Last Updated:
20 Sep 2019

Policy Challenges in the Implementation of Performance-based Contracting for Road Maintenance

The topic of this policy paper – how to develop contractual methods to secure the full usable-life of roads – is of critical economic and fiscal importance to all countries, but especially so for countries with limited public budgets for road rehabilitation and maintenance. In most developing and merging market economies (EMDEs), which include the EBRD’s client countries, roads require rehabilitation, or indeed even reconstruction, many years before the date one would have expected according to their original year of construction. Simply put: usable life is not equal to design life: it is not uncommon to find that a road must be rehabilitated only halfway into its estimated original asset duration. Whilst harsh climate conditions with large seasonal temperature changes may play a role, much of this ‘premature’ investment is down to lack of systematic maintenance that is normally applied in countries with regular ‘asset management’ funding regimes. As numerous studies by the OECD, the World Bank and others have shown, every 1 euro/dollar of deferred maintenance today results in 3 euro/dollars needed in rehabilitation tomorrow. Fortunately, applying Performance-Based Maintenance Contracting (PBMC) to the road sector can produce significant improvements for the fiscal purse and for users in the form of better maintained and therefore safer roads.