Highway Infrastructure: Quality Improvements Would Safeguard Billions of
Dollars Already Invested (Chapter Report, 09/19/94, GAO/RCED-94-198).
Federal, state, and local governments will need to spend about $50
million annually through the year 2011 to maintain the nation's highway
infrastructure. This figure substantially exceeds the $26 billion spent
in 1991 for construction and capital repairs for highways built with
federal assistance. These funding levels make it imperative that
investments in federal-aid highways be cost-effective. This report (1)
reviews states' experiences with using warranties in highway contracts
and the factors that promote or discourage the use of such warranties,
(2) identifies efforts to provide adequate maintenance for federal-aid
highways, and (3) identifies opportunities for improving states'
procedures for selecting pavement designs.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-94-198
TITLE: Highway Infrastructure: Quality Improvements Would
Safeguard Billions of Dollars Already Invested
DATE: 09/19/94
SUBJECT: Interstate highway system
Highway planning
Federal aid for highways
Road construction
Federal/state relations
Public roads or highways
Warranties
Maintenance (upkeep)
Ground transportation operations
Life cycle costs
IDENTIFIER: FHwA Strategic Highway Research Program
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Cover
================================================================ COVER
Report to Congressional Committees
September 1994
HIGHWAY INFRASTRUCTURE - QUALITY
IMPROVEMENTS WOULD SAFEGUARD
BILLIONS OF DOLLARS ALREADY
INVESTED
GAO/RCED-94-198
Highway Infrastructure
Abbreviations
=============================================================== ABBREV
AASHTO - American Association of State Highway and Transportation
Officials
DOT - Department of Transportation
FHWA - Federal Highway Administration
GAO - General Accounting Office
ISTEA - Intermodal Surface Transportation Efficiency Act of 1991
LCCA - life-cycle cost analysis
NCHRP - National Cooperative Highway Research Program
NHS - National Highway System
NQI - National Quality Initiative
OIG - Office of Inspector General
QC/QA - quality control/quality assurance
SEP 14 - Special Experimental Project 14
SHRP - Strategic Highway Research Program
TRB - Transportation Research Board
WASHTO - Western Association of State Highway and Transportation
Officials
Letter
=============================================================== LETTER
B-257079
September 19, 1994
The Honorable Max S. Baucus
Chairman
The Honorable John H. Chafee
Ranking Minority Member
Committee on Environment
and Public Works
United States Senate
The Honorable Norman Y. Mineta
Chairman
The Honorable Bud Shuster
Ranking Minority Member
Committee on Public Works and
Transportation
House of Representatives
In response to section 1043 of the Intermodal Surface Transportation
Efficiency Act of 1991, this report reviews states' experiences with
using warranties in highway contracts, identifies efforts to provide
adequate maintenance for highways built with federal assistance
(federal-aid highways), and identifies opportunities for improving
states' procedures for selecting pavement designs.
We are sending copies of this report to the Secretary of
Transportation; the Administrator, Federal Highway Administration;
the heads of the state departments of transportation mentioned in
this report; and other interested parties. We will also make copies
available to others on request.
This work was performed under the direction of Kenneth M. Mead,
Director, Transportation Issues, who may be reached at (202)
512-2834. Major contributors to this report are listed in appendix
III.
Keith O. Fultz
Assistant Comptroller General
EXECUTIVE SUMMARY
============================================================ Chapter 0
PURPOSE
---------------------------------------------------------- Chapter 0:1
If our nation's highways are not adequately maintained, they will not
support the level of service needed to sustain a large and growing
economy. Federal, state, and local governments will need to invest
about $50 billion annually in constant dollars through the year 2011
to maintain the condition and level of performance of the nation's
highway infrastructure. This figure substantially exceeds the $26
billion spent in 1991 for construction and capital repairs for
highways built with federal assistance (federal-aid highways), as
reported in a January 1993 Department of Transportation (DOT) report
to the Congress.\1 These funding levels make it imperative that
investments in federal-aid highways be cost-effective.
To help protect the investment in the nation's highway
infrastructure, the Intermodal Surface Transportation Efficiency Act
of 1991 (ISTEA) required GAO to assess ways of improving highway
quality. GAO agreed with the Senate Committee on Environment and
Public Works and the House Committee on Public Works and
Transportation to (1) review states' experiences with using
warranties in highway contracts and the factors that promote or
discourage the use of such warranties, (2) identify efforts to
provide adequate maintenance for federal-aid highways, and (3)
identify opportunities for improving states' procedures for selecting
pavement designs. To meet these objectives, GAO reviewed six states
in detail and obtained supplemental data from other states on
selected issues.
--------------------
\1 The Status of the Nation's Highways, Bridges, and Transit:
Conditions and Performance, Report of the Secretary of Transportation
to the United States Congress (Jan. 1993).
BACKGROUND
---------------------------------------------------------- Chapter 0:2
When highway contracts include a warranty clause, contractors
guarantee to a state highway department that a project will perform
as expected over a number of years. Until 1992, the Federal Highway
Administration (FHWA), which administers the federal-aid highway
program for DOT, prohibited warranties in federal-aid highway
contracts, believing that warranties would entail federal
participation in maintenance. However, most states may now generally
use warranties for some projects.
Under ISTEA, states can now receive federal funding for certain
preventive maintenance projects shown to be cost-effective. States
are required to properly maintain their federal-aid highways, and
FHWA requires that its field offices annually certify whether the
states are doing so. If FHWA determines that a state's maintenance
is not adequate and the state does not take corrective action, the
Secretary of Transportation can withhold approval of further
federal-aid projects for all or parts of the state until proper
maintenance is achieved.
Federal legislation gives the states considerable flexibility in
selecting highway pavement designs but does provide broad directives.
For example, highway facilities must meet existing and probable
future traffic needs in a way conducive to safety, durability, and
economy of maintenance. In addition, ISTEA tasks the states with
considering life-cycle costs as part of transportation planning.
Life-cycle cost analysis is a procedure for selecting a pavement
design that will provide a satisfactory level of service at the
lowest cost over time.
RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3
Officials in the nine states that GAO identified as having included
warranty clauses in contracts for 33 highway or bridge projects have
generally been satisfied with these warranties. But the small number
of projects that have been completed under warranty makes it
difficult to definitively assess warranties' costs and benefits.
Contractors and others have raised concerns as to whether warranties
are fair and enforceable, but states' initial experiences suggest a
number of strategies to address these concerns. Given recent actions
by FHWA that generally permit states to use warranties for the
majority of federal-aid highway projects, federal guidance could help
states assess when warranties can be an effective tool for promoting
quality.
Approximately 60 percent or less of the nation's principal highways
are considered to be in good condition (see fig. 1). The states GAO
visited had backlogs of maintenance projects, mainly because of
resource shortages. Nevertheless, four of the six states GAO
contacted said they would not use the funds made available under
ISTEA for maintenance, in part because doing so would reduce the
funds available for capital projects. Furthermore, FHWA's oversight
has not ensured that states adequately maintain federal-aid highways.
The agency has not established performance standards to guide its
determination that maintenance is adequate. Furthermore, in some
states where FHWA has identified maintenance problems, it has not
followed its procedures for correction and follow-up, resulting in
lingering problems.
Figure 1: Pavement Conditions
of Principal Highways, 1991
(See figure in printed
edition.)
Note: For rural highways, "other principal highways" refers to
non-Interstate principal arterials. For urban highways, the term
refers to non-Interstate principal arterials, freeways, and
expressways.
Source: GAO's analysis of FHWA's data.
In selecting pavement designs, many states do not consider the
results of life-cycle cost analysis in their decisions. Even those
states that perform such analysis limit its usefulness by excluding
important data, such as maintenance costs. A lack of guidance on
when life-cycle cost analysis is useful and what factors need to be
analyzed undermines the states' use of this approach in making
investment decisions.
PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4
STATES' USE OF WARRANTIES IS
LIMITED BUT GENERALLY
SATISFACTORY
-------------------------------------------------------- Chapter 0:4.1
Federal regulations have traditionally prohibited contracts for
federal-aid highways from including warranty clauses requiring
contractors to guarantee their work. However, recent actions by FHWA
now permit states to include such warranty clauses in an array of
circumstances.
As of spring 1994, nine states had undertaken 33 projects under
warranty, including bridge painting and pavement rehabilitation.
While preliminary observations or final results were available for
just two-thirds of these projects, state officials generally have
been satisfied with their use of warranties. They cited both the
quality of workmanship and the opportunity to obtain remedial action
when necessary--as was the case in 15 of the 23 projects for which
preliminary observations or final results were available. State
officials also noted that, with a few exceptions, warranties appeared
to have a minimal impact on costs.
Others are more skeptical about the viability of warranties.
Contractors in particular fear that warranties could shift an
excessive measure of liability to them, since factors beyond their
control, such as inadequate maintenance, could affect how a project
performs. Reconciling these opposing views of warranties is
difficult because of the relative scarcity of warranted projects.
Until a broader base of evidence is established, states are dealing
with contractors' concerns by using such strategies as limiting the
duration of the warranty period.
MAINTENANCE: A
COST-EFFECTIVE ACTIVITY THAT
IS UNDERFUNDED
-------------------------------------------------------- Chapter 0:4.2
Maintenance can slow deterioration, thus keeping highways and bridges
in good condition for a longer time. Maintaining pavement in good
condition is highly cost-effective, FHWA said, because $1 spent on
pavement in good condition saves $4 to $5 that would be needed if the
pavement deteriorated to fair condition and even more if the pavement
deteriorated to poor condition.
In the six states GAO visited, maintenance needs often outstrip the
resources expended. As a result, needed repair work such as
spot-painting bridges and sealing joints and cracks in pavement has
been postponed. Four of the six states GAO contacted said they would
not use federal funds for maintenance, in part because doing so would
reduce the funds available for more costly capital projects.
Moreover, the funds available for capital projects fall far short of
needs: FHWA has estimated the cost in 1991 dollars to eliminate the
backlog of deficiencies on highways and bridges and related work at
$290 billion, yet the actual 1991 capital investment was $26 billion.
FHWA is responsible for ensuring that states perform adequate
maintenance. Yet the agency has invoked its regulatory sanction on
federal funding for a state's highway projects only once--when
Louisiana admitted that it was not adequately maintaining its
highways. Furthermore, the agency has not established performance
standards to aid in its annual determination that states' maintenance
efforts are adequate. FHWA does have guidance calling for identified
maintenance deficiencies to be addressed through corrective action by
the state and follow-up by FHWA, but the agency has not
systematically followed this guidance. As a result, identified
maintenance problems linger unresolved for long periods. For
example, 2 years after FHWA found that California was not upgrading
guardrails and other related equipment to current safety standards
during replacement, as required by federal regulations, the issue was
still outstanding, with no time frame established for resolution.
IMPORTANT TOOLS FOR
ANALYZING DESIGN COSTS ARE
UNDERUTILIZED
-------------------------------------------------------- Chapter 0:4.3
Because of geographic and climatic diversity, states have
considerable flexibility in the way they select pavement designs.
Although ISTEA requires that states consider life-cycle cost analysis
as part of their planning processes, it remains unclear what this
consideration is to entail. As a result, states have made varied use
of such analysis. For instance, 11 of 38 states (nearly 30 percent)
responding to a 1993 survey reported that they did not use life-cycle
cost analysis in making highway investment decisions. Moreover, FHWA
officials note that the total decision-making process encompasses
numerous factors, including engineering experience, budget
constraints, management prerogatives, and political considerations.
States that used life-cycle cost analysis frequently limited it to
new construction and reconstruction projects, excluding
rehabilitation strategies. Only 16 states reported using such
analysis to evaluate highway repair strategies. A key impediment to
states' use of life-cycle costing is the difficulty of quantifying
certain costs, including maintenance costs. FHWA intends to issue a
policy statement on life-cycle cost analysis in the summer of 1994
and is considering sponsoring training on the subject.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5
To help protect the nation's highway infrastructure, GAO recommends
that the Secretary of Transportation direct the Administrator of FHWA
to take a number of actions to enhance states' ability to experiment
with warranties, improve oversight of states' maintenance efforts,
and improve states' ability to undertake life-cycle cost analysis.
GAO's detailed recommendations appear in chapters 2, 3, and 4.
AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6
On August 1, 1994, DOT provided GAO with written comments on a draft
of this report. DOT generally agreed with GAO's overall conclusions
and noted its commitment to protecting the nation's investment in
highway infrastructure and improving highway quality. DOT concurred
either fully or partially with all of the recommendations in the
draft report. However, in several cases, the Department maintained
that action already completed had satisfied the recommendation. In
the case of warranties, GAO agrees with DOT that the recent
clarification of the policy on instances in which states are allowed
to use warranties satisfies the proposed recommendation in the draft
report. Therefore, this recommendation has been withdrawn. In other
cases, however, GAO believes that the Department needs to take
additional action. For instance, DOT partially concurred with GAO's
recommendation that FHWA develop and disseminate model warranty
provisions for a variety of types of projects. Officials stated that
while FHWA made an exception in the case of a particular maintenance
process cited in the report, the agency generally prefers to let
states develop their own project specifications. GAO believes,
however, that other types of projects could also benefit if FHWA
assumed an activist stance in working with the states to develop and
disseminate model warranty provisions.
GAO also recommended that DOT develop performance measures for
maintenance. The Department partially agreed with this
recommendation but maintained that its existing requirements and
policies were sufficient to determine the adequacy of states'
maintenance. However, GAO found that DOT's existing guidance on
maintenance is not specific and is silent on whether a deficiency
that is severe and frequent is enough to support a finding that
maintenance is inadequate. Moreover, the existing guidance is not
being systematically followed, since maintenance problems identified
by FHWA can linger unresolved for lengthy periods of time, with no
strategy developed for corrective action and no time frame set for
resolving the deficiencies. Consequently, this proposed
recommendation has been clarified to underscore GAO's view that
performance expectations and standards that would provide nationally
comparable measures, with specific time frames for corrective action,
need to be developed. These expectations and standards should
reflect the severity and impact on safety of the maintenance
problems.
DOT's specific comments and GAO's evaluation of them are discussed in
chapters 2, 3, and 4 and in appendix I. GAO made changes in the
report in response to these comments where appropriate.
INTRODUCTION
============================================================ Chapter 1
About $50 billion annually through the year 2011 will be needed to
maintain the condition and performance of federally funded highways,
according to estimates by the Federal Highway Administration (FHWA).
This amount is in constant 1991 dollars, and substantially exceeds
the 1991 capital outlay of $26 billion by federal, state, and local
governments for construction and capital repairs of federally funded
highways, as reported in a January 1993 Department of Transportation
report to the Congress.\1
It is critical that the highways in which these investments are made
realize their expected service life, in part through adequate design
and maintenance.
The Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991
authorized funding to sustain and enhance the nation's surface
transportation infrastructure. The act provided an unprecedented
funding authorization of $122 billion for highways, bridges, and
related activities.\2 These funds are targeted in large measure to
preserving and improving the quality of existing transportation
resources. Section 1043 of ISTEA tasks the Comptroller General with
examining methods for improving the quality of the nation's highways
through the use of warranties and guarantees, improved maintenance,
and alternative design standards.
--------------------
\1 The Status of the Nation's Highways, Bridges, and Transit:
Conditions and Performance, Report of the Secretary of Transportation
to the United States Congress (Jan. 1993).
\2 The full ISTEA authorization for all surface transportation
programs, including mass transit, totals $155 billion for fiscal
years 1992 through 1997.
EUROPEAN HIGHWAY QUALITY DREW
ATTENTION OF U.S. HIGHWAY
EXPERTS
---------------------------------------------------------- Chapter 1:1
In 1990 and 1992, representatives from the highway industry and
federal and state highway agencies toured European countries to study
the condition of asphalt and concrete pavements there. Tour
participants found that, generally, the durability and longevity of
European pavements exceeded those of U.S. pavements. Participants
on the 1990 tour, for instance, reported that the study team's most
striking observation was that the pavements on European motorways and
trunk routes were in superior condition. The extreme forms of
distress that are evident in the U.S., such as rutting, cracking, and
potholes, were rarely seen. The reduced distress on European roads
could not be explained by lower truck weights; in fact, European
truck axle weights substantially exceed those allowed in the United
States.
The tour participants not only considered the condition of European
pavements but also compared European methods of designing, building,
and maintaining highways with U.S. practices. One finding that
generated intense discussion was that in many European countries,
warranties covering highway construction are a standard component of
most highway contracts. One potential indication of the quality of
European roadways is the fact that, according to FHWA officials,
European road authorities have rarely had to invoke the warranty
clauses. For example, officials in both Sweden and Denmark reported
that during the warranty period, contractors are called to repair or
replace their work in only 2 to 3 percent of all cases.
Although the use of warranties in Europe coincides with highways of
good quality, the relationship between highway quality and the use of
warranties remains uncertain because a number of factors combine to
contribute to the performance of European highways. These factors
include a high level of investment in highway infrastructure
throughout Europe, sophisticated design practices, and a commitment
to early preventive maintenance.
PERFORMANCE WARRANTIES ARE NEW
TO HIGHWAY CONSTRUCTION
---------------------------------------------------------- Chapter 1:2
Warranties are regularly used to indicate to consumers that a product
meets a certain standard of quality and that the manufacturer will
repair or replace the product if it fails to meet that standard. As
envisioned for highways in the United States, a warranty would bind
highway builders and/or designers to guarantee to a state highway
department that a project will perform as expected over a given
number of years.
During the debate over ISTEA, the administration proposed lifting a
long-standing regulatory prohibition on including construction
warranty clauses in contracts for highways built with federal
assistance (federal-aid highways). The prohibition existed because
of FHWA's concerns that warranties would entail federal participation
in maintenance, which was outside the scope of federal involvement.
A proposed amendment to ISTEA would have permitted states to include
either construction or design warranties in contracts. However,
professional and industry trade groups argued that warranties would
impose an unfair burden of risk on them, and they helped defeat the
amendment.
Holding highway contractors responsible for their work is not
completely new to the United States. Some construction contracts
already carry a 1-year performance bond that allows a state to obtain
repairs from the contractor for defective materials or workmanship.
Performance warranties, however, go a step beyond this bond, as they
typically extend for a longer period of time and target broader
performance characteristics of a project--for example, the smoothness
of a pavement, the reflectivity of a lane-marking stripe, or the
absence of peeling paint on a bridge. The emphasis on overall
project performance is a concern to industry representatives because
this focus may penalize them for variables they believe are beyond
their control.
WHAT IS MAINTENANCE?
---------------------------------------------------------- Chapter 1:3
Maintenance for federal-aid highways is defined in 23 U.S.C. 101 as
"preservation of the entire highway, including surface, shoulders,
roadsides, structures, and such traffic-control devices as are
necessary for its safe and efficient utilization." At the state
level, however, the definition of maintenance varies from state to
state. For purposes of this report, we generally defined maintenance
as either corrective or preventive. Corrective maintenance consists
of those activities that keep pavements, structures, drainage
facilities, and traffic control devices in good condition through the
repair of defects or problems as they occur. Typical activities
include repairing potholes, removing debris from drainage systems,
and repairing and replacing guardrails. Preventive maintenance is
planned and is intended to arrest minor deterioration, retard
progressive failures, and reduce the need for corrective maintenance.
HIGHWAY DESIGN AND CONSTRUCTION
---------------------------------------------------------- Chapter 1:4
The durability, safety, and cost-effectiveness of a highway depends
on the quality of both its design and construction. Highway
construction involves the processes associated with mixing and
placing the pavement materials. Highway design encompasses two major
elements: pavement design and geometric design. Pavement design
includes determining the appropriate layer structure, composition
(mix), and thickness of materials required to withstand the traffic
and environmental conditions the pavement will be subjected to.
Geometric design entails determining the lane width, slope, and
curvature required to adequately and safely serve the level of
traffic anticipated.
Current federal laws and regulations do not generally specify
detailed requirements for acceptable highway pavement designs;
instead, they usually only provide broad directives. Specifically,
23 U.S.C. section 109 requires that highway facilities adequately
meet the existing and probable future traffic needs and conditions in
a manner conducive to the safety, durability, and economy of
maintenance and be designed and constructed in accordance with the
standards best suited to accomplish the foregoing objectives and
conform to the particular needs of each locality. The Pavement
Policy, 23 C.F.R. part 626, requires each state highway agency to
have a process that is acceptable to FHWA for the selection of type
and the design of new, reconstructed, and rehabilitated pavement
structures.\3
--------------------
\3 Effective January 3, 1994, the Pavement Policy was removed from
federal regulations and replaced by a definition of pavement design
and a requirement that "pavements shall be designed to accommodate
current and predicted traffic needs in a safe, durable, and
cost-effective manner."
OBJECTIVES, SCOPE AND
METHODOLOGY
---------------------------------------------------------- Chapter 1:5
Section 1043 of ISTEA states that the Comptroller General shall
report to the Congress on means for improving the quality of highways
constructed with federal assistance. Specifically, section 1043
directed the Comptroller General to address three areas: (1) the
inclusion of guarantee and warranty clauses in contracts with
designers, contractors, and state highway departments; (2) means of
enhancing the maintenance of the federal-aid highway system to ensure
that the public investment in this system is protected; and (3)
alternatives to current federal and state minimum design standards.
In addition, we reviewed other areas, such as research and
development as well as federal oversight and planning requirements,
as they relate to the three primary issues of guarantees and
warranties, maintenance, and design standards.
As agreed with the Senate Committee on Environment and Public Works
and the House Committee on Public Works and Transportation, our
emphasis for the three directed areas centered on
determining states' experiences to date with the use of warranties
and guarantees and the primary factors likely to influence use
of these innovative approaches to contracting;
identifying efforts to provide adequate maintenance for projects
constructed with federal-aid highway funds; and
identifying opportunities for improving procedures for selecting
highway pavement designs.
To address these issues, we performed work in six states--California,
Michigan, Mississippi, New York, Oregon, and South Carolina. Factors
used in selecting these states included the percentage of pavement
considered deficient, the guidelines used for pavement design, the
status of the states' pavement and bridge management systems, and the
states' experiences with warranties and guarantees or other
innovative contracting strategies. On the issues of warranties and
design, we expanded the information developed on these six states by
contacting other states. For warranties, we obtained information
from seven additional states (Colorado, Missouri, Montana, Nevada,
New Hampshire, North Carolina, and Washington) with known experiences
with warranties. For design, we surveyed three additional
states--Illinois, Kentucky, and Washington--because they provided a
different perspective on pavement design procedures than the original
six states.
To review the use of warranties, we first analyzed information
available as a result of study tours to Europe in 1990 and 1992. To
obtain information on the U.S. experience with warranties, we
contacted FHWA officials, who provided information on the legal
history and regulatory status of warranties for federal-aid highway
projects. We obtained opinions on the potential impact of warranties
from top officials of major trade associations representing the
engineering, construction, and surety communities as well as
organizations representing disadvantaged business enterprises. We
contacted a number of individual contractors to obtain their views on
the potential benefits and costs of warranties. We also reviewed the
findings of research studies on innovative contracting, including
reports issued by the Transportation Research Board (TRB) and private
consultants.
To obtain state-level information on warranties, we reviewed
information provided by states on the factors contributing to their
decisions on whether to use warranties. We analyzed project-level
information from all nine states that used warranties and reviewed
the information we obtained in light of the theoretical arguments
both for and against warranties provided in the literature to date.
In reviewing maintenance practices and oversight, we analyzed federal
and state efforts to assess the cost-effectiveness of maintenance.
We identified any problems states were having with performing
adequate maintenance. These problems were identified through our
discussions with state and federal transportation officials and our
review of annual state maintenance reports; surveys of pavement
conditions; maintenance budget allocations; information on system
development and scope for pavement management systems; and, when
applicable, maintenance management systems, special maintenance
studies, and reports such as studies on strategies for addressing
maintenance backlogs and state audit reports. Finally, in assessing
federal oversight of maintenance, we reviewed legislative and other
maintenance requirements, FHWA division (state) offices' maintenance
evaluation plans, the results of these efforts, and the offices'
certification that the states' maintenance had been adequate, along
with accompanying submissions and responses by the states to problems
that FHWA identified.
In evaluating means for improving highway design standards, we
focused our efforts on pavement design and construction methods. We
did not review geometric highway standards, because section 1049 of
ISTEA mandated that the Department of Transportation (DOT) conduct a
survey and report on this issue. We reviewed nationally recognized
design guides and manuals developed by the American Association of
State Highway and Transportation Officials (AASHTO), and technical
reports and papers published by TRB. In assessing the federal role
in pavement design and construction, we reviewed federal laws,
regulations, and guidance, including FHWA's Federal-Aid Policy Guide,
manuals, technical advisories, training course materials, and policy
memorandums.
In addition, as part of our review of highway design, we analyzed (1)
a National Cooperative Highway Research Program (NCHRP) report on
national pavement structural design practices; (2) information from
the Strategic Highway Research Program (SHRP) on the results of its
research on pavement design and construction; and (3) materials from
the National Quality Initiative, a cooperative effort of FHWA,
AASHTO, and highway industry representatives to promote the
improvement of highway quality. We also interviewed FHWA officials
at headquarters, regional offices, and division offices. In
addition, we reviewed reports on design related issues from DOT's
Office of Inspector General. We also obtained from the states their
current pavement design and construction procedures, and we discussed
with state highway engineers the key factors they consider in
designing and building their pavements.
Our review was conducted from June 1992 through May 1994, with
updates through August 1994, in accordance with generally accepted
government auditing standards. DOT reviewed a draft of this report
and provided written comments, which appear at the end of each
chapter along with our evaluation. The full text of DOT's comments
appears in appendix I.
STATES' EXPERIMENTS WITH
WARRANTIES PROVIDE EARLY
INDICATIONS OF IMPLEMENTATION
STRATEGIES
============================================================ Chapter 2
As highway experts look for ways to improve the performance and
durability of the nation's federal-aid highways, the potential of
including warranties in highway contracts has sparked strong interest
as well as controversy. A highway warranty would bind a contractor
or engineer to repair or replace a project if it failed to perform
adequately over a set period of time.\1 Most major trade groups
representing the engineering and construction professions oppose
warranties for highway work, arguing that warranties would impose an
unfair burden of risk on their industries. Other transportation
experts, however, assert that warranties would result in a greater
measure of accountability in the nation's contracting practices and
thus could improve highways by raising the quality of workmanship.
In the past, states' use of warranties was prohibited by federal
regulations. Under ISTEA, FHWA has clarified that the regulatory
prohibition does not apply in certain circumstances, but states' use
of warranties remains limited. As of spring 1994, about 30
highway-related projects, representing a narrow range of project
types, had been conducted under warranty. Of that total, only about
half had reached the conclusion of the warranty period.
Preliminary indications from these projects are that, with a few
exceptions, those few states that have tried warranty contracting
have generally been satisfied with the experience. However,
officials from some other states fear that warranties could prove
difficult to enforce as a result of disputes over who is liable for
project failures. Similarly, some state officials doubt that the
benefits of warranties outweigh the effort of drafting new contract
specifications. For those states that have experimented with
warranties, careful design of the warranties has been key to
successful outcomes. These initial experiences with warranties
provide early indications of a number of strategies that can maximize
the potential benefits of warranties with the least threat to states'
ability to enforce warranties and contractors' ability to compete in
a fair and equitable marketplace.
--------------------
\1 As noted in ch. 1, the term "warranty" refers to a contracting
practice that is distinct from 1-year performance bonds that can
accompany local road projects. In this report, we use the term
warranty to cover both warranties and guarantees, as the terms are
typically used interchangeably. A warranty is technically defined as
a direct contractual relationship between owner and warrantor; a
guarantee connotes the involvement of a third-party intermediary,
such as a bonding agent.
A FEW STATES ARE EXPERIMENTING
WITH WARRANTIES
---------------------------------------------------------- Chapter 2:1
Federal regulations have traditionally prohibited states from using
warranties on federal-aid highway projects. Since 1990, however,
states have had the opportunity to use warranties on an experimental
basis under a special FHWA project. Additionally, in October 1992,
FHWA clarified that the regulatory ban on warranties did not apply to
projects on a large portion of the federal-aid highway system. As of
spring 1994, nine states had employed warranties in highway projects,
and officials in those states have generally been satisfied with the
outcomes, although an overall assessment of the broad benefits,
costs, and applicability of warranties remains limited by the
relatively small number of cases in which they have been tested.
STATES ARE NOT ALWAYS AWARE
OF FHWA'S POLICY ON
WARRANTIES
-------------------------------------------------------- Chapter 2:1.1
In the United States, FHWA's regulations have prohibited the use of
warranties for federal-aid highways since 1976.\2 In most cases,
federal-aid highway funds may only be used for capital projects, with
maintenance being the states' financial responsibility. Warranties
were banned because FHWA officials perceived that warranties could
indirectly involve the federal government in maintenance. This could
occur if contractors raised initial bid prices to cover the costs of
returning at a later date to perform repairs.
FHWA took a first step toward liberalizing the policy on the basis of
a request by a TRB task force for experimentation with a number of
innovative contracting techniques. In February 1990, FHWA
established Special Experimental Project 14 (SEP 14) to permit states
to try a variety of innovative contracting practices, including
warranties, and to promote their evaluation.\3
In October 1992, FHWA clarified that the regulatory ban on warranties
was no longer applicable for certain categories of federal-aid
highway projects. Specifically, FHWA officials determined that under
section 1016 of ISTEA, those states that were exempt from federal
oversight for projects not included in the National Highway System
(NHS) had the flexibility to use warranties for all federal-aid
projects on those non-NHS roads.\4 Non-NHS roads make up about 83
percent of the full federal-aid highway system. As of March 1993, 41
states were exempt from federal oversight for their non-NHS road
projects.
