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Customer Satisfaction and Safety Targets in Finnish Road PerformanceBased Maintenance Contracts Author: Katja Levola - Maintenance Engineer Pirkanmaa (ELY) Center for Economic Development, Transport and the Environment P.O. Box. 297 FI-33101 Tampere Finland Tel: +358 400277812 Fax: +358 33891597 Email: [email protected] Co-Author & Corresponding Author: Pekka Pakkala - Senior Consultant Ramboll Finland Oy Saterinkatu 6, P.O. Box 25 FI-02601 Espoo Finland Tel: +358 20755611 Fax: +358 207556201 E-Mail: [email protected]

Total Word Equivalent: 4517 +2000 + 185 = 6702 Number of Tables: 6 Number of Figures: 2 Date of Revised Paper # 14-0998: October 28, 2013

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Customer Satisfaction and Safety Targets in Finnish Road PerformanceBased Maintenance Contracts By Katja Levola and Pekka Pakkala ABSTRACT In Finland, safety and availability of the road network is guaranteed through meticulous maintenance. The procurement of road maintenance contracts is publicly tendered in the form of area based contracts amongst private companies. Contractors are responsible for road maintenance activities according to the Performance-Based Maintenance Contracts (PBMC) concept. Customer satisfaction surveys are done on an annual basis and the contractor has the opportunity to earn a bonus or disincentive based upon the results. The client wishes to set a zero tolerance as the safety target, which means there are zero occupational accidents arising from road maintenance work and no accidents or injuries to third parties in connection with road maintenance and repair work. A pilot project was initiated to test a new bonus scheme that is customer-oriented and applies a Vision Zero approach to occupational and traffic safety. An additional bonus may be earned based upon the professional driver’s observation team. The results for the first two years have been satisfactory. Both incentives and disincentives have been realized and the client continues to monitor progress before a broader implementation of the new safety bonus system.

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INTRODUCTION Finland has been outsourcing the maintenance for the entire state road network for over ten years in the form of area based contracts, using Performance-Based Maintenance Contracts (PBMC) concept (1). The PBMC in Finland include a bonus and disincentive scheme based upon the results from the annual customer satisfaction surveys. Recently, safety issues have been raised to a higher priority and there was a desire to test a new bonus scheme that uses the Vision Zero concept for both occupational health and traffic safety. A pilot project in Kangasala, Finland was undertaken to test the viability of using a safety bonus system that introduces a Vision Zero concept and includes occupational and traffic safety. It is important to gain the acceptance of the maintenance contractors to determine if there would be a broad acceptance and that it can be reasonably achieved. This may perceived as an additional risk to the contracting industry and needs to be tested before being broadly implemented to other area contracts. Background The Finnish Transport Agency (FTA) is a government agency operating under the Ministry of Transport and Communications. Previously, it was known as The Finnish Road Administration (Finnra) and is now called The Finnish Transport Agency (2010), where three important modes of transport, such as, road, rail and waterways were combined into one transport agency. FTA is responsible for maintaining and developing the standard of service in the transport system’s traffic network of behalf of the Finnish government. Also, the reform included the creation of an independent Finnish Transport Safety Agency. FTA's responsibilities Some of FTA's responsibilities are listed as follows: to maintain and develop the traffic system jointly with other key stakeholders in the field; to maintain the government’s road and rail networks as well as the specific waterways under their jurisdiction. Also, consolidate transportation measures and direct supervision across the country; to implement vital road, railway and waterway projects including planning, design, maintenance and construction; to develop and promote transport services and the functioning of the markets for them; to direct the road maintenance operations for the regional Centers for Economic Development, Transport and the Environment (ELY); and to safeguard the transport system and is functional under exceptional situations. Centers for Economic Development, Transport and the Environment (ELY Centers) The Centers for Economic Development, Transport and the Environment (ELY Centers) are a different governmental agency that is responsible for the regional implementation and development tasks of the central government and FTA. Finland has a total of 15 ELY Centers, which are tasked with promoting regional competitiveness, well-being, sustainable development and curbing climate change. These ELY Centers act basically as the “road manager” on behalf of FTA and is responsible for the entire state road network as well as the rail and waterways sectors. The ELY Centers perform the actually procurement of the road maintenance contracts, quality inspections

