Currently, the road construction contracts are being undertaken on the basis of the ‘design-bid-build’ system. Under this approach, the client designs the project and prepares the construction contract document with either in-house staff or support of an engineering consultant. The construction contract is then opened to bidders and awarded to the lowest responsive bidder. However, concerns have been raised on the efficacy of this type of contracting system in terms of project cost, schedule and quality of product.

Another approach has been to combine the design with construction in the same contract. This is known as “design and build system”. This is a relatively new system. In this approach, the project owner selects a contractor to undertake both ‘design and construction’ under a single contract. Once the owner agency established the design criteria, the prospective builder develop proposals by optimizing the design and construction aspects. This improves the designing capability
of the contractors and fosters collaboration between designers and contractors which helps in incorporation of construction knowledge into design. Additionally by giving the contractor more flexibility in the selection of design, material and construction methods, this system enables him to provide innovation in design and construction.

Today, the success of a highway construction and maintenance project is seen largely from the perspective of ‘Road Users’. The Government Agencies and Contractors responsible for highway construction have to use customer focused performance standards by addressing characteristics, such as, smoothness, noise, longevity and journey time.

While the current specifications provide an input recipe for getting to a specific final product, performance standards tell what level of performance to expect for that product and then leave it upto the contractor to work out how to achieve these performance standards. The primary benefit is that the contractor is allowed to use his ingenuity and experience in coming up with innovative ways for obtaining the specified performance standards. The performance standards for construction and maintenance of highways would usually include parameters, such as, safety, riding quality and speed of travel.

The Highway profession has now to adopt performance approach for addressing the current challenge and establish specific performance targets to achieve improvements in safety, construction related quality and augmentation of capacity to reduce congestion and improve level of service to Road Users. A side benefit of such an approach will be to bring the construction contractors into customer satisfaction equation. The Contractor and owner agency become a team aimed at satisfying the needs of the customer. The performance standards should be set at a
level of performance well above the average, but within the bounds of what has been achieved with current best practices and technologies so that contractors can strive to achieve the same with excellence.

Performance based road maintenance contracts have been taken up in British Columbia in Canada, Argentina and several other Latin American countries, such as, Brazil, Chile, Peru, Australia and USA (Virginia and Washington D.C.) in the last ten years or so. In India also, some pilot projects were taken up in World Bank assisted road projects in Andhra Pradesh.

Further, for each type of defect, a cure period could be stipulated. The National Highways Authority of India have stipulated such requirements during the operation and maintenance period to be followed by private entrepreneurs undertaking NH projects on BOT basis as part of a Model Concession Agreement.

The principal advantage of contracting out Road Construction and Maintenance based on performance indicators is in their potential for reducing road construction and maintenance cost and at the same time improving road condition, and safety giving higher level of service to the Road Users.