Exploring Performance-Based Contracts: A Good Option to Address Long-Term Road Maintenance in California?

Abstract

Performance-based contracts (PBCs) used in road maintenance provide flexibility for considering new materials, design, and technology to achieve predetermined performance targets. Several states in the U.S. have already used these types of contracts in road maintenance, and their experience can inform the use of PBCs in California. The objectives of this research are twofold. First, identify the benefits and challenges of PBCs compared to traditional contracts. Second, explore the main aspects of PBCs implementation for road maintenance and relate them to California's context. To this end, deductive-inductive content analysis was conducted on 84 peer-reviewed articles published between 1998 and 2023. Findings of this research identified the main benefits of PBCs to be: (1) cost savings, (2) improved work/service quality, and (3) reduction in risk to the transportation agency through the transfer of responsibility to the contractor. The main challenges were found to be: (1) the need for training and a shift in mindset from traditional contracting forms to PBCs, (2) the need to establish trust between contracting agencies and contractors, and (3) the temptation for contractors to abuse the system. Research findings highlighted "procurement," "performance indicators," and "incentives/disincentives" as the three major themes to consider in PBC implementation. California does not have a history of using performance-based contracts for road maintenance. Results from this research may be the first stepping stone to initiate the decision-making process to use these types of contracts for road maintenance.