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on behalf of FTA and have a performance agreement with FTA. The ELY Centers have three main areas of responsibility: 1. Business and industry, labor force, competence and cultural activities 2. Transport and infrastructure 3. Environment and natural resources The ELY Center departments dealing with the transport and infrastructure are responsible for the road maintenance, traffic safety, road projects, transport system management, and public transport. Some of the specific tasks include issuing transport permits and licenses, traffic management, and customer service. The main goal is to keep roads available every day, ensure that traffic can flow freely, and is a safe road for the travelling public. The ELY Centers are responsible for managing a total of about 78,800 km (48,940 miles) of road network. Environment issues are very important in all aspects of road maintenance. As previously mentioned, the road maintenance has been fully outsourced to companies operating in the open market. The ELY Centers promote traffic safety in co-operation with such bodies as The Finnish Transport Safety Agency, the police, and with the municipalities. Responsibility of traffic safety lies with those responsible for the development of the traffic system and road users. The risk of traffic accidents and its consequences may be lowered by improving the traffic environment and by maintaining proper speed limits by taking into account the road conditions. Some measures include the construction of median barriers and off-road bicycle and pedestrian paths. The vision for traffic safety is that there are no fatalities and serious injuries on the road network. Improving traffic safety is one of the main goals of the ELY Centers. The main purpose of road improvements and construction are to facilitate mobility, preserve the transport network, improve traffic safety and improve esthetics to make the journey as pleasant as possible. Road construction projects may include the building of bridges, tunnels, junctions, traffic management systems and road lighting. Other aspects include measures to reduce noise levels and protection of the groundwater. ELY Centers are also responsible for the design and planning, which are procured from the private market of engineering and design companies. The transport system is comprised of traffic arteries intended for different modes of transport, the adjoining structures, along with passenger and freight traffic. ELY Centers are actively involved in the development of traffic systems in their respective regions, co-operating with regional councils, municipalities and with the FTA. Public transport is managed by many different stakeholders and the ELY Centers are responsible for public transport services and providing a basis for a smooth functioning public transport system. Other responsibilities include procurement, license administration, planning, and funding tasks concerning public transport. Road Maintenance Contracts in Finland In Finland, safety and availability of the road network is guaranteed through meticulous maintenance. Road maintenance services are publicly procured in the form of area-based contracts. Currently, there are 81 area-based contracts using the PBMC concept. Contractors are responsible for road maintenance activities according to the Levels of Service (LOS) for their respective road classification. In Finland, winter maintenance is the largest expense and operations include snow plowing, prevention of slippery conditions or deicing, repairing uneven surfaces, and ensuring the visibility of traffic control equipment. In the summertime, the main

