Performance Indicators of Transport Infrastructure PPP Projects

1
Performance Indicators of Transport
InfrastructurePPP Projects
Ministry of Economy of Poland and World
Bank Seminar on Legal, Economic and
Implementation Issues in PPP Projects

• César Queiroz
• Roads and Transport Infrastructure Consultant
• Warsaw, Poland, June 17 and 18, 2008

2
Presentation Outline

• Summary of performance-based contract (PBC)
  experience
• An example from the US Virginia Department of
  Transportation Performance criteria
• Example of legal framework
• Performance criteria for dredging works
• From performance-based contracts (PBC) to
  concessions
• Success factors for a PPP project

3
Summary of PBC Experience in the USA
State Introduction Year Contract Life (years)
Virginia 1996 5 (5)
Florida 1999 5 7 (7)
Texas 1999 5 (3)
Washington, DC 2000 5 (5)
4
PBC Experience

• US State of Virginia http//www.virginiadot.org/pr
  ojects/constSTAN-I81-overview.asp
• US State of Florida http//www.dot.state.fl.us/sta
  temaintenanceoffice/asset.htm
• US State of Texas http//www.dot.state.tx.us
• Other Countries Include Estonia, Serbia,
  Australia, New Zealand, Canada, Sweden, Finland,
  Argentina, Brazil

5
An Example of Invitation for Bid with Expected
Outcome and Tolerance

• Virginia Department of Transportation, Invitation
  for Bid IFB 156-RT, Issued on July 27, 2007
• Scope Turnkey Asset Maintenance Services (TAMS)
  of I-81 and I-66 sections (about 320 km)
• Mandatory Pre-bid Conference August 20, 2007
• Technical Proposal Due Date October 2, 2007
• Initial Contract Period April 15, 2008 to April
  14, 2013
• http//www.virginiadot.org/projects/constSTAN-I81-
  overview.asp
• www.eva.state.va.us

6
The Bidding Process

• Combined two-step sealed bid Bidders are to
  furnish at the same time
• an unpriced technical proposal in one sealed
  envelope
• bid price in a second sealed envelope
• The technical proposals will be opened and
  evaluated. Only the price envelopes for those
  technical proposals selected as acceptable will
  be opened
• The award will be made to the lowest responsive
  and responsible bidder
• Acceptable - a score of 75 points or higher

7
Technical Proposal Evaluation Criteria

• Qualifications Scoring
• Organizational Structure, History and Key
  Personnel 10
• Quality Management Plan 15
• Routine Maintenance Operations Plan 20
• Emergency Operations Incident Management 20
• Customer Service, Timeliness Requirements
  Tracking Plan 10
• Third Party Damage Scoring
• Accounts Receivable Claims Process and Reporting
  5
• Small Business Utilization
• Use of Small Business 20

8
I-81 is one of the eight top truck routes in the
U.S.
9
Corn poppies in the median of I-81 near Dixie
Caverns
10
Performance Requirements

• The Contractor performance is measured by
  achievement of Outcomes and Performance Targets
  as specified in the IFB (Attachment III)
• Outcomes include both Asset Outcomes and
  Timeliness Requirements
• Failure to meet any of the performance
  requirements may result in deductions from the
  Contractors payment

11
Example of Performance Criteria 1

• Asset Vegetation
• Outcome Healthy Growing, Neat appearance,
  Acceptable coverage, Proper sight distance
• Target 90
• Tolerance and criteria lt 10 of mowable area to
  exceed 12 in height All sight distances are
  clear Neat / trimmed around guardrail,
  headwalls, paved ditches, signs No cut less than
  4 in height
• Timeliness Vegetation affecting sight distance
  presenting a safety hazard shall be removed
  within 24 hours of notification or discovery

12
Example of Performance Criteria 2

• Asset Landscaping, Wildflowers, Beds, Bulb Beds,
  Ornamental Shrub Beds
• Outcome Neat, Attractive, Growing
• Target 90
• Tolerance and criteria lt 10 of bed contains
  weeds lt10 of bed not growing

13
Example of Performance Criteria 3

• Asset Illegal signs / structures
• Outcome Right-of-way free of illegal signs or
  structures
• Target 100
• Tolerance and criteria No illegal signs on the
  right-of-way No illegal structures on the
  right-of-way
• Timeliness Requirement Removal of sign within 24
  hours

14
Example of Performance Criteria 4

• Asset Concrete Barriers
• Outcome Safe Structurally sound
• Target 90
• Tolerance and criteria Free of vegetation lt 10
  joint material damaged or missing Weep Holes gt
  90 free of obstruction
• Timeliness Requirement Damaged or misaligned
  barriers due to accidents/incidents shall be
  mitigated immediately upon notification or
  discovery or before accident scene is cleared
  Repair to barriers shall be completed within 10
  days of notification or discovery

