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IJPPM
62,3
276
Received 30 August 2012
Revised 22 October 2012
Accepted 26 October 2012
International Journal of Productivity
and Performance Management
Vol. 62 No. 3, 2013
pp. 276-292
r Emerald Group Publishing Limited
1741-0401
DOI 10.1108/17410401311309186
A review of performance
based maintenance of road
infrastructure by contracting
Masuda Sultana, Anisur Rahman and Sanaul Chowdhury
Griffith School of Engineering, Griffith University, Gold Coast, Australia
Abstract
Purpose – Many road authorities considered contracting out road maintenance to the private sector
based on performance measures as an alternative and better solution than traditional methods of
contracting. It highlights issues of interest to road authorities in the context of saving maintenance
costs and managing contracting times effectively. This method is named as performance based
maintenance by contracting (PBMC) and has substantial success records in minimizing infrastructure
maintenance costs in many developed and developing countries over the last two decades. It has
received the attention of researchers and practitioners. However, the literature on PBMC is reasonably
high although the concept of PBMC is relatively new. The purpose of this paper is to carry out
a comprehensive state of the art review of the literature that has been conducted in the recent years.
Design/methodology/approach – A total of 62 published report and journal articles related
to performance based maintenance by contracting for road network system has been analysed and
reviewed in this paper.
Findings – This paper analyses the literature on PBMC and presents examples of developed and
developing countries that have been successfully maintaining their road network systems using
PBMC as their preferred method of contracting.
Practical implications – The potential of reducing maintenance costs, increasing the quality of
works and reducing the chance of corruption in the long run in developing countries are the
challenging issues for PBMC, which needs more attention. This paper can be used as a base or
platform for future research in the area of PBMC such as developing optimal policies and cost models.
Originality/value – This paper would be useful for the research on PBMC. It would be beneficial for
the engineers or professionals in improving the performance of road maintenance and management.
Keywords Performance based maintenance, Road infrastructure, Contract, Literature, Review,
Performance management, Roads
Paper type Literature review
1. Introduction
A resourceful road infrastructure system is the key component for poverty
eradication and economic sustainability of a country. Controlling the cost of road
maintenance work as well as maintaining the efficiency of the road infrastructure
system is an important issue for a country. The traditional method of the road
maintenance system is based on the amount of work done and payment is given
based on a mutually agreed unit rate with the contractors (Zietlow, 2004).
Experience and existing literature suggests that the road authorities face difficulties
in controlling quality, time, and cost effectively using these methods of contracting.
Escalation of cost and time, delays in completion of maintenance projects, lack of
proper training in the public sector, and a high level of political influence and
corruptions are the main problems associated with these methods of contracting.
In the late 1990s, road professionals and engineers started to introduce an efficient
method which could be used to resolve the shortcomings and problems associated
with traditional methods of contracting. The new method called performance-based
maintenance by contracting (PBMC) has the potential for reducing maintenance Performance
costs by 10-50 percent (Zietlow, 2005). based
As PBMC have excellent success records in minimizing infrastructure
maintenance costs in many developed and developing countries over the last two maintenance
decades, it has received the attention of researchers and practitioners. The literature
on PBMC is reasonably substantial although the concept of PBMC is relatively new.
The main objective of this paper is to review the problems of traditional methods 277
of contracting, prospects, and problems of PBMC. The purpose of this paper is to
carry out a comprehensive state of the art review of the literature that has been
conducted in recent years. In total, 65 published report and journal papers related
to PBMC for road network systems has been analyzed and reviewed in this paper.
This paper also presents examples of developed and developing countries that
have been successfully maintaining their road network systems using PBMC as
their preferred method of contracting.
The outline of this paper is as follows: Section 2 provides a brief introduction of
PBMC together with the historical background, and a review of problems related
to various traditional methods of contracting, Section 3 reviews the benefits and
potential of PBMC in maintaining road infrastructure systems, Section 4 presents
a brief review of key requirements for PBMC, and Section 5 deals with the potential
problems and drawbacks associated with the use of PBMC.