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duties include maintaining gravel roads, traffic signs, rest areas, grass cutting, repairing pot-holes and other surface defects that cause risks to traffic safety. The contractors are responsible for continuous monitoring of the road system, on-site tasks, reporting and tracking defects, and assisting authorities/officials when there are emergencies. Objective Recently, a national infrastructure development project was initiated and included developing procurement methods, new cooperative models, project implementation models, improving productivity and innovations. One objective of the client (FTA) was to initiate a customer-oriented project and apply a “Zero Accident” approach to occupational and traffic safety. The cornerstone of the Vision Zero approach to traffic safety was a governmental approved traffic safety vision and resolution stating that there should not be any road user fatalities or become seriously injured in a traffic accident. A PBMC in the areas of Kangasala, Finland (2011–2016) was selected as a pilot project under the development program and was launched in 2010. The objective of the pilot project is to test new incentive models for road maintenance contracts that would improve productivity (2), establish partnerships within the transport infrastructure sector and consider safety. This paper will provide a summary of the results of the pilot project in Kangasala that incorporated incentives and disincentives for safety (Vision Zero) as part of the Performance Based Maintenance Contracts (PBMC). Methodology A PBMC pilot project (3) in Kangasala, Finland was selected and tendered by the Pirkanmaa ELY Center in 2011. This pilot project serves as the basis for the methodology for this paper. Kangasala Project Details The PBMC in Kangasala was publicly tendered by the Pirkanmaa ELY Center and used for this area-based contract as the pilot project. The contract includes total length of 617 km (383 miles), 251 km (156 miles) of gravel roads and 72 km (45 miles) of low-volume traffic routes. Finland has five road classifications and this pilot project has 51 km (32 miles) of class “Is” (motorway standard) and 81 km (51 miles) class “Ib” (main roads), and the remaining roads have lower classifications. The road network is situated in the third largest city in Finland and is susceptible to congestion and accidents. The maintenance activities include winter maintenance, summer maintenance, maintenance of gravel roads, maintenance of pedestrian and bicycle pathways, and many other routine maintenance activities. A significant challenge is to maintain the area network within a large municipal area that has many diverse features from significant congestion, to farming, and low volume roads that have some gravel roads. Finland includes incentives and disincentives in their PBMC and incentives are from the results of customer satisfaction surveys. Disincentives are also applied when for not meeting the service levels and other requirements in the contract. This pilot project is the first of its kind in Finland and was designed to test a new incentive/disincentive based upon traffic and occupational safety. Safety is an important issue and has been emphasized through European Union (EU) safety goals and targets. Trying to develop incentives and disincentives measures in terms of safety were a challenge and even more so when developing the incentive and disincentive methodology!

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OBSERVATIONS AND RESULTS Since the pilot project includes a new incentive/bonus and disincentive system, a new contractor selection criterion was specifically developed for this project. Observations, results, and other pertinent information are included to describe how the scheme was developed and used. Contractor Selection Criteria PBMC are tendered using the Lowest Conforming Price Tender (LCPT), in which the winner of the maintenance contract was selected by the lowest price, providing the contractor met an existing threshold. Prior to 2009, maintenance contracts used more of a qualitative approach and this pilot project uses similar concepts used in earlier PBMC. Safety is now the new criteria to be applied to the contractor selection criteria. The road user customer satisfaction also requires changes and development to be used as a contractor selection criterion. Therefore, a new bonus and disincentive system was developed to assure that safety measures are emphasized. The tenderer or service providers were obliged to commit to using alcohol interlocks (4) as a voluntary compliance measure in all vehicles and machines intended for the use of maintenance or in its transport. Further requirements included conducting equipment inspections for each vehicle or machine within 24 hours before the use to perform road maintenance and repair work. The contractors who submitted an action and quality control/assurance plan, in addition to committing to the above-mentioned requirements, were invited to take part in the proposal. This new formula includes road user customer satisfaction during the winter and summer, and safety commitments/promises during the tender submission. The overall weighting criteria to select the winning contractor were 80% for price portion and 20% for the quality portion (satisfaction and safety commitments). The quality points are determined based on a total potential of 1,000 points. The actual formula for the contractor selection criteria can be written as follows and includes the price, road user satisfaction for winter and summer, and the safety commitments: X cp

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X tp * 1

30 31 32 33 34 35 36

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PSatis ( a ) 1000

* 0 .10

PSatis ( b ) 1000

* 0 .04

PSafety 1000

* 0 .06

where Xcp = comparative price (in euros) X tp = tender price (in euros)

PSatis(a ) 1000

PSatis(b) 1000

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* 0.10 = comparison sum, quality points for road user satisfaction commitments, winter

* 0.04 = comparison sum, quality points for road user satisfaction commitments, summer PSafety 1000

* 0.06 = comparison sum, quality points for safety commitments

38 39

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The contractor submits a price proposal that includes the customer satisfaction for winter and summer and safety commitments/promises. Table 1 shows the percentage weights applied to the contractor selection criteria. TABLE 1 Contractor Selection Criteria Weighting Distribution Price for 5 years

