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Performance contracting is designed to encourage the use of innovative products like temporary signals that adjust automatically based on traffic volume. Photos: Michigan DOT
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The extra time and materials cost of paving the shoulder was justified by the advantages of keeping two lanes of traffic open throughout construction.

Highways for Life (HfL) is a Federal Highway Administration (FHWA) initiative to encourage innovations in design and construction that will improve pavement quality, increase traffic safety, and extend roadway service life.

One component of the program is “performance contracting,” an approach to bidding and awarding projects in which contractors assume greater risk while gaining increased flexibility and potentially higher profits. At the same time, highway agencies get to communicate specifically what they want to achieve — for example, fewer traffic delays or a longer-lasting overlay — in their projects and hold contractors accountable for agreed-upon outcomes.

A rural rehabilitation project, completed in November in Clare County, Mich., served as a test and demonstration of the process. The rehabilitation covered 5.5 miles, including replacing the superstructure on two bridges, of M-115. Both Michigan DOT (MDOT) and the contractor judge the project to be highly successful.

The project had been designed and planned for construction in 2007, but state budget shortfalls led to its postponement. Around that time, HfL was soliciting inquiries from states interested in proposing pilot projects. MDOT Development Engineer and Project Manager Jack Hofweber thought the program might be a way to move the M-115 rehab forward.

HfL held a workshop on performance contracting in Lansing, Mich., in April 2007, for contractors and MDOT officials and employees to learn more about the concept. Contractors expressed concerns about having enough project control to offset their risk and the need for MDOT to establish clear and reasonable performance goals. Officials were concerned about how susceptible to claims the process would be and how to determine the types of innovation they should allow or encourage. The workshop helped both parties better understand what to expect.

The department applied for and received $1 million in HfL funding for the M-115 project.

MDOT revamped the rehab specifications in accordance with performance contracting guidelines, setting up performance targets in a number of areas before putting it out for bids. Goals included minimum pavement ride quality measurements, a requirement for long-term serviceability, targets for minimizing traffic closures and delays, and protecting the safety of workers and motorists.

Bidders were asked to submit plans for meeting or exceeding each goal and to explain specific innovative steps they'd take to do so. MDOT reviewed and weighted the scoring for each bid to reward innovation and short- and long-term benefits to the traveling public.

Winning contractor Central Asphalt Inc. of Mount Pleasant, Mich., proposed a significant change from the project's original design. The original plan was to remove the existing asphalt top layer, repair any cracks and fill the joints in the underlying asphalt pavement, then place a new surface layer of asphalt.

Central Asphalt, however, opted to rubblize and remove all the existing asphalt before placing the new asphalt. This would increase the initial cost of materials, but reduce the labor involved in joint and crack repairs. Equally important, it would eliminate the possibility of reflection cracks in the renewed surface layer. Required to guarantee performance for five years rather than MDOT's standard three-year materials-and-workmanship warranty, the firm hoped this approach would promote the pavement's longevity.