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Privatized Highway Asset Management

Management of Subcontract Maintenance

Presentation to theInternational Road Federation

Symposium

Hanoi, Vietnam

September 29 – October 1, 1999
 

By

Kent O. Lande, P.E. Asset Manager 

VMS, Inc. Richmond, VA

VMS, Inc. of Richmond, VA, USA, entered into a 5 ½ year lump sum contract with the Virginia Department of Transportation (VDOT) on December 19, 1996 to perform Highway Asset Management services on approximately 2,000 lane km (1,250 lane miles) of interstate highway. The Asset Management contract was developed on the basis of performance criteria whereby all of the roadway features are maintained to a set of pre-established outcomes.

Performance and Outcomes

·         Manage Asset Groups – A set of seven (7) major asset groups were established jointly by VMS and the VDOT:

1.       Pavement Maintenance

2.       Roadside Maintenance

3.       Drainage Maintenance

4.       Vegetation & Aesthetics

5.       Traffic Services

6.       Snow & Ice Control

7.       Bridge Maintenance

Within each of these Asset Groups are a series of functional activities which relate to work within the group. For example, within the Pavement Maintenance Group are activities including but not limited to Pothole Patching, Base Repair, Pressure Grouting, Asphalt Resurfacing and PCC Resurfacing. Other groups have from six (6) to fifteen (15) discrete activities assigned.

·         Manage Outcomes – VMS, Inc. guarantees services to meet agreed upon standards and established performance measures and backs this guarantee with performance bonds. These outcomes were developed jointly with VDOT personnel during the negotiation of the contract and provide written, measurable standards that are monitored on a quarterly basis for compliance.

·         Manage Tolerances and Criteria – Each asset has been assigned a tolerance level of acceptance which VMS, Inc. is expected to meet or exceed. As an example, potholes are not acceptable if more than 75mm x 100mm (3” x 4”) and more than 25mm (1”) deep. Likewise, snow must be plowed to bare pavement within 24 hours after the cessation of a snowstorm. The following table specifies the Outcomes and Performance Criteria as well as the Tolerances and Criteria for some of the specific Assets within the Traffic Group. Similar tables are contained within the Agreement for Drainage, Roadside, Pavements, Bridges, Services and Snow & Ice Control.
 

Exhibit A: Asset Management Project Deliverables

 

 

·         Manage Performance

It was necessary to determine the overall condition of the assets at the time VMS assumed responsibility for them so that the efforts required to meet the performance targets could be planned. To ensure the integrity of the data, VMS engaged outside contractors to conduct an impartial assessment of the condition of the assets on I-95 in August 1997. The contractors evaluated all assets in both the northbound and the southbound lanes at 75 randomly selected one-tenth mile sections. These assessments showed that the maintenance rating (MRP) of the entire I-95 corridor was 85.1, compared to the VDOT requirement of 92.8.

A large number of culverts and drop inlets in the drainage asset group were deficient. Many of the signs and pavement markings in the traffic services group were also found to be deficient. The most significant deficiency in this asset group, however, was that many roadway lighting units were inoperative.

After the initial findings were analyzed, plans were developed to concentrate maintenance efforts on these deficiencies. Additional contracts were prepared and awarded to clean drainage structures and to map the highway lighting circuitry throughout the corridor. VMS employees checked all regulatory signs and replaced those that were missing or in an unacceptable condition. Additionally, a contract to analyze the level of sign retroreflectivity was completed.

VMS recognized that up-to-date information about the state of maintenance provides an excellent management tool. Accordingly, additional evaluations were planned and, to ensure consistency, the same contractors performed them. The second assessment was completed in December 1997.The data showed that the overall maintenance rating increased to 91.5, and that a significant improvement had occurred in the drainage and traffic asset groups. The third maintenance rating was performed in April 1998.Again, the overall rating improved, to 92.8. The July 1998 rating of 95.4 showed that further improvement had been made. Future ratings will be conducted on a quarterly basis so that VMS can continue to collect the data necessary for proper planning as well as to evaluate its performance.