80%

Road user satisfaction in winter

10%

Road user satisfaction in summer

4%

Safety commitments

6% Total

100%

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Calculation of the Winter Customer Satisfaction Portion The Finnish Transport Agency (FTA) conducts road customer satisfaction surveys on an annual basis and includes both summer and winter evaluations. The survey includes various categories using a scale of 1–5 (1 for “‘not at all satisfied” and 5 for “very satisfied”). FTA required that the goal of the contractor should be aimed at improving road user satisfaction, or at least keeping it at the existing level. During the tendering phase, the contractors’ offer their commitments/promises of road user customer satisfaction with a single score. The contractor’s single score is stated within two significant digits (like 4.00 based on a 1 to 5 scoring system) and this constant score applies for each year in the five year contract. The structure for scoring points during the contractor selection phase is shown in Figure 1 and shows how the scaling for each of the contractor’s commitments is evaluated. Figure 1 shows that there are no points for commitments below 3.45 minimum scoring and the curve flattens out at around a commitment value of about 4.00. Using this example, the contractor’s commitment is a value of 4.00, which represents a point score of 975 out of 1,000 points, which is used for scoring the winter satisfaction portion of the formula.

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FIGURE1 Calculation of Winter Road User Satisfaction Points

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The road user customer satisfaction actual results are taken directly from the results used in FTA’s yearly surveys. However, there is a weighting criteria applied to the three different categories, such as, winter maintenance of main roads, other roads and pedestrian and bicycle pathways. The weighted criteria for the winter road user satisfaction for the main roads are 55%, 30% for other roads and 15% for the pedestrian and bicycle pathways. Table 2 shows an example of the scoring methodology for the winter road user satisfaction portion for applying any incentives or disincentives. The contractor’s road user winter satisfaction commitments were a value of 4.00, and the actual total score for the winter road user satisfaction was determined to be 3.40 after applying the weighting factors. Since the actual score is less than the contractor’s commitments, the result is a disincentive payment based upon the percentage below the actual value of 3.40. In this example, the actual results were 0.60 lower (or 10.75%) lower than the contractor’s commitments in that year. Therefore, a disincentive payment of 10.75% of contractor’s winter proposal contract price is deducted from the next monthly payment. TABLE 2 Calculating the Winter Road User Satisfaction Portion Category

Weighting Factors Winter maintenance of main roads 0.55 Winter maintenance of other roads 0.30 Winter maintenance of pedestrian and bicycle 0.15 pathways Total Contractor's road user satisfaction commitment Road user satisfaction result Difference between commitment versus actual results Percentage of disincentive amount in winter 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

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Actual Score Results 3.69 2.03 3.04 0.91 3.03 0.45 3.40 4.00 3.40 -0.60 -0.1075

Calculation of Summer Customer Satisfaction Portion The customer satisfaction during the summer period follows the same principle as with the previous example from the winter road user customer satisfaction calculation. The contractor provides a single score for the summer customer satisfaction stated in two significant digits (like 3.40 based on a 1 to 5 scoring system) and this constant score applies for each year in the five year contract. The structure for scoring points during the contractor selection phase is shown in Figure 2 and shows how the scaling for each of the contractor’s commitments is evaluated. Figure 2 shows that there are no points for commitments below 3.12 minimum scoring and the curve flattens out at around a commitment value of about 3.65. Using this example, the contractor’s commitment is a value of 3.40, which represents a point score of 890 out of 1,000 points, which is used for scoring the summer satisfaction portion of the formula. The contractor should use caution and wisdom when providing these commitments as they will in fact be measured, where disincentives and incentives will be applied based upon the actual outcomes form the road user customer satisfaction surveys.

