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Chapter Four

Postconstruction Aspects of Construction Management

Introduction

The construction management process is not finished when the project opens to traffic. Agencies, and in some cases their industry partners, are responsible for operating and maintaining the facilities long after the construction contract is complete. International highway organizations have a different philosophy on warranties than those in the United States. Warranties of 5 years and longer are not uncommon in the countries studied on this scan. Agencies and their industry partners must also continuously consider how to improve their construction management methods.

  • Many countries employ long-term warranties.
  • There were numerous examples of design-build-operate-maintain contracts in various forms.
  • The team found examples of international agencies working closely with their industry partners to implement construction management innovations.

This chapter discusses postconstruction aspects of construction management. It describes the typical involvement of the construction contractor with the maintenance and operation of facilities it constructed. It also discusses how new knowledge is captured during the construction management process and how it is used to improve the process on future projects. The scan team found warranties of 1 to 7 years being used for various aspects of construction, and numerous examples of design-build-operate-maintain contracts. The team also found that the international agencies work closely with their industry partners to implement construction management innovations that can save time and money and help meet customer needs.

Maintenance and Warranties

The typical involvement of the construction contractor with the maintenance and operation of facilities it constructed varies substantially with the project delivery method. As stated in Chapter Two, England, Scotland, Finland, the Netherlands, and Ontario all have used some type of design-build-operate-maintain project delivery method. In these cases, the contractor is responsible for maintaining the project to predetermined performance levels. Warranties are not required on these projects. This section of the report will discuss primarily maintenance and warranty issues on traditional design-bid-build and design-build projects, as these have the most relevance to U.S. highway construction management.

In Germany and Ontario, the construction contractor does not get involved in maintenance. The construction contractor’s responsibility is similar to that in the United States with the exception of warranties. Ontario requires a 1-year warranty on all aspects of the project. Germany requires longer warranty periods of 5 years for soil and earthwork, 5 years for bridges and drainage systems, and 1 to 3 years for pavements.

The Highways Agency in England uses different maintenance and operational requirements for various contract types. For the design-build-finance-operate contracts and other long-term contracts, the contractor provides operational and maintenance services for the full length of the 30-to-50-year contract. The contractor designs and constructs the project with the full knowledge that he will have to operate and maintain the infrastructure for the full term of the contract. At the termination of DBFO contracts, criteria require a level of guaranteed workmanship, and Euro products have to be tested and certified. On the other hand, the preferred new method of contracting for design and construction services—the ECI contract—does not provide for traditional operational and maintenance services. These contracts include a general workmanship and materials warranty. The team members of the A500 contract indicated that at the completion of construction, the contractor is responsible for a 2-year general workmanship and materials warranty. In addition, the contractor is also responsible for any design or construction defects directly attributable to the contractor’s failure to exercise reasonable care in design and construction for 12 years after the contract is executed.

  • At the end of a DBFO project the HA criteria require a level of guaranteed workmanship, and Euro products have to be tested and certified.

Like England, the Netherlands uses different maintenance and warranty requirements for various contract types. For design-build contracts (and variations of design-build known as D&C, E&C contracts in which both design and construction services are provided), the Netherlands requires a 7-year warranty for the surface course of asphaltic concrete pavements. This is a performance warranty for raveling and skid resistance. A 3-year warranty is also required for expansion joints for structures, pavement markings, and landscaping plants such as trees. The Netherlands indicated that warranties have not always been effective in the past. Historically, Dutch law has been liberally interpreted in the contractor’s favor to release the contractor from any liability unless the agency can prove that the defective workmanship or materials are directly attributable to the contractor. Under the newer design-and-build contracts discussed above, the agency believes that any pavement defects occurring in the first 7 years after construction will be the responsibility of the contractor. Officials said that the Netherlands is considering more pilot projects with bonded warranties because of success with these warranties in the railroad sector.

Although the term “warranty” is not used in Scotland, the Scottish Executive requires contractors to be responsible for all defects during a 5-year maintenance period after construction is complete. A retainage is used to ensure the correction for defects, but some contractors opt to submit a bond in lieu of having retainage held. For pavements, the design life is 40 years. The agency runs a deflectograph in years 3 and 4 to determine performance trends, and again in year 5 for acceptance and/or remediation. Warranty bonds are not used. The agency does not want to invoke a bond only to get the defects corrected. Since past performance is considered in determining the list of invited bidders, disputes could affect a contractor’s ability to tender on future projects.

The Finnish Road Administration often requires a 5-to-7-year warranty for all workmanship and materials, with the exception of pavements, which have 2-year warranties. However, the specific warranties for a given project may vary with the scope of the project. Warranties of 5 to 7 years have been used on pavements, 2 years on lighting and other electrical devices, and 1 year on plantings and landscaping items.

U.S. Parallel—Asphalt Pavement Warranties

Figure 12. Map showing States using warranty evaluation in 1999, including Alabama, California, Colorado, Florida, Georgia, Indiana, Iowa, Kentucky, Maine, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Washington, West Virginia, Wisconsin, and Wyoming.

