33925 TRANSPORT NOTES OPERATIONAL GUIDANCE THE WORLD BANK, WASHINGTON, DC Transport Note No. TRN-4 June 2005 Why road maintenance is important and how to get it done Sally Burningham and Natalya Stankevich ___________________________________________________________________________________________________ Roads, and means of transport, make a crucial contribution to economic development and growth and bring important social benefits. Poorly maintained roads constrain mobility, significantly raise vehicle operating costs, increase accident rates and their associated human and property costs, and aggravate isolation, poverty, poor health, and illiteracy in rural communities. This Note highlights the economic and social importance of regular road maintenance and recommends ways to achieve sustainable road maintenance with scarce public resources. Its audience is not specialists but rather people who need to understand road maintenance enough to discharge their responsibilities effectively: government policy-makers, mayors, ministry staff, new World Bank staff and staff in sectors such as rural development and social funds. The reference section offers sources providing more detailed information. This Note has been produced with the financial assistance of a grant from TRISP: a partnership between the UK Department for International Development and the World Bank for learning and sharing knowledge in the fields of transport and rural infrastructure services. maintenance actions (e.g., rehabilitation), and finally to Although the need for maintenance is widely recognized, new construction" (SANRAL 2004). it is still not getting adequately done. Many countries spend just 20­50 percent of what they should be 1.3. Delayed maintenance has indirect costs as well. spending on maintenance of their road network. There Neglected roads steadily become more difficult to use, are many reasons why this is so. This Note explains some resulting in increased vehicle operating costs (more of them and shows how to overcome them. The frequent repairs, more fuel use) and a reluctance by challenges include distinguishing maintenance from other transport operators to use the roads. This imposes a types of road work; calculating how much maintenance heavy burden on the economy: as passenger and freight will cost; where to get the money; and how to plan for it services are curtailed, there is a consequent loss of institutionally; and contracting maintenance work. economic and social development opportunities. 1. WHY IS MAINTENANCE IMPORTANT? 1.4. Countries need a core road network that carries about 80 percent of national traffic, including key roads in 1.1. Roads are among the most important public assets in urban areas and roads providing sufficient access to rural many countries. Road improvements bring immediate and areas. Some part of the overall road budget thus has to sometimes dramatic benefits to road users through be spent on construction and some part on maintaining improved access to hospitals, schools, and markets; the core network. But many countries have tended to improved comfort, speed, and safety; and lower vehicle favor new construction, rehabilitation, or reconstruction operating costs. For these benefits to be sustained, road of roads over maintenance. This has led to a steady improvements must be followed by a well-planned increase in the backlog of road repairs and a loss of program of maintenance. Without regular maintenance, development impact. In Sub-Saharan Africa for every roads can rapidly fall into disrepair, preventing realization kilometer of road rehabilitated, an estimated three of the longer term impacts of road improvements on kilometers of road fall into disrepair, leading to a net development, such as increased agricultural production deterioration in the total road network (World Bank and growth in school enrollment. 2003). The situation is similar in many other developing 1.2. Postponing road maintenance results in high direct and country regions. Much of the capital cost of road indirect costs. If road defects are repaired promptly, the construction is financed by donor funds, with low cost is usually modest. If defects are neglected, an entire perceived cost to the country but high real costs, while road section may fail completely, requiring full maintenance is funded locally, requiring difficult and reconstruction at three times or more the cost, on average, unpopular tax mobilization. of maintenance costs. The South African National Road 2. WHAT IS MAINTENANCE? Agency Ltd. (SANRAL) estimates that repair costs rise to six times maintenance costs after three years of neglect 2.1. The goal of maintenance is to preserve the asset, not and to 18 times after five years of neglect. To avoid such to upgrade it. Unlike major road works, maintenance escalating costs, SANRAL first "allocate[s] its available must be done regularly. Road maintenance comprises funding resources to ideal maintenance actions (e.g., "activities to keep pavement, shoulders, slopes, drainage reseals and overlays), and thereafter to more extensive facilities and all other structures and property within the Page 2 Transport Note No. TRN-4 June 2005 road margins as near as possible to their as-constructed (Malmberg Calvo 1998). For example in India the or renewed condition" (PIARC 1994). It includes minor national highways (about 65,000 km) are the repairs and improvements to eliminate the cause of responsibility of the Ministry of Roads and Highways, defects and to avoid excessive repetition of maintenance while state highways (about 124,300 km) are the efforts. For management and operational convenience, responsibility of the states. At each level the same road maintenance is categorized as routine, periodic, and agency is responsible for development as well as urgent. maintenances of its "own" network. 