table 1: Performance Criteria and Performance Target for the “Paved Ditches” asset item Defect for each Asset ItemWarranty Criterion for each Asset Item 5) Warranty Length Alternative 1&2 Alternative 3 Figure 3: Establishing the length of the warranty using Alternative 1 or 2Figure 4: Establishing the length of the warranty period using Alternative 3 6) Conclusions Performance Target: 90% Contract Completion Fix the Overall Condition Rating wanted at the end of the Contract Term as “A” or “100%” Calculate the length of the warranty period as “Z” or “X”, using the Normal Deterioration Curve Contract Completion and beginning of the Warranty Period Performance Target: 90% Defect for the “Paved Ditches” asset item can be stated as: “Meeting the performance criteria for less than 90% of the total amount of paved ditches present in the interstate system maintained by the contractor”. Warranty criterion for the “Paved Ditches” asset item can be stated as: “Meeting the performance criteria for at least equal to or more than 90% of the total amount of paved ditches present in the interstate system maintained by the contractor”. Fix the Length of the Warranty Period, “W” 2 Calculate the Overall Condition Rating required at the end of the contract term, “B” 11 2 1 2 3 4 5 6