1. 2007 Transportation Research Board Performance Contracting A State Agency Perspective Steven DeWitt, PE Chief Engineer North Carolina Turnpike Authority

2. 2007 Transportation Research Board ?

3. Agenda Is There a Problem?Is There a Problem? Contracting Industry?Contracting Industry? Why Performance Contracting?Why Performance Contracting? BenefitsBenefits National ActivitiesNational Activities ChallengesChallenges

4. 2007 Transportation Research Board Is There A Problem? We Need… QualityQuality SafetySafety Environmental ResponsibilityEnvironmental Responsibility Reasonable CostReasonable Cost Schedule CertaintySchedule Certainty Reality Doesn’t Always Meet Expectations…

5. 2007 Transportation Research Board Is There A Problem? State Agencies Don’t Always Have the Best Solution to Get There … We Do Have Expertise in: PlanningPlanning DesignDesign Contract Administration vs Construction?Contract Administration vs Construction? MaintenanceMaintenance We Do Not Always Pull Them Together Well… –

6. 2007 Transportation Research Board Bridge To New Island I am sure this will work! Bridge To Nowhere Bridge To No Wheland I guess this is what they meant. I am sure they can build it this way! I can’t build this! Who the #&%$ dreamed this up! I can’t believe they left this %$#’en piece of *&^% for me to live with! Planning Design Construction Operations Project Development & Implementation Typical “Silo” Approach COLACOLA COLACOLA

7. 2007 Transportation Research Board How About the Contracting Industry? Low Bid… Bid the ContractBid the Contract Get the ProjectGet the Project Build the ProjectBuild the Project Move on…Move on… What About Long Term Performance? What About Long Term Performance? – Low Bid Contract for Project 345657 The New Island to Nowhere Connector New Island Nowhere

8. 2007 Transportation Research Board Rely on State Agency Specifications, Means & Methods, Inspection… Rely on State Agency Specifications, Means & Methods, Inspection… Where is that DOT guy to tell me I am doing this right? How About the Contracting Industry? Quality Control? Quality Control? Quality Assurance? Quality Assurance? Who, Where, What… Who, Where, What…

9. 2007 Transportation Research Board Means & Methods Performance Specifications Long Term Project Wide Warranties Can We Transition?

10. 2007 Transportation Research Board Why Performance Contracting? Design-Build? Alternative Contracting? Claims? Added Work? Public, Legislative, Etc. Pressures A Changing Transportation World…

11. 2007 Transportation Research Board Project Scope The New Island – Nowhere Connector New Island Nowhere CL Typical Section Station 132+00 to 256+32 –l- AASHTO Design Guide Specifications Utility Manual Noise Policy NEPA Process Asphalt Designs Roadway Design Guide Construction Manual 404 Conditions 401 Conditions Parcel #35 Commitment Parcel #46 Commitment MPO Commitment Water & Sewer Issues Signing Policy ITS Requirements Hydraulic Openings FEMA Requirements Pavement Conditions E & C Requirements R/W Constraints Materials Requirements Steel Design Concrete Pavement

12. 2007 Transportation Research Board Benefits InnovationInnovation Fewer Constraints - Planning & ExecutionFewer Constraints - Planning & Execution Streamlined Agency Project Development?Streamlined Agency Project Development? Cost Savings?Cost Savings? –Less Inspection? –Less Testing? –Freedom = Better Prices? Risk ApportionmentRisk Apportionment Life-Cycle ConsiderationsLife-Cycle Considerations –

13. 2007 Transportation Research Board Benefits More Industry Involvement Value EngineeringValue Engineering ConstructabilityConstructability Clarity for Bidding?Clarity for Bidding? Contractor View of “Engineering Economy”Contractor View of “Engineering Economy”  Eliminate “Best Guess” Engineering  Efficiency in Execution Contractors Will Get BetterContractors Will Get Better

14. 2007 Transportation Research Board Contractors Will Get Better? Home Builders – Specifications, Plans, Details… Inspection? Means & Methods? Transportation Contractors – Specifications, Plans, Details… Inspection – Yes Means & Methods – Yes Knowledge Gained Through Staying Engaged…

15. 2007 Transportation Research Board Existing Examples of Performance Specifications/Contracting A + B ContractsA + B Contracts M & W WarrantiesM & W Warranties Traffic Control SpecificationsTraffic Control Specifications Maintenance ContractsMaintenance Contracts Many Other Examples…Many Other Examples…

16. 2007 Transportation Research Board National Activities Performance Specifications WGPerformance Specifications WG Highways For LifeHighways For Life SHRP IISHRP II Construction Management ETGConstruction Management ETG Other “Stuff”Other “Stuff” –

17. 2007 Transportation Research Board Challenges Cultural IssuesCultural Issues Cost?Cost? Performance MeasuresPerformance Measures Contract IssuesContract Issues

18. 2007 Transportation Research Board Challenges Scope ClarityScope Clarity –“You Will Get What You Tell Them You Want” –Needs Versus Wants Risk!Risk! Making the Business CaseMaking the Business Case

19. 2007 Transportation Research Board Risk DOT Gets “Stuck” With the Product & Must Maintain it… DOT Gets “Stuck” With the Product & Must Maintain it… Long Term Performance Contracting Could Open Doors for Much Greater Acceptance of Innovation. Long Term Performance Contracting Could Open Doors for Much Greater Acceptance of Innovation.

20. 2007 Transportation Research Board Bottom Line… What Will it Cost?What Will it Cost? Will It Produce the Results?Will It Produce the Results? Can We Overcome the Cultural Hurdles?Can We Overcome the Cultural Hurdles? Make The Business Case…