2.2. Routine maintenance, which comprises small-scale Involve all agencies and institutions associated works conducted regularly, aims "to ensure the daily with roads at national, regional, district, and local passability and safety of existing roads in the short-run community levels as well as road users and other and to prevent premature deterioration of the roads" stakeholders in identifying road issues and planning (PIARC 1994). Frequency of activities varies but is road interventions. Other stakeholders include generally once or more a week or month. Typical organizations dealing with tourism, health care, rural activities include roadside verge clearing and grass development, agriculture, and mining; road user cutting, cleaning of silted ditches and culverts, patching, associations; community organizations; and pothole repair. For gravel roads it may include nongovernmental organizations; and businesses. regrading every six months. Determine the overall level of funding required 2.3. Periodic maintenance, which covers activities on a and the balance among construction, rehabilitation, section of road at regular and relatively long intervals, and maintenance. Priority for maintenance funds aims "to preserve the structural integrity of the road" should go to roads that are functionally important and (WB Maintenance website). These operations tend to be in reasonably good condition. Routine maintenance large scale, requiring specialized equipment and skilled should be included as a cost component in donor- personnel. They cost more than routine maintenance funded road construction projects even if maintenance works and require specific identification and planning for is fully funded by government resources, to ensure implementation and often even design. Activities can be that it is not neglected. classified as preventive, resurfacing, overlay, and pavement reconstruction. Resealing and overlay works Develop standards for improving roads. Design are generally undertaken in response to measured standards and maintenance practices should be deterioration in road conditions. For a paved road reviewed to ensure the sustainability of the entire road repaving is needed about every eight years; for a gravel network. For instance, for low-volume roads design road re-graveling is needed about every three years. standards may stress accessibility and durability rather than width and speed. 2.4. Urgent maintenance is undertaken for repairs that cannot be foreseen but require immediate attention, such Include maintenance of bridges, road signs, as collapsed culverts or landslides that block a road. sidewalks, and other road structures. Neglected road structures and signs lead to increased road 2.5. Maintenance does not include rehabilitation, building accidents and, in the case of bridge deterioration, can shoulders, or widening roads. If the sections to be rebuilt lead to road closures and network disruptions. constitute more than 25 percent of the road's length, the work is rehabilitation, not maintenance. Assess capacity to fund, manage, and supervise road maintenance. International donors have become 3. HOW TO INCORPORATE MAINTENANCE INTO increasingly involved in road maintenance programs, PROJECT AND SECTOR STRATEGIES and this can be a good if temporary solution for some road agencies. For the longer term, donors should help 3.1. To be sure that road maintenance is not neglected, it to create a more stable source of funds. needs to be incorporated into project and sector strategies. That requires a clear and realistic strategy for Assess the capacities of municipal, district, and road network management that attends to the following provincial road agencies to perform any key principles: management and supervision responsibilities delegated by the central road department. Use the core network concept. As a rule of thumb, 80 percent of traffic flows over 20 percent of the road Define objectives and develop plans for road network. This core network is often the responsibility maintenance capacity building, including training, of the national government's highways ministry. These technical assistance, and local revenue generation. most heavily trafficked roads should receive priority for 4. WHAT WILL IT COST TO MAINTAIN THE ROAD full routine and periodic maintenance. NETWORK? Clearly assign to specific institutions "ownership" of roads and responsibilities for 4.1. Maintenance costs vary with road conditions, traffic development, maintenance, and priority-setting. Often, volume, geographic location, climate conditions, work when construction or upgrading has been completed methods, technical equipment, and other factors. by the national road agency through a loan or grant, 4.2. Where no maintenance program is in place, cost responsibility for maintenance remains unclear or is calculations do not have to be precise at the beginning. handed over to the "community." Good practice The main point is to get started. If calculations of road indicates that the agency that implements the road maintenance need using sophisticated road management construction or rehabilitation be responsible for systems or complicated formulas seem overwhelming, subsequent routine and periodic maintenance Page 3 Transport Note No. TRN-4 June 2005 Table 1: Maintenance costs for two-lane roads, all regions, 2000 (US dollars per kilometer) Work class Work type Predominant work activity Minimum Maximum Mean Routine Routine maintenance Unsealed 2L Highway 277 1,740 989 Bituminous 2L Highway 656 5,580 2,199 Periodic Grading