Identifying the Appropriate Contract Types for Highway Maintenance and Rehabilitation Projects on the Basis of Project Characteristics

Innovative approaches for contracting out highway maintenance and rehabilitation activities have emerged in the last few decades to help palliate the impact of increasing traffic growth and limited maintenance resources. Innovative outsourcing approaches currently sought by highway agencies, which include performance-based contracting, warranties, cost-plus-time and incentives/disincentives, aim to reduce costs, increase efficiency, and improve the asset performance. It is often sought to identify which types of contracts are most appropriate for which types of projects. Also, appropriate selection of the physical size (length) of a road contract, and reliable estimates of contract duration and cost, can be useful for maintenance planning, operations, contract administration, work-zone impact assessments, and other management functions. While previous research has provided insight into the factors that affect these characteristics, the findings have often been limited because the simultaneous relationships between duration, length and cost have not been fully considered. In this study, highway project data from the U.S.A. and abroad are analyzed using simultaneous equation models for the traditional and innovative contract types. These models are estimated by three-stage least squares while duly accounting for the interrelationships between contract duration, length and cost. The results suggest that a number of factors significantly affect the contract characteristics, such as the number of different maintenance activities incorporated in the contract, contract duration, length, and cost, and the asset type that is being preserved or maintained.