Figure 12. States using warranty evaluation.

Warranties are not new to the United States. From 1890 to 1921, Warren Brothers Paving owned a patent on hot mix asphalt (HMA). Warren Brothers provided a warranty for its products that lasted up to 15 years. The warranties covered both materials and workmanship. After 1921, the Warren Brothers’ patent expired. The asphalt market was opened up to competition and the warranty program was discontinued.

In the 1950s, the U.S. government formalized its participation in the highway construction program. Warranties were not allowed because they were considered maintenance, and the Federal government could participate only in construction. In 1988, a Transportation Research Board study produced Circular 38—Innovative Contracting Practices, which described the possible application of warranties to highways. FHWA Special Experimental Project 14, put in place in 1990, allowed for the evaluation of warranties and other alternative contracting methods on Federally funded highway projects. In 1995, FHWA mainstreamed most alternative contracting methods, including warranties, and many State and local agencies began to evaluate the use of warranties on their own. Figure 12 depicts the States in which FHWA had approved warranty projects in 1999.

Process Improvement

This report has provided numerous examples of continuous improvement processes for construction management processes. The international organizations shared their newest innovations in construction management and the team learned the processes of capturing the new knowledge that generated them. A few of the most notable process improvement examples previously described in this report include the following:

All of these examples were developed in close consultation with industry partners. Officials in each country shared specific examples of how they obtain feedback to ensure the knowledge gets back into the project development system. Ontario has a very formal process. With its contractor administration consultant, it holds monthly meetings to discuss ratings and progress. One final rating is provided for each contractor at the end of the project. For multiyear projects, discussions are held, but no ratings are done. Postconstruction meetings are held between the engineering consultant and construction contractor at the end of every project. A construction report is prepared for each project and circulated within the ministry. The ministry is also starting to invite the design consultant to construction site meetings.

Germany receives feedback through a team concept. It develops projects using a designated team assigned to the project from beginning to end. These teams are multifaceted, and consider the lessons learned from construction in future project development. German construction officials meet regularly with the country’s contractors’ association to address conflicts and resolve industry issues.

The Highways Agency in England conducts joint reviews with the Office of Government Commerce at various phases of the project development process to gather lessons learned and provide feedback to the overall transportation delivery program. The schedule of reviews is determined by a risk assessment of the project scope.

Postconstruction reviews are conducted informally in Scotland, but if the final contract amount exceeds the bid by 15 percent or more, a more detailed review is done to explain overruns. The Scottish Executive also conducts several meetings with tendering contractors to ensure that their approach is in compliance with the owner’s needs. Whether the approach meets the criteria in the request for tender or is an alternate design, the submission must meet the basic criteria established by the agency. These meetings essentially have eliminated tenders being rejected for noncompliance with the owner’s requirements.

For processes to be improved, they must be measured. All of the countries measure time and cost growth, and Ontario tracks these in earnest, as discussed in Chapter Three. While the Highways Agency traditionally has tracked cost and schedule growth on its projects, the lump sum-based ECI contracts provide even stronger economic incentives for the contractor to complete the work on time and on schedule. Also, the DBFO contract, by its nature, rewards contractors for innovation, risk taking, performance measurements, and budget attainment. By awarding the project to a DBFO company based on a quality/concept selection process and having the DBFO company identify the target costs, contract cost growth and time growth should be at a minimum. If the owner can refrain from initiating change orders, the DBFO company is measured against the standards it established for itself through the certification process.

Both England and Finland have more global key performance indicators that they measure to attain their goals of the future. Table 9 provides a list of these indicators.

Table 9. Key Performance Indicators
England Finland
Characteristics of the specific product Impacts to road users and society
Service being delivered Performance-based criteria (currently being developed as part of the strategy)
Predictability of time Level of service, outcome, and performance based criteria
Predictability of cost Adherence to technical specifications
Safety Adherence to material specifications
Defects  

These key performance indicators are relatively new, so the agencies did not have historic data to share with the scan team at the time of the site visits. However, the potential for the measurement of process improvement is obvious.

Past performance assessment of individual contractors is discussed in Chapter Two, but a summary of the measurement techniques is merited here. The Netherlands is prohibited from using past performance in procurement. Ontario and England have the most mature past performance measurement systems. Ontario uses its RAQS system for both consultants and contractors. England uses its CAT system, which is relatively new. Details on these systems are in Chapter Two.

Conclusions

Postconstruction aspects of construction management are important to maintaining long-term success. The international organizations the scan team met with are striving to incorporate long-term construction management solutions through the use of warranties and innovative contracts that include substantial maintenance agreements. The team discovered numerous examples of innovations stemming from rigorous process improvement. U.S. highway agencies may benefit from employing these innovative techniques or process improvement techniques that generated them.

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Page last modified on November 7, 2014
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