Cutting Cost and Improving Quality through Performance Specified Road Maintenance Contracts
Pilot experiences in Latin America offers lessons for Africa

by Gunter Zietlow

Cutting the cost of road maintenance and improving road conditions are the main reasons why several Latin American countries have started to look for new ways of contracting out road maintenance. With technical assistance from the International Road Federation and German Aid, Colombia, Brazil, Guatemala and Uruguay have initiated so called Performance Specified Road Maintenance Contracts on a pilot basis. In addition, Chile has let two such contracts recently. Most of these contracts have been operating for more than a year and cover routine and periodic maintenance, and in some cases road rehabilitation as well. Extension of the road network, road surfaces and conditions, and the time period vary in each pilot project and will provide a wide basis for evaluation and improvements (see Figure 1). The experiences of the road rehabilitation and maintenance concessions let in Argentina in1990 were used in the design of these projects. In addition, several developed countries such as Australia, Great Britain and, most recently, the United States of America have started to contract out road maintenance based on performance specifications.

Country Number of Contracts Length in km Duration of Contract Maintenance Cost per km and year in US$
Chile 2(a) 747 5 r H: 3 850 

A: 3 200 

B: 2 700

Colombia 3 542 2 r,s A: 5 000
Guatemala 8 343  1 (b) r (road surface) A: 3 700
Guatemala (me) 70 2 995 1 (b) r (drainage system and right of way only) 1 950  

(drainage system and right of way only)

Uruguay 1(a) 359 4 r,p C: 4 750 

A: 4 950

Uruguay (me) 2 275 2 (b) r A,B and G: 

3 100



1(a) 1.5x106 


3 (b) r,p A: 1.8/m2 

C: 2.8/m2 

G: 2.0/m2

Brazil (Santa Catarina) 1(a) 375 5 r A and G: 

3 000

  Figure 1. Example of Performance Specified Road Maintenance Contracts


Performance Specified Road Maintenance Contracts

What is a Performance Specified Road Maintenance Contract? The traditional way of contracting road maintenance is based on a schedule of unit prices and estimates of quantities. The works to be performed are specified in the contract and payments are based on executed measured works. By contrast, a Performance Specified Road Maintenance Contract defines the minimum conditions of road, bridge, and traffic assets, which have to be met by the contractor. Payments are based on how well the contractor manages to comply with the performance standards defined in the contract, and not on the amount of works executed. The nature of the contract allocates responsibility for work selection, design and delivery solely to the contractor. Hence, the choice and application of technology and the pursuit of innovation in materials, processes and management is all up to the contractor. This allocates higher risk to the contractor compared to the traditional contract arrangement, but on the other hand may increase the contractor's margin where improved efficiency and effectiveness of technology, process, design or management reduces the cost of achieving the specified standards.

To define these standards is rather a challenging task. The aim is to minimize total systems cost, including the long-term cost of preserving the roads as well as the cost to the road user. To avoid ambiguity, performance standards have to be clearly defined and objectively measurable.

Typical performance standards are:

Examples of performance standards applied in different contracts are compiled in Figure 2.


Asset Class Component Performance Standard
Pavement Potholes 

Roughness (asphalt) 

Roughness (bituminous) treatment) 



No potholes 

IRI < 2.0 (Argentina), IRI < 2.8 (Uruguay) 

IRI < 2.9 (Argentina), IRI < 3.4 (Uruguay) 

< 12mm (Argentina), < 10mm (Uruguay, Chile) 


Gravel surfaces Potholes 


Thickness of gravel layer 

No potholes 

IRI < 6 (Uruguay), IRI < 11 (Chile) 

> 10 cm (Chile, Uruguay)

Shoulders Potholes 


Joints with pavement

No potholes 


Vertical alignment < 1cm (Chile, Uruguay), sealed (Peru)

Drainage system Obstructions 


No obstructions. Should allow for unhindered flow of water (Chile, Uruguay) 

Without damages and deformations (Chile, Peru)

Road signs and markings Road signs 

Road markings 

Reflectivity of road markings

Complete and clean (Argentina, Chile, Peru) 

Complete and visible (Argentina, Chile, Peru) 

>160 mcd/lx/sqm. (Argentina) 

> 70 mcd/lx/sqm. (Uruguay)

Right of way Vegetation 

Foreign elements

< 15cm height (Argentina, Uruguay) 

No foreign elements allowed

Figure 2.: Examples of performance standards applied in different contracts

As traffic conditions vary from road section to road section, different sets of parameters will create minimal system cost. The application of the Highway Design Model (HDM) can be helpful to define some of these parameters, such as the IRI.