The clarification of policy was initially communicated in a
question-and-answer format over FHWA's electronic bulletin board
system as well as in an FHWA briefing package. However, officials
from several states we contacted were not aware of the policy change.
In April 1994, FHWA issued an addendum to the Federal-Aid Policy
Guide stipulating that states now have the latitude to apply warranty
provisions to exempted non-NHS projects. The addendum also
reiterated that for projects on the NHS, states may still seek
warranties as long as they receive FHWA's approval for the projects
under SEP 14.
--------------------
\2 The regulation appears as section 635.413 of title 23 of the U.S.
Code of Federal Regulations. Warranties for certain mechanical and
electrical equipment are specifically exempted.
\3 A description of some of the alternative, innovative contracting
methods that states are permitted to try under SEP 14 appears in app.
II.
\4 The NHS, as established under ISTEA, is to include a network of
federal-aid roads of national significance totaling approximately
155,000 miles. Section 1016 of ISTEA permits state exemption from
federal oversight for certain categories of roads. If a state opts
for the exemption, it may design, construct, operate, and maintain
all non-NHS roads in accordance with state, rather than federal, laws
and procedures. Thus, warranties may be used for these projects.
The Congress must approve the final NHS network by September 30,
1995; until it is approved, an interim NHS serves as a surrogate
system for the purposes of the exemption clause.
STATES' USE OF WARRANTIES IS
LIMITED BUT GENERALLY
SATISFACTORY
-------------------------------------------------------- Chapter 2:1.2
Even in the wake of FHWA's creation of SEP 14 and the clarification
of federal policy on warranties, states' use of warranties remains
limited. According to recent surveys of states' use of warranties
performed by FHWA and TRB, nine states have included warranty clauses
in highway contracts as of spring 1994, accounting for 33 projects.\5
Six of the nine states that have used warranties have done so under
the auspices of SEP 14: These states are California, Michigan,
Missouri, Montana, New Hampshire, and Washington. Two additional
states (Colorado and Nevada) have used warranties on projects
financed wholly with state funds. Finally, North Carolina used a
warranty on a federal-aid project in 1987, although the project was
not conducted under SEP 14. Table 2.1 summarizes states' use of
warranties as of spring 1994.
Table 2.1
Summary of States' Use of Warranties as
of Spring 1994
Type of Warranty Project completion Source of
State project duration date funding
-------------- -------------- ---------- ------------------ ----------------
California Rubberized 1 year August 1991 State
asphalt chip
seal
Rehabilitation 3 and 5 November 1993 and Federal-aid
using years June 1994 (SEP 14)
rubberized (expected)
asphalt (2
projects)
Colorado Microsurfacing 1 year September 1992 State
Michigan Bridge 2 years \a State (3) and
painting (18 federal-aid
projects) (15)
(SEP 14)
Concrete 2 years August 1992 and Federal-aid
pavement June 1993 (SEP 14)
repair (2
projects)
Missouri Rehabilitation 3 years February 1992 and Federal-aid
using October 1993 (SEP 14)
rubberized
asphalt (2
projects)
Montana Pavement 4 years September 1992 Federal-aid
marking (SEP 14)
Nevada Microsurfacing 2 years September 1992 State
Resurfacing 5 years September 1992 State
using
rubberized
asphalt
New Hampshire Bridge 2 years Expected 1996 Federal-aid
painting (SEP 14)
North Carolina Pavement 4 years November 1987 Federal-aid
marking
Washington Installation 5 years June 1989 and Federal-aid
of bridge September 1993 (1 project under
expansion SEP 14)
joints (2
projects)
--------------------------------------------------------------------------------
\a In Michigan, bridge painting on 11 of 15 federal-aid bridge
projects was completed as of May 1994. Evaluations of the
performance of the projects were available for 8 of the 11 completed
bridges. All three state-funded bridge painting projects had been
completed and evaluated as of the same date.
Source: GAO's analysis of information provided by FHWA and relevant
state departments of transportation.
With a few exceptions, state officials told us that they have
generally been satisfied with their experiences, on the basis of
preliminary observations or final results from 23 of the 33 warranted
projects undertaken to date. These officials' satisfaction resulted
from both the initial quality of the workmanship and the opportunity
to obtain remedial action when necessary. For instance, Michigan
officials have been pleased with the results of their warranted
bridge painting projects, with one official noting that two of the
projects completed under warranty were of the highest quality the
state had ever obtained. Although some type of repair work has been
required for all 11 Michigan bridge painting projects for which the
warranty period is complete, only two projects required more than
minor repair work. Given both the generally high initial quality of
workmanship and the fact that repair work would previously have been
performed by state crews, several Michigan engineers said that they
would like to see the state enter into warranty contracts for all
bridge painting.
The remaining 12 projects for which preliminary observations or final
results are available represent other types of highway work. Of
these 12 remaining projects, 8 are satisfactory to date, with no
repair work required, according to state officials. Some type of
remedial action was required for the other four projects, although,
again, state officials were able to obtain such action under the
warranties. In Missouri, for example, a layer of aggregate came
loose from a warranted asphalt pavement rehabilitation project 3
months after the project was completed. The cause of the problem was
identified as the failure of the sealing process used to bind the
aggregate to the pavement surface, and the contractor returned to
repair the failed pavement. According to one state engineer, calling
the contractor in to fix it "was one of the best feelings in the
world," since state crews funded by taxpayers' dollars would have had
to make the same repairs in the absence of the warranty.
--------------------
\5 The warranties under discussion are only those that were
previously subject to the federal prohibition. Thus, states'
acceptance of warranties for such items as landscaping and
premanufactured equipment and materials are not captured in the
survey results.
IMPETUS TO USE WARRANTIES
CENTERS ON RISK SHARING
-------------------------------------------------------- Chapter 2:1.3
Two principal factors have contributed to individual states'
decisions to try warranties. First, some states have viewed
warranties as a possible means of dealing with types of projects that
have typically required repair work within just a few years of
completion. For example, in Michigan, state officials found that
state maintenance crews were devoting an unacceptable amount of time
to touching up newly painted bridges. The officials determined that
contractors' commitment to quality workmanship could be improved by
using a warranty to delay acceptance of the project until the
project's performance was determined to be adequate. In California,
state engineers told us that they had ongoing problems with aggregate
stripping away from new asphalt pavements. These engineers saw
warranties as a means of improving contractors' attention to their
workmanship.
The second key impetus for trying warranties has been the desire to
test innovative but unproven materials or techniques while minimizing
the risk to the state. As noted by a federal official, this
situation occurred in Missouri, where manufacturers of rubberized
asphalt had advocated the benefits of this innovative paving
material. State officials, however, had little experience with the
material and decided that the only way to increase their confidence
in rubberized asphalt would be to couple its use with the fallback of
a warranty. In another example, contractors in Montana urged the
state to include new pavement marking materials in the state's
specifications. While state officials ultimately agreed to try new
materials, they did not want to take the full risk of trying
relatively untested materials. A warranty was again used as a
risk-sharing device to accommodate contractors' interest in using an
innovative material while protecting the state from an undue risk.
As noted by officials of the California department of transportation,
in some cases suppliers of materials have viewed warranties as a
marketing technique.
COSTS OF WARRANTIES ARE
UNCERTAIN
-------------------------------------------------------- Chapter 2:1.4
At present, experience with warranties in the United States is too
limited to provide information on their impact on construction costs,
although states' limited experiences with warranties can provide some
initial indications. State officials believe that in most cases to
date, the presence of a warranty has had a minimal impact on costs.
Michigan officials, for instance, told us that their preliminary
analyses show that the costs for warranted bridge painting projects
throughout the state were generally about the same as the costs for
projects that did not carry a warranty. Officials in California,
Colorado, and Missouri also believed that including warranty clauses
in contracts for seal-coating, microsurfacing, and rehabilitation
projects did not lead to any apparent increase in the bid price.
Representatives from a number of trade groups we contacted contended
that warranties would dramatically increase the costs of
construction. None, however, provided any empirical evidence to
document this position. We found only isolated cases in which the
inclusion of a warranty may have had a dramatic impact on
contractors' bids. In two Michigan pavement marking projects, for
example, warranty provisions--in concert with some additional
experimental contract features--appear to have driven bid prices far
above the state's estimated project costs. In one case, the bid
price was 50 percent higher than the state's estimated cost for
completing the project; in the other case, the bid price was almost
twice the state's estimated cost. Michigan officials ultimately
decided to eliminate the contract's warranty provisions, and the
projects were completed without a warranty.
STATES' EXPERIENCES SUGGEST
STRATEGIES FOR ADDRESSING
OBSTACLES TO IMPLEMENTATION
---------------------------------------------------------- Chapter 2:2
The major trade organizations representing the design and
construction industries in the United States have voiced a number of
concerns about the fairness of warranties. Some state officials have
also raised related concerns about their enforceability, citing these
concerns as the reason for holding back on trying this contracting
technique. Although states' use of warranties remains limited, the
experiences of the nine states that have tried warranties to date
provide a preliminary perspective on how warranties might be tested
prudently during this experimental period.
OPPOSITION TO WARRANTIES
CENTERS ON FAIRNESS AND
ENFORCEABILITY
-------------------------------------------------------- Chapter 2:2.1
The major U.S. engineering and construction trade associations are
nearly unanimous in their belief that warranties shift an
unacceptable amount of risk from the project's owner (the state) to
the warrantor. A leading concern is that a number of elements beyond
a contractor's control can affect the project's performance. For
example, inadequate performance may be caused by an engineer's
project design rather than the contractor's workmanship or may result
from external factors such as unexpected traffic volumes. Also,
there is concern that shifting a greater burden of risk to the
contractor will constrict the availability of bonding, particularly
for smaller and less well financed firms.\6 Officials from some state
departments of transportation fear that an inability to clearly
attribute responsibility for a failure may undermine the
enforceability of warranties.
--------------------
\6 For most highway contracts, contractors must obtain surety bonding
before undertaking a project. In brief, surety companies provide the
owner of a project (in this case, a state highway department) with
assurance that the contractor will meet its obligations as
contracted. After performing underwriting to ensure that the
contractor in question is not assuming risks beyond its capabilities,
the surety firm issues its bond stating that if the contractor cannot
fulfill its contractual obligations, the surety firm will assume the
liability for the contractor's debt, default, or failure.
SHARED RESPONSIBILITY FOR
PROJECT PERFORMANCE MAY
HINDER ENFORCEABILITY OF
WARRANTIES
-------------------------------------------------------- Chapter 2:2.2
The successful implementation of warranties in Europe is facilitated
by the fact that European construction firms tend to be large and
typically have responsibility for the full range of engineering and
construction activities. In contrast, a typical U.S. construction
project divides responsibility for a project's quality among a number
of participants. For example, an engineer develops plans for the
project, the state highway department specifies materials and
construction methods, a materials supplier provides raw materials,
and a general contractor is responsible for the actual paving
process. If a failure occurs 2 years after the project is accepted,
to whom should responsibility for that failure be attributed?
Given the splintered nature of the U.S. construction market,
contractors and engineers contended that the widespread use of
warranties would lead to finger-pointing among the participants and
reasoned that the difficulty in attributing responsibility for a
failure would increase litigation. Some state officials agreed that
the wide assortment of participants contributing to a project's
performance raises the likelihood that any attempt to enforce the
warranty would be met by legal challenges.
A practical example of the potential dangers of such shared
responsibility occurred during the warranty period of a pavement
marking project in Montana. Six months after the project's
completion, the new pavement stripes began to erode in such a way
that the whole pavement needed to be restriped. Officials from the
state department of transportation and FHWA's division office told us
they feared that a potentially major legal dispute could occur
between the state and the contractor if the contractor argued that
the erosion could be attributed to a problem with the materials
supplied by the manufacturer. Eventually the dispute was resolved
out of court and the contractor restriped the area. Nonetheless, one
observer stated that the experience may cause state officials to look
at warranties somewhat more critically in the future.
EXTERNAL FACTORS ALSO
INHIBIT ENFORCEMENT OF
WARRANTIES
-------------------------------------------------------- Chapter 2:2.3
Another set of variables that threatens to undermine the
enforceability of warranties is the array of external factors that
also have a bearing on a project's performance. In each of the
following cases, contractors are concerned that a state might
misidentify the cause of a failure and consequently try to hold a
contractor liable for outcomes that resulted from external factors
beyond the contractor's control. Questions of liability become
particularly problematic if warranties are loosely worded, so that
their coverage is not limited to performance characteristics tied to
workmanship but rather extends to the overall performance of a
project.
Maintenance. While improper or inadequate maintenance would be
unlikely to have a noticeable effect within the first year or
two following a project's completion, as time passes, inadequate
maintenance could cause a premature failure. Typically,
providing routine maintenance is the responsibility of the state
department of transportation, not the contractor.
Traffic weights and volumes. Pavements are highly sensitive to
traffic weights and volumes: Cracking and rutting are two
primary kinds of damage that can result from excesses in these
areas. If a state or local government does not enforce legal
limits on truck weights, or if the volume of truck traffic
dramatically exceeds design projections, a pavement could fail
prematurely.
Preexisting structural flaws. When a project involves adding on to
an existing pavement, as in resurfacing, a preexisting but
hidden flaw can affect the new surface. Participants in the
1990 tour to examine European asphalt pavements recognized the
criticality of a sound existing pavement, noting that the
pavements' "structural predictability has helped to make some
innovative forms of contracting for surface courses work
effectively (namely . . . guarantees)."
WARRANTIES COULD RESULT IN A
TIGHTER BOND MARKET
-------------------------------------------------------- Chapter 2:2.4
Surety firms, which essentially assume the contractor's risk of
failing to properly execute a contract, typically oppose warranties
because they prolong the period of liability. Surety representatives
told us that, generally, warranties can cause problems in
contractors' abilities to obtain bonds if they (1) extend for longer
than 1 year and (2) cover overall performance rather than specific
failures of materials and workmanship. A warranty period of 1 year
typically does not present a problem for surety companies. Some
municipal agencies, for instance, delay acceptance of highway work
pending a 1-year assessment of the quality of the workmanship and
materials, and surety representatives told us that they find 1-year
bonds acceptable. Long-term warranties that cover a project's
general performance, however, are considered problematic. For
example, during negotiations on a Missouri contract for an asphalt
rehabilitation project that ultimately included a 3-year warranty,
the state initially sought a lengthier warranty, but, according to a
state engineer, the sureties became uninterested in the project. To
ensure that contractors would have the ability to obtain bonding, the
state reduced the duration of the warranty to 3 years.