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FIGURE 2 Calculating the Summer Road User Satisfaction Portion The road user customer satisfaction actual results are taken directly from the results used in FTA’s yearly surveys. However, there is a weighting criteria applied to the five criteria. The weighting criteria for the roadside cleanliness of the main roads is 10%, 10% for grass mowing, 10% of the roadside foliage, 10% for the bus stop shelters, and 60% for the gravel road conditions. Table 3 shows an example of the scoring methodology for the summer road user satisfaction portion for applying any incentives or disincentives. The contractor’s road user summer satisfaction commitments were a value of 3.40 and the actual total score for the summer road user satisfaction results was determined to be 3.07 after applying the weighting factors. Since the actual score is less than the contractor’s commitments, the result is a disincentive payment based upon the percentage below the actual value of 3.07. In this example, the actual results were 0.33 lower than the contractor’s commitments. Therefore, a disincentive payment of 7.7% of contractor’s summer proposal contract price is deducted from the monthly payment. Safety Portion Calculation FTA has set a zero tolerance on the safety target for the road maintenance activities in the contract. This means there should be zero occupational accidents arising from road maintenance and repair work, and no accidents or injuries to third parties in connection with the maintenance services. The safety portion scored during the tendering phase is based on a maximum of 1,000 points. These five categories are recording safety observations (including close calls), recording occupational and serious injuries within 14 days, conducting the safety equipment checks (Finnish MVR standard), identifying at least 30 observations/innovations for improving occupational health and safety, and the results of accident rates per employee. The contractor proposes that they either accept each factor or not. These categories and targets are described in Table 4. The mandatory use of alcohol interlocks and the management and documentation as evidence of conformance are mandatory requirements.

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TABLE 3 Calculating the Summer Road User Satisfaction Portion Weighting Actual Score Factors Results 0.10 3.46 0.346 0.10 3.17 0.317 0.10 3.37 0.337 0.10 2.93 0.293 0.60 2.96 1.776 Total 3.07 Contractor's road user satisfaction commitment 3.40 Road user satisfaction result 3.07 Difference between commitment versus actual results -0.33 Percentage of disincentive amount in winter -0.077 Category Roadside cleanliness of main roads Grass mowing Mowing of the roadside foliage Condition and tidiness of bus shelters Condition of gravel roads in summer

2 3 4 5 6 7 8 9 10 11 12

Table 4 shows the five categories, contractor’s safety commitments/promises, actual results and either a bonus or disincentive received. During the proposal submission phase the contractor answers either “YES or NO” to the five questions/categories. If there is a “YES” proposed to each of these categories, the contractor receives 200 points. There is a maximum potential total of 1,000 points. If there are “NO” answers the contractors receives zero points for each category toward the safety portion. The total points are summed as part of the safety evaluation portion in the contractor selection criteria. TABLE 4 Calculating the Safety Portion Categories 1 2

3 4

5

Recording of safety observations (including possible close calls), at least 50 per year Recording, investigation, and analysis of occupational accidents and serious incidents within 14 days of occurrence, for prevention purposes. Conducting of MVR measurements at various work sites at least 10 times per month, including follow-up of the results Innovation & observations related to finding methods for improving occupational or traffic safety, or identifying safety deficiencies in the contract, at least 30 in total. An accident rate of under three accidents per 100 employees (3.0/100) during the review period in the contracting year Total

Commitments (during tender)