The first assessment of the assets associated with the Interstate 77, 81, and 381 corridors was done in April 1998.The rating for these corridors, combined, was 79.4.

The table below reflects the MRP achieved for the Traffic Group through four ratings taken between September 1997 and March 1999.Similar tables have been developed for Drainage, Roadside, and Pavements and their respective Asset elements
  

 

 

Contracting Process

·         Identify Work Needs – VMS, Inc. staff determines when work needs to be accomplished through the use of software programs which schedule work and via routine field observation of the roadways. 

·         Break work into Packages – Some activities are stand-alone activities and Sub-contractors are assigned their work based on their individual contracts but sized according to VMS’ assessment of a specific Work Order. Other activities are packaged together especially when a given Sub-contractor has provided responsible and responsive bids for more than one similar activity.

·         Types of Contracts – VMS, Inc. has developed three levels of contracts that are more fully defined later in this paper.

·         Meetings with Contracting Community

·         Outreach Meetings – VMS, Inc. holds regular meetings with the contracting community in each of its three interstate highway corridors in order to provide an opportunity for small businesses and minority businesses to have an opportunity to offer their services.

·         Bidding Procedures – All contracts are solicited through a bidding process with notices published in area newspapers and in contractor bulletins. Bids are publicly opened and read.

·         Contract Award & Execution Procedures – Contracts are normally awarded to the lowest responsive and responsible bidder after his submission of all documents required as a part of the tendering process. However, VMS, Inc. reserves the right to enter into agreements with more than a single contractor if it is in VMS’ best interests. As previously noted, contracts may be one time or annual contracts with all work subject to the development of a specific Work Order for the task(s) expected to be accomplished.

·         Annual – renewable

·         One time

·         Work Orders

 

Level I

Small Service Contracts – VMS’ Level I contracts are routinely reserved for very small contractors and are very limited in scope. They have a small dollar value, are quite simple in terms of contract specifications and provisions and normally do not require a performance bond. Instead, VMS, Inc. carries the bonding responsibility. These features allow the small “Mom and Pop” type of sub-contractors to be able to provide their service at a cost normally lower than from larger contractors.

·         Up to US $50,000

·         Types of Work

·         Shoulder Maintenance

·         Vegetation/Aesthetics

·         Drainage Maintenance

·         Contract Contents

·         Bid Solicitation Notice

·         Bid Proposal Form

·         VMSI Special Provisions

·         VMSI General Conditions

·         VDOT Specifications (Generally Materials Related), if necessary

·         Plans Package, if necessary

·         Bidding Procedures

·         Local Bid Requests

·         Three or more bids for an award

·         Purchase order/service contract

·         No bid or performance/payment bond required

Level II

Level II Contracts are normally Medium/Specialty Agreements that involve a higher level of Sub-contractor expertise as well as equipment and resources. Scope of work is more detailed and work activities are more complex.

·         US $50,000 up to US $250,000

·         Types of Work

·         Pavement Maintenance

·         Snow & Ice Control

·         Bridge Maintenance

·         Traffic Services

·         Contract Contents

·         Bid Solicitation Notice

·         Bid Proposal Form

·         VMSI and/or VDOT Special Provisions

·         VMSI General Conditions

·         VDOT Specifications (Work Process & Materials), if necessary

·         Plans Package, if necessary

·         Bidding Procedures

·         Local Newspaper Advertisement

·         Two or more bids w/o Second Advertisement

·         Emergency Award Declaration/Top Management Approval

·         Mandatory Pre-Bid Meetings

·         No Bid Bond

·         Performance Payment Bond may be required up to 50% of contract value

Level III

Level III Contracts are reserved in most cases to Restorative Type Work. This includes pavement milling and overlays as well as major bridge rehabilitation work. Contracts are normally in excess of $250,000 and may take several months to complete.

