General Knowledge
The World Bank
Published in
Submitted by
Olim Latipov
Related theme(s)
Finances & Economics
Latin America and Caribbean (LAC)

Contractual Procedures to Involve the Private Sector in Road Maintenance and Rehabilitation

This paper reviews options for creating an enabling environment for the construction industry, thus leading to more involvement of private contractors and consultants in improved management of road assets. The process, which is of particular importance for economies in transition, begins with separating the functions of planning and management from implementation of road works. Forms of contract reviewed include price based and cost based, procedural to functional specifications (or method based and performance based), and short and long term. These different forms have several implications on the risk allocation between client and contractor; the risks to the highway agency tend to decrease as the agency shifts from force account (or direct labor) to shortand long-term forms of contract with the private sector, including concessions. Highway agencies have increased private sector involvement in an attempt to: reduce the amount of highway agency resources required on a highway project; reallocate performance risk; increase contractor innovation; increase the quality of constructed products; and reduce life cycle costs of highway projects. A summary of recent experience in the increased involvement of the private sector in highway asset management is summarized for countries such as Australia, New Zealand, the United States, the United Kingdom, and Argentina.