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Performance-based Contracting for Roads in Estonia

In the nineties, Estonia went through a privatization reform that also affected the road sector. The Estonian National Road Administration (ENRA) was encouraged to promote the creation of contracting firms and outsource road works to contractors. Private firms established at that time recruited mostly former government employees who were experienced in the execution of road works. The privatization process going in the road sector led in 1995 to a pilot experience of performance-based procurement of road management and maintenance. From 1995 through 2000, the ENRA tested several one-year and two-year performance-based contracts (PBCs).

Satisfied with the results of these experiments, the ENRA moved in 2000 to using longer-term PBCs on a regular basis. At present, 63% of the national road network, specifically 10,288 km of paved and gravel roads, is covered under five-year PBCs. These contracts are fully funded from the central government budget.

PBCs are awarded only for those road corridors where rehabilitation is not warranted, only maintenance. These contracts typically cover routine maintenance and winter maintenance (snow removal, snow blowing, ice cleaning).

As of February 2005, 5 private contractors were commissioned to execute 12 PBCs. These contracts may not be renewed. At the end of the fifth year, the contractors that have completed their obligations, and are interested in continuing for another 5-year term, have to participate in an open competitive bidding again. The legislative framework actually permits to extend contracts for up to additional two years, but contractors in Estonia are interested in longer terms and prefer going through a competition again.

Monitoring
In 1995, a consulting company was hired to supervise one-year and two-year pilot PBCs. After analyzing this experience, the ENRA and its regional offices concluded that the supervision of PBCs required fewer personnel and fewer resources than with the traditional method of procurement, and could be done by in-house staff. At present, the supervision of contractors executing PBCs is arranged through periodic informal and regular monthly inspections. Typically, periodic inspections are typically done by a single supervisor from the road agency. Other agency staff can be engaged if their assistance is needed to resolve emerging problems.

Regular monthly inspections are conducted by an official commission, appointed by decree of the head of the respective road region. The Commission usually consists of 3 supervisors, 1 traffic person and 2 representatives from the ENRA. Contractors are not official members of the Commission, but the decree indicates that it is the Contractor’s responsibility to assign the appropriate people to represent their interests during the Commission’s inspections. Though the contractors are not obliged to attend monthly inspections, they receive invitations from the ENRA (or its regional offices) to participate, and they always do. The ENRA is interested in the physical presence of the contractor, as this helps discuss identified defects and resolve possible disputes on the site. To avoid corruption among the parties concerned and achieve better contractor accountability, one of the regions (Kagu) has initiated the rotation of its three Commissions from county to county when they are to conduct monthly site inspections.

Road users are also encouraged to participate in monitoring and evaluation of the contractors’ work. Billboards with contact information are established along the contracted road corridors to report any deficiencies. Since the deployment of a PBC approach, the ENRA has noticed a decrease in the number of complains from road users about road conditions.

Workforce reduction in the National Road Administration


In 2003, the number of personnel at the ENRA and regional offices was reduced by 283 people (29%) as a result of the road management organization reform. At the end of 2003 the ENRA and its subordinate state agencies had totally 692 employees (administration staff – 343, workers – 349) (see the chart ).
One of the reasons was the outsourcing of routine maintenance works under PBCs, which lead to the need in fewer workers to continue executing other kinds of road works and fewer administration staff to administer and supervise PBCs.

Partnership
The ENRA and its state agencies have established strong partnership relations with their contractors. The Administration arranges bi-annual workshops to bring together representatives of the contractors and road agencies involved in PBC. The main objective of such events is to share experiences of different counties, collaboratively discuss lessons learnt and find innovative solutions for future implementation of PBCs.

Appendix: Requirements for the State of Roads
(Provided and translated from Estonian into English by the ENRA. Performance requirements are set for 4 levels of roads).

The state of road shall enable safe traffic and shall conform to environmental protection requirements and the technical requirements established for the corresponding class of road. Requirements for the state of roads are obligatory for all the owners of the roads. A road owner can impose the obligation of fulfilling of the requirements for the state of road on the contractor by concluding relevant agreement.
If it is not possible to meet the required state of road and therefore if it is not possible to drive safely, this stretch of road should be designated with relevant road signs. According to the road class, type and traffic volume there are four levels of road states, from 1 to 4, 4 being the highest level at which the condition of road is the best and 1 being the lowest level.

The requirements for road are divided as follows:

Requirements for the state of paved roads.
Levels of state and indicators that describe every state are given for the evenness of road surface and the amount of defects on surface, for shoulders, for road signs and road marking, for side visibility distance, for general appearance and for manhole covers.
Requirements for the state of gravel roads.
Levels of the state and indicators of describing the road state are given for evenness and cross section of road surface, for side visibility distance and for general appearance of road.
Requirements for the state of bridges.
A bridge is a construction along which the road crosses the obstacles and which has one or more spans with the length of at least 3 meters.

The accordance of bridge to the requirements of the state is determined by the state of every single structural element of the bridge.

The following structural elements of bridge are evaluated to determine the state of the bridge:

Pavement and its width, evenness and profile;
Road signs;
Sidewalks;
Hand-rails;
Hydro sealant and deformation joint;
Underneath surface of bridge construction;
Bearings;
Drainage system;
Bearing construction for cement concrete, steel bridge and wooden bridge;
General span construction;
Piers;
Embankment end;
River bed beneath the bridge.

Requirements for the state of road in winter conditions.
Requirements for winter maintenance are valid in weather conditions typical to winter like snow, ice and slipperiness, blizzard etc. States of road in winter conditions are described with slipperiness, amount of snow and evenness and are given in the following table.

Indicators	States of roads and their description
	1	2	3	4
Slipperness
	Road surface is allowed to be covered with snow or ice, anti-skid treatment only in dangerous places.	Surface is allowed to be covered snow or ice, anti-skid treatment is required.	Wheel tracks must be clear	Whole road surface must be clear from snow and ice
Snowiness
Dry and light snow	up to 10 cm	5 cm	3 cm between tracks	--
Wet thaw snow, sleet, salt-snow mix	up to 6 cm	3 cm	2 cm between wheel tracks	--
Space between road side snow-drifts at least	6 cm or at least width of road	8 cm or at least width of road	9 cm	10 cm
Evenness
Ruts or unevenness on snowy road surface up to	4 cm	3 cm	There can be squeezed snow between wheel tracks up to 2 cm	Road surface must be clear, at temperature lower than – 12 C squeezed snow between wheel tracks up to 1 cm is allowed

 

Sources:

1. ENRA (Estonian National Road Administration). 2004. “Annual Report 2003.” Tallinn.
   
   
2. Interview of the Estonian National Road Administration staff and private contractors, February 2005, Tallinn.

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