Light Grading 51 205 110 Heavy Grading 323 876 522 Gravel resurfacing Regravelling 1,997 65,038 15,326 Bituminous pavement Fog Seal 2,805 15,783 8,946 Unsealed Unsealed Preventive Treatment 2,009 6,965 4,266 Surface Slurry Seal or Cape Seal 4,452 27,520 9,780 treatment Resurfacing Single Surface Treatment 5,295 38,607 18,937 Double Surface Treatment 10,684 45,277 27,039 Asphalt mix Asphalt Overlay < 40 mm 12,878 82,320 38,095 Resurfacing Asphalt Overlay 40 to 59 mm 21,021 126,131 68,713 Source: World Bank ROCKS website. Table 2: Unit costs for maintenance of a two-lane road, Lao PDR, 2003 Surface/Type of Work type Description Financial unit cost maintenance (US dollars) Paved/ routine Routine maintenance Grass Cutting, ditch cleaning, culvert cleaning, 195 per km maintenance off carriageway slopes, etc. Crack sealing Bituminous sealing of cracks wider than 3 mm. 1.5 per m2 Patching Patching of potholes by filling with base material 5.8 per m2 and patch with surface dressing Edge Repair Repair of pavement edges 2.2 per m2 Paved/ periodic Surface dressing Resurfacing the pavement surface with a single 1.5 per m2 maintenance bituminous surface dressing ~12,500 per km Spot rehabilitation New single surface treatment by scarifying the old ~25,000 per km surface Overlay Resurfacing and reshaping the surface with 30 6.6 per m2 mm asphalt concrete overlay Reconstruction Reconstruction of the whole pavement structure ~120,000 per km including new sandy subbase, gravel base and a ~21 per m2 double bituminous surface dressing Unpaved/ Routine maintenance Grass cutting, ditch cleaning, culvert cleaning 180 per km routine Grading Reshaping and leveling of the pavement surface 125 per km maintenance Unpaved/ Spot regravelling Spot regravelling in affected areas 5.8 per m3 periodic Regravelling including Regravelling of the pavement surface by applying 8.0 per m3 maintenance scarifying and 150 mm gravel including scarifying and reshaping ~7,750 per km reshaping the road surface Rehabilitation Same as for paved roads except bitumen works ~15,000 per km Upgrade Upgrade the pavement to sealed standard with ~170,000 per km new sub-base, base and surface dressing Source: Ministry of Communication, Transport, Post and Construction of the Lao People's Democratic Republic 2003. year for maintenance at the national level. Thus if a start with simple rules of thumb. Thus, for a road network municipality in, say, the Philippines owns a 50 km road in reasonable condition, assume costs of about USD500 network in reasonable condition, the minimum required per kilometer per year for routine maintenance at the annual budget for routine maintenance would be about municipal level and USD500­USD750 per kilometer per Page 4 Transport Note No. TRN-4 June 2005 USD25,000 at USD500 per kilometer. Or, at the national Create a ring-fenced road maintenance line item in level, if a country such as Cambodia has recently the national budget. The ministry of finance would thus undertaken major rehabilitation and now has a core be responsible for the allocation. This is not always a national road network of 4,000 km in good condition, the secure and stable financing source, but it has the required annual budget for routine maintenance would be advantage of being designated under the budget law. about USD2­USD3 million at USD500­USD750 per kilometer. These budgets do not cover the costs of Set up a dedicated road fund that receives resources periodic maintenance, but they are more than is actually directly from road user charges. The road fund can be being spent on maintenance today in many countries. included in the budget, as in Kenya, or it can be off- Another simple rule of thumb is that 80 percent of the budget and managed by an independent roads fund road budget should be spent on the 20 percent of the board established by relevant ministries and road user network that carries 80 percent of the national traffic, associations. Though a dedicated fund provides a more remembering to include urban, rural, and interurban stable source of financing and is managed by an roads in the network. administration dedicated to roads maintenance, the ministry of finance may oppose this method because of 4.3. Once a maintenance program is in place, road perceptions of earmarking and the proliferation of off- maintenance needs can be estimated more accurately budget funds. Sometimes road funds accumulate too through direct or indirect assessments: much money, which can encourage spending on new roads, which may not be in the national interest. A direct assessment can be based on the output of a standardized road management system such as the Give the road agency more discretion in concessioning World Bank's HDM-4 (WB HDM-4 website). The road maintenance activities to private sector providers, agency needs strong technical capacity to operate such which could be allowed to charge tolls to cover the cost models and to modify them appropriately in calculating of maintenance. This option could be combined with costs for subnational-level roads. any of the other options. An indirect assessment uses formulas related to 5.3 External funding sources can also complement local road length, traffic, and other variables affecting resources on a declining basis, to give local funding time maintenance needs. This approach requires less to develop. In general, external funding should not be technical capacity than the direct assessment used for routine maintenance. Rather, an overall program approach. Estimates can be based on available should be developed that includes both construction and average maintenance costs per kilometer for different maintenance, with external sources allocated to types of road. In