2. PBMC for road infrastructure system

Performance-based road maintenance by contracting (PBRMC) is a method under
which a contractor has to plan, design, and implement maintenance activities in order
to achieve short- and long-term road condition standards for a fixed price, subject to
specified risk allocation (Frost and Lithgow, 1998). PBMC is a method where a contract
is awarded to the contractor on the agreement that the contractor/agency takes the
responsibility of meeting the minimum standards of performance measures of roads
that are set by the government’s road authority. In PBMC, contractors have to take the
risk and obligations of the road maintenance work because they are responsible for the
design and implementation of the project by using their workforce. When PBMC is
developed carefully, it may motivate the contractors to implement better-quality
maintenance practices to improve the overall condition of road assets during the
contract period. In this contracting method, the contractors may need to carry on other
services such as collection and management of asset inventory data, call-out and
attendance to emergencies, and response to public requests, complaints, and feedback.
Payments are made after checking that the contractor is meeting properly the
performance standards defined in the contract (Zietlow, 2005). PBMC reduces
the maintenance time and cost of roads by applying the well-organized working
methods and technologies. It also encourages good customer service by providing
transparency to the road users and administrators. The overall road condition is
improved as this method focusses on developing the quality of work.

2.1 Brief history of PBMC

Road infrastructure maintenance professionals started to implement PBMC in the
early 1990s with the realization that it could resolve the shortcomings and problems
associated with the traditional methods of contracting. PBMC was first used by
British Columbia, Canada in 1988. The successful applications of PBMC have also been
observed in many other developed and developing countries such as in Argentina
IJPPM (1990), Australia (1995), the USA (1996), Uruguay (1996), Chile (1997), New Zealand,
62,3 Columbia, Brazil (1998), Peru, and Guatemala (Zietlow, 2005). This trend has spread
to other developed and developing countries in Europe, Africa, and Asia, for example
the UK, Sweden, Finland, the Netherlands, Norway, France, Estonia, Serbia, and
Montenegro (8 percent of national roads), South Africa (100 percent of national roads),
Zambia, Chad (17 percent of all-season roads), the Philippines (231 km or 140 miles
278 of national roads) (Stankevich et al., 2005). PBMC are also referred to as performance-
based contracts (PBC), output-based aid by the World Bank, asset management
contracts in the USA, performance-specified maintenance contracts (PSMC) in
Australia and New Zealand, PBRMC, Contrato de Recuperation y Mantenimiento
which means contract for rehabilitation and maintenance (CREMA) in Argentina and
other Latin American countries, managing agent contracts in the UK, and area
maintenance contracts in Finland (Stankevich et al., 2005).
PBMC and PBC are very popular in many other fields such as water and wastewater
system and water utilities maintenance for municipalities (OECD, 2006), social welfare
programs (Carolyn and Youseok, 2007), air force (Ausink et al., 2001), etc. This paper is
confined to discussion on the application of PBMC for road infrastructure system.

