Contractor Network Outcomes Contracts (NOCs) Roading

Road Asset Management (RAM) contracts

RAM Contracts

Road asset management is about managing existing roads as an integrated asset in the most cost-effective manner. RICHARD SILCOCK talks with some of those involved with RAM contracts.

THESE DAYS, WITH so many large road building projects under construction it is sometimes easy to forget that maintaining the existing road network is equally as important, though perhaps less newsworthy.

“Road asset management [RAM] can be defined as providing and achieving a level of road life in the most cost-effective manner,” says Tony Porter, Opus International Consultants global strategic advisor for Road Asset Management. “To meet this goal it’s been essential to implement a strategy that is both robust and sustainable.

“For many road asset owning authorities, the traditional means of managing the asset has resembled a facilities management approach, with a ‘find-it and fix-it’ approach dependent on the budget available and the level of service. There has been, up until quite recently very little thought given by authorities to minimise whole-of-life-costs in their road network,” he says. “Yet roads constitute one of the largest assets of any country, and every dollar spent on the physical infrastructure in excess of that necessary equates to less dollars being available for other road improvements and other public services.

“Through planning and adopting good RAM policies benefits, such as reduced life-cycle maintenance costs, consistent levels of service and performance predictability, lower financial and operational costs can be achieved.”

Pothole maintenance of road surface and entering in central RAM database using a tablet.
Pothole maintenance of road surface and entering in central RAM database using a tablet.

Tony says that linked to performance-based (PBC), or network outcomes (NOC) contracting models, where the contractor is responsible for meeting (or exceeding) specified performance indicators, whole-of-life road maintenance is enhanced through: more consistent and improved levels of service, allocation of risk, spread of resources beyond the controlling authority, cost certainty, and a separation of the governance authority role from the operational/activities contractor role.

“A typical PBC results in significant price reduction with savings of eight to 20 percent. Variations can result however, depending on the nature or condition of the existing road, ie, unpaved roads will generally deteriorate more quickly with the KPIs generally easier to specify. By comparison, paved roads in poor to fair condition may need to move from upgrading through to an ongoing maintenance programme, while roads in excellent condition may require relatively small (if any) investment.

“These types of contracts require a sound understanding by both the authority and the contractor to deliver timely maintenance interventions and workmanship that meets a specified service level for the least cost.”

Here in New Zealand the NZ Transport Agency’s RAM policy is led by ‘customer’ levels of service as defined in the One Network Road Classification.

Applying aggregate as part of a road upgrade.
Applying aggregate as part of a road upgrade.

“A sector-wide, road maintenance and operations review some 18 months ago resulted in most of our maintenance activities being delivered through NOC contracts,” says David Darwin, outcomes delivery manager for NZTA. “These [contracts] target the delivery of activities to ensure ‘customers’ receive a fit-for-purpose level of service delivered by the right activity, at the right level, in the right place and at the right time.

“When considering what ‘treatment’ to apply we take a short, medium and long term view and consider the options, ie, continued maintenance, partial rehabilitation and resurfacing, or a low-cost, short-term solution followed by significant capital investment. In reaching a decision, we calculate the costs of the maintenance and renewal works of each option and select the one with the best cash flow to determine the best long-term solution in relation to whole-of-life cost.

“In recent years we have also instituted a more durable road design specification, such as better quality aggregate which has resulted in a reduction in maintenance activity, while also improving skid resistance.

“In making these advances, we look to our contractors to deliver more effectively and efficiently, and we believe the NOC style of contract rewards suppliers who develop and implement better practices for the benefit of our customers.”

Mike Manion, road maintenance business development manager for Higgins Contracting, says the depth of asset management service depends on the client’s needs and capability.

“Higgins brings a robust understanding of materials and performance which we use in making our RAM decisions. We use RAM and RAM Contractor applications as the platform to manage this type of work and have developed a strong capability in-house,” he says. “Our goal is to obtain data capture as close as possible to the actual road in question, with our maintenance teams equipped with mobile devices which enable a more accurate data collection on work identified and completed.

“At a contract level we are able to analyse this data and this helps us to make better decisions in terms of efficient maintenance activities and better long-term outcomes.”

Mike says Higgins has modified its RAM systems, refining them to meet the needs of NZTA’s new contract model and is delivering tangible cost savings and whole-of-life benefits.

“For example, as the lead contractor on three NOC contracts – Bay of Plenty East, Manawatu/Whanganui and Hawke’s Bay – we are achieving significant whole-of-life savings,” he says.

Fulton Hogan’s chief executive, Robert Jones says the new NZTA NOCs are a positive step forward in managing road assets.

Resurfacing a footpath using ‘long-life’ concrete.
Resurfacing a footpath using ‘long-life’ concrete.

“The holistic view being applied to each contract by Fulton Hogan, both in New Zealand and Australia, is allowing for smarter and more cost-effective solutions,” he says.

“As an industry we have a long history of working with authorities to solve difficult challenges and we apply this collaboration in meeting and managing today’s and tomorrow’s [future] infrastructure.

“We need, however, to explore how we as an industry can harness the expertise across the sector so that we can provide solutions using a broader range of contract types. Models such as those used on SCIRT provide cost effective, end-to-end solutions by combining the input from planners, designers, contractors and the asset owners to deliver outcomes that are based on actual need and affordability.”

The Transport Agency’s David Darwin agrees that innovation across the sector is key to delivering improved RAM services.

“We are always keen to consider innovation that has been tested through an objective assessment process. We should all systematically review performance against plan, identify opportunities, implement best practice and improve the value-added component.”

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