Peru, Provincial Road Institutes construction and local resources to maintenance. prepare Participatory Provincial Road Plans that estimate maintenance costs based on road 5.4. Each country should develop an approach that suits classifications, climate, geography, traffic, and other local conditions. In Bolivia, the Road Maintenance influencing factors, as well as data on costs incurred in Account receives funds from road user revenues, but the past maintenance works (Supplement, box 3). account is managed by the road agency rather than an independent board. The amount of funds allocated to the 4.4. As a guide to road agencies using indirect account is determined by a Supreme Decree. External assessment to calculate their maintenance needs, table 1 funding was provided by international donor agencies to provides a worldwide picture of routine and periodic get the account started and then was phased out as road maintenance costs for 2000 from the World Bank's user charges accumulated. In Lesotho, 60­70 percent of ROCKS Database (WB ROCKS website). Table 2 provides routine and periodic maintenance needs are covered by more recent data, as of 2003, on unit costs of different the Road Fund financed by road toll revenue, a fuel levy, types of maintenance work in Lao PDR. license fees, and the Ministry of Finance (Supplement, box 1). 5. HOW TO ENSURE A STEADY FLOW OF MAINTENANCE FUNDS 5.5. Essential to all this is government commitment to road maintenance. Without it, no funding mechanism will 5.1. Good maintenance requires a steady and reliable work and the funds will simply be "borrowed" or shifted flow of funds. There are several reasons why this often to other purposes fails to materialize. Those responsible for allocating the budget may have little understanding of the economic 6. HOW SHOULD ROAD AGENCIES ENGAGE WITH and social importance of maintenance; they may have THE MINISTRY OF FINANCE AND PRESENT ANNUAL allowed the budget process to become politicized, MAINTENANCE BUDGETS? favoring construction, which is more visible and popular, over maintenance; or they may believe that fiscal 6.1. Road agencies need a system for requesting budget constraints justify deferring maintenance, which only funds, and they need accountability and audit raises future costs. mechanisms to account for the funds' use. 5.2. There are several ways to address these problems: 6.2. Once maintenance needs have been estimated, the road agency finalizes and submits its annual budget for Rely on a single annual allocation from the consideration to a funding source. At the central level national budget to the road sector, with the road that would be the ministry of finance or a road fund; at agency responsible for allocating appropriate funds for the regional or local level, it would be the funding maintenance. This only works where the road agency authority at that level. Each country's institutional and recognizes the importance of maintenance and is not financial systems affect how the budget submission is under pressure to prioritize new construction. presented. Page 5 Transport Note No. TRN-4 June 2005 6.3. Some funding sources are satisfied with a single, 7.2. Several types of road maintenance contracts can be total figure, while others demand more detailed used. Table 3 shows the most common types and can information, including work methods and technology help road agencies select the type that meets their needs choice. Routine and periodic maintenance costs may need and capacities. to be separated. Enough detail should be provided to permit later auditing against planned works. The budget 7.3. Procedures for contract management vary, but most may include such additional costs as overhead and have these four steps: contingencies for inflation and emergency works. Invitation for bids. Provisions for inflation are important in contracts of longer than a year and in short-term contracts in Assessment of bids and contract award. countries where inflation is high. Management of ongoing contract. 6.4. The funding source then allocates resources following standard procedures. When funds are allocated by the Auditing and evaluation of completed work. ministry of finance, the road agency's requests would be 7.4. Aspects of effective contracting include efficient assessed against those of other sectors as well. Other designs informed by local knowledge, use of local factors influencing funding decisions include quality of contractors and consultants, generation of local submission, network size, historical precedent, and employment and income, capacity building, use of technology choices. When regional and local level appropriate technology, and simplified contract forms. In agencies depend on transfers from the central addition, effective contracting requires: government, the ministry of finance determines the allocation for the entire road sector. In some Latin Capacity to prepare bid documents, arrange American countries with unitary systems and stringent contracting procedures, process contracts, supervise fiscal constraints, the ministry of finance limits the overall work, and deal with arbitration issues. allocation to each sector. In that case the road agency Straightforward procurement procedures. Use of e- would need to work within that budget envelope, procurement is strongly recommended. apportioning funds among maintenance, rehabilitation, and new construction. A steady flow of funds to pay contractors. 