2.2 Problems of traditional methods of contracting

In traditional methods of contracting, the road authority or project owner selects
the consultant for the design of the project and the contractors are decided by the
competitive bidding procedure. Governments’ road authorities in many countries have
faced problems regarding routine and periodical maintenance done by in-house labor
force based on the unit price method. Engineering maintenance is not just cosmetic in
nature. Road maintenance is directed to preserving the value of the roads assets by
preserving the durability of the roads and bridges. Without maintenance the value of
these assets will rapidly deteriorate. Moreover, the problems are severe in developing
countries as their road authorities are always struggling to manage funding for the
maintenance of their roads after the roads are constructed. A single rehabilitation
project is estimated to cost three to four times the amount that should have been
spent on routine and periodic maintenance of roads. If the road network system is
not maintained properly national economic growth is probably slowed by about
1 percent of GDP each year in Bangladesh (RRD, 2001). The respective government
department has to follow a lengthy process in traditional methods of contracting. This
is especially, in the case of large road maintenance projects in developing countries
where many organizations like external funding authorities and consultants are
involved. Sometimes, it is difficult to make the right decision for the road authorities in
developing countries as there are many sensitive decision-making factors involved.
The common problems observed in traditional methods of road maintenance
contracts based on the literature are as follows:
. escalation of cost and time;
. poor quality of work and contractors;
. inadequate motivation of contractors;
. no proper risk sharing between the owner and the contractor;
. overhead and inspection cost;
. delay in project completion;
 . high level of political influence and corruption; and Performance
. lack of training in the public sector. based
The problems are discussed in this following section. maintenance
2.2.1 Escalation of cost and time. Construction and maintenance of the road network
system involve a large amount of money. Road authorities give more priority to the
construction of new roads than the maintenance of older roads due to various reasons. 279
The rehabilitation work of an underprivileged road is often delayed due to bureaucracy.
The traditional design-bid-build (DBB) method uses a two-step process separating
the planning and design phase from the construction phase. Contractors are selected
almost always by a low-bid approach in DBB. This method has worked well for
many projects in delivering quality work for the lowest bid price. This is particularly
true for those projects where the work, and the public agency’s management
procedures, are well understood by the contracting community and where there is
relatively low uncertainty in the work or conditions, particularly geotechnical
conditions (Reilly, 2009). However, this method is slow and does not favor a life cycle
cost approach to projects (Carpenter et al., 2003). Reilly (2009) also stated that
sometimes low-bid environment in DBB method creates pressures which increases
cost and schedule of a project.
The growing populations in the USA were continuously placing increased demands
on the aging road network and highways. At the same time, government entities
were faced with uncertain fiscal conditions (Segal et al., 2003). Florida Department of
Transportation (FDOT) of USA faced the cost and time overrun problem by using
traditional methods of contracting. FDOT reported a 12.4 percent cost overrun and a
30.7 percent time overrun on the 375 traditional low-bid contracts in 1997-1998
(Carpenter et al., 2003; FDOT, 2000). Some remarkable factors that caused the cost
and time overrun in the construction sector of Florida, USA are modifications of the
plan, changed conditions, lack of project coordination, and design-related problems
(Vidalis and Najafi, 2002).
However, as escalation of cost and time has a direct effect on the road construction
and maintenance and the economy, road authorities are always seeking for a better
solution to these problems.
2.2.2 Poor quality of work and contractors. The traditional low-bid project
delivery method does not select contractors on the basis of qualifications or proven
ability to perform similar projects in the past (Kwak and Bushey, 2000). Therefore,
the contractors are rendering poor quality of works. This study finds out that some
traditional methods of contracting have included the prequalification of contractor
prior to bidding to improve the quality of work. However, if the contractors are selected
depending on the competitive unit price bidding procedure, there is a risk that
contractors may compromise with quality to reduce the cost.
2.2.3 Inadequate motivation. Lack of motivation of the contractors to do better
quality of work in traditional methods of contracting is a major cause of cost overrun.
In many cases, contractors neglect small maintenance works which can be critical in
the future if left unattended for a long time. As the payment is based on a lump sum
work in a traditional method of contract, the contractors only concentrate on conferring
a huge amount of works to maximize their earnings (Hartwig et al., 2005). Chad first
started to contract out all road maintenance works to private contractors in 1994.
As they were continuously using the traditional civil works contractual arrangements
for road maintenance, the improvements were not satisfactory. This contracting
IJPPM approach has generated a vicious circle of heavy rehabilitation works followed by long
62,3 periods of neglect and thus rapid deterioration (Hartwig et al., 2005).
The contractors are not adequately motivated by the short-term traditional
contracts to improve the quality of service or reduce the maintenance cost or to use new
technologies. Modifications in traditional methods of contracting are inevitable to
improve the conditions.
280 2.2.4 No proper risk sharing. In the DBB method, the design of a construction
project is finalized by the owner agency. Before the start of a competitive bidding
procedure, the owner agency accomplishes works such as fulfillment of all the
requirements of construction, specified drawings, an estimation of works, and
necessary permissions from other authorities. The main purpose of the process is to
reduce the risk of the contractors by defining most of the unknown conditions, which
reduces contractors’ liabilities of ensuring the quality of work (Carpenter et al., 2003).
Robinson et al. (2006) added that under the contract language, the contractors are only
obligated to achieve the performance criteria and targets. Therefore, they would be
willing to maintain the road asset at the existing level. They would not improve the
condition of the road to minimize their cost.
This study also suggests that the risk sharing between the owner and the contractor is
necessary to improve the quality of road construction and maintenance work. This option
can help the owner to reduce the burden of cost overrun and poor quality of work.
2.2.5 Overhead and inspection cost. The government’s road authority is accountable
for the supervision of any project in the traditional method of contracting. More than
two parties (government, consultant, and contractor) are involved in many
construction and maintenance projects. A considerable amount of proficient and
expert personnel have to be hired and paid by the administration to inspect the
contractors’ performance and for co-ordination and integration of work which
increases cost (Carpenter et al., 2003; Hardy, 2001). Moreover, lack of plan,
administrative capacity, and supervisory staff can be a hindrance to effective road
maintenance. As stated by Hartwig et al. (2005), these factors caused problems in Chad
during transferring the road maintenance to the private sector.
For some big budget projects, the road authority has to pay extra money and hire
more employees for the supervision of work.
2.2.6 Delay in project completion. A direct consequence of traditional methods of
contract is their contribution in delaying the completion of the projects as per the
schedule. This research has reviewed 14 journal paper and conference paper which
discusses delay in project completion using traditional methods of contracting, such as
Memon et al. (2011), Fugar and Agyakwah-Baah (2010), Kaliba et al. (2009), Alaghbari
et al. (2007), Assaf and Al-Hejji (2006), Nguyen et al. (2004), Long et al. (2004), Parviz and
Nabil (2004), Frimpong et al. (2003), Odeh and Battaineh (2002), Al-Tabtabai (2002), Chua
et al. (1999), Ogunlana et al. (1996), and Dlakwa and Culpin (1990). The literature review
helped to identify some common factors which contribute to the projects’ failure to
complete in the scheduled time. The factors are as follows: lack of efficient/competent
contractor, slow administrative process by client (government/road authority), poor
supervision by client (government/road authority), lack of expert technical personnel by
client or the contractor, extreme site condition like rain, flood, etc., contract disputes or
issues between the parties, delay in payment of contractor, shortage of material, manpower
and funds, uneven increase/fluctuation of material price, and modification of plan or
design-related issues. However, this paper has included only a few factors that causes
delay in completing the projects as this is not the main purpose of this review paper.
 2.2.7 High level of political influence and corruption. Construction is a $1.7 trillion Performance
industry worldwide, amounting to between 5 and 7 percent of GDP in most countries. based
As the construction industry comprises an extensive and intricate set of activities
where several parties like consultant, contractor, and government closely work maintenance
together, political influence and corruption are some of the most common problems of
that industry (Kenny, 2007). The problem is worse in developing countries than
developed countries. Kenny (2007) presented some cases where corruption is disclosed 281
in the construction industry. For example, in 2006, the Deputy Mayor of Beijing who
was responsible for urban development and Olympic projects was dismissed along
with nine vice-mayors as they were charged with corruption related to construction. In
the same year, an audit on 21 Chinese highway construction projects at a cost of $605
million found that as much as a third of that amount had been mishandled by officials.
Political influence and corruption are another area of concern for road
authorities. They are always seeking for a better method of contracting to resolve or
reduce the effect of these problems.
2.2.8 Lack of proper training in the public sector. Shortage of efficient personnel in
the right place is a common problem in many countries. Contractors’ lack of project
management and construction site management skills also cause cost and time
overrun. Most of the contractors’ organization is in need of professionalism and proper
training for their engineers (Al-Tabtabai, 2002). The road authorities and contractors
are hardly motivated to provide training for the staff and engineers when they use the
traditional methods of contracting.
This study suggests that the knowledge of understanding and applying construction
project and site management skills of the staff should be improved with the development
of technology. Regular training should be provided to the employees to increase the
efficiency of the road authority.

