1. Pavement Type Selection: What is the Ideal Process (and what Role does Competition Play)? Leif G. Wathne P.E. ACPA

2. Pavement Type Selection One of the more challenging and controversial decisions administrators face Balancing materials, structural design and performance against initial and life cycle costs Increasingly important given constrained resources and growing needs $90 billion spent on highways in U.S. annually! Needs exceed $200 billion…

3. Pavement Type Selection Earliest US guidance - 1960 AASHO Guide on Project Procedures – Aim “to assure the public of full value for their highway dollar.” – Established process based on transparency, and sound engineering while leveraging benefits of free market dynamic through healthy and spirited competition

4. 1960 AASHO Guide Lists a host of factors: Traffic, materials, weather, pavement performance, cost, etc. Much improvement in understanding and modeling since 1960 (design, performance modeling, cost analysis, etc.) Despite such advancements, authors warn that PTS process only meaningful in presence of competition between industries.

5. 1960 AASHO Guide In section on cost comparisons (LCCA): doubt as to the validity [of such analysis] arises in the case where on[e] type of pavement has been given monopoly status by the long-term exclusion of a competitive type. I.e., the cost-data is not meaningful… “…desirable that monopoly situations be avoided…” Often not recognized or considered appropriately by decision makers today

6. Current U.S. Practice Vast differences across US… despite guidance and policy National research effort into PTS Comprehensive guidance, based on 1960 guidance – Formal and transparent – Life cycle cost analysis framework – Weighing economic and non- economic factors – Use of alternative bidding – Also notes: consider alternatives that stimulate competition

7. Suggested process

8. Role of Competition Cannot afford to forgo any opportunity to make highway investment go farther! Competition between industries assures the highest return on taxpayer investment – Drives down cost – Spurs innovation – Improves quality Realized over 50 years ago by highway officials and, it is also true today…

9. Analysis of Bid Prices ----------------> Increasing Competition ---------------->

10. Competitive Paving Program? 0-10% 10-20% 20 + % From 5-year rolling average balance of DOT pavement type, based on Oman Systems bid tabulations.

11. Competitive Paving Program Same data viewed through a break-even analysis… MORE PAVEMENT FOR SAME INVESTMENT!

12. Role of Competition Complex relationship between a number of factors (# bidders, volume of market, etc.) We can say however: – Clear trend of lower prices for both pavements with increasing levels of competition (regardless of process) – Variability in unit prices decreases with increasing competition Confirms what officials recognized 54 years ago No downsides- allows agencies to purchase more pavements for same investment!

13. In summary Lots of guidance on pavement type selection – Started in US at outset of interstate construction – Competition identified as important factor – Improvements in understanding, modeling, etc. – Role of competition forgotten or overlooked… Process developed rooted in 1960 guidance – Equivalence, life cycle, transparent, competition Analysis of bid-data confirms value of competition in assuring improved value

14. In Conclusion… Pavement type selection process is only meaningful and equitable if made in the context of a competitive market place! Competition represents the most significant opportunity for highway agencies to extend the purchasing power of their investment!

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