Types of Work

·         Pavement Repairs/Overlays

·         Bridge Rehabilitation

·         Normally large $ Value

·            Contract Contents

·         Bid Solicitation Notice

·         Bid Proposal Form

·         VDOT Special Provisions

·         VMSI General Conditions

·         VDOT Specifications 

·         Plans Package

·         Bidding Procedures

·         Advertisement Once Every Week for Two Weekly Periods

·         Competitive Bidding and Award

·         Certified VDOT Contractors/non-barred Status

·         Mandatory Pre-Bid Meetings

·         Bid Bond Required 5% of Bid

·         Performance/Payment Bond 100% of contract value

·         A Contract may have DBE/MBE/SBE % Requirements

·         An Award to Lowest Responsive Bidder

·         Contract Award & Execution Procedures

·         Bids Received One Week after Mandatory Pre-bid Meeting

·         Public Bid Opening

·         Bid Analysis/Award Recommendation

·         Award Notification & Contract Execution

Contractor Outreach Activities

VMS conducted an aggressive outreach program to attract qualified Virginia subcontractors. The many strategies, which included newspaper advertising, community meetings, and direct mail to contractors on VDOT lists, resulted in more than 300 firms asking to be notified of bid opportunities.

VMS does not perform maintenance operations but creates opportunities for Virginia businesses by using contractors to provide labor, materials, and equipment as needed. VMS began early in 1997 to identify contractors that might be interested in performing maintenance work on I-95.The company held meetings in three communities along the I-95 corridor to explain its open, fair, and inclusive competitive bidding process. Newspaper advertisements and letters of invitation mailed to contractors on VDOT lists resulted in standing-room only attendance. VMS staff discussed the firm’s approach to asset management, the types of contracts, how they would be packaged, and the procedures that would be followed in advertising and awarding work to the responsible contractor who submitted the lowest responsive bid. 

VMS also established backup contractors for some activities. This ensured that the work would be done if the contractor to whom the contract was awarded could not accomplish it within the timeframe necessary to achieve the performance targets.

During the first six months of 1998 minority-owned firms who participated in the VMS small business outreach and training program received contracts totaling nearly $1.1 million.

VMS energetically sought out minority- and women-owned small businesses and offered special workshops and training sessions to enhance the ability of these firms to compete successfully for contracts. The events included seminars on estimating, which were held in Richmond and Marion, and on-the-job-training in proper performance of litter pick-up, graffiti removal, and small sign placement, provided in Petersburg.

Contracts

VMS began in the spring of 1997 to prepare contract documents for work to be performed by contractors. Contracts are of three basic types, depending on the monetary value and the complexity of the work. The simplest ones are for work that does not require large specialized equipment. They range in value up to $50,000, and they are packaged to interest small contractors. These contracts do not contain requirements for bid and performance bonds. 

The next level of contract includes pavement maintenance, snow and ice control, general bridge maintenance, guardrail repair, and pavement striping. VMS does not require a bid bond but may require a performance bond of up to 50% of the contract value. These contracts range in value from $50,000 to $250,000.

The most complicated contracts are for pavement inlays/overlays and major bridge repairs. This is complicated work requiring plans and contractors with specialized equipment and substantial experience. For that reason, VMS considers only those contractors pre-qualified by VDOT for this type of work.

Virginia transportation and road builders benefited from the VMS contract by receiving 94 percent of the contracts awarded.

In the year July 1, 1997 through June 30, 1998, VMS awarded 44 contracts to 25 contractors. The following table shows the number and types of contracts awarded.  