Actual Results

YES 200 Points YES 200 Points

52 observations 0 occupational accidents, 2 serious incidents 10 times per month

+10000€

YES 200 Points

32 innovations

+10000€

YES 200 Points

Accident rate 0.0/100 (27 employees,

+10000€

YES 200 Points

1000 Points

Bonus or Disincentive

+10000€

+10000€

+50000€

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Table 4 also shows the results of the first year’s safety results and the incentive/disincentive received. The maximum bonus potential is 10,000 euros per category factor and a total maximum potential incentive of 50,000 euros. The example in Table 4 shows that the contractor met all the categories targets and received a full bonus of 50,000 euros. Determination of Contract Award Once all the customer satisfaction scores for the winter and summer, and the safety commitments/promises are added together, then the subtotal of points is calculated towards the overall formula of 20%. Then these results are compared with the price proposal portion according to the “main formula” and the comparative price is calculated for all the potential offers’. The lowest comparative price is selected and that contractor is the declared winner of the contract. The normal European Union tendering rules apply to Finland and the once all the due diligence is completed, then the contract may be awarded. Incentive and Disincentive Model There are disincentives already included in all Finnish PBMC and have been a normal practices since the outsourcing began in 2001. These disincentives are still valid and applicable to this pilot project. The new reward system used in this Kangasala pilot project includes both an incentive (bonus) and a disincentive (less payment) for safety and customer satisfaction during winter and summer. A bonus is provided as an additional payment providing the results achieved exceed the contractor’s commitments/promises. A disincentive is a reduced payment, if the contractor’s commitments/promises are not achieved according to the assessment criteria. The amount of the bonus or reduced payment for the road user satisfaction for the winter and summer portion is calculated seasonally based upon the contractor’s bid price for each season. The maximum amount for the potential summer and winter customer satisfaction bonus is eight percent and the maximum disincentive is 12.5 percent. Correspondingly the maximum annual bonus for the safety commitments portion is three percent, while the maximum disincentive is ten percent. There is a fourth potential bonus/reward only system that is used for monitoring the contractor’s performance during the winter period for slippery conditions, amount of snow, and surface variations. The deficiencies and performance is determined by a professional drivers’ weather observation team, consisting of professional drivers and is formed by the client and has about ten members. The monitoring and reporting process uses GPS surveillance and telecommunications. The bonus is determined for each calendar month from November to March, and the amount is based upon observed injurious conditions percentages per kilometres driven by the professional drivers’ weather observation team. There are no disincentives applied in this category and this is a bonus only potential award. The potential incentive/bonus is 4% or 6000 euros for each month (November through March) with a maximum potential incentive of 30000 euros each year. The incentives are based upon the percentage of deficiencies reported per kilometre of travel. If there are more than 4% deficiencies pre travelled kilometre there is no bonus. Mathematically this means that each percentage of defects can be valued at 1,500 euros. The overall incentive and disincentive reward scheme is shown in Table 5.

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TABLE 5 Incentives and Disincentives Scheme in the Contract Reward system

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Max. incentive per year

Max. disincentive per year

Road user satisfaction in winter

8%

12.5%

Road user satisfaction in summer

8%

12.5%

Safety commitments

3%

10%

The professional drivers’ weather observation team

4%

na

na = not applicable Results to Date The results to date are for the first two years of data have been complied. Overall, both the client and contractor were satisfied with the results from the first two years. Customer satisfaction has slightly increased from previous years and safety was very good in the first year. The results from the first year of the pilot project were that the road user satisfaction during the winter and summer were lower than the contractor's commitments/promises. The outcome resulted in a reduced payment of 10.8% during the winter period and a reduced payment of 7.7% in the summertime. The safety related portion of the reward system was a success for the contractor. The contractor committed to all five targets (answered “YES” to Table 4) for all the safety categories and all targets were achieved and earned the maximum safety bonus of about 3%. Since safety was the new category used in these PBMC, it was a good outcome that the safety targets were achieved. The additional bonus from the professional driver’s outcome was a positive outcome and the contractor received a bonus of 3.9%. This was an additional benefit and was very satisfying for the contractor. The second year’s outcome was slightly lower than those from the first year’s results. The road user satisfaction for the second winter was lower compared to the contractor’s commitments/promises. The outcome resulted in a reduced payment of 11.6% during the winter period and a reduced payment of 7.7% in the summer time. The safety related portion of the reward system was somewhat lower than the first year and the contractor met three out of five targets (answered “YES” to Table 4) and earned a safety bonus of about 2.4%. The additional bonus from the professional driver’s outcome was a positive outcome and the contractor received a bonus of about 3.3%. As a learning experience, the client (FTA) received some useful ideas and methods for improving occupational and traffic safety. There were additional benefits because there were additional safety innovations identified throughout the road network. The results also tested the use of alcohol interlocks used during the first two years of the contract and it seems to be acceptable and a routine operational parameter for the service providers. As a result of the positive feedback, there is a requirement by The Finnish Transport Agency (FTA) and ELY Centers to use the alcohol interlocks. Presently, there are 29 contracts using the alcohol interlocks. Alcohol interlocks are now mandatory in all vehicles and machines that require professional competence of drivers in the road maintenance contracts. The methodology and evaluation system appears to be functional and actual performance was acceptable. It appears that the contractor’s commitments/promises during the tender phase

