1. Assessing the Effectiveness of K.P.M.s
Alex Finn – WBoPDC Transportation Manager David McDougall – Inroads Asset Manager

2. Where and What Population 42,000 212,000 hectares 1030 km roads
3x national growth rate
10th fastest growing (96-01)
14th fastest growing (01-06)
212,000 hectares
1030 km roads
790/240 (sealed/unsealed)
177 Bridges and Structures
Encompass Tauranga City
110,000 pop
Largest port in NZ

3. Background The problem faced in 1999 The Solution Growth at 4%
Declining Levels of Service
Escalating costs
Council not wanting rate rises
The Solution
Lump sum, performance based, long term maintenance contract ….PBC-01

4. Joint Principals – NZTA & WBOPDC 2-Tier Governance structure
PBC-01 - Introduction
10 Years –
Joint Principals – NZTA & WBOPDC
2-Tier Governance structure
Joint Client Panel
WBoPDC
NZTA (Transit)

5. PBC-01 Features
Outcome based (measured by KPM)
Lump sum
Transfer of Operational Control & therefore some risk transfer
Single provider

6. Investment
$3million investment including subsidy
Gathering data
Setting up KPMs
Developing contract document
Tendering process
Compensating tenderers

7. Savings for Council
Estimate for 10 years $135m
Tender $105m
Saving $30m
Tender/Estimate $78%

8. In Summary
Investment $3 million
Savings over 10 years $30 million
Includes savings in NZTA subsidy

9. Setting up Performance Measures
Affordable Level of Service
Necessary for community and the asset
Must drive the contractor to provide the correct response

10. Basis of PBC Savings
Economy of scale
Contract period – 10 years
Risk allocation
Definition of Level of Service

11. Economy of Scale
Efficiency
Multi-skilled workforce

12. Contract Period
Better resources
Opportunity to invest in asset
High value staff

13. Risk Allocation
To party suffering consequences of failure to manage
To party best able to lower risk

14. What has Worked
Average road roughness has improved
Smooth travel exposure has improved
Surface condition (SDI) has improved
Condition of structures has improved
Provision of streetlighting has improved
Roads are safer than peer local authorities
Customer service has improved

18. What has not worked
Dust KPM
Difficult to measure
Subject to environmental conditions

19. What has not Worked (2)
Sealed Width KPM
Good idea in principle
Formula weighting focused on long straight underwidth roads
Mountainous, winding roads were avoided
New roads agreed by negotiation

20. What has not Worked (3)
Streetlighting
Intended to provide consistent level of illumination
Difficult to measure consistently
Difficult to address if lights are too far apart

21. Asset Manager - Inroads
David McDougall
Asset Manager - Inroads

22. Asset Consumption Whole of Life Value for money Big Ticket Items
Consuming inherent value/life of an asset by deferring maintenance and thereby incurring more expense later
Assessing the long term impacts that negate initial gains
Applies to assets where life cycle>> contract period
Big Ticket Items
Resurfacing ($350k per annum)
Pavement Reconstruction ($1M p.a.)

23. Why Resurface in a Performance Based Contract?
Resealing
Why Resurface in a Performance Based Contract?
Minimise maintenance costs (internal)
Texture KPM (%<0.5mm thresholds)
Surface Defects Index KPM
f(RAMM Rating, High Speed Data)
Residual Seal Life KPM

24. Residual Seal Life – Issues
RAMM Default life - based on average performance over similar geographical areas in NZ
Start = End
Compares existing age to RAMM default age f(traffic, seal type)
∑network
Set at Year 0
KPM requires same Y0 Yr 8, 9 & 10
Flawed…? Why?

25. Residual Seal Life – Flawed? Why?
Large variation in actual performance
Not necessarily start of Yr 0
Previous MIS, philosophy
Conservative seal selection criteria
Snapshot
To 10 to match Yr 0?
Counter productive
Could extract more value with careful MIS

26. Residual Seal Life – Why is it Important?
Measurement of value left in a network
Difficult to measure
Now favour comparison to previous top surface
Tracking texture change over time

27. Existing Top Surface vs Previous Top Surface

30. Seal Residual Life - Summary
Extending the life of an asset through a careful and proactive MIS thereby adding value
Residual Life KPM should encourage the extraction of its maximum potential life through
an effective MIS
tracking age profiles
not through Y0 profiles
flexible
risk transfer
needs to have understanding/management

31. Pavement Residual Life
“Consuming inherent value/life of an asset by deferring maintenance and thereby incurring more expense later”
What pavement KPMs drive Reconstruction?
Roughness – STE
Maintenance Costs
Residual Life

32. Pavement Residual Life
Intent in 2002:
Design Checks pre construction
Performance Measurement Post Construction
Use FWD deflection to measure Residual Life
Transfer maintenance consequences
Reality in 2010
Design Checks
Verify Design Assumptions Post Construction
Maintenance is only short term (  life)

33. Measure subgrade deflections
Design Theory
Measure subgrade deflections
Calculate thickness of aggregate to protect subgrade based on stiffness (Es)of aggregate
Empirical
Based on what has worked in past
If we do this in these situations then % failures should be less than 5%
No guarantees

34. Pavement Residual Life
We don’t know how to measure residual life of pavements
Deflection (e.g. FWD) does not measure life
We know when they have failed/about to fail
Measurement/prediction of actual life is difficult

35. Pavement Residual Life
What have we learnt?
Rely on good investigation, design
Rely on Quality Assurance and Control during construction
Monitor over time rutting and roughness
Expected life projection based on actual annual trends in rutting and roughness

37. Transportation Manager - WBoPDC
Alex Finn
Transportation Manager - WBoPDC

38. Team Culture
Mindset “best for the network”
Win-win approach
Drive for innovation
Danger of under-pricing
Contractor must make a profit
Reported through Balanced Scorecard

40. Customer Care
Contractor and client support each other
Sharing information
Act jointly to resolve issues
Managing community expectations
Customer processes measured and reported
Customer satisfaction surveys reported

42. Conclusion
More for less
Partnering relationship based on mutual respect
Data specific
Clearly articulated outcomes
Councils seeks to extend
Subject to NZTA endorsement

43. Questions