Work Activity	Number of Contracts
Pothole Patching	2
Bituminous Pavement Joint Repair	2
Unpaved Shoulder Restoration	1
Fence Repairs	2
Roadway Sweeping	2
Drainage Structure Cleaning	1
Culvert Repair	2
Mowing	7
Litter Removal	1
Graffiti Removal	1
Wildflower Planting	2
Seeding	2
Landscape Maintenance	2
Chemical Weed Control	3
Tree Trimming	1
Traffic Control	1
Sign Repair	1
Highway Lighting Repair	1
Pavement Marking and Markers	1
Attenuator Inspection/Repair	1
Guardrail Repair	1
Bridge Deck Patching	1
Bridge Deck Joint Replacement	2
Bridge Rail Replacement	2
Bridge Superstructure Repair	3
Bridge Superstructure Design	1

 

 

Summary of Accomplishments

 

The following is a brief description of the accomplishments and costs for several maintenance items. The same difficulties experienced in integrating VMS’ financial and operations software may have affected the cost data reported.
 

VMS Outputs During the First Year on I-95
Activity	Number of Units	Unit of Measure	Cost
Asphalt Patching	309	Ton	$316,700
Pavement Joint Repair	85	Lane Mile	$311,800
Shoulder Repair	104,500	Square Yard	$70,500
Fence Repair	8,500	Lineal Foot	$91,800
Drainage Structure Maintenance	527	Each	$85,900
Drainage Culvert Maintenance	52,700	Lineal Foot	$88,500
Roadside Mowing	4,900	Acre	$476,500
Graffiti Removal	14,600	Square Feet	$113,200
Delineator Replacement	2,200	Each	$10,900
Sign Replacement	259	Each	$59,800
Guardrail Repair	29,100	Lineal Foot	$430,300
Pavement Marking	29,900	Lineal Foot	$82,200
Incident Response	296	Each	$501,600
Glare Foil Replacement	593	Each	$26,100
Highway Lighting Repair	300	Each	$270,700
Bridge Deck Repair	66	Square Yard	$101,100
Bridge Superstructure Repair	2,750	Square Yard	$1,244,700
Bridge Joint Replacement	7,700	Lineal Foot	$13,300

Cost Savings Realized

·         VDOT estimated savings of $22 million over the course of the five and one-half year contract.

·         Due to the investment orientation of the VMS approach, the savings were expected to be minimal to low in the first year and to rise throughout the project, with the greatest savings realized in the final years.

·         The expectation was that the road would be maintained in its existing condition.

·         The initial condition of the road was below expectations.

·         VMS was able to improve the highway beyond its existing condition and nearly achieve the established goals within budget. 

·         VMS believes that the work performed to increase the maintenance rating from 85.1 to the contract level created a cost savings for VDOT as this work was done without any change order. It is VMS’ estimate that the level of savings is between $750,000 to $1,000,000 

·         Had the level of service been placed at the 85.1 level which existed in summer of 1997 rather than the 92.8 level of the Agreement, this would translate to savings of about $1,250 to $1,500 per lane mile. 

Lessons Learned

Every new venture usually experiences a few “bumps in the road,” yet the implementation of this public-private partnership was remarkably smooth, with relatively few and rather minor glitches, most of which occurred in the early months. That this was the first contract of its type made the accomplishment by VDOT and VMS even more remarkable.

During the year VMS attempted to learn from its errors and adopted new procedures to prevent recurrences. The following are a few of the most significant lessons learned.

Incident Response Services

Incident response was the activity that provided the most learning opportunities, largely due to a higher than anticipated volume of accidents. VMS assumed responsibility for this activity in April 1997.After responding to nearly 30 incidents on I-95 in the first month, it was obvious that the number would be far greater than available statistics indicated, and that additional resources were necessary. VMS modified its approaches, obtained additional equipment, and was diligent in achieving its timely response requirements.

·         It became apparent that rather than relying on a contractor for the placement of lane closures at all incidents, it would be more efficient and, in some instances, more economical, to have the in-house capability to do this. VMS acquired the equipment and traffic control devices needed. 

·         Communication and coordination with police, fire, and rescue workers at the incident site are very important. VMS initially equipped its personnel with cellular telephones but added two-way radios after realizing they were more reliable in some situations. VMS also learned that it would be helpful and efficient to have access to the Virginia State Police (VSP) radio system, but was advised this would not be feasible.