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were greater than the actual results from the road user satisfaction surveys. It appears likely that the contractor’s might be speculating in order to place them in a better position to winning the bid. This is a similar trait with low-bid contractors, where contractors may speculate on various aspects to position themselves in a favorable bidding situation. The intent of this methodology is make contractors aware of the severity of safety and customer satisfaction during performing the maintenance services. Table 6 shows an overall summary of the results for the first two years and provides a baseline for any future applications. TABLE 6 Overall Results of First Two Years Category Road User Satisfaction in Winter Winter maintenance of main roads Winter maintenance of other roads Winter maintenance of pedestrian and bicycle pathways Total Contractor's road user satisfaction commitment (points) Percentage of contract amount in winter Road User Satisfaction in Summer Roadside cleanliness of main roads Grass mowing Mowing of the roadside foliage Condition and tidiness of bus shelters Condition of gravel roads in summer Total Contractor's road user satisfaction commitment (points) Percentage of contract amount in summer Safety Commitments

Results 2012

Results

2.03 0.91

2013 2.01 0.86

0.45 3.40 4.00 -10.75 %

0.43 3.29 4.00 -11.55 %

0.35 0.32 0.34 0.29 1.78 3.07 3.40

0.35 0.33 0.34 0.29 1.76 3.07 3.40

-7.70 %

-7.70 %

Category 1 Category 2 Category 3 Category 4 Category 5

Pass Pass Pass Pass Pass 5 passes Total (Full Bonus) Professional Drivers’ Weather Observation Team

Fail Pass Pass Fail Pass 3 pass/ 2 Fail

Bonus

3.3%

3.8%

Further development is required as this is only one pilot project and there needs to be robust data before similar systems can be broadly applied to future road maintenance contracts. FTA is eager to continue the progress of this new concept and hopefully the concept can be expanded and tested in other areas. However, the contractor must be able to influence the customers’ perception and additional positive experiences are needed by similar projects before they can be broadly practices.

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CONCLUSIONS Finland has tested a new scheme that includes incentives and disincentives using a safety and road user satisfaction component into the maintenance contracts. A pilot PBMC project in Kangasala, Finland was selected as the test case to determine if the concept is feasible and practical. The pilot project is beginning the third year with two full years of data. The customer satisfaction commitments/promises were greater than previous year’s results and the actual results were quite good from both the client and the contractor’s perspective. The methodology and evaluation system appears to be functional and actual performance was acceptable. It appears that the slight blemish is with the contractor’s commitments/promises during the tender phase, which may be higher than the actual results, in order to place a winning bid. Despite receiving a greater amount of disincentives compared to bonuses, there have been mainly positive feedbacks and many improvements towards safety and customer satisfaction. The motivation for this new model is to make the contractor more diligent and consider safety seriously, so that there are satisfied customers and no significant safety consequences. To date there has not been any expansion of the pilot study. There needs to be more robust data with this model, further analyze if the targets are realistic and if the methodology is proved to be sound. It is too early to determine if the new scheme can be broadly applied and requires further testing and studies. This is a new concept for PBMC and may be a potential platform for others to consider. REFERENCES 1. Pakkala, P. “Improving Productivity Using Procurement Methods – an international comparison”, Sweden Productivity Committee, Stockholm, Sweden. 2011. 2. Levola, K. "Development of productivity in maintenance contracting", Presentation at the 29th Winter Road Congress in Finland, February 16, 2012. 3. Levola, K. "Incentive models for tendering and implementation in road maintenance contracts - Tukefin 2 pilot project for Road Maintenance Contract in Kangasala, 2011– 2016", Presentation at the National Transport Infrastructure Conference, Turku, Finland. August 30, 2012. 4. Levola, K. "Alcohol interlocks in Road maintenance and repair contracts in Finland", Presentation at the 13th International Alcohol Interlock Symposium, Helsinki, Finland. September 10, 2012.

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