3. Benefits of using PBMC

The owners and contractors are needed to be motivated to share the construction risk.
They need sufficient skilled staff and efficient management systems to ensure the
successful implementation of a PBMC project. This section discusses and analyses the
literature on benefits of PBMC over the traditional methods of contracting. The seven
beneficial areas identified are cost savings, risk sharing, assurance of quality,
availability of initial funding sources, achieving a sustainable road management
system, increase in flexibility, and increase in transparency.

3.1 Cost savings

A road authority can save a huge expenditure required for the road maintenance by
implementing PBMC. As stated by Frost (2001), a review of evidence reported from around
the world indicates that long-term PBMC are consistently delivering lower costs than any
other form of maintenance delivery, and at the same time are generally delivering higher
levels of service and a lower level of risk for the owner. Straub (2009) mentioned that on an
average the indirect cost of contractors were 21 percent lower in PBMC. Contractors can
also improve their internal business process with more efficient manpower, equipment, and
materials due to the long-term nature of PBMC. This helps to reduce the overhead costs.
Cost savings of different countries using PBMC over traditional methods are
tabulated after Pakkala (2002) in Table I.
In 1995, the Australian construction industry was introduced to PBMC (called
PSMC in Australia and New Zealand) for the maintenance of a large proportion of the
IJPPM Country Cost savings (%)
62,3
Norway About 20-40
Sweden About 30
Finland About 30-35; about 50 less cost/km
Holland About 30-40
282 Estonia 20-40
England 10 minimum
Australia 10-40
New Zealand About 20-30
The USA 10-15
Ontario, Canada About 10
Table I. Alberta, Canada About 20
Cost savings of different British Columbia, Canada Some might be in order of 10
countries using PBMC
over traditional method Source: Pakkala (2002)

