# Presentation: 030700

##  What is Performance Contracting?

- Transportation Research Board86th Annual Meeting
*Session 403, Performance Contracting *
*“**Delivering Performance and Harnessing the Innovation of the American Industry”*
*January 22, 2007*
- Sidney Scott, III, P.E.
- Trauner Consulting Services, Inc.

## What Performance Contracting is Not:

*“**Just tell me what to do, I want to build it and move on”*
- Traditional way of doing business
- The way we have always done it
- Price driven (lowest price)
- Burden/risk is on the owner to design, specify, and control the work
- Recipe or M&M specifications describing:
- Materials (products) used
- Methods (processes required)

## What is Performance  Contracting?:

*“**Tell me what you want, but don’t tell me how to do it.” *
- Goal or results-oriented
- Best-value driven (LCC)
- Doesn’t dictate how (except essential needs or functions)
- Rewards innovation
- Rewards “*better-than-the-minimum*” outcome

## Trends in Highway Contracting

- Prescriptive Requirements

- QC/QA  End-Result

- Performance Contracting

- Performance Warranty
- Performance-based Maintenance
- Best-Value
- Design-Build
- Incentives
- Highways for Life

## Performance Specifying

- Umbrella definition
*“**A statement of required results with criteria for verifying compliance”  (CSI)*
- Categories
- QC/QA or End-Result Specifications
- Performance Warranty provisions
- Performance-based or -related  Specifications
- Design-Build

## Performance Contracting 

- Strategic Roadmap (2004)
- What do we want?
- How do we order it?
- How do we measure what we ordered?
- How do we know we got what we ordered?
- What do we do if we don’t get what we ordered?

## What do We Want?

- High-Level Goals (HFL)
- Safety
- Congestion Reduction
- Improved Quality
- User satisfaction

- Project Goals
- Time-savings
- Cost-reduction
- Traffic Management
- Environmental
- Innovation

## How Do We Order it?

## How Do We Order it?

## Considerations

- Can the work be described in terms of end result performance?
- Smoothness
- Strength
- Durability
- Aesthetic features
- Time
- Safety

## Considerations

- Are there multiple means and methods (alternatives) for achieving intended results?
- Are specified alternatives practical and economical?
- If multiple factors contribute to the desired result, can they be identified?
- Are factors measurable and testable?

## How do We Measure What We Ordered?

- Traffic Management 
- Worker Safety 
- Pavement Quality 
- Pavement Safety 
- Time 
-   User Satisfaction 

- Time thru work zone
- Incident Rate
- Smoothness (IRI)
- Skid Resistance
- % ahead of schedule
-  Survey

## Trust but Verify
Tests
Rapid and Reliable
Repeatable
Achievable and Economical

- Tests
- Rapid and Reliable
- Repeatable
- Achievable and Economical

*How Do We Know We Got What We Asked For?*

## Incentive/Disincentive (I/D) Strategies
Promote “better than the minimum” performance 
Pay Adjustment Systems
I/D for quality
Payment based on Value Received or LCC
Shared Risk Contingency

- Promote “better than the minimum” performance
- Pay Adjustment Systems
- I/D for quality
- Payment based on Value Received or LCC
- Shared Risk Contingency

*What Do We Do if We Don’t Get What We Asked For?*

## Summary

- Performance contracting is new way of doing business
- A cultural shift
- Not for all projects
- Requires risk/reward sharing
- Requires a framework and specifications

##  What is Performance Contracting?

- Transportation Research Board86th Annual Meeting
*Session 403, Performance Contracting *
*“**Delivering Performance and Harnessing the Innovation of the American Industry”*
*January 22, 2007*
- Sidney Scott, III, P.E.
- Trauner Consulting Services, Inc.