Surety agents explained that the reason why the duration of the
warranty is of critical importance is that with each additional year
of exposure, the chance of a project's failure or of the construction
firm's going out of business escalates. Sureties' concern for firms'
longevity could prove particularly troublesome for smaller firms, as
these smaller construction firms are more likely to go out of
business. According to surety representatives, the consequence would
likely be that surety agents would tighten underwriting standards if
a contractor assumed the responsibility of providing a multiyear
warranty. They add that bonding companies would thus screen out all
but the most well-financed and well-established firms, denying the
necessary bonds to other contractors wishing to bid on a contract
that included a warranty clause.
It is unclear whether tighter underwriting could make it particularly
difficult for disadvantaged business enterprises to obtain bonding,
because these firms tend to be less well financed than their
competitors.\7 However, such firms often serve not as prime
contractors but rather as subcontractors. Subcontractors are
typically not party to a warranty, as the prime contractor has
ultimate responsibility for the project's performance. Thus the
extent to which warranties will present a problem for disadvantaged
business enterprises is uncertain.
--------------------
\7 Federal law and regulations define disadvantaged business
enterprises as those small businesses that are owned and controlled
by socially and economically disadvantaged individuals. State
highway agencies receiving federal-aid highway funds must establish a
participation goal for disadvantaged business enterprises, reflected
as a percentage of all such funds the state will spend in federal-aid
highway contracts during the fiscal year. The goal is subject to
FHWA's approval, and must be at least 10 percent, unless otherwise
approved by FHWA.
STATES DEVELOP WARRANTY
LANGUAGE TO ADDRESS
POTENTIAL BARRIERS TO
IMPLEMENTATION
-------------------------------------------------------- Chapter 2:2.5
States have adopted a variety of strategies to address the
above-mentioned potential impediments to the fairness and
enforceability of warranties. These strategies include restricting
the duration of the warranty to 5 years or less and specifically
defining what sorts of failures are subject to the warranty. Most of
the strategies restrict the scope of the warranty, so that the
contractor's unique contribution to the project's performance may be
isolated. Well-focused warranty language works not only to the
advantage of the contractor, but also to the advantage of the state
department of transportation, because fair risk allocation both
fosters trust between warrantor and owner and minimizes the chances
that legal disputes will arise as a result of a state's efforts to
enforce a warranty.
SHORTER WARRANTY DURATION
ENCOURAGES PARTICIPATION
AND PROMOTES FAIRNESS
------------------------------------------------------ Chapter 2:2.5.1
A critical variable for mitigating each of the potential impediments
to viable warranties is the duration of the warranty period. A
relatively short warranty period (5 years or less) helps isolate the
unique effect of the quality of construction on a project's
performance. If a warranty period stretches too far into the future,
the effects of uncontrollable or unexpected variables (e.g.,
inadequate maintenance or excessive traffic loads) can obscure the
quality of the original workmanship. Of the warranties we identified
in the United States, none lasted longer than 5 years, and most fell
within the 2- to 4-year range.
An overly long warranty period can negate the utility of a warranty
if contractors view the project as too risky even to bid on. For
example, in Montana, state officials initially sought a 5-year
warranty period for a pavement marking project, but contractors
balked, saying that this duration entailed too much risk for them.
As a result, the state scaled back the warranty period to 4 years.
Even so, a state official noted that this duration may still have
presented a barrier to contractors' ability to obtain bonding and
submit bids to perform the contract. According to the state
official, of the six to eight contractors that initially expressed
interest in the project, only two ultimately submitted bids. He also
noted that one contracting firm approached 12 surety firms and was
unable to obtain bonding from any of them.
DEFINING INADEQUATE
PERFORMANCE IMPROVES
ENFORCEABILITY
------------------------------------------------------ Chapter 2:2.5.2
Targeting warranty coverage to specific types of failures can reduce
the number of variables that affect pavement performance and thus
help ensure that what the warranty covers actually corresponds to the
types of failures associated with inadequate workmanship. As noted
in a March 1993 consultants' report to FHWA on the potential for the
use in the United States of contracts covering both the design and
construction of projects and including warranties, it is essential
that performance characteristics sought under warranty (for example,
skid resistance and pavement smoothness) be expressed in quantifiable
terms. Moreover, clearly specifying what condition triggers the
warranty obligation and what type of repair work is required can
improve the warranty's viability. Contract language that specifies
and restricts the conditions the project will be subjected to (for
example, traffic loads) and the state's responsibilities (for
example, frequency of maintenance) may also help reduce the number of
unknowns facing the warrantor as well as the potential for legal
disputes arising from shared responsibility for the outcome of a
project.
State officials appear to be making a good-faith effort to specify
what failures are covered under warranty. In Nevada, for instance,
contract language for a resurfacing project included a list of
specific types of deterioration deemed unacceptable, including
rutting, raveling (a wearing away of the pavement surface), and
delamination (a loss of the interlock between layers, which can
ultimately result in potholes). While the contract stipulated that
identification of some of these types of deterioration, such as
raveling, was at the discretion of the state engineer, in the case of
rutting, the contract specified measurement criteria, stating that
the contractor would have to perform repairs for rutting exceeding
one quarter of an inch.
In some cases, contract language has been less specific. In
Missouri, state officials drafted two asphalt rehabilitation
contracts that included warranties for the projects' overall
performance. In the case of the second project, FHWA urged that for
the purposes of the warranty, the contract language be amended to
distinguish between a surface failure and a failure of the underlying
base. FHWA also urged (unsuccessfully) that the language be further
amended to target specific performance.
CONTRACTORS' INPUT INTO
PROJECT SPECIFICATIONS
CAN PROMOTE FAIRNESS OF
WARRANTY
------------------------------------------------------ Chapter 2:2.5.3
Specifications that offer the contractor greater input into the
method of construction improve the acceptability of warranties from
the contractor's perspective. A contract that includes these
so-called performance-based (or end-result) elements might, for
instance, identify specific characteristics, such as the smoothness
of the pavement or a minimum amount of pavement rutting. This
approach departs from conventional procurement practices because
instead of using method-based specifications that are stringent and
prescriptive, states identify overall characteristics of the
project's performance to be obtained and leave the determination of
how to achieve these end results to the contractor. Those
contractors willing to consider warranties stress that, in most
cases, performance-based specifications are a prerequisite to their
acceptance of warranties. In their view, it makes little sense to
hold contractors accountable for a project's performance when
contractors have little control over the method of construction.
While the development of appropriate performance-based specifications
is in its infancy, we found that many states that have tried
warranties have included at least a few performance-based elements in
the specifications for their warranted projects. For example, the
Missouri department of transportation defined overall acceptability
standards for the materials to be used and made recommendations as to
good practice, such as the preferred ranges of ambient temperatures
during the paving process. However, the final decision on materials
and paving practices was left to the contractor.
In other cases, states have opted to couple warranty language with
method-based specifications. The Michigan bridge-painting projects
provide a prime example. State officials reported that they retained
method-based specifications for all warranted bridge-painting
projects, noting that they felt confident that (1) they had a good
ability to distinguish between performance problems attributable to
workmanship and factors beyond the contractors' control and (2) the
2-year warranty period was short enough to eliminate most cases of
the project's performance being affected by external factors. In a
number of cases, the state did request repair work for early peeling
that could clearly be attributed to problems with initial workmanship
(an example might be a failure to prepare the surface adequately
before applying the paint). In another case, however, state
engineers recognized during inspection that nicks in the paint
surface did not indicate any problems with workmanship, such as poor
surface preparation but rather were likely the result of vandals
throwing rocks at the bridge. As noted by a state engineer, the
state will not require the contractor to repair these spots.
HEIGHTENED ROLE FOR FHWA
COULD ENCOURAGE PRUDENT
EXPERIMENTATION WITH
WARRANTIES
-------------------------------------------------------- Chapter 2:2.6
State highway agencies face many uncertainties in developing warranty
contracts, including determining the types of projects that are best
suited for use with a warranty, the proper duration of a warranty,
and, most especially, the way to develop appropriate
performance-based specifications. Some states have addressed these
uncertainties by approaching other states for advice, and in some
cases by borrowing contract language from them. For instance,
California patterned its specifications for several projects for
asphalt rubber rehabilitation on Nevada's specifications for the same
type of project. A state engineer from Montana's department of
transportation noted that six to eight states had requested
information from Montana on how best to incorporate a warranty clause
into a pavement marking contract.
A key tool that could promote prudent implementation of warranties
would be model provisions for those types of projects deemed
best-suited to warranties. FHWA is already making progress in this
area, primarily at the prompting of a materials association that
views a standard product warranty as a potential marketing tool. In
conjunction with the International Slurry Surfacing Association, FHWA
developed generic, standardized warranty language to cover
applications of microsurfacing--a thin layer of a mixture of asphalt
emulsion and aggregate. The warranty provisions, which were issued
in June 1994, serve as a guide that states can adopt and implement
with minimal effort. While other opportunities may exist to develop
model warranty provisions, FHWA currently has no effort under way to
develop model contract provisions in other areas.
CONCLUSIONS
---------------------------------------------------------- Chapter 2:3
The evidence on the advantages and disadvantages of including
warranties in highway contracts in the United States is limited.
Highway contractors and other transportation experts are polarized at
opposite ends of the spectrum in terms of the value of warranties.
The states' continued experimentation with warranties affords the
opportunity to develop an improved base of knowledge of the impacts
of warranties on the quality and costs of construction. FHWA has
encouraged states to try warranties by sponsoring an experimental
project as well as by clarifying that the regulatory ban on the use
of warranties does not apply to non-NHS projects. Because strategic
implementation of warranties appears to be a key ingredient for
success, FHWA's continued role in guiding states' implementation
decisions can help minimize the chances that loose warranty language
or excessive warranty durations could potentially undermine the
enforceability of warranties or pose threats to fair and open
competition among contractors, particularly with respect to the
availability of surety bonds.
FHWA can continue to facilitate the states' appropriate
experimentation with warranties and encourage judicious
implementation of warranties by providing guidance to all the states
on strategies for implementing warranties. In particular, state
officials could benefit from information on how to (1) identify the
types of projects that most lend themselves to warranties, (2)
determine the appropriate duration of warranties, (3) target warranty
coverage to specific types of failures, and (4) develop
performance-based specifications. We believe that a particularly
effective means of disseminating information would be to work with
the states to develop generic warranty terms for individual project
types that are relatively new or unfamiliar to many states and that
are deemed well-suited to a contract that includes a warranty. Such
model warranty terms could help ensure that states approach
warranties in a manner that promises a fair allocation of risk
between the warrantor (the contractor) and the project's owner (the
state).
RECOMMENDATION TO THE SECRETARY
OF TRANSPORTATION
---------------------------------------------------------- Chapter 2:4
The Secretary of Transportation should direct that the Federal
Highway Administrator, in cooperation with state departments of
transportation, develop and disseminate model warranty provisions for
individual types of projects, such as rubberized asphalt pavement
overlays. Model provisions might detail
the duration of the warranty,
the types of failures the warranty should target, and
suggested performance specifications.
AGENCY COMMENTS AND OUR
EVALUATION
---------------------------------------------------------- Chapter 2:5
In the draft report provided to DOT for comment, we proposed two ways
for FHWA to facilitate states' appropriate experimentation with
warranties. The first was for FHWA to issue formal policy guidance
on the instances in which warranties may now be used and to encourage
states to share with FHWA the results of their experiences with
warranties. In responding to the proposed recommendation, DOT stated
that it concurred with the substance of the recommendation and had
addressed it by issuing an addendum to the Federal-Aid Policy Guide
in April 1994. Accordingly, we withdrew the proposed recommendation
and acknowledged the addendum in the text of the final report.
However, since the intent of our recommendation was to help educate
state transportation officials, in August 1994 we recontacted
contracting and engineering representatives from four state
departments of transportation to determine whether this formal
clarification of policy had corrected their previous misunderstanding
that warranties were prohibited for any federal-aid project not
conducted under SEP 14. We found that officials from three of the
four states remained uncertain about the circumstances under which
warranties were permissible. We believe this finding is a reminder
of the shared federal and state responsibility for seeing that needed
information is channeled to all key parties. We credit FHWA with
issuing the clarification of its policy on warranties and urge the
agency to reinforce the message through additional means, such as
speeches and conference and workshop materials.
DOT partially concurred with our second proposed recommendation,
calling for FHWA to develop and disseminate model warranty language
for a variety of individual project types. DOT stated that FHWA
generally prefers not to develop standard specifications for use by
state highway agencies but prefers rather to assist states in
developing their own specifications. The Department acknowledged,
however, that in the case of the model microsurfacing specification
described in this chapter, FHWA made an exception. The rationale for
this action was the states' lack of familiarity with microsurfacing.
We believe that our proposed recommendation calling for FHWA to
develop and disseminate model warranty provisions for certain types
of projects remains valid. Specifically, we believe that, besides
microsurfacing, other techniques and processes are similarly little
known to many states and consequently provide opportunities for FHWA
to play an active role in developing and disseminating warranty
language. We note that such model provisions need not limit the
states' ability to modify the language to suit their own particular
needs--FHWA noted that it built such flexibility into the
microsurfacing specifications mentioned above. While retaining the
recommendation, we modified it slightly to recognize that FHWA's
development of model warranty provisions would occur in cooperation
with state departments of transportation.
MAINTENANCE IS A STRATEGY FOR
EXTENDING PAVEMENT LIFE
============================================================ Chapter 3
Maintenance can help protect the multibillion dollar investment in
the nation's highway network, as the performance of a pavement is
greatly affected by the type, timeliness, and quality of maintenance
it receives. Maintenance can slow the rate at which pavement
deteriorates, thus keeping it in good condition for a longer period
of time. In recent years, the overall percentage of the nation's
pavement categorized in good condition has improved. Nonetheless,
approximately 60 percent or less of principal highways are considered
in good condition. Unmet needs for maintenance could cause further
deterioration of these highways.
The federal government is responsible for ensuring that adequate
maintenance is provided for projects constructed with federal funds.
However, no measurable standards exist for defining what constitutes
adequate maintenance. Furthermore, FHWA's guidelines recommend that
maintenance deficiencies be resolved through corrective action by the
state within an agreed time frame and a plan for FHWA to ensure that
the corrective action is carried out. Because this recommendation is
not being systematically adhered to, some identified maintenance
problems--even safety-related deficiencies--have lingered unresolved
for lengthy periods of time.
Underfunding for highway maintenance is a long-standing problem.
ISTEA responded to the problem in 1991 by authorizing the use of
federal funds for maintenance of Interstate highways, if justified as
cost-effective. For a variety of reasons, however, most states are
reluctant to use federal funds for maintenance. One reason is that
since no additional federal funds are being provided, using federal
funds for maintenance reduces the moneys available for capital
projects.