arterial road network in Sydney, New South Wales to provide a quality road network
system to road users at a reduced cost, free of the many risks which traditionally
restrain effective road management (Frost and Lithgow, 1996).
Examples of the results which have been reported are as follows:
. Sydney, New South Wales 38 percent savings.
. Southern Tasmania 20 percent savings.
. North Island, New Zealand 15 percent savings.
. South Perth, Western Australia 25 percent savings.
. Mid North Region, Western Australia 30 percent savings (Frost, 2001).
Therefore, the performance-based model is consistently delivering savings in excess of
35 percent compared to in-house operations (Frost, 2001).
The government of Argentina introduced PBMC (called CREMA in Argentina and
other Latin American countries) in 1995 to reduce the administrative cost of input-
based method such as the need for efficient staff to measure and monitor activities and
additional budget to meet the extra claim demanded by the contractor, to motivate the
contractor to use innovative technology and share the risk of the maintenance work, to
ensure quality services for road users (The World Bank, 2010). By 2002, around 75
percent of Argentina’s non-concessioned roads were expected to be operating under
output-based contracts (Liautaud, 2001). In Latin America no cost reductions have been
reported so far, since no cost comparison studies have been undertaken. But road
conditions have notably improved on roads that are being maintained under the new
contracting scheme (Zietlow, 2005).
A comparison between the unit costs of the rehabilitation works of PBMC to those
offered in the more conventional contracts shows that the long-term PBC are, overall,
more cost efficient (Silva and Liautaud, 2011). The study of Anastasopoulos et al. (2010)
implied that PBMCs with longer duration are more likely to experience cost savings
and have higher amount of cost savings. The findings also showed that projects with
long road segments or very short road sections tend to perform better under PBMC.
However, the application of PBMC is still at an early stage. Road authorities, and
contractors will gain experience with time (Zietlow, 2007).
 This study suggests that more research and analysis are required from other Performance
countries using PBMC in order to determine the method’s success in terms of cost based
savings. There is still a gap in the research in comparing the cost savings between
traditional methods of contracting and PBMC. maintenance

3.2 Introduction of innovation

Scientists are inventing and improving technologies so that people can utilize time 283
and money more effectively than ever. Construction and maintenance of road
infrastructure systems should not be overlooked in using innovative technology for
a better economy and smarter community. The contractors would be motivated to
use innovative technologies only if it is beneficial to them. Use of specifications
based on performance can promote innovation by allowing the contractor to control
the materials and methods used (Carpenter et al., 2003). Moreover, successful
contractors have long-term revenue streams under PBMC which has motivated them
to make long-term investment decisions for both research and development (R&D)
and training (Hardy, 2001).
However, research is also necessary on the PBC conducted in countries till this date to
examine the method’s ability to motivate contractors. A further questionnaire survey
can be conducted to see if the advantage is achieved due to the long-term nature or the
change in the form of the contract.

3.3 Reduction of delay and impact on public

The use of technology under PBMC can help to minimize the impact of highway
projects on the public by reducing the unnecessary construction delay. Utilization of
technologies, materials, and techniques reduce noise and other environmental impacts.
In the long run, it can reduce bad effects on the public (Carpenter et al., 2003).

