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Output & Performance based Road Contracts (OPRC)

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Presentation on theme: "Output & Performance based Road Contracts (OPRC)"— Presentation transcript:

1 Output & Performance based Road Contracts (OPRC)
An innovative way of outsourcing maintenance & asset management

2 OPRC The Contractors on Output- and Performance-based Road Contracts should ensure that the physical condition of the roads under contract is adequate for the need of road users, over the entire period of the contract which is normally several years.

3 Multiple year contract to manage and maintain infrastructure, whereby:
Payment to Contractor is linked to road conditions not to physical works and are lump sum in nature. Road conditions mainly defined from a road users’ perspective (travel speed, safety, comfort , all weather access etc.) Contractor responsible for planning, design & implementation of maintenance works including road condition monitoring. Payment reduction if road conditions are not maintained. LGED (client) only has to monitor road conditions!

4 During the life of the Contact the Contractor will most likely have to carry out different types of maintenance works. The definition of the exact nature of the maintenance works, their timing, and their implementation is left to the judgment of the Contractor. The Contractor is entitled to independently define: (i) what to do, (ii) where to do it, (iii) how to do it, and (iv) when to do it. The role of LGED is to enforce the contract by verifying compliance with the agreed Road Conditions and with all applicable legislation and regulations.

5 Together with his monthly invoice, the Contractor will report the result of his own evaluation of compliance with the required Road Conditions, based on his own monitoring system which is mandatory. His statement will then be verified by the Employer or his representative (contract manager) through inspections. If the Service Levels are not met, payments are reduced, based on a schedule given in the contract. Payments may even be suspended, and the contract cancelled, if the contractor fails during an extended period to achieve certain minimum thresholds values of Service Levels.

6 A monthly lump-sum remuneration paid to the Contractor will cover all physical and non-physical maintenance services provided by the Contractor, except for unforeseen emergency works which are remunerated separately Contractors are not paid directly for “inputs” or physical works (which they will undoubtedly have to carry out), but for maintaining specified Service Levels (Road Conditions). It is possible that during some months contractors 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. However, his monthly payment remains the same as long as the required Service Levels are complied with.

7 Some emergency works should always be foreseen
Some emergency works should always be foreseen. Those are meant to remedy unexpected damages which occurs as a result of extraordinary natural phenomena, and which affect the normal use of the road, or the safety and security of the users. For emergency works, the contract limits the responsibility of the Contractor, establishing that LGED will approve execution of services and separate remuneration based on specific amounts proposed by the Contractor for each case, on the basis of volume of works estimated at each time and on unit prices included in the bid and in the contract. A provisional sum shall be set aside for emergency works.

8 Insulation maintenance budget from Political interference
OPRC Less Monitoring Cost reduction Asset management Improved performance Contractors and XEN/UEO Insulation maintenance budget from Political interference Less Erratic Fund Flow

9 HYBRID CONTRACTS: Maintenance & Asset Management Services: Emergency Works Initial Repair Works: Initial Repair Works have to bring the Road up to pre-defined standards, this may include reconstruction of minor structures The Initial Repair Works are explicitly specified by LGED in the contract are quoted on the basis of measurable output quantities and paid as performed.

10 Fixed lump-sum prices for maintaining the roads at certain services levels for a relatively long period. The Repair and Emergency Works will be paid on basis of measurement, as par traditional LGED contract arrangements. The contractor shall recover a portion (about 40%) of the initial Repair works through the monthly Road Maintenance & Management Charges. Warrantee & Guarantee Reduce backlog maintenance through borrowing from private sector.

11 financial offer: the Maintenance Services: Sum of monthly lump-sum payment the Repair Works: A Sum, linked to quantities of measurable outputs. Emergency Works in the form of a traditional bill of quantities. A Sum on the basis of the estimated quantities and on the quoted unit prices.

12 Steps towards the Successful Pilot of OPRC
This type of contract makes it necessary for the Contactor to have a good financial & management capacity. Training/Workshops. Technical studies. Prequalification of Contractors. Facilitation during Pilot Contracts. Restricted tender Prequalification & Screening Attendance of training Qualifications of personnel Soundness Technical & Financial Proposal Selection Lowest Bid

13 Average Annual Maintenance Expenditures OPRC Contract
Union Upazila 6 years 503,750 615,402 9 years 366,885 446,509 14 years 336,025 408,435

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