Ministry of Economy of Poland

and World Bank

Seminar on Legal, Economic and
Implementation Issues in PPP Projects
Performance Indicators of
Transport Infrastructure
PPP Projects
César Queiroz
Roads and Transport Infrastructure Consultant

Warsaw, Poland, June 17 and 18, 2008

 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
Summary of PBC Experience in the USA
State Introduction Contract Life
Year (years)
Virginia 1996 5 (+5)

Florida 1999 5 – 7 (+7)

Texas 1999 5 (+3)

Washington, 2000 5 (+5)

DC
 PBC Experience
• US State of Virginia
http://www.virginiadot.org/projects/constSTA
N-I81-overview.asp
• US State of Florida
http://www.dot.state.fl.us/statemaintenanceoff
ice/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
 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
 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
 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
I-81 is one of the eight top truck routes in the U.S.
Corn poppies in the median of I-81 near Dixie Caverns
 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 Contractor’s payment
 Example of Performance Criteria 1
• Asset: Vegetation
• Outcome: Healthy Growing, Neat appearance,
Acceptable coverage, Proper sight distance
• Target: 90%
• Tolerance and criteria: < 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
 Example of Performance Criteria 2
• Asset: Landscaping, Wildflowers, Beds, Bulb
Beds, Ornamental Shrub Beds
• Outcome: Neat, Attractive, Growing
• Target: 90%
• Tolerance and criteria: < 10% of bed contains
weeds; <10% of bed not growing
 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
 Example of Performance Criteria 4
• Asset: Concrete Barriers
• Outcome: Safe; Structurally sound
• Target: 90%
• Tolerance and criteria: Free of vegetation; < 10%
joint material damaged or missing; Weep Holes >
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
 Example of Performance Criteria 5
• Asset: Asphalt surface
• Outcome: Safe, Durable, Smooth
• Target: 95%
• Tolerance and criteria: No potholes; Patches < 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
 Example of Performance Criteria 6
• Asset: Concrete surface
• Outcome: Safe, Durable, Smooth
• Target: 95%
• Tolerance and criteria: No potholes; < 10% of surface area
has cracks > 1/2” wide; < 25% surface area has spalling >
1” deep; < 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
 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
 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 _________________________
Signature ___________________________
Date_______________________________
An Example of Legal Framework:
Commonwealth 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/resour
ces/PPTA-overview.pdf
 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
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
 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
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
 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 (> 80% of export)
 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
 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)
Hidrovia Waterway
Concession
 How can the goals of a complex
PPP 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
Thank you!
 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/resource-guide/Docs-
latest%20edition/PBC/trn_27_PBC_Eng_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/Highways/index.htm
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/pre
Login.jsp?guest_login=Public Access
• In Keyword Search, type: 156-RT
 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/E
XTTRANSPORT/EXTROADSHIGHWAYS/0,,contentMDK:
20706624~pagePK:148956~piPK:216618~theSitePK:338
661,00.html
• Road Management Catalog
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/E
XTTRANSPORT/EXTROADSHIGHWAYS/0,,contentMDK:
20735996~pagePK:210058~piPK:210062~theSitePK:338
661,00.html
 Cesar Queiroz
Roads and Transport Infrastructure
Consultant
World Bank, 1818 H Street NW
Washington DC 20433 USA
Tel +1 202-473 8053
Mob +1 301-755 7591
Email: cqueiroz@worldbank.org
http://www.worldbank.org/transport
http://www.worldbank.org/highways
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.