3.4 Reduction of administrative cost and increase in proficiency

The application of PBMC can reduce the supervision costs and increase the efficiency.
The road authority should provide necessary training to the staff and contractors to
introduce them to the new contracting approach. It would help to improve their quality.
If the road authority is unable to provide training, they can reform the administration
by contracting out to the private sector. For example, Texas Department of
Transportation, USA started to outsource a significant portion of their roads due to the
lack of expert personnel (Menches et al., 2010). The road administrations of Guatemala
and Uruguay have been successfully able to inspire some of their staff to form small
road maintenance enterprises and to maintain roads under the new approach. Thus the
road administrations reduce excessive staff and the experienced personnel with their
new enterprise can now gain experience with PBMC (Zietlow and Bull, 1999). Hardy
(2001) argued that the reduced administrative staff is passed mainly onto the
contractor. Actually, the consultants’ roles in earlier types of contract are absorbed by
the contractors. In this way, cost for one contract is saved; on the other hand
contractors get some expertise. However, cut down of staff is only commendable if the
road users are satisfied by using the roads maintained under PBMC (Hardy, 2001).
However, the review of this research suggests that the road authority’s attitude
toward the new approach in terms of staff reduction can be a very sensitive issue in the
initial stage of implementing PBMC in a country. Excessively reducing the number of
employees may create a shortage of expertise in commencing R&D in the road
IJPPM authority in future. A questionnaire survey should be conducted to find out if the cost
62,3 savings claim in terms of the supervisory staff reduction is true or the cost is passed to
the contractor or the private sector.
3.5 User satisfaction
The need for a new contracting approach arises from considering many factors one
of which was the satisfaction of road users. Road users or general public never
284 measure the amount of work done for the maintenance of roads. They consider the
outcome of the work (Cabana et al., 1999). A well-maintained road reduces the costs
for vehicle maintenance. PBMC can help to increase the road safety which is
discussed by Manion and Tighe (2007) in detail.
For example, the outsourcing of the road network management and maintenance
activities has produced significant benefits to New Zealand’s economy and road users.
Less money is being spent on reactive repairs, users enjoy a higher level of service, and
there is a far greater understanding of the asset’s future needs (Porter, 2005). The use of
PBMC in Estonian road network has decreased the number of complaint from road
users (Queiroz, 2011).
3.6 Risk sharing by contractors
A change in the method of specification from work output to performance, allocates
the risk exposure of road authority to the service provider, i.e. contractor (Carpenter
et al., 2003; Frost, 2001; Frost and Lithgow, 1996; Segal et al., 2003). There is evidence
that PBMC results in better outcomes at lower cost with less risk and more financial
predictability for highway agencies (Hyman, 2009). Moreover, risk allocation to the
contractors would be beneficial for the road authorities only when contractors are
better be able to manage the risk (Austroads, 2003; Hardy, 2001).
The contractors must be able to properly understand PBMC to successfully
interpret contract language and share the risk.
3.7 Assurance of quality
PBMC significantly expands the role of the private sector, from the simple execution of
works to the management and conservation of road assets. In order to be entitled to the
monthly payment for maintenance services, the contractors must ensure that the roads
under contract comply with the service quality levels which have been specified in the
bidding document. It is possible that during some months they will have to carry out a
rather large amount of physical works in order to comply with the required service
levels, and very little work during other months. Yet their monthly payment remains
the same as long as the required service levels are complied with (The World Bank,
2004). Therefore, as suggested by Queiroz (2005), five steps can be followed to ensure
the quality in PBMC such as:
(1) contractor’s self-control system;
(2) formal monthly inspections;
(3) supervisors (formal/informal) inspections;
(4) project managers (formal/informal) inspections; and
(5) maintaining a record book to follow the comments or complaints of roads users.
However, the bidding process of PBMC includes prequalification of contractors, ensuring
that the final bid evaluation was not overwhelmed by poor-quality providers (Hartwig
et al., 2005). Thus this approach is able to ensure the quality of maintenance work.
3.8 Availability of initial funding sources Performance
International financing institutions provide assistance to developing countries and based
economies in transition to develop a local construction industry (Queiroz, 1999).
International donors and agencies such as the IDA, the International Bank for maintenance
Reconstruction and Development, bilateral aid agencies, the United Nations
Development Programme, the United Nations Economic Commission for Latin
America and Caribbean provided funding for many road projects (Mumseen et al., 285
2010). For example, in 2001, the government of Chad accepted the help of an external
funding authority to fully move to PBMC and the contractors successfully improved
the road conditions to an expected satisfactory level (Hartwig et al., 2005).
However, the analysis of this study suggests that availability of the initial funding
source can be counted as a benefit in a sense that the road authority is ready to go for
a long-term contracting commitment. The top-level management is agreed to provide
the constant funding required for the monthly payment in PBMC. Taking a loan
can never be a permanent solution for road maintenance of a developing country.
The road authority must figure out the future funding source if they want to
implement PBMC successfully.