6.5. Accountability mechanisms are also important. A quality assurance plan developed in close National treasuries are reluctant to release funds unless collaboration with quality control engineers that road agencies can demonstrate how the funds are used assigns clear responsibilities to contractors, and with what effectiveness. For instance, in Cambodia, consultants, and road agency and spells out expected funds collected by the Road Fund are not being released road maintenance outcomes for contractors and for road maintenance because of shortcomings in the technical audits for consultants. budgeting and accounting mechanisms (WB and ADB 2003). When internal accountability structures are weak, 7.5. Private contractors are increasingly being used in independent parties can be called in to evaluate the place of in-house units, for reasons of cost effectiveness maintenance program. External audits can demonstrate and efficiency. Claims that in-house units are cheaper are the road agency's willingness to be held accountable for often based on improper costing of the force account program management and may be more convincing to activities. Maintenance activities are easy to learn, so that national treasuries than internal systems. a system that combines microenterprises for routine maintenance and larger contractors for periodic 6.6. Again, strong support from political leaders and maintenance can be established quickly. Redundant force national treasuries is crucial. A road board and road fund account crews--and their equipment--can be reorganized will not achieve the desired results unless there is a to become contractors, with some training and strong political will to support them. In India, for supervision. They should not be retained as agency staff. example, although the Central Road Fund allocations are assured and are not constrained by annual budgeting, in 7.6. The same firm contracted to do routine maintenance practice the funds go to upgrading rather than can also handle emergency work. If maintenance is maintenance. In Ghana, despite clearly acknowledged carried out regularly and properly, the need for past failures to allocate adequate funds for maintenance emergency work will reduce substantially. A limited from a substantial roads budget, the 1997 Ghana Road number of in-house units can be retained to allow Fund Act does not clearly prioritize maintenance in its list emergency work under force-majeure circumstances, of activities eligible for funding (Ghana Road Fund 1997). such as earthquake and flooding. As a result, maintenance remains compromised, and a 8. WHAT TYPES OF CONTRACTORS COULD BE credible maintenance program for roads has yet to be developed. USED? 7. HOW WOULD MAINTENANCE PROGRAMS BE 8.1. Routine maintenance contracts are often short term IMPLEMENTED? (6­12 months) and low value, with little appeal to contractors from other countries. Many countries 7.1. Maintenance operations can be outsourced to private therefore use domestic contractors to implement organizations or carried out using force accounts (in- maintenance works. A strongly developed local house units and equipment). Responsible road agencies contracting sector has several advantages, from works need competent maintenance program management, a methods tailored to local conditions and improved good monitoring system, and clear and transparent productivity to greater accountability and lower cost. The procurement procedures. Page 6 Transport Note No. TRN-4 June 2005 creation of direct and indirect employment opportunities 9. WHAT IS THE AVERAGE DURATION AND SIZE OF also contributes to poverty reduction. CONTRACTS? 8.2. Maintenance of South Africa's entire national road network is covered by routine road maintenance 9.1. The longer the contract period, the greater is the contracts. A managing contractor is paid a fee to manage incentive for contractors to invest in specialized the work of historically disadvantaged enterprises and equipment. This allows considerable cost savings but micro, small, and medium-size enterprises, which requires well-developed contractors and a highly perform 80% of all maintenance work. This system professional road agency to manage their work. The ensures that the entire national road network is United Kingdom uses three- to five-year contracts, maintained by contractors responsible for maintenance Sweden uses three- to six-year contracts, and Chile uses and any emergencies that arise. three-year contracts for unpaved roads and five-year contracts for paved roads. 8.3. Contractors can be classified by size of contract and type of work (TRL and DFID 2003): 9.2. Other developing and transition countries go for short-term contracts of a year or less, for a variety of Lengthworker: an individual contracted to perform reasons. For instance, unfavorable weather conditions routine maintenance on a 1­2 km road section. The may prevent contractors from conducting any road works lengthworker often lives alongside the road and is during certain times of year, such as the monsoon season supplied with tools and material. Since managing in Bangladesh or winter in Mongolia, making one-year individual lengthworkers is inefficient, they can be contracts inefficient. Lesotho generally engages in three- encouraged to join together into small contracting month trial contracts with its locally developed organizations or to subcontract to larger contractors. contractors covering small sections (about 3 km) of rural Ghana and Mongolia use lengthworkers, because long road. Once they prove their competence and efficiency, distances and low population density make it hard to they are awarded longer term contracts covering a longer get other types of contractors out to the roads. road sections (see box 1). Community contractor: an organization that springs 9.3. The size of contracts depends on maintenance costs up in response to emerging community needs and may in each country (see section 