PAVEMENT CONDITION VARIES BY
AREA AND TYPE OF HIGHWAY
---------------------------------------------------------- Chapter 3:1
FHWA uses data from the states that classify pavement into broad
categories--poor, mediocre, fair, and good--based on the roughness of
the ride and the extent of surface defects. The data show that
pavement conditions improved throughout the 1980s and continue to do
so into the 1990s. More specifically, in 1991 (the most recent year
for which data are available), the indicator shows that the
percentage of principal highways classified in good condition ranges
from a high of 61 percent for rural Interstate highways to 46 percent
for principal non-Interstate highways in urban areas. Consequently,
the balance of the nation's major highways are at most in fair
condition. According to FHWA, this means that the pavements are
noticeably inferior to new ones and may be barely tolerable for
high-speed traffic. Figure 3.1 shows the overall condition of the
nation's principal highways--Interstate highways and other principal
highways--in rural and urban areas.
Figure 3.1: Pavement
Conditions of Principal
Highways, 1991
(See figure in printed
edition.)
Note: For rural highways, "other principal highways" refers to
non-Interstate principal arterials. For urban highways, the term
refers to non-Interstate principal arterials, freeways, and
expressways.
Source: GAO's analysis of FHWA's data.
FHWA has estimated that each dollar of repair costs not spent when
the pavement is in good condition multiplies to $4 to $5 if the
pavement deteriorates to fair condition, and to $10 if the pavement
deteriorates to poor condition.
STATES' MAINTENANCE NEEDS
EXCEED RESOURCES DEVOTED TO
MAINTENANCE
---------------------------------------------------------- Chapter 3:2
As a result of budgetary constraints and competing priorities, the
six states we contacted lack sufficient funds to cover needed
maintenance work. All six states had maintenance backlogs and had
postponed needed repair work, such as sealing joints and cracks,
clearing and repairing damaged drains, and spot-painting bridges.
Deferring maintenance can prove costly if doing so accelerates the
need for more expensive repairs. For instance, Michigan officials
noted that routine bridge maintenance, such as spot-painting bridges,
is necessary to prevent the accumulation of corrosion and rapid
deterioration. Not performing this spot-painting can result in the
need for completely replacing the deck or accelerate the need for
full-scale painting, according to these officials. Similarly,
bridges can be protected through periodic cleaning and washing. The
New York department of transportation's current policy is to clean
and wash bridges on a 2-year cycle. Department officials explained
that, among other things, washing bridges unplugs and cleans the
drainage system through which water from the deck is carried down and
away from vulnerable components of the bridge. However, in 1992 New
York reported that the average interval between cleaning of state
bridges was nearly double the desired 2-year period.
Difficulty in obtaining adequate funds for maintenance is a common
problem for the states we visited for a variety of reasons. In
Michigan, for instance, transportation officials cited three primary
reasons for the state's backlog of highway and bridge maintenance.
First, resources are lacking. According to a senior Michigan
maintenance official, this is largely because the state's gas tax
rate--the principal source of funds for maintenance--has been capped
at 15 cents per gallon for over a decade. Second, providing funds
for maintenance has no glamour or political payoff compared with a
new highway or bridge construction project. Finally, the state's
transportation revenues that are generated have been eroded over the
years by inflation and increased liability from lawsuits, among other
things.
Mississippi is another state that is having trouble funding
maintenance. According to officials from Mississippi's department of
transportation, actual expenditures for maintenance are running
significantly lower than the amount budgeted for that purpose. A
primary reason was that funds originally budgeted for maintenance
were shifted to capital projects so that the state could match
federal funds, as required. In fiscal year 1992, the state spent 26
percent less than the original maintenance budget. Some maintenance
problem areas bore a significant share of the impact of these reduced
expenditures. For instance, expenditures for pavement striping (a
center line or edge line for traffic control) were reduced by 61
percent from the amount originally budgeted.
While there is no federal requirement that states develop maintenance
standards, Mississippi has developed such standards. Mississippi's
maintenance standards include a requirement that 70 percent or more
of the original pavement striping must function as intended. A
fiscal year 1992 survey of the state's highway conditions disclosed
that 43 of 180 highway segments (24 percent) reviewed did not
function as intended.
South Carolina also has difficulties with maintenance funding. In
1991-92, South Carolina estimated its ordinary annual highway
maintenance needs at $144 million, but expenditures for this period
were $117 million--a shortfall of $27 million (19 percent). As a
senior South Carolina transportation official observed, the state has
unmet maintenance needs in all areas because maintenance has
historically been underfunded.
In addition to the problems cited, we note that the 953,241 mile
federal-aid system represents only about a quarter of the total
national road network of 3,923,830 miles. Maintenance and
preservation of the nearly 3 million miles of roads not a part of the
federal-aid system is the financial responsibility of state and local
governments. This additional responsibility further complicates
funding choices at the state level.
BARRIERS INHIBIT THE USE OF
FEDERAL FUNDS FOR PREVENTIVE
MAINTENANCE
---------------------------------------------------------- Chapter 3:3
Before passage of ISTEA in 1991, federal-aid highway funding was
generally limited to new construction and major capital
repairs--reconstruction, resurfacing, restoration, and
rehabilitation. Preventive maintenance was not eligible for federal
funds. Under ISTEA, however, preventive maintenance became eligible
for federal Interstate maintenance funding if a state could
demonstrate that such activities are a cost-effective means of
extending pavement life on Interstate highways. This use of federal
funds for maintenance of Interstate highways must be justified
through a state's pavement management system. A pavement management
system, which was mandated by ISTEA, is intended to provide a
consistent, systematic approach for determining pavement needs,
setting priorities for those needs, and selecting the "best" actions
and the costs of implementing those actions.
Some states assume that they cannot use federal funds for preventive
maintenance, because their pavement management system is not able to
provide data justifying the cost-effectiveness of preventive
maintenance strategies. A senior FHWA pavement management official
estimated that about half of the states' systems now have this
capability but said that more can be expected to acquire this
capability in the future. FHWA recognizes that this data limitation
could pose a problem, and officials have told us they will consider
various data to justify the cost-effectiveness of using federal funds
for preventive maintenance work. Nevertheless, some states do not
believe they have data that could be used to demonstrate the
cost-effectiveness of using federal funds for preventive maintenance
work. For instance, Mississippi transportation officials expressed
doubt that the state had any data that could be used for this
purpose.
Although officials in all six states we contacted attributed their
maintenance backlogs primarily to a lack of resources, officials in
four of the six states--California, Mississippi, New York, and
Oregon--stated that they do not currently plan to use federal funds
for preventive maintenance. Besides some states' belief that they do
not have data that could be used to justify the cost-effectiveness of
preventive maintenance work, states pointed to a number of reasons
for not tapping into a potential funding source. Among their reasons
were
uncertainty over whether states could use federal funds to pay for
maintenance work performed by state employees,
concern that using federal funds for maintenance could prove costly
because of paperwork and administrative requirements, and
the fact that no additional federal funds are being provided for
maintenance, so that using federal funds for maintenance reduces
the moneys available for capital projects.
Some FHWA division and state officials expressed uncertainty to us
about whether federal funds could be used to reimburse a state for
maintenance work performed by state personnel. For instance, FHWA
division officials in New York expressed doubt that federal funds
could be used for this purpose, and they emphasized that maintenance
work covered by federal funds should remain under the competitive bid
process. FHWA division officials in South Carolina, however, either
took a different position or expressed uncertainty regarding this
issue. Some of these officials said that states should be able to
use federal dollars to fund state maintenance crews if doing so is
shown to be cost-effective. However, other division officials said
they were uncertain that federal funds could be used for such
purposes.
In addition, some states noted that since the same federal paperwork
was required for both large capital projects and small maintenance
projects, it was not worth the administrative burden to request
federal funds for maintenance. For instance, officials from one
state noted that a more streamlined process needs to be developed to
secure federal funds for preventive maintenance work. They noted
that the current rigorous process for justifying and getting approval
for capital projects is not warranted for preventive maintenance
work. However, the administrative and paperwork requirements could
be mitigated through an overall contract for maintenance. Two of the
states we contacted--Michigan and South Carolina--have used, or plan
to use, a contract that packages various maintenance activities
together for FHWA's approval.
ISTEA did not provide separate funding for preventive maintenance
work. Instead, the legislation provided states with more flexibility
in using federal funds for capital or preventive maintenance
activities. Making trade-offs between capital and preventive
maintenance strategies should be facilitated by efforts under way
through the Strategic Highway Research Program (SHRP). In 1987, SHRP
received a 5-year, $150 million authorization, which was subsequently
extended under ISTEA. One of the four major research areas of the
program focused on efficient methods of highway maintenance.
One SHRP project was designed to address the need for more reliable,
consistent, and comparable data on the effectiveness of pavement
maintenance. Six specific maintenance treatments, such as joint and
crack sealing and thin overlays, are being monitored on state
highways over a 15-year period. The results will be compared with
those of a control group of untreated pavements. An FHWA program
manager estimated that preliminary data should be available starting
in 1995 or 1996.
Nevertheless, because the funds available for highway and bridge
capital projects fall far short of needs, transportation officials
are likely to continue to face difficulties in making trade-offs
between using federal funds for capital versus maintenance projects.
FHWA estimates that the 1991 cost to eliminate the backlog of
deficiencies in highway pavement was $212 billion. Approximately 42
percent of the backlog is the cost of maintaining the pavement; the
remaining 58 percent is the cost of adding capacity to provide the
level of service that would meet minimum condition standards.
Furthermore, FHWA estimates the cost of eliminating the backlog of
existing bridge deficiencies at $78 billion.
FEDERAL DETERMINATIONS OF THE
ADEQUACY OF MAINTENANCE ARE
QUESTIONABLE, AND PROBLEMS
PERSIST
---------------------------------------------------------- Chapter 3:4
FHWA requires that its division administrators annually certify
whether states are properly maintaining the federal-aid highway
system. If maintenance is not adequate, federal legislation provides
that the state be notified that corrective action must be
accomplished within 90 days. If the 90-day deadline is not met, the
Secretary of Transportation must withhold approval of further
federal-aid highway projects of all types for the entire state or for
a particular area within the state until proper maintenance is
achieved.
FHWA has no measurable standards for determining whether maintenance
is adequate, and, until it establishes such standards, FHWA will have
difficulty making any meaningful determination of whether maintenance
is adequate or inadequate. Furthermore, some FHWA-identified
maintenance problems have remained unresolved for lengthy periods of
time, in part because no time frames were established for resolving
or following up problems.
SANCTIONS ARE RARELY USED
-------------------------------------------------------- Chapter 3:4.1
According to FHWA officials, project approvals have only been
withheld once on a statewide basis. This occurred in Louisiana, when
the state told FHWA that it could not certify that it was adequately
maintaining its highways. In this case, the state responded by
channeling additional funds to maintenance. As a result, FHWA lifted
the funding restriction. On a local basis, FHWA officials have
withheld project approvals more often, according to FHWA officials,
but FHWA has no data on the frequency or extent that this sanction
has been employed. For the six states we contacted, maintenance
problems existed to varying degrees, but FHWA had taken no action to
impose sanctions in these states.
FHWA officials have historically viewed sanctions as an undesirable
and ineffective means of satisfying maintenance requirements. In
1981, we reported that DOT and FHWA believed that sanctions should
only be applied when highways become unsafe or unserviceable and not
as a mechanism to encourage adequate maintenance.\1 We also reported
that FHWA officials viewed sanctions as counterproductive and
undesirable because they would result in withholding funds from the
states.
FHWA's unwillingness to impose sanctions for maintenance deficiencies
remains unchanged. The imposition of sanctions for inadequate
maintenance does not help to resolve the basic problem, according to
a Branch Chief in FHWA's Office of Engineering. One reason is that
sanctions do not correct the problem, but instead exacerbate the
financial situation of a state that is probably already facing
budgetary problems. However, the use of sanctions in Louisiana
resulted in the state's channeling additional funds to maintenance.
In addition, since FHWA is reluctant to use sanctions, some FHWA
officials consider FHWA's role in maintenance to be limited,
embodying no real authority to direct that maintenance deficiencies
be corrected within a certain time frame.
--------------------
\1 Deteriorating Highways and Lagging Revenues: A Need to Reassess
the Federal Highway Program (CED-81-42, Mar. 5, 1981).
NO MEASURABLE STANDARDS
EXIST FOR DETERMINING
WHETHER MAINTENANCE IS
ADEQUATE
-------------------------------------------------------- Chapter 3:4.2
FHWA requires that its division administrators annually certify
whether states are adequately maintaining highways constructed with
the assistance of federal funds. However, no measurable federal
standards exist to guide assessments of how well states are
maintaining projects built with federal assistance. All six states
we visited have maintenance deficiencies and backlogs, but FHWA
certified that their maintenance was adequate--with the exception of
California, which is discussed later in this chapter. Moreover,
FHWA's certification will provide limited assurance that the states
are maintaining their highways adequately until such time as
maintenance performance standards are used to guide the
certifications.
In 1991,\2 we reported that FHWA certified that four of seven states
we reviewed had performed adequate maintenance of their Interstate
highways despite significant maintenance backlogs. The four states
with significant backlogs had not performed various kinds of needed
maintenance, such as sealing joints and cracks, painting and
repairing bridges, and repairing guardrails. Such maintenance
deficiencies can cause structural damage to highways, shorten the
life of roadways, and create safety problems. To enhance FHWA's
annual maintenance certifications, we recommended that FHWA develop
measurable standards defining what constitutes adequate maintenance
for the Interstate Highway System. DOT disagreed that measurable
standards were needed for FHWA to determine whether states'
maintenance practices are adequate. According to DOT, existing
guidance is sufficient for FHWA to carry out its oversight
responsibilities. However, we disagreed with DOT's position. In the
absence of measurable standards defining what constitutes adequate
maintenance, we questioned FHWA's certification of the maintenance
efforts in states where we found significant unmet needs.
Furthermore, we noted that developing measurable maintenance
standards would more clearly delineate the states' maintenance
responsibilities, greatly assist FHWA's efforts to ensure that these
responsibilities are fulfilled, and provide a measurable basis for
imposing sanctions when needed.
Measurable standards for maintenance could be developed by drawing on
the standards some states have established. For instance,
Mississippi has established standards for various maintenance
activities. For example, Mississippi's standard on rutting provides
that such areas should not exceed 1/2 inch, a standard for potholes
provides that no defects should be greater than one square foot in
area and one inch deep, and a standard for pavement marking
(striping) provides that at least 70 percent or more of the original
installation must function as intended.
In 1992, FHWA officials considered, but dropped the idea of,
developing maintenance standards by drawing on standards developed by
several states. This issue arose because ISTEA tasked FHWA with
developing criteria for transfers of federal Interstate maintenance
funds. As part of this effort, a senior FHWA official suggested that
FHWA draw on data from several states that had developed maintenance
standards for their own use. This suggestion was not pursued,
however, since the ISTEA mandate did not require the development of
standards on maintenance performance. FHWA officials issued the
federal criteria for fund transfers but noted that these criteria
would not apply to evaluating the states' responsibility to properly
maintain projects constructed with federal funds.
--------------------
\2 Transportation Infrastructure: Preserving the Nation's Investment
in the Interstate Highway System (GAO/RCED-91-147, Aug. 2, 1991).