3.9 Sustainable road management system and assurance of long-term funding

The road authority gets the option for the possibility of long-term sustainability
using PBMC. These types of contracts have exhibited larger reductions in necessary
long-term expenditure for road maintenance in Chad which proves the method’s
ability of providing more sustainable road maintenance and management system.
The Government of Chad gradually increased the road maintenance fund because of
the improvement in road management system. The existence of donor involvement
also gave the contractor motivation and confidence that the output-based payments
would be paid regularly. The same arrangement is also being replicated elsewhere in
Sub-Saharan Africa, including Burkina Faso, Cape Verde, Madagascar, and Tanzania
(Hartwig et al., 2005).
In Brazil, the road sections maintained under CREMA are in better condition than
the road sections with traditional rehabilitation. Use of performance contracts also
increases the management efficiency which includes providing good engineering
design and drawing, a gradual streamlining, and standardization of processes used for
preparation and evaluation of engineering designs and for bidding of civil works (with,
e.g. the emergence of standard bidding documents for contracting of civil works in road
administrations). Another aspect of the contract was that it helped to increase
government commitment to invest in road maintenance and management (Lancelot,
2010). However, PBMC will be beneficial when the road authority and the contractors
would be able to manage the road network better than earlier.

3.10 Increase in flexibility

Contractors receive flexibility in achieving their work target in PBMC. This
flexibility can be enjoyed either by choosing the desired engineering design and
drawing or by using innovative technology. Lancelot (2010) indicated on the CREMA
experience in Brazil which showed that under PBC, contractors needed to have
sufficient flexibility to determine an optimized mix of technical solutions and an
optimized execution schedule, without any interference from the employer. However,
this could be a great benefit depending on the contractors’ ability to choose
engineering design, and use of managerial capabilities and technologies.
IJPPM 3.11 Increase in transparency and reducing the chance of corruption
62,3 As discussed earlier, traditional methods of contracting are more prone to corruption
because of the nature of the decision-making processes. PBMC has the potential
to reduce the scale of the decision-making process by promoting transparency and
good governance in road maintenance works (Liautaud, 2001; Zietlow, 2004).
According to Tineo (2007), the limited experience with PBMC (output-based
286 approach) in developing countries has prevented a comprehensive examination of its
effects on lowering corruption. However, even at this early stage, PBMC can
reasonably be expected to reduce administrative discretion and increase efficiency;
two factors associated with corruption.
Kenny (2007) said that construction companies bribe in order to obtain contracts,
to increase profit margins on those contracts and to reduce the cost of construction.
He also suggested that corruption is likely to be reduced if there are fewer
opportunities, which means less chance for government officials to decide contract
winners and contract terms, or interpret regulatory compliance and less need, i.e. fewer
contracts, fewer competitors, less fear of competitor bribery, less regulation.
In addition, the net benefits of corruption would change if costs are higher, bribes
are larger or have to be paid to more people or the risk of being caught increases
because of audits, inspections, or punishment regimes. Moreover, in contrast with
inputs, outputs are by definition relatively easy for everyone to monitor, and results are
therefore transparent and measurable in PBMC (Mumseen and Kenny, 2007).
However, there is really a very little evidence of PBMC reducing the chance
of corruption especially in developing countries. The stubborn nature of the
political leaders makes it very difficult to reduce the political influence and
corruption in developing countries. PBMC may not be applicable at all for a road
authority due to these problems.

4. Key requirements of PBMC

This section briefly discusses the key requirements for introducing PBMC in a country.
The key requirements are summarized after Pakkala (2005) as follows:
. Robust and good data of existing road network assets and what are the present
costs of these assets at existing levels of service.
. Good funding stream for maintenance, if funding continues to decline then the
costs for repair tend to escalate.
. Requires expertise, good tendering practices, clear, and concise contract
language. It is difficult to write all conditions in the contract.
. Having common standards and performance measures.
. A good understanding and relationships between the client and service providers.
. Partnering or partnering board.
. Head to head competition among service providers.
. Good communications and sharing knowledge with all parties.
Sultana et al. (2012a) discussed some general issues which should be considered before
introducing PBMC in a country. The issues are as follows: having performance
specification and setting up a standard, expertise of the private sector, deciding the
initial project, risk exposures, performance monitoring, employee issue, payment, and
termination of the contract. Therefore, the road authority should carefully Performance
move toward the new approach as failure in the first trial may cause problems based
in proceeding further with PBMC.
maintenance
4.1 Performance indicators
Performance indicators measure the performance of the contractors in PBMC. Some
examples of performance indicators/standards as stated by Zietlow (2007): 287
. the International Roughness Index to measure the roughness of the road surface,
which affects vehicle operating cost;
. absence of potholes and control of cracks and rutting, which affects safety and
pavement performance;
. amount of obstruction of the drainage system to avoid destruction of the road
structure;
. friction between tires and road surface for safety reasons; and
. retro-reflexivity of road signs and markings for safety reasons.
Establishing the right performance indicators are indeed an important part of PBMC.
However, research is also required in this area to prepare some guidelines for the
countries that are considering PBMC for their road infrastructure system.

