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J. Litzka:
"PPP-Contracts - a Challenge for Road Engineers";
Talk: 8. Slowenischer Straßenkongress, Portoroz (invited); 2006-10-25 - 2006-10-27.

Recently new forms of contracting have been implemented in road construction projects as
well as in other projects. Traditionally planning, design, specification of works and positions
were made by the administration/client as a basis for the awarding process and the offers from
the contractors. The contractor then had to build the road and - depending on the contract - also
structures and other parts. After completion of the project and final acceptance as well as
termination of the warranty period the responsibility for the project went to the client. Road
operation and all maintenance works were done by the road administration. Contrary to this
traditional form in the new PPP-contracts the contractor/concessionaire has not only to design
the pavement (the alignment is fixed in most cases) and to construct/build the complete road, but
he is also responsible - with variations from contract to contract - for the road operation and
the maintenance for a given concession period, in most cases between 20 and 30 years after
construction.
This brings a big part of the risks which were with the administration before to the
concessionaire. For the decision and bidding process life cycle costing has to be taken into
account including
- construction costs
- maintenance costs
o routine maintenance
o rehabilitation including
traffic management at construction sites
choice of methods
intervals of intervention
condition assessment
o additional user costs (e.g. time loss)
o environmental costs (possibly)
This requires correct input values for
- material quality
- traffic
- other random conditions
to optimize pavement design and the maintenance plan.
For pavement design analytical calculations should be used to improve the economic
efficiency and to make better use of improved material properties or of innovative materials and
solutions. For this procedure laboratory tests are an important requirement, the time for this has
to be provided.
Another important part for the tender-calculation is the maintenance plan. This plan must
forecast the need and the time of constructive maintenance (rehabilitation, strengthening) for the
full concession period. Developing this plan the given random conditions for the pavement
condition based on periodic condition assessments must be taken into account. The type of
maintenance is also influenced by given restrictions of availability of a road section as well as
the fulfilment of existing noise limits etc.
The crucial point for this maintenance plan at the bidding process undoubtedly is the
performance prediction using performance models for the different performance parameters.
These can be based either on analytical calculations or on empiric functions from former
measurements in the respective network.
Additionally the required remaining structural life at the end of the concession period has
to be taken into account - not a very easy task, too.
Bringing together all these different parts the bidder has to look for the optimum solution
for design and maintenance.
While during the bidding process the forecast of the development of the pavement
condition must be performed for the whole service life, things may become easier for the periodic
adaptation of the maintenance plan during the concession period. The respective performance
prognosis can then be based on the actual measurement values and the timeframe for the
forecast is normally only 3 - 4 years.
So the main technical risk for the contractor is in the accuracy of the condition prognosis
at the bidding process.
Of course - depending on the contract - another risk is in connection with the traffic
development. Payment in most cases is linked somehow to the amount of traffic. This means in
general the better the traffic forecast at the beginning the lower the financial risk for the
concessionaire.
In conclusion one may list some advantages and disadvantages of PPP-contracts for
further discussion:
Advantages:
- promotion of innovative solutions
- improved quality of construction, due to higher responsibility of
the contractor
- improved quality control
- possibly lower costs (PSC - public sector comparison)
- reduced or no direct financial resources needed from the client
Disadvantages:
- Increased control activities
- rather short sections often ineffective
- Loss of technical expertise at the administration
- problems for KMUs
- difficult comparison/decision process
- long term forecast of all random conditions almost impossible
Overall the existing experience is positive with some reservations. But the technical
quality of the design and maintenance concept often has less weight within the
acceptance/bidding process than all the financial aspects. This may be somehow disappointing
for road engineers.

Public Private Partnership, PPP,