RESOLUTION IS SLOW FOR
IDENTIFIED MAINTENANCE
PROBLEMS
-------------------------------------------------------- Chapter 3:4.3
FHWA's guidance recommends that when maintenance deficiencies are
identified, a strategy for corrective action by the state should be
developed, along with a plan for future FHWA follow-up to ensure the
corrective action is carried out. This guidance, however, is not
being systematically followed. Instead, maintenance deficiencies
identified by FHWA can linger unresolved for lengthy periods of time,
with no strategy developed for corrective action or time frame set
for resolving the deficiencies. For instance, in April 1992 FHWA
found that, contrary to federal regulation, California's department
of transportation was not upgrading highway elements (signs, markers,
guardrails) to current safety levels when it was repairing or
replacing these elements. FHWA's Division Administrator in
California stated that because of the seriousness of this problem,
California's highways could not be considered adequately maintained.
Thus, the certification of adequate maintenance was not made.
To facilitate resolution of the issue, in May 1992 FHWA's Division
Administrator in California asked FHWA's Regional Administrator for
any available guidance on how other states were handling similar
issues of compliance with maintenance requirements. FHWA's division
office did not receive a response to this request. Furthermore,
representatives of FHWA's division and regional offices and
California's transportation department told us that efforts to
resolve this issue had not yet begun, and there was no schedule for
undertaking this work--about 2 years after FHWA determined that the
state's maintenance practices were in conflict with a federal
requirement.
A case in New York provides another example of a delay in correcting
an identified maintenance problem. FHWA's division officials
initiated a review of repairs to guardrails (known as guiderails in
New York) because of a general sense that damaged guardrails were
remaining unrepaired for long periods of time. As a result of this
effort, FHWA concluded that the timeliness of guardrail repair was
inadequate statewide. FHWA transmitted its guardrail report, which
contained a number of recommendations, to New York's transportation
department in February 1991. However, the state advised FHWA in May
1992 that a state committee would address the issues; a year later,
in May 1993, the state advised FHWA that a committee was being
established to address the guardrail issues--just over 2 years after
FHWA issued its report.
CONCLUSIONS
---------------------------------------------------------- Chapter 3:5
Although ISTEA provided a source of federal dollars for Interstate
preventive maintenance, most of the states we visited do not plan to
avail themselves of this resource. FHWA could remove some barriers
states identified to using federal funds for this purpose by
providing guidance on (1) whether federal dollars can be used to fund
maintenance work performed by state employees, (2) what kinds of data
can be used to demonstrate the cost-effectiveness of maintenance when
these data are not available through a pavement management system,
and (3) how states can combine planned maintenance work into an
overall request for funding.
In the absence of performance standards, FHWA's annual determinations
of whether states adequately maintain their federal-aid highways
could be questioned. Although the states we visited all had
maintenance backlogs--some for deficiencies that could result in
structural damage and cause safety problems--FHWA has in most cases
continued to certify that these states' maintenance is adequate.
Working with states, FHWA could develop federal standards that draw
on the maintenance standards some states have developed for their own
use, such as the standards related to potholes and lane striping.
FHWA has the legal authority to withhold approval of federal-aid
highway projects if it determines that maintenance is inadequate.
However, FHWA has been reluctant to use this enforcement tool.
According to FHWA, it would rather work with the states to address
maintenance deficiencies than impose sanctions. However,
deficiencies identified by FHWA have persisted, with no corrective
action taken, for lengthy periods of time.
RECOMMENDATIONS TO THE
SECRETARY OF TRANSPORTATION
---------------------------------------------------------- Chapter 3:6
We recommend that the Secretary of Transportation direct the FHWA
Administrator to do the following:
Provide guidance on the use of federal funds for preventive
maintenance that would include (1) clarification on when and
under what circumstances a state can use federal funds to pay
for work performed by state maintenance personnel, (2) an
explanation of the type of data a state could use to justify
using funds for preventive maintenance if a state's pavement
management system does not capture such information, and (3)
advice on how maintenance activities could be packaged into one
funding request.
Work with states to develop performance standards and expectations,
including specific time frames for corrective action that depend
on the severity and safety impact of maintenance problems.
AGENCY COMMENTS AND OUR
EVALUATION
---------------------------------------------------------- Chapter 3:7
DOT agreed with our draft report concerning the importance of
maintaining the quality of our nation's highways. In addition, the
Department concurred with one of the proposed recommendations on
maintenance in our draft report and partially concurred with the
other.
The Department fully concurred with our proposed three-part
recommendation on providing guidance on the use of federal funds for
preventive maintenance. Specifically, regarding clarification of
when and under what circumstances a state can use federal funds to
pay for work performed by state maintenance personnel, the Department
responded that FHWA's division offices and state highway agencies are
already aware that work performed by state maintenance personnel
could be approved for federal-aid funding under force account
procedures.\3 We found, however, that some FHWA division officials
and state representatives were uncertain, or had reservations, about
whether federal funds could be used to reimburse a state for work
performed by state maintenance personnel. Consequently, we believe
further clarification is warranted.
DOT concurred with our proposed recommendation that guidance be
provided on the type of justification that would allow a state to use
federal funds for preventive maintenance. However, DOT maintained
that guidance has already been provided through memorandums, an
electronic bulletin board, and AASHTO. Nevertheless, we believe that
additional guidance is needed because (1) some states do not believe
that they have any data that could be used to justify the
cost-effectiveness of preventive maintenance work and thus allow them
to use federal funds for preventive maintenance work, (2) only about
half of the states currently have pavement management systems that
are able to justify the cost-effectiveness of preventive maintenance
strategies, and (3) some states do not have a preventive maintenance
program.
DOT also concurred with our proposed recommendation to provide
instructions on packaging maintenance activities into one funding
request. DOT responded that FHWA has worked and will continue to
work with state highway agencies on developing areawide maintenance
construction projects covering counties, state highway districts, or
the entire state. The Department noted some examples of work
approved in the past for areawide application: areawide paint
striping projects, railroad-highway grade crossing projects, and
traffic sign replacement. We recognize there have been instances in
which FHWA has worked with states in developing areawide maintenance
projects. We further believe that publicizing such work may
facilitate similar action in other states and increase the use of
federal funds for preventive maintenance work. To emphasize that our
recommendation is aimed at encouraging FHWA to publicize this type of
activity, we have modified the wording of our proposed recommendation
from providing "instructions" to providing "advice" on how this
packaging can be accomplished.
Finally, DOT partially concurred with our proposed recommendation
that FHWA work with states to develop performance measures to be used
in determining the adequacy of states' maintenance efforts. The
Department's position is that existing guidelines and maintenance
policies are sufficient for FHWA to determine whether the states'
maintenance is adequate. We observe, however, that existing
maintenance guidance lacks specificity in a number of areas. This
guidance groups deficiencies into one of four classes, the first
class of which concerns safety. The guidance states that timely
response and/or correction of safety deficiencies should be the
foremost concern of highway maintenance, but no insight is provided
on what is meant by timely. This omission seems particularly
surprising given that federal legislation provides that if
maintenance is not adequate, a state should be notified that
corrective action must be accomplished within 90 days. If the 90-day
deadline is not met, the Secretary of Transportation must withhold
approval of further federal-aid highway projects of all types for the
entire state or for a particular area within the state until proper
maintenance is achieved.
While FHWA's maintenance guidance is not prescriptive, we found that
it is not being systematically followed. Maintenance deficiencies
identified by FHWA can linger unresolved for lengthy periods of time,
with no strategy developed for corrective action and no time frame
set for resolving the deficiencies. We believe that to correct this
situation and buttress FHWA's existing maintenance guidance and
policies, maintenance performance expectations and standards that
provide national comparable measures need to be established. We have
clarified the recommendation to underscore our view that performance
expectations, along with specific time frames for corrective action,
need to be established. Furthermore, maintenance standards and
expectations need to be commensurate with the severity and impact on
safety of the maintenance problems.
--------------------
\3 Force account refers to the use by a public agency or utility of
its own personnel and equipment for construction work.
PAVEMENT DESIGN COULD BE IMPROVED
THROUGH COMPREHENSIVE USE OF
DESIGN ANALYSIS TOOLS
============================================================ Chapter 4
States are given flexibility to select pavement designs suited to
their individual geographic and climatic needs, subject to approval
by FHWA. FHWA fosters good highway design practices by encouraging
states to consider critical factors in highway design, such as
life-cycle cost analysis and improved traffic data. Federal
legislation and regulations do not generally prescribe specific
pavement design requirements, but there are exceptions. For
instance, ISTEA requires that life-cycle costing be considered in
pavement design, but the act does not prescribe how it should be
considered.
Life-cycle cost analysis is a procedure for selecting a pavement
design alternative that will provide a satisfactory level of service
at the lowest cost over time. However, states sometimes do not
consider this tool in determining cost-effective highway investments
or evaluating pavement rehabilitation strategies. Furthermore, when
this analysis is used, its value is often limited by the exclusion of
important data, such as maintenance costs.
Information on traffic patterns is a key factor in highway design,
but the precision of the data used for individual highway projects
varies. States often rely on traffic data for the state, a region,
or a corridor, rather than project-specific data. The use of
project-specific data could yield substantial improvements in the
accuracy of traffic forecasts. For instance, a 1991 FHWA- sponsored
research effort found that states could realize a 30- to 85-percent
improvement in the accuracy of traffic forecasts by determining the
number, type, and weight of vehicles using a roadway.
Two other highway design and construction tools hold promise for
improving the quality of highways. Quality control/quality assurance
programs require contractors to test materials before and after they
are placed on the roadbed, making the contractors more accountable
for quality. Resilient modulus tests predict pavement deterioration
as a function of traffic and environmental conditions, providing
engineers with useful information needed to design pavements with new
materials or under changing conditions.
STATES HAVE FLEXIBILITY IN
CHOOSING PAVEMENT DESIGN
---------------------------------------------------------- Chapter 4:1
States can use one of two pavement design guides developed by the
American Association of State Highway and Transportation Officials
(AASHTO) in 1972 and 1986 or adopt another design guide approved by
FHWA. Most states have elected to use the AASHTO guides as the basis
for their asphalt and concrete pavements.\1 FHWA estimates that in
designing their asphalt and concrete pavements, 40 and 41 states
respectively follow in whole or in part the AASHTO 1972 guide, the
AASHTO 1986 guide, or a combination of these two guides. The
remaining states develop their own designs or base their designs on
guidance developed by industry associations or other states and
approved by FHWA.
--------------------
\1 Throughout this chapter, we use the broad terms "asphalt" and
"concrete" pavements. Asphalt or asphalt concrete pavements are made
from a variety of bitumen found in nature or obtained by evaporating
petroleum into a brown or black tar-like substance and mixed with
sand or gravel. Concrete or portland cement concrete pavements
include any pavement made of sand and gravel bonded together with
cement into a hard, compact substance.
LIFE-CYCLE COSTING IS AN
UNDERUTILIZED TOOL
---------------------------------------------------------- Chapter 4:2
While ISTEA requires that states and metropolitan planning
organizations consider life-cycle costs in the design and engineering
of bridges, tunnels, or pavements, the act does not prescribe how
such costs should be considered. FHWA recommends all states use
life-cycle cost analysis (LCCA) to help ensure that the selection of
a highway design is not based solely on initial costs but instead
considers all the future costs expected to occur over the highway's
serviceable life. FHWA further recommends that states complete
life-cycle costing when selecting the type of pavement--asphalt or
concrete--and for assessing alternative strategies for rehabilitating
existing pavements approaching the end of their useful life.
Furthermore, FHWA requires that pavement management systems for major
highways should include an analysis to determine investment
strategies using LCCA. FHWA officials noted that a pavement
management system provides quantifiable information to help manage
highway pavements. Nonetheless, FHWA stresses that the total
decision-making process is based on information from a pavement
management system coupled with engineering experience, budget
constraints, scheduling parameters, management prerogatives, public
input, political considerations, and planning and programming
factors.
Life-cycle costing is an elusive term subject to varying
interpretations of what such analysis should entail. In addition,
FHWA provides limited criteria on what constitutes an acceptable
LCCA, and some states do not include data, such as maintenance costs,
that are integral to an effective analysis. As a result, states'
practices vary considerably, and many states either do not routinely
perform the analysis or omit critical factors.
STATES' USE OF LIFE-CYCLE
COST ANALYSIS IS LIMITED
-------------------------------------------------------- Chapter 4:2.1
A sizable number of states make highway investments without using
LCCA. According to data from a 1993 AASHTO survey, nearly 30 percent
of the responding states (11 of 38) reported that they did not use
LCCA in making highway investment decisions.
States frequently use life-cycle costing to evaluate new construction
and reconstruction strategies, but not for rehabilitation strategies.
AASHTO's 1993 survey showed that 27 of 38 state respondents used LCCA
when making highway investment decisions. However, while most of
these states--25 of 27 states--used the technique in analyzing new
and reconstructed pavement types,\2 --only 16 states used it to
evaluate rehabilitation designs.
The results of AASHTO's survey indicating underutilization of LCCA
bolster concerns raised by DOT's Office of Inspector General (OIG) in
a series of audits on states' procedures to select pavement types.
For example, in September 1992 the OIG reported that Florida's
department of transportation had not prepared such an analysis on 12
of 13 federally assisted projects reviewed. Similarly, in April 1992
the OIG found that South Carolina had not used such an analysis to
determine the most cost-effective design for seven pavements
reviewed. The OIG estimated that one project's $5.8 million
construction cost could have been reduced to about $3.5 million--a
savings in excess of $2 million--on the basis of life-cycle costing
showing that the choice of an asphalt pavement rather than a concrete
pavement would have been less costly over the expected life of the
project. For the other six projects, the OIG study reported that the
pavements were being underdesigned--that is, designed to last
approximately 10 years at forecasted traffic levels rather than 20
years, the more common design life. The OIG estimated that choices
made on the basis of the longer design life would yield savings of
$2.2 million over a 20-year period. South Carolina, however, assumes
that it is generally more cost-effective to build a weaker initial
pavement with a 10-year design life and add an overlay to the asphalt
surface during the 10th year. The OIG reported that the state had no
recent or previous analysis to support the cost-effectiveness of this
approach.
FHWA requires that a state's pavement management system for major
highways (that is, those highways that are intended to make up a
national highway system) be able to set priorities for projects for
single-year as well as multiyear periods using LCCA. As of April
1994, FHWA estimated that most states do not produce a multiyear list
of recommended projects, ranked by priority, using LCCA. However, a
senior FHWA pavement management official is optimistic that most
states will comply with the multiyear requirement by October
1995--the date set by FHWA for states to meet the pavement management
system requirements for major highways. According to this FHWA
pavement management official, there will be no scorecard of states'
compliance with specific pavement management system requirements
because such reporting could jeopardize FHWA's cooperative working
relationships with the states. Nevertheless, this official noted
FHWA will be aware of the status of states' compliance with specific
pavement management system requirements through its oversight
efforts.