4). In Peru routine then dissolve again the need is met. Any profits are maintenance costs for previously rehabilitated rural returned to the community to fund future maintenance gravel roads dropped from USD1,000 per km per year needs. Most activities in which they engage are labor- and higher to USD700­USD800 once regular based or labor-intensive. This type of arrangement maintenance was introduced (see table 4 and box 3). provides employment to the local population. Microenterprise contracts average 35 km of road (with a Petty contractor: like a community contractor, uses 20 km minimum and 50 km maximum, or about 3 km per labor-intensive methods and performs routine person), or about USD24,200­USD27,700. The use of maintenance works in a very local area. Can be a local labor and very simple tools keeps costs low. cooperative with some 10­20 members with limited 9.4. Albania spends more on routine maintenance of technical qualifications. Differs from a community paved rural roads (a little more than US$3,000 per km contractor in being a private organization. per year) because of more sophisticated equipment and Microenterprise: a cooperative or community more expensive material, higher traffic loads, and other association set up as a private enterprise and factors; contracts average one year. Periodic operating like a petty contractor. Peru and other Latin maintenance costs vary from USD10,000 to USD16,000 American countries have successfully used the per km per year, and most contracts are for two years microenterprise method for rural road maintenance. (see table 4). Small scale contractor: usually operates only in a 9.5. The average length of road assigned to individual local area, but strives to grow in size, technical contractors generally depends on the qualification and capacity, and geographical range. Small-scale experience of local contractors and the type of works. contractors are trained in labor-based methods and are Periodic maintenance contracts tend to cover smaller competent to work on unsealed roads only. They have road segments than routine maintenance contracts. For more technically qualified staff than a microenterprise. instance, in Lao PDR in 2001-02 periodic maintenance contracts covered 23 km of national roads and routine Medium- and large scale contractors: may begin maintenance contracts covered 86 km on average. as a small-scale contractor or as a merger of several small contractors. A medium-scale contractor often 10. CONCLUSION has more sophisticated equipment and wants to use that investment as much as possible. Its staff is often 10.1. To conclude, "if money is short ­ and it usually is ­ trained in new skills, such as the construction of there's only one rational course of action: improved and bituminous surfaces. A large-scale Maintain existing roads before funding new ones. contractor operates nationally and, possibly, internationally and is interested in large, areawide, Make sure it is done today, and even every day. multiyear performance contracts, possibly subcontracting some activities to small contractors. Because tomorrow, it will be much more expensive" (PIARC 1999). Page 7 Transport Note No. TN-4 June 2005 Supplement Table 3: Types of road maintenance contract Contract type Definition Suitability Short-term contracts Normal Required quantities of each activity are listed on a bill of quantity (BoQ). Periodic maintenance and measurement The price is submitted and used by the road agency to assess bids and rehabilitation. contract/Adm award the contract. Typically, the quantity of completed work that meets easure the technical specification is measured monthly, and the contractor is paid contract for that quantity multiplied by the contract unit rate. Simple For work on a larger scale, quantities are estimated, measured, and paid Can save on measurement Measurement as usual, but the BoQ includes fewer items. Requires skilled inspectors to costs. contract ensure that all necessary work is carried out under the composite activities. Cost plus Actual costs incurred by the contractor are paid, plus an agreed For contractors undergoing contract percentage for profit. Generally not cost effective, and the contractor has training or for items of work little incentive to provide high-quality output. where a specification is difficult to set. Long-term contracts Term Based on a schedule of unit prices and estimates of quantities listed in For routine maintenance. measurement BoQ. Bids are assessed and contracts awarded as above. Contract For all contractors. contract specifies activities to be performed and timing and may include an When funding is unreliable. emergency response capability. Payment is based on inputs (amount of physical works executed and amount of material supplied). Performance- Contractor is paid monthly based on performance outputs measured For routine maintenance or based against standards stated in the contract rather than inputs. Penalties are both rehabilitation and contract imposed if the outcomes for a specific activity fail to comply with the routine maintenance, but contract standards, and payment may be reduced or suspended until the not for rehabilitation alone; necessary repairs are done. for longer periods. Less effort is spent on contract administration, and corruption tends to For a mature road agency decline. The contractor's share of responsibility increases over time. The that can establish and follow contractor decides whether to use innovative and more efficient methods transparent checking and to cut costs and meet the required performance standards. auditing procedures; and a As the road agency and contractors gain more experience, the routine mature