4.2 Performance monitoring

Monitoring the performance of the contractor regularly is a very important part of
PBMC. It would be beneficial in the initial stages of introducing PBMC in a country.
The monitoring system differs among the road authorities. However, a monitoring
system is necessary to maintain the quality of work and also to record the data for
future R&D in the road authorities. At present, road authorities follow the criteria and
standards developed for their traditional methods of contracting to evaluate the
performance of contractors in maintaining road infrastructure systems. These
standards vary significantly among the road authorities and some of them have not
been properly defined to monitor PBMC. The development of a revised performance
evaluation procedures will ensure the reliability of the overall performance in PBMC
(de la Garza et al., 2009). Piñero (2003), Piñero and de la Garza (2004), de la Garza et al.
(2008, 2009) identified five components in order to develop a framework for monitoring
performance in PBMC which are level of service effectiveness, timeliness of response,
safety procedures, quality of services, and cost-efficiency. The major contribution of the
proposed framework is to provide road authorities with guidelines for evaluating the
effectiveness and efficiency of PBMC as an alternative delivery method to maintain and
preserve the roadway system. The readers can follow these papers for a detailed
overview on performance monitoring.

5. Drawbacks and challenges of PBMC

Although PBMC has many advantages, it is not free of drawbacks and challenges.
This section briefly discusses the problems of PBMC.

5.1 Drawbacks of PBMC

PBMC is still a new approach in the construction industry with some disadvantages
which is not an exception. Most studies available on PBMC focus mainly on the good
IJPPM sides and benefits. Negative issues are mentioned on a small scale in a very few
62,3 papers such as in Pakkala (2002), Hunter and Kyle (2001), Queiroz (2005), Zietsman
(2004), Zietlow (2007), Hyman (2009). Hardy (2001) and Austroads (2003) have provided
a detailed list of drawbacks of PBMC which are high cost of tendering of PBMC,
decreased competition among the contractors, significant increase in poor performance
by the contractors, reduced ability to deal with changes, reduction of technical
288 capability, and risk of loss of innovation to the public domain. The readers are referred
to these papers for the details.
However, this study suggests that research is required on the drawbacks of PBMC.
Problems faced by the different road authorities during implementation of PBMC may
not be similar. The drawbacks can even vary in developed and developing countries.
Proper planning can help to eliminate the drawbacks of PBMC.

5.2 Challenges of PBMC in developing countries

Sultana et al. (2012b) have discussed a number of factors which could be regarded as
a challenge during the introduction and implementation of PBMC in a developing
country. These challenges are as follows: lack of support from the government,
dependency on the external funding, political influence and corruption, lack of
experience and knowledge on PBMC, lack of proper planning, fear of losing jobs,
challenges in estimating the cost of PBMC, performance and attitude of contractors,
and loss of competition. However, as discussed earlier, funding is always a major
problem for the road maintenance in developing countries. As these challenges could
significantly influence the implementation of PBMC, the road authority of a developing
country should consider them before shifting to PBMC.

6. Conclusion
A strong road infrastructure system for communication is a prerequisite for
maintaining a sustainable socio-economic structure. PBMC is a new concept to
resolve the problems related to traditional methods of contracting and has significant
potential to improve the maintenance and management of the road infrastructure
system. This is a state of the art review paper that comprises the topic of PBMC and
related issues of implementing the method. It highlights issues of interest to road
authorities in the context of savings in maintenance cost and time. This concept is
still in its early stages and has ample scope of work for future researchers. Research
has been carried out on the implementation of PBMC in developed countries.
However, more research is needed to study the effectiveness of PBMC in developing
countries. The potential for reducing maintenance costs, increasing the quality of
works and reducing the chance of corruption in the long run in developing countries
are the challenging issues for PBMC, which needs more attention. This paper can
be used as a base or platform for future research in the area of PBMC such as
developing optimal policies and cost models. Further research can be carried out
on standards, which are needed to measure the performance of contractors.
Careful attention should also be given to resolving any hindrance which can be
a cause of failure to implement PBMC.

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Corresponding author
Masuda Sultana can be contacted at: m.sultana@griffith.edu.au

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