In addition, performance standards may include other obligations, i.e. supplying direct services to the road user such as roadside telephone, ambulance and towing, as for example in the case of Argentina.


Control Procedures and Penalties

How can we make sure that the contractor complies with the performance standards specified in the contract? Vital to the success of this new way of contracting road maintenance is to have appropriate control procedures as well as penalties for non-compliance well defined in the contract documents. Procedures defined in various contracts as well as experiences vary.

In the case of Argentina inspectors are inspecting the road and making random checks to verify compliance at least twice per month. Over time, inspectors become more experienced and familiar with trouble spots along the roads. Experiences underline the importance of having a well-documented inventory of the road as well as daily records of activities undertaken by the contractor. This helps to understand the specific behavior of the roads and contributes to better preventive maintenance. Inspectors and personnel of the contractors went through a valuable phase of learning and adaptation to arrive at an effective control system. In Argentina a very important role is given to the active participation and control of the road user. Each toll station is keeping a complaints and suggestions book and users are encouraged to report incidents to the Road Administration. Extensive use of this mechanism has helped to improve road conditions and has revealed an increasing satisfaction of the road users with the new scheme.

In Chile there are four kinds of inspections: (i) monthly inspections for the effect of payments cover 10% of the roads under contract. Selection of stretches of 1 km each is based on a random sample well defined in the contract; (ii) weekly inspections looking at 5% of the roads randomly selected; (iii) non-programmed inspections to respond to complaints by road users; and (iv) follow-up inspections to verify that appropriate action has been undertaken by the contractor to rectify non compliance. Payments to the contractor are based on the results of the monthly inspections. A percentage of compliance is being calculated based on a formula using the results of each individual performance standard as input data. Full payment will only be made on 100% compliance. During the first year of operation compliance is around 95%. Penalties are being applied if the contractor does not rectify established deficiencies within a certain time limit.

In order to enable the contractor to manage the contract properly and the road administration to monitor it, it is vital that the contractor has a proper management and quality control system in place. Part of the obligations of the contractor is to keep records of his inspections, quality control procedures and works undertaken. This is especially important to monitor and adjust the pilot projects.


Implementation of pilot projects

How can this new contracting scheme be implemented best? The approach to be taken very much depends on the specific circumstances of each country. The experiences of the road administrations with contracting out road maintenance and the competence of local contractors play major roles. The longer the experience of contracting out road maintenance, the more comprehensive the scheme to implement pilot projects based on performance standards can be. If all maintenance is still being executed by force account, pilot projects should be limited to small-scale schemes.

In order to gain experience Brazil, Chile, Colombia, Peru and Guatemala have started with 1 to 3 pilot projects with a road network of approximately 300 kilometers each, concentrating mainly on roads with asphalt concrete and bituminous treated surfaces. In some cases gravel roads were included as well. Typical contract duration is 3 to 5 years. Generally, contracts have been awarded based on public bidding. Prior to the preparation of bids extensive discussions took place. As this is a new contracting scheme, the road administrations as well as the contractors went through a learning and adaptation process in coming up with the final contract documents. Close cooperation between the road administration and the contractors during the operation of the pilot projects has been cited as very important to the success of the pilot schemes so far.

In Guatemala and Uruguay staff of the road administration has been successfully encouraged to form small road maintenance enterprises and to maintain roads under the new contracting scheme. This way the road administrations were able to reduce staff as well as to gain experience with contracting out road maintenance by performance standards.


Lessons learned

Fortunately, none of the pilot schemes has failed so far. To the contrary, road conditions in the pilot areas have improved notably and maintenance costs have either stayed the same or have been reduced. Road administrations and contractors express satisfaction with the preliminary results. Nevertheless, it is far too early to come to final conclusions.

Preliminary conclusions can be drawn as follows:


The principal advantage of contracting out road maintenance based on performance standards is its potential to reduce road maintenance cost and improve road conditions, especially in developing countries. Unfortunately, improper implementation of this scheme could backfire and produce adverse effects. Most likely contracting out road maintenance based on performance standards will quickly spread all over the world and eventually will replace the traditional way of contracting out road maintenance based on unit prices.

Published in
Africa Transport
Technical Note
Road Management Initiative (RMI)
SSATP Note No. 14
Sub-Saharan Africa Transport Policy Program (SSATP)
UNECA and The World Bank

July 1998