contractor that can maintenance contract can be extended from one year to three or more. If innovate to meet the contract is extended to cover periodic maintenance once the performance standards and contractor has the necessary skills, the contract should be issued for three reduce its own costs. years or more since periodic maintenance occurs less frequently. This type Unsuitable if funding cannot of contract can be used for roads in poor condition, but initial rehabilitation be ensured for the entire should be specified using agreed rates and measured quantities. contract period. Lengthworker A type of performance contract for one person to implement routine For routine maintenance if contract maintenance works on an allocated length of road (normally 1­2 km). contractors are adequately The contractor is often paid monthly based on a specified work time. trained and supplied with Performance standards should be specified, and contractors should be needed equipment and paid for performance rather than attendance. Lengthworkers can be material. subcontracted to a larger contractor, to avoid the high costs of administering many small scale contractors. Community Payment is based on measurement or performance. Contracts are often For contractors that have contract awarded on agreed rates rather than tendered, but if other community emerged from the local contractors are interested, technical proposals may also be assessed. community. Contract documentation should be transparent and easy to understand by those unfamiliar with contracting. A contract may provide for assistance from a road agency or assign complex work to a commercial subcontractor. As the client road agency and contractor are usually from the same community with the same incentives for success, conflicts of interest may arise. Source: Heggie and Vickers 1998; TRL and DFID 2003. Page 8 Transport Note No. TRN-4 June 2005 Table 4: Average costs, road length, and duration of a road maintenance contract in selected countries Average cost per km Average road length in Average cost (USD) Average contract per year (USD/km) km per contract per contract duration (months) Country Routine Periodic Routine Periodic P+R Routine Periodic Routine Periodic Albania (2002-2003) National roads (mostly all paved) 1,985 16,000 31 n/a 44 61,535 - 12 24 Paved rural roads 3,035 9,850 6 n/a 19 18,210 - 12 24 Laos (2001/2002) National roads 6,000- (mostly all paved) - 13,000 86 23 n/a - - 12 12 Rural roads (mostly all gravel) - 2,000 - - - - - - - Lesotho (2000) 20,000- 10-15 6,000- 200,000- Paved rural roads 600-700 40,000 km n/a 10,500 600,000 6-12 6-8 10,000- 10-15 9,000- 100,000- Gravel rural roads 900-1,000 15,000 km n/a 15,000 15,000 6-12 6-8 Peru (2002) 24,220- Gravel rural roads 700-800 n/a 34,6 n/a n/a 27,680 n/a - - Zambia (2003-2004) Main paved roads 360 - 70 - - 25,000 - 12 - "n/a" means "not applicable". "-" means "no available data". Source: The results of the research conducted for this particular project. Box 1. Training local road maintenance contractors in Lesotho. Since phasing out its force account in 1997, Lesotho has relied on local small-scale contractors for maintenance of rural roads. A nine-month Contractor Training Program has trained 65 small-scale contractors in road maintenance and rehabilitation. Classroom and technical training are followed by three-month trial contracts for routine maintenance and periodic maintenance, typically for road segments of 3 km. The program has generated temporary employment for some 4,000 workers, contributing to poverty alleviation. Contractors who successfully complete the trial contracts are awarded a road maintenance contract, generally for a road segment of 10­15 km. Competitive bidding is avoided to keep the program focused on quality and local contractors rather than price. Several small-scale contractors have merged and formed medium-size firms to perform periodic maintenance, and medium size contractors are encouraged to consolidate to form large-scale units capable of competing in international tenders. About 60­70 percent of routine and periodic maintenance needs are financed through the Road Fund (financed by road tolls, a fuel levy, and license fees) and Ministry of Finance budget allocations, an outstanding achievement. Source: Interview with Subhash C. Seth, Highway Engineer in the Africa Region of the World Bank; Seth 2004. Box 2. Contracting out routine road maintenance in Zambia. Since 1999 small local contractors have been awarded one-year performance-based contracts to maintain road verges, ditches, and cross-drainage structures to set standards on designated sections of the main road system. A typical contract covers 70 km of rural road for US$25,000, paid by the Road Fund. More than 6,000 km of paved main roads have received routine maintenance regularly using this system, at an annual average cost of US$360 per km. Most operations are labor- intensive, using local laborers. An estimated 1.5 million person-days of employment per year have been created under this system. Beginning in 2005 the contracts will be extended from one year to three years and will include simple on-road maintenance such as pothole patching. A slightly modified contract is used for routine maintenance of urban roads in Lusaka, including litter collection. Teams of five people per kilometer on one side of the road conduct routine maintenance under three-year performance-based contracts. About 108,000 person-years of employment have been created. The program is being extended to other urban areas. Source: Gary Taylor, IT Transport Ltd.; Zambia National Roads Board: http://www.nrb.org.zm Page 9 Transport Note No. TRN-4 June 2005 Box 3. Contracting out