A related pavement management requirement tasks states with
estimating the remaining life of major highways, which is considered
important because it provides a snapshot of the long-range health of
a network and can improve the budgeting for and management of these
important roads over a multiyear period. But as of April 1994, FHWA
noted that only 10 states had performed an analysis of the remaining
service life for highways. The head of FHWA's Pavement Management
Branch expects that this requirement will be met by most states by
October 1995.
--------------------
\2 Reconstruction involves removing and replacing the road rather
than extending the life of an existing road through rehabilitation
techniques, such as resurfacing.
CERTAIN LIFE-CYCLE COSTS ARE
DIFFICULT TO QUANTIFY
-------------------------------------------------------- Chapter 4:2.2
AASHTO's guidance suggests that states include costs both to the
highway agency (e.g., initial construction and maintenance costs) and
to the highway users (e.g., traffic delays and other user costs
associated with traffic congestion during rehabilitation) in their
life-cycle costing of alternative pavement designs. However, many of
the states performing LCCA encounter problems in considering
maintenance and user costs in their analyses.
In responding to AASHTO's 1993 survey, states indicated that a major
weakness of LCCA is the difficulty of predicting the future,
especially predicting future rehabilitation strategies and their
timing. As the states noted, future maintenance costs, deterioration
rates, and salvage values are difficult to model or estimate. In
addition, states noted problems in selecting the appropriate discount
rate.\3 Furthermore, our analysis of data from a 1984 TRB survey
found that 22 of 45 states responding did not include maintenance
costs in their economic analysis.\4 Of those states that did consider
maintenance costs in their analysis, half rated the maintenance data
as either poor or fair. One reason is that states' data on
maintenance are often limited to historical information on the
dollars spent throughout the system or in each county or region.
This broad information excludes site-specific data that would allow
the state to calculate the costs related to different types of
pavement (asphalt or concrete) or different features in the pavement,
such as drainage.
Similarly, user costs are frequently omitted from LCCA. AASHTO's
1993 survey found that only 16 of the 27 states that performed LCCA
included any type of user costs. Moreover, there are various types
of user costs--such as fuel costs, delay costs, and other vehicle
operating costs--and states often recognize some of these costs but
exclude others from the analysis. For instance, of the states that
reported considering user costs in their LCCA, only seven states
considered fuel costs.
Difficulty in estimating the user costs of a project is a primary
reason that states often leave these costs out of LCCA.
Nevertheless, factoring in the user costs resulting from delays in
construction zones or detours is an important determinant of even the
least-expensive project, especially in an urban area, according to a
senior FHWA policy official. This official illustrated the
importance of user costs by comparing two pavement design
alternatives. As figure 4.1 shows, on the basis of initial cost, a
50-year design looks about 50 percent more expensive than the shorter
20-year alternative. But, using LCCA, the 50-year pavement
reconstruction strategy is shown to be the optimal, most
cost-effective strategy, primarily because of user costs resulting
from delays during the rehabilitations that will be needed on the
pavement designed to last for 20 years.
Figure 4.1: Initial and
Life-Cycle Costs of 20-Year and
50-Year Portland Cement
Concrete Pavement Designs
(See figure in printed
edition.)
Note: An analysis period of 50 years and a discount rate of 4
percent were used. Costs for initial construction, maintenance,
traffic control, rehabilitation, and users' delays were included.
Source: GAO's illustration based on FHWA's data.
The need for additional research and guidance on quantifying user
costs was a common theme among a number of the states responding to
AASHTO's 1993 survey. States also noted other life-cycle costing
areas that presented them with problems. For example, states made
comments like the following:
The projection of costs, particularly fuel costs, has always been
the "weak link" in this type of analysis. It is unlikely that
environmental factors can be quantified. Despite these problems
and related issues such as determining the appropriate discount
rate, LCCA remains a useful technique. The most useful product
would be a technical manual that describes methods for LCCA,
including acceptable value ranges.
The greatest difficulty in conducting LCCA is including user costs.
Guidance and research are needed in this area.
Future research should concentrate more on the valuation of social
costs and other nontraditional costs (e.g., pollution,
congestion, fuel usage, and disposal costs at landfills\5 ).
Determining the value of travel time and forecasting fuel costs are
difficult tasks. Furthermore, many maintenance costs and
salvage values of infrastructure are only guesses.
FHWA formed a task force in 1992 to review LCCA and identify problems
that may hinder its application. The task force gathered information
on this technique and problems with its use from state, industry, and
university representatives and from consultants. FHWA officials are
currently reviewing the task force's data with a view toward
developing training courses and technical assistance materials and
determining an appropriate research agenda to address such issues as
how to quantify user costs and how to better predict the performance
life of pavements.
In addition, a January 1994 executive order on principles for federal
investments in infrastructure supports broader use of LCCA. In
response to this executive order, FHWA's Executive Director noted
that in the summer of 1994, FHWA will be issuing a policy statement
on life-cycle costing, laying out the agency's position on some of
the more common technical issues.
--------------------
\3 The discount rate is the interest rate used to determine the
present value of a future stream of benefits and costs.
\4 Dale E. Peterson, Life-cycle Cost Analysis of Pavements, NCHRP,
Synthesis of Highway Practice 122, TRB (Dec. 1985). Note: Some of
the states responding to this question performed economic analysis
other than life-cycle cost analysis.
\5 If disposal costs were calculated, recycling of materials would
become more cost-competitive.
USING SITE-SPECIFIC TRAFFIC
DATA WOULD ENHANCE THE QUALITY
OF PAVEMENT DESIGN
---------------------------------------------------------- Chapter 4:3
Research and state practices demonstrate that up-to-date,
site-specific information on the amount, type, and weight of traffic
offers the potential for significant improvements in pavement design
by ensuring a better match between the pavement and the traffic load
it is expected to accommodate. Most states we contacted, however,
continued to rely on traffic data that are not project-specific in
selecting their highway designs. FHWA officials view this use of
non-specific data as acceptable. They further noted that the expense
of collecting site-specific traffic data, rather than using the more
readily available data on corridors, may not be warranted. FHWA
officials believe that the added expense would be warranted for
certain projects, but there is no FHWA guidance or criteria on the
size of highway project that would benefit from site-specific traffic
data. Nevertheless, FHWA is encouraging states to improve the
accuracy of their traffic data through the use of computerized
technologies for determining the weight and classification of
traffic.
Furthermore, FHWA officials noted that to be effective, state
pavement management systems need to recognize traffic volume and load
analysis for specific routes. Yet FHWA officials said that very few
state highway agencies can produce data on load analysis. Since
collecting load data on a route-specific basis is more expensive than
the existing process for collecting traffic information, FHWA
officials stated that it is not known if the additional expense
(which has not been calculated for each state) is justifiable.
Nevertheless, the research that FHWA has already sponsored
demonstrates that substantial savings can be realized through
site-specific traffic data.
FHWA's Policy Guide recommends refinements in traffic data through
the use of weigh-in-motion and automatic vehicle classification
technologies.\6 Specifically, the guide suggests that states purchase
and use these technologies for collecting traffic data to improve the
current base traffic data used to forecast future truck volumes and
loads. In discussions with officials in nine states,\7 we found that
all of the states had improved or planned to improve their
capabilities to collect traffic data through weigh-in-motion or
automatic-vehicle classification technology. However, states
generally continued to rely on data on statewide, regional, or
corridor traffic, rather than site-specific data, when developing
highway designs, especially when determining traffic loads.
While data averages for statewide, regional, or corridor traffic are
often all that states have available, such average data can result in
sizable errors in estimating the traffic at a particular site.
Sizable errors in traffic forecasting can be quite costly, as they
can lead to a misallocation of resources. If traffic is
overestimated, it could lead to the construction of thicker, more
costly pavement than needed. Conversely, an under investment occurs
when major repairs are needed prematurely because the highway was
designed to support less traffic that actually materialized. A 1988
FHWA-sponsored study illustrated the effect with an example from
Washington state.\8 Approximately $6.6 million could be misallocated
in a 2-year period, the study estimated, if planned overlay projects
to cover 1,200 miles of highway were under- or overdesigned by as
little as one-quarter inch.
The cost of using imprecise traffic data was also illustrated in one
of the states we visited. Mississippi constructed a concrete
pavement between 1986 and 1988 that had an expected design life of 20
years. Within approximately 3 years, the pavement began to show
premature distress. A 1990 state investigation faulted the quality
of construction but noted that poor traffic predictions contributed
to the problem. Current traffic data indicate that traffic levels
have increased about 70 percent above the design estimates. The
investigation concluded that the state had not accurately predicted
the weight of the trucks that actually used the highway.\9
Studies have demonstrated the benefits that could be realized through
the use of site-specific traffic data. For instance, a 1991
FHWA-sponsored study showed that dramatic improvements could be
realized through the use of site-specific data,\10 as the research
found that states could realize (1) a 30-percent improvement in the
accuracy of traffic forecasts by determining the number, type, and
weight of trucks by manually counting them over a 24-hour period or
(2) an improvement of over 85 percent by using weigh-in-motion
technology over a 1-week period. The study also described the cost
of such data collection and the size of project for which this type
of data would prove cost-effective, as shown in table 4.1.
Table 4.1
Costs and Benefits of Site-Specific
Traffic Data
Break-even
Cost of data size of
Data collection method collection project
-------------------------------- ------------ ------------
24-hour manual count $550 $248,000
Week-long weigh-in-motion $2,790 $543,000
session
------------------------------------------------------------
Source: Based on data in Traffic Load Forecasting for Pavement
Design.
--------------------
\6 Weigh-in-motion systems utilize a measuring device that estimates
a moving vehicle's weight and the portion of that weight that is
carried by each wheel, axle, or axle group and classifies the vehicle
by axle configuration. Automatic vehicle classifiers record the
continuous passage of vehicles across a given section of roadway by
type and axle configuration using computerized electronic equipment.
\7 California, Illinois, Kentucky, Michigan, Mississippi, New York,
Oregon, South Carolina, and Washington.
\8 Harshad R. Desai, et al., Traffic Forecasting for Pavement
Design, FHWA (Mar. 1988).
\9 Mississippi has subsequently modified its techniques for
forecasting traffic.
\10 Anthony J. Vlatas and George B. Dresser, Traffic Load
Forecasting for Pavement Design, Texas A&M University (Aug. 1991).
QUALITY CONTROL/QUALITY
ASSURANCE PROGRAMS COULD HELP
STATES
---------------------------------------------------------- Chapter 4:4
States can also potentially improve the quality of the pavement
design and construction of their highway projects through quality
control/quality assurance (QC/QA) programs. First, in the quality
control stage, the contractor is responsible for testing the
construction materials before they are mixed and after they are
placed on the roadbed. The tests are conducted to ensure that the
materials meet state-prescribed standards. Second, in the quality
assurance stage, the state assesses the quality of the contractor's
work. For example, the state would randomly take samples of the mix
and pavement and determine if the contractor had met agreed upon
standards for density, asphalt content, and aggregate gradation.
Slightly over half of the states we visited did not routinely use
QC/QA for their asphalt pavements. Of the nine states we contacted,
four used QC/QA on all or nearly all of their asphalt pavements, and
five states used this approach on asphalt pavements on a pilot basis.
The use of QC/QA is even less common for concrete pavements. In this
case, only one of the nine states we contacted used this approach on
all or nearly all of its concrete pavements. Three states used QC/QA
on an experimental basis on their concrete pavements, and the
remaining five states did not use it at all for concrete pavements.
Resource and technical reasons were the primary obstacles noted by
state officials for not using QC/QA with concrete pavements. State
transportation officials stated that contractors often do not have
the equipment and/or trained staff required to do the testing. One
state official also mentioned technical obstacles, including
uncertainty about which pavement characteristics to measure and what
test methods were best.
States using QC/QA provided some examples of improved pavement
quality as a result of using the procedures. For example, Oregon
evaluated the costs and benefits of its QC/QA program for asphalt,
and found that pavements were better compacted and had lower moisture
contents after the program was implemented. The state estimated that
the improvement in pavement compaction alone would increase pavement
life by 16 percent, requiring only a nominal cost increase to cover
bonuses for contractors who surpassed the standards that had been
set.
In 1989, FHWA recommended that a QC/QA approach be established for
the processing and production of highway pavement materials,
construction inspection, and maintenance operations. At that time,
there was no national information or guidance on what an acceptable
QC/QA program would entail or on what properties of the materials
should be measured. Since then, AASHTO and its western division,
WASHTO (Western Association of State Highway and Transportation
Officials), have taken the lead in developing and disseminating
guidance on QC/QA.
In 1991, WASHTO published a QC/QA implementation guide--a
step-by-step discussion of how to establish a successful program. In
1993, AASHTO expanded on WASHTO's guide, publishing the Quality
Assurance/Quality Control Specifications and Implementation Guide to
assist states in adopting such a program. This guide identifies
characteristics of asphalt and concrete materials--roadway density,
smoothness, and strength--that states should consider when developing
their programs.
In addition, FHWA sponsored a quality management workshop for highway
industry managers in late 1990. The results of this workshop,
together with concurrent AASHTO quality initiatives, resulted in the
formation of a National Quality Initiative (NQI), a partnership of
FHWA, AASHTO, and various industry associations. The NQI is geared
to making a continuing commitment for quality products, information,
and services to enhance highway design and construction. One of the
major objectives of this initiative is to promote quality through
proper design, construction specifications related to performance,
adherence to specifications, use of quality materials, use of
qualified personnel, and sufficient maintenance. NQI efforts geared
to furthering this objective include research on performance-related
specifications and guidance on QC/QA programs.
Strategic Highway Research Program (SHRP) research will also benefit
states implementing QC/QA programs. For example, SHRP developed a
number of advanced testing procedures to measure the performance
characteristics of asphalt and concrete pavements. One example is
test equipment and procedures to more precisely measure the water
content of fresh concrete. The correct water content in the mix is a
key determinant of the concrete's quality, since it affects the
durability of the hardened concrete.
TESTS TO DETERMINE MATERIALS'
ELASTICITY COULD AID IN
IMPROVING DESIGN
---------------------------------------------------------- Chapter 4:5
FHWA's Federal-Aid Policy Guide encourages states to become familiar
with the concept of resilient modulus and its application in the
pavement design process. Resilient modulus tests allow engineers to
predict pavement deterioration as a function of traffic and
environmental conditions. The tests measure a material's elasticity
or ability to withstand an applied pressure without permanently
deforming. Traditionally, pavement engineers have characterized
soils and pavement materials through empirical strength tests rather
than tests of elasticity. Strength tests identify the amount of
stress that a material can withstand before breaking apart or
rupturing. However, elasticity tests provide more useful
information, since highway pavements generally do not suddenly break
apart or rupture but slowly rut or crack as heavy trucks pass over
the pavement.