·         To further improve coordination and communications at incident sites, VMS hired a retired VSP sergeant to serve as emergency response coordinator. This proved most effective.

·         Several accidents caused liquids to be spilled onto the pavement. Usually sand is spread on the wet pavement to absorb the liquid and then swept from the roadway leaving a dry pavement. VMS originally intended to have contractors accomplish this task. It soon became apparent that the response time of the contractor was not always acceptable. Consequently, VMS equipped one of its trucks with a tailgate spreader so that it could be used to spread sand when it appeared that a contractor could not be available within an acceptable timeframe.

·         VMS learned the importance of meeting early on with state police, fire, and other agency personnel to improve coordination at incidents. VMS staff working on I-77, I-81, and I-381 visited with community officials well in advance of assuming maintenance responsibilities.

Drainage

·         Several severe rainstorms in the spring and early summer of 1997 caused the unnecessary flooding of some ramps and shoulders in the Richmond metropolitan area. Drop inlets in the barrier wall drain the affected locations, and the culverts leading from them were partially or completely blocked. A concentrated effort was made not only to clean the drop inlets but also to identify and clean the outfall culverts. Since this was done routine flooding has not occurred as the drop inlets and culverts are functioning properly.

·         The heavy rainfalls caused debris to cover the grates and/or slot openings of the drop inlets. It was sometimes difficult, because of the debris, to locate these and clean them so that proper drainage could be restored. Blue delineators were placed on the barrier walls directly above the drop inlets to identify their location. This will also assist maintenance crews during heavy snowfalls.

Roadside

·         The wildflowers in several beds established before VMS took over did not grow well. The services of a landscape architect were utilized to develop a realistic plan for the management of the wildflower beds in the I-95 corridor. One of his findings was that the soil in several locations was depleted of nutrients and could not support the wildflowers. Another was that different wildflowers, ones that could better withstand the harsh roadside environment, should be used. A new seeding mixture and a program of bed rotation were established to improve the appearance of the roadsides in the corridor.

Traffic

·         There have been many collisions with exit signposts located in the off ramp gore areas. Delineation devices were added to better direct traffic from the deceleration lanes onto the ramps. Since this was done, there has been a marked reduction in the number of signposts hit by vehicles.

Pavement

·         It became apparent early on that the life of some of the patching material being used for use on concrete pavement was not as long as hoped. These early failures meant that the same location had to be patched several times causing a disruption in the flow of traffic each time. To remedy this repetitive activity, VMS contracted to have Roadflexä placed. It has proven to be very effective on bridge decks and concrete pavement. This material has performed very well and VMS will continue its use.

Contractors

·         Despite extensive outreach activities, VMS experienced some resistance to the concept of privatized maintenance on the part of trade associations and individual contractors. Although many fears were allayed as VMS awarded contracts through its fair, open, and inclusive competitive bidding process, concerns persisted. This situation resulted in a delay of some activities planned by VMS as well as higher prices than expected for some activities.

·         While VMS attracted a number of highly qualified contractors who performed quite well, five contracts were terminated for non-performance.  

Reporting

·         VMS experienced problems in integrating its financial and operations software, which affected its ability to deliver timely monthly reports. The problems were resolved and all monthly reports are prompt.

To date, VMS, Inc. has been successful in soliciting Sub-contractors to perform work on all three of its interstate highway corridors. We have developed an On-The-Job training program for small and MBE/DBE Sub-contractors in order to expand our Sub-contractor base and we are seeing positive results from that training program. We have found that in many cases unless training such as this is provided, these small firms do not feel that they are capable of working on interstate highway type programs. The normal governmental induced rules and regulations as well as the amount of time to administer the contracts generally are a deterrent to very small businesses. The methodologies used by VMS, Inc. are intended to simplify the overall contracting process and to expedite payments to these businesses when their work tasks are completed.