15
Example of Performance Criteria 5

• Asset Asphalt surface
• Outcome Safe, Durable, Smooth
• Target 95
• Tolerance and criteria No potholes Patches lt
  1/4 higher or lower than surrounding pavement
  No pavement obstructions that present a safety
  hazard
• Timeliness Requirement Temporary repairs to
  potholes 6 x 6 x 1 ½ deep or larger shall be
  repaired immediately upon notification or
  discovery All others within 2 days of
  notification or discovery Permanent repairs to
  potholes/ pavement failures shall be completed
  within 30 days of notification or discovery
  during seasons when asphalt plants are operating
  or within 30 days of asphalt plants opening for
  the season Pavement obstructions that present a
  safety hazard shall be mitigated immediately

16
Example of Performance Criteria 6

• Asset Concrete surface
• Outcome Safe, Durable, Smooth
• Target 95
• Tolerance and criteria No potholes lt 10 of
  surface area has cracks gt 1/2 wide lt 25
  surface area has spalling gt 1 deep lt 25 of
  joint material missing No grass growing in
  joint No pavement obstructions that present a
  safety hazard
• Timeliness Requirement Temporary repairs to
  potholes 6 x 6 x 1 ½ deep or larger shall be
  repaired immediately upon notification. All
  others within 2 days Permanent repairs to
  potholes/ pavement failures shall be completed
  within 30 days of notification Pavement
  obstructions that present a safety hazard shall
  be mitigated immediately

17
Withholding for Nonperformance

• The Department will assess a nonperformance
  withholding equal to 1 of the annual contract
  value for each point below a maintenance rating
  of 90 for each Asset Group (roadway shoulders,
  roadside, traffic services, drainage, and
  bridge).
• The Department will assess an additional
  nonperformance withholding equal to .50 of the
  cumulative amount for each point below 70 on any
  Asset item

18
IFB 156-RT CONTRACTORS BID SHEET MONTHLY Bid
price for Turnkey Asset Maintenance Services
___________________ Total Lump Sum Bid Price
(Monthly bid price X 60 months)
___________________ Firm Name ___________________
______ Print Name _________________________ Signat
ure ___________________________ Date______________
_________________
19
An Example of Legal FrameworkCommonwealth of
Virginia, USA

• The Public-Private Transportation Act of 1995 is
  the legislative framework enabling the
  Commonwealth of Virginia to enter into agreements
  authorizing private entities to acquire,
  construct, improve, maintain, and/or operate
  qualifying transportation facilities
• http//www.virginiadot.org/business/resources/PPTA
  -overview.pdf

20
Performance Based Contracts for Dredging a Form
of PPP

• Also known as draught guarantee contracts
• The contractor bears sedimentation risks over
  longer periods and is paid for services with
  monthly fixed amounts (or alternative financing
  such as toll then a concession)
• Most ports and waterways have carried out
  maintenance dredging by two types of contract
  Dredging paid by volume, or Charter contracts
• Before directly by the government

21
Where to Apply Performance Based Contracts for
Dredging?

• Where a stable level of policy is to be expected
• Where sedimentation can be evaluated within
  reasonable assumptions of risk
• Where other risks are covered with reasonable
  contractual limits (for example, extreme weather
  conditions)
• Sufficient volume to allow competitive bidding

22
Example of Performance Based Contract (PBC) for
Dredging

• BAHIA BLANCA , Argentina
• A 5-year PBC for maintenance dredging
• Phase 1 Capital dredging Opening Volume preset
  at 1 million m3 when real opening volume is
  measured the contract value was adjusted
  accordingly
• Phase 2 Maintenance dredging during remained of
  5-year period
• The bid price was comprised of 60 equal monthly
  payments, plus the initial dredging

23
From Performance Based Contract to Concession
An Example

• PBC The contractor bears sedimentation risks
  over longer periods and is paid for services with
  monthly fixed amounts
• Concession In addition to sedimentation risks,
  the contractor also bears demand risks, as
  payments are made by the users directly to the
  concessionaire

24
Example of Concession for Dredging

• Hidrovia Waterway Concession, Argentina
• Concession contract for 18 years 1995 2013
• Rio Parana and Rio de la Plata from Santa Fe to
  the Atlantic Ocean
• Mainly for oceangoing traffic, but also river
  barges use the waterway
• 800 km of main waterway for Argentine exports (gt
  80 of export)