rural road maintenance in Peru. The Peru Rural Road Rehabilitation and Maintenance Project (jointly financed by the Inter-American Development Bank, World Bank, and government of Peru) established a microenterprise-based road maintenance program, recognizing that is was "not a welfare program but a cost-effective way of ... ensuring the benefits from improved access [following road rehabilitation] will not vanish" and of generating employment. All rehabilitated roads were entered into the routine maintenance program. Microenterprise contractors (with 10­16 employees) received annual performance-based contracts, which could be renewed. Once microenterprises gained technical and business skills, competitive bidding was introduced. In the second phase of the project, which began in 2002, Provincial Road Institutes were set up to estimate maintenance costs, prepare road maintenance plans, and managing contracts. There are now about 40 institutes in the 105 provinces where the project is operating. The institutes are typically staffed with one engineer, one planner or technical specialist, and one administrative support person. Maintenance contracts cover 20­50 km of road (an average of 45 km of road or 3 km per person). Average maintenance costs fell from US$1,000 per kilometer of rural road to US$700­US$800 once maintenance work was being performed regularly. The program, which began with rural roads, has been expanded to the national network. Initially, payment was uniform, but gradually roads were classified according to road conditions, traffic load, geographic location, and climate impact. Microenterprises are now required to submit brief descriptions of types of maintenance activities implemented and expenditures incurred. All of this helps the Provincial Road Institutes to estimate maintenance costs more accurately. In the first phase of the project, financing was handled through a maintenance cofinancing mechanism under which participating local governments covered the cost of routine maintenance activities in their jurisdictions and the Ministry of Transport and Communication financed the balance. In the second phase local governments are responsible for covering part of rural road maintenance costs (generally about a third). The new Municipal Compensation Fund allows municipalities to finance recurrent costs associated with rural road maintenance. Overall, transfers from the center cover about 62% of road financing, while local taxes, fees, and loans cover the rest. Colombia originated the use of microenterprises as road maintenance contractors some 15 years ago. The successes in Colombia and Peru encouraged Bolivia and Honduras to adopt the same approach. Keys to success have been the strong commitment of local communities, which see road maintenance as a means of social and economic development, and the use of local microenterprises, which employ people who live alongside the roads and so have an incentive to keep the roads in good repair. Source: Interview with Aurelio Menendez, Senior Transport Economist, LCSFT, TTL for the Peru and Bolivia projects; World Bank 2001. Page 10 Transport Note No. TRN-4 June 2005 REFERENCES 1. Ghana Road Fund. 1997. Road Fund Act 1997 Act 536. GTZ/GHA Road Maintenance Project. 2. Government of Andhra Pradesh, India. 2002. Road Maintenance Management Users Manual, Revision 3, August 2002. Prepared by SMEC International and SMEC India. 3. Heggie, Ian .G, and Vickers, Piers. (1998). "Commercial Management and Financing of Roads. Technical Paper No. 409. World Bank, Washington, D.C. 4. Hoban, C., J. Riverson, and A. Weckerle. 1994. Rural Road Maintenance and Improvement: Best Practice. World Bank, Operations Evaluation Department, Washington, D.C. 5. Liautaud, G. 2001. Maintaining Roads. The Experience with Output-Based Contracts in Argentina. The World Bank, Washington, D.C. 6. Malmberg Calvo, C. 1998. Options for Managing & Financing Rural Transport Infrastructure. World Bank Technical Paper No. 411. World Bank, Washington, D.C. 7. New Zealand Transfund. 2003. Comparative Maintenance Unit Costs per Kilometre 2002/2003. 8. PIARC (World Road Association). 1999. Save your Country's Roads. Also available at the PIARC Website. 9. PIARC (World Road Association). 1994. International Road Maintenance Handbook: Practical Guidelines for Rural Road Maintenance, Volume I of IV. Roadside Areas and Drainage. Financed and coordinated by ODA and TRL. 10. SANRAL (South African National Road Agency Ltd). 2004. Annual Report 2004: Sustainability Report. Pretoria, South Africa. 11. Seth, S. 2004. Training of Small Scale Contractors for Rural Road Maintenance in Lesotho. SSATP Note 36. World Bank, Washington, D.C. 12. TRL (Transport Research Laboratory) and DFID (U.K. Department for International Development). 2003. Management of Rural Road Network. Overseas Road Note 20. TRL Limited, Crowthorne, Berkshire, United Kingdom. 13. World Bank. 2004. Road Financing Learning Series. Available In English and Russian at the World Bank ECA Region Transport Web Library. 14. World Bank. 2004. Terms of Reference for the Preparation of Bidding Documents for Performance-based Management and Maintenance of Roads in Several Countries. World Bank, Washington, D.C. 15. World Bank HDM-4 Website 16. World Bank ROCKS Website 17. World Bank Construction and Maintenance Website 18. World Bank Rural Transport Thematic Group. 2003. Rural Transport in Multi Sectoral and Community Driven Projects. World Bank, Washington, DC. Also available in Spanish. 19. Zietlow, G. 1998. Cutting Costs and Improving Quality through Performance Specified Road Maintenance Contract. Pilot experiences in Latin America offer lessons for Africa. SSATP Note No. 14.