25
Hidrovia Waterway Concession

• Risk of sedimentation and traffic born by the
  concessionaire
• The works include Capital dredging and
  installation of buoys in 1995-1996 Deepening
  works from 9.8 m 10.4 m navigation channel 800
  km maintenance dredging about 22 million
  m3/year Maintenance of the buoys and beacons
  Toll system
• Contract clause includes guaranteed depths and
  safety all year round, 24 hours per day

26
Hidrovia Waterway Concession

• Tolls paid by all commercial vessels per tonnage
  (NRT) and used stretch
• Toll level is revised on regular basis with state
  to find equilibrium between costs and revenues
• End costs for typical users about 1 USD/ton of
  grain exported 16 USD/TEU
• Concessionaire Jan De Nul Group (DJN)

27
Hidrovia Waterway Concession
28
How can the goals of a complexPPP project be
achieved?

• Careful selection of the project
• Due consideration of economic, financial, social,
  and environment aspects
• Transparent, competitive selection of the
  concessionaire
• Realistic expectations, including deadlines
• A dedicated and well prepared team
• PPP agreement satisfactory to stakeholders,
  including a fair distribution of risks

29
(No Transcript)
30
Thank you!
31
Some Basic References

• World Bank (2006). Resource Guide for
  Performance-based Contracting. Washington, D.C.
  http//www.worldbank.org/transport/roads/
  resource-guide/index.html
• World Bank (2005). Performance-based
  Contracting For Preservation and Improvement of
  Road Assets. Transport Note No. 27. Washington,
  D.C. http//www.worldbank.org/transport/roads/reso
  urce-guide/Docs-latest20edition/PBC/trn_27_PBC_En
  g_final_2005.pdf
• World Bank (2006). Sample Bidding Document
  Output- and Performance-based Road Contract
  (OPRC).
• http//www.worldbank.org/procure/
• World Bank (2003). Toolkit for
  Public-Private Partnership in Highways.
  Public-Private Infrastructure Advisory Facility
  (PPIAF) and World Bank.
• http//rru.worldbank.org/Documents/Toolkits/Highw
  ays/index.htm

32
How to Find the Virginia DOT Invitation for Bid
on the Internet?

• Virginia Department of Transportation, Invitation
  for Bid IFB 156-RT
• www.eva.state.va.us
• Vendors
• eVA business opportunities
• Click here to view current and future eVA
  Business Opportunities
• Public Access to current and past Solicitations
• https//vendor.epro.cgipdc.com/loginEngine/preLogi
  n.jsp?guest_loginPublic Access
• In Keyword Search, type 156-RT

33
World Bank Websites on Performance-based Contracts

• Resource Guide for Performance-based Contracting
  http//www.worldbank.org/transport/roads/resource-
  guide/index.html
• Training Course for Performance-Based Management
  and Maintenance of Roads http//web.worldbank.org/
  WBSITE/EXTERNAL/TOPICS/EXTTRANSPORT/EXTROADSHIGHWA
  YS/0,,contentMDK20706624pagePK148956piPK21661
  8theSitePK338661,00.html
• Road Management Catalog http//web.worldbank.org/W
  BSITE/EXTERNAL/TOPICS/EXTTRANSPORT/EXTROADSHIGHWAY
  S/0,,contentMDK20735996pagePK210058piPK210062
  theSitePK338661,00.html

34
Cesar QueirozRoads and Transport Infrastructure
ConsultantWorld Bank, 1818 H Street
NWWashington DC 20433 USATel 1 202-473
8053Mob 1 301-755 7591Email
cqueiroz_at_worldbank.orghttp//www.worldbank.org/tr
ansporthttp//www.worldbank.org/highways
35

• Cesar Queiroz is an international consultant
  on roads and transport infrastructure, with main
  interest in public-private partnerships (PPP) in
  infrastructure, road management and development,
  performance-based contracts, port rehabilitation,
  improving governance, quality assurance and
  evaluation, research, teaching and training.
  Between 1986 and 2006, he held several positions
  with the World Bank in Washington, D.C.,
  including principal highway engineer, lead
  highway engineer, and highway advisor. Prior to
  joining the World Bank, Cesar was the deputy
  director of the Brazilian Road Research Institute
  in Rio de Janeiro. He holds a Ph.D. in civil
  engineering from the University of Texas, USA,
  and a M.Sc. in Production Engineering from the
  Federal University of Rio de Janeiro. Cesar has
  published more than 130 papers and articles, and
  is a co-author of two World Bank main
  publications, the Toolkit for PPP in Highways
  and the Resource Guide for Performance-based
  Contracting. His recent countries of assignment
  include Russia, Brazil, Latvia, Lithuania,
  Poland, Ukraine, Philippines, Sweden.