Information from resilient modulus testing could help states in
designing their pavements. Unlike empirical tests that require
historical knowledge, resilient modulus tests of the material
properties simulate field conditions and can be used to help a
pavement design engineer predict the performance of new materials
that have not been used before. The resilient modulus tests also
allow engineers to evaluate the performance of traditional materials
under new conditions, such as increased truck axle weights.
While a number of researchers and AASHTO support resilient modulus as
the definitive method for characterizing the suitability of materials
in pavement design and construction, practical application of
resilient modulus testing has been slow. A 1993 report from the
National Cooperative Highway Research Program found that only 10
states had incorporated resilient modulus or material elasticity
testing to characterize roadbed soils in their pavement design
processes. Most states continued to use strength tests to
characterize the properties of materials. State and FHWA officials
cited several reasons for slow adoption of resilient modulus testing:
(1) problems with the accuracy of test methods for determining
resilient modulus, (2) the extra costs associated with laboratory
equipment, and (3) the increased time required to adequately perform
the tests for a project.
These impediments may be eased through SHRP's efforts. As of May
1994, the research and development of new resilient modulus test
procedures and equipment is nearly complete through projects
undertaken as part of SHRP. AASHTO adopted SHRP's new test method
for determining the resilient modulus of soils and aggregates and is
waiting to review SHRP's test method for determining the resilient
modulus of asphalt pavement materials. However, the rate or extent
that states will adopt resilient modulus testing in the future
remains unknown. FHWA stated that upon completion of the current
research efforts, it will undertake implementation of the resilient
modulus procedure as part of the SHRP implementation program.
CONCLUSIONS
---------------------------------------------------------- Chapter 4:6
Not all states are ensuring the cost-effectiveness of their highway
investment decisions by using important tools such as life-cycle
costing to decide between concrete and asphalt pavements or to
examine rehabilitation strategies. FHWA officials expect this
technique to be more widely used in the future because the agency is
requiring that states' pavement management systems use LCCA to set
priorities for projects for major highways. To date, however, FHWA
estimates most states do not produce a multiyear list of recommended
projects, ranked by priority, using LCCA.
Furthermore, when the states that do use LCCA omit factors such as
user and maintenance costs from the analysis, the results are skewed
because all costs are not considered. Thus, the usefulness of such
analysis in identifying the design alternative that will provide a
satisfactory level of service at the lowest cost over time is
undermined.
FHWA is aware of states' problems in quantifying LCCA-related costs
and plans to issue a policy statement in the summer of 1994 laying
out its position on some of the more common technical issues
associated with this technique. If this policy statement provides
clear guidance on the (1) types and size (dollar amount) of projects
that would benefit from LCCA, (2) the factors that constitute a
complete analysis, and (3) the discount rate that should be used,
then FHWA's policy statement would clarify federal requirements and
address some of the concerns that states have raised. Moreover,
linking such policy guidance to a research program would address the
range of problems that states face in effectively using life-cycle
costing, such as the difficult issue of quantifying user costs.
Improving traffic projections through the use of site-specific data
could also enhance the quality of highway designs, making them more
accurately reflect design requirements for the traffic that will use
the highways. Using data from larger geographic areas can result in
highways that are either overdesigned or underdesigned based on the
extent to which the actual traffic patterns at the site differ from
those described by the data. While collecting site-specific data may
not be warranted in all cases, studies have shown that doing so is
cost-effective for some projects. Guidance could provide a benchmark
for when collecting such data would be cost-effective. For instance,
it could be determined that site-specific traffic data are generally
warranted for all highway projects over a specified dollar threshold.
RECOMMENDATIONS TO THE
SECRETARY OF TRANSPORTATION
---------------------------------------------------------- Chapter 4:7
We recommend that the Secretary of Transportation direct the FHWA
Administrator to
issue guidance to states on factors to be considered as part of
life-cycle cost analysis, such as setting priorities for
projects over multiyear periods; establishing acceptable value
ranges, particularly for social and other nontraditional costs
like pollution, congestion, and fuel usage; and refining
maintenance costs and salvage values and
issue guidance on the type and size (dollar amount) of highway
projects that warrant collection of site-specific data when a
highway project is being designed.
AGENCY COMMENTS AND OUR
EVALUATION
---------------------------------------------------------- Chapter 4:8
DOT partially concurred with our proposed recommendations concerning
life-cycle costing and the need for site-specific traffic data in
selecting pavement design. The Department noted that an FHWA working
group is preparing an action plan for addressing issues related to
applying LCCA to highway planning and construction. The working
group is expected to provide guidance, which may include suggestions
on appropriate LCCA values for, among other things, user costs,
discount rates, salvage values, and the useful life of pavements.
Guidance may also be provided on how to estimate factors such as
sources of information and default values or ranges for various types
of highway projects.
We credit DOT with moving to strengthen life-cycle costing in a
number of areas and recognize that work continues in this field. We
would encourage the Department, however, to be bolder and more
definitive when it provides guidance. Federal guidance that "may
include suggestions" on appropriate LCCA values for user costs,
discount rates, salvage values, and the useful life of pavements may
not provide states with a clear picture to guide them in their use of
LCCA for various highway projects.
DOT concurred in part with our proposed recommendation that guidance
be issued concerning site-specific traffic data. The Department
noted its intent to evaluate the states' pavement design procedures
in the next 2 years. The evaluation will include procedures for
estimating and forecasting traffic. Thereafter, the Department will
determine whether specific guidance is needed in this area. We
believe that this planned action will lay the groundwork for
satisfying our recommendation.
(See figure in printed edition.)Appendix I
COMMENTS FROM THE DEPARTMENT OF
TRANSPORTATION
============================================================ Chapter 4
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
Now on p. 3.
Now on p. 32.
The following are GAO's comments on the Department of
Transportation's (DOT) letter dated August 1, 1994.
GAO'S COMMENTS
---------------------------------------------------------- Chapter 4:9
1. In response to a proposed recommendation in our draft report that
called for issuing formal policy guidance on the instances in which
warranties may be used, DOT concurred with the recommendation and
said it had addressed the issue with an April 22, 1994, addendum to
the Federal-Aid Policy Guide. Accordingly, we have deleted the
proposed recommendation from our report. However, since the thrust
of our proposed recommendation was to ensure that responsible
personnel in state departments of transportation were apprised of the
change in policy on warranties, in August 1994 we recontacted
engineering and contracting staff from four of the states in our
review. We found that among these officials, the substance of the
Federal Highway Administration's (FHWA) clarification of the policy
was still generally unknown. This finding is a reminder that the
duty of ensuring that such information filters through to key
personnel responsible for implementing such changes is a shared one.
It lies not only within the headquarters offices of FHWA but also
with regional and division officials who serve as the main conduit of
information and with the respective state departments of
transportation.
2. Although DOT notes that FHWA prefers not to develop model or
standard specifications, the Department elected to make an exception
in the case of a procedure--microsurfacing--with which states were
generally unfamiliar. As noted in our report, states are often most
inclined to try warranties in the context of unfamiliar types of
projects. We believe that microsurfacing is just one of a number of
processes that are relatively new to most state transportation
agencies; another example is rubberized asphalt pavement overlays.
We believe that the use of new processes and products resulting from
recent research might provide another opportunity for FHWA to assume
an activist role in developing model warranty provisions in
cooperation with state departments of transportation. We note that
such warranty provisions need not be unduly prescriptive. As DOT
points out, the recently issued microsurfacing specifications may be
modified as necessary by the states to meet their individual needs.
Thus, in our opinion, the development of certain model specifications
need not deprive states of their ability to tailor such
specifications to their own circumstances. Furthermore, we have
modified our recommendation to acknowledge that FHWA's development of
guide specifications would be done in cooperation with state
agencies.
3. DOT asserts that FHWA's division offices and state maintenance
personnel are already aware that work performed by state maintenance
personnel could be approved for federal-aid funding under force
account work.\1 We found, however, that some FHWA division officials
and state representatives were uncertain, or had reservations, about
whether federal funds could be used to reimburse a state for work
performed by state maintenance personnel. Given this confusion and
uncertainty, we continue to believe that further clarification is
warranted.
4. We believe that the type of guidance DOT is describing here
provides a broad framework for the justification a state needs in
order to use federal funds for preventive maintenance work.
Nevertheless, we believe additional guidance is needed because (1)
some states do not believe that they have any data that could be used
to justify the cost-effectiveness of preventive maintenance work and
thus allow them to use federal funds for such work, (2) only about
half of the states currently have pavement management systems that
are able to justify the cost-effectiveness of preventive maintenance
strategies, and (3) some states do not have a preventive maintenance
program.
5. We recognize there have been instances in which FHWA has worked
with states in developing areawide maintenance projects. We further
believe that publicizing such work may facilitate similar action in
other states and increase the use of federal funds for preventive
maintenance work. To emphasize that our recommendation is aimed at
getting the word out on how states can package maintenance activities
into one funding request, we have modified the wording of the
recommendation from providing "instructions" to providing "advice" on
how this packaging can be accomplished.
6. Although DOT maintains that existing guidelines and maintenance
policies are sufficient for FHWA to determine the adequacy of states'
maintenance, we observe that the guidance lacks specificity in a
number of areas. For instance, if maintenance deficiencies are
statewide, the guidance says that it would be "desirable" to
highlight those deficiencies considered to be of statewide
significance to assist in planning future monitoring and follow-up
activities.
In addition, FHWA's guidance groups maintenance deficiencies into one
of four classes, the first class being safety. The guidance states
that timely response and/or correction of safety deficiencies should
be the foremost concern of highway maintenance, but no insight is
provided on what is meant by timely. This omission seems
particularly surprising given that federal legislation provides that
if maintenance is not adequate, a state should be notified that
corrective action must be accomplished within 90 days. If the 90-day
deadline is not met, the Secretary of Transportation must withhold
approval of further federal-aid highway projects of all types for the
entire state or for a particular area within the state until proper
maintenance is achieved.
Furthermore, FHWA's guidance provides examples for the four classes
of maintenance deficiencies. In the first class of
deficiencies--safety-related deficiencies--FHWA's guidance lists a
number of examples, such as missing signs and signals, inadequate
roadway delineation, and severe pavement distress in the form of
potholes, depressions, and ruts. The guidance notes, however, that
these are not the types of problems routinely found on the
federal-aid system. Yet we observe that these appear to be common
maintenance problems identified in state and FHWA maintenance
reports. However, such reports are generally silent on whether the
severity and frequency of the deficiency is enough to support a
finding of inadequate maintenance. Without such a finding, there is
no basis for pursuing the legislatively provided remedy.
While FHWA's maintenance guidance is not prescriptive, we found that
it is not being systematically followed. Moreover, maintenance
deficiencies identified by FHWA can linger unresolved for lengthy
periods of time, with no strategy developed for corrective action and
no timeframe set for resolving the deficiencies. To correct this
situation and buttress FHWA's existing maintenance guidance and
policies, we believe that maintenance performance standards and
expectations need to be established. We have clarified the
recommendation to underscore our view that performance expectations,
including specific timeframes for corrective action, need to be
established and that these standards and expectations need to reflect
the severity and safety impact of the maintenance problems.
7. We recognize the Department is moving to strengthen life-cycle
cost analysis (LCCA) in a number of areas and that this effort is
continuing. We would encourage the Department, however, to be bolder
and more definitive when it provides guidance. Federal guidance that
"may include suggestions" on appropriate values for user costs,
discount rates, salvage values, and the useful life of pavements may
not provide states with a clear picture to guide them in their use of
LCCA for various highway projects.
8. We believe this planned action will lay the ground work for
satisfying our recommendation.
9. We revised the relevant passages to reflect the substance of
DOT's comment.
10. We made DOT's suggested technical corrections.
--------------------
\1 Force account refers to the use by a public agency or utility of
its own personnel and equipment for construction work.
STATES CONSIDER ALTERNATIVE
INNOVATIVE CONTRACTING APPROACHES
========================================================== Appendix II
While the prospect of highway warranties has attracted especially
pronounced attention over the past few years, warranties are but one
item on a large menu of innovative contracting approaches that states
are considering. Some approaches aim to speed the process of
construction; others seek to improve the quality of design and
construction. Many of these approaches came to the forefront as a
result of the efforts of a task force on innovative contracting
practices that was convened by the Transportation Research Board
(TRB) in 1987.\1 The task force's findings formed the basis for
FHWA's decision to establish Special Experimental Project 14 (SEP
14). This appendix describes the three principal procurement methods
being tried under SEP 14 as well as other alternatives.
--------------------
\1 The task force issued its report, Innovative Contracting Practices
(Transportation Research Circular No. 386), in Dec. 1991.
EXPERIMENTAL APPROACHES
AUTHORIZED FOR EVALUATION UNDER
SEP 14
-------------------------------------------------------- Appendix II:1
In addition to warranties, states have experimented with three other
types of innovative contracting methods under SEP 14. Two of these
approaches--lane rental and cost-plus-time bidding--principally seek
to reduce the duration of the construction process. The objectives
of the third approach, known as design/build, are to (1) improve the
efficiency of the design and construction process by permitting
certain activities to occur concurrently and (2) foster maximum
flexibility in the selection of innovative designs, materials, and
construction techniques.
LANE RENTAL AND
COST-PLUS-TIME BIDDING
------------------------------------------------------ Appendix II:1.1
Under the formulation considered by FHWA most adaptable to the United
States, lane rental provides for charging the contractor a specified
amount, based on road user costs, for the period during which the
contractor occupies part of the highway for the purpose of
construction. Under cost-plus-time bidding (also known as A+B
bidding), the successful low bid is determined as a combination of
cost of construction and the cost associated with the expected
duration of construction. (This formula is only used to determine
the lowest and best bid and is not used to determine how much the
contractor is paid.) According to FHWA, as of March 1993 four states
had launched one or more projects involving the lane rental concept.
Sixteen states and the District of Columbia were experimenting with
one or more projects that use the cost-plus-time approach.
DESIGN/BUILD
------------------------------------------------------ Appendix II:1.2
Additionally, SEP 14 permits states to try an innovative contracting
approach known as design/build. This method of procurement departs
from the traditional separation of responsibility for the design and
construction of a project. Instead, both functions are combined in a
single contract. As envisioned by FHWA, under a design/build
contract, the state highway agency identifies the desired end results
and establishes minimum design criteria. Prospective bidders prepare
proposals encompassing both the design and construction of the
project, and the state highway agency subsequently selects the
successful bid on the basis of a combination of factors, including
the quality of the design, the delivery time, and the cost.
According to FHWA, as of March 1993, five states and Puerto Rico had
initiated design/build highway contracts.
ADDITIONAL ALTERNATIVE METHODS
OF PROCUREMENT
-------------------------------------------------------- Appendix II:2
Aside from the experimental approaches that states are trying under
SEP 14, states may consider a wide array of other innovative methods
of procuring highway construction services. The National Quality
Initiative, a government-industry partnership devoted to raising
awareness of technical and procedural approaches to the quality of
highway design, construction, and operations, is one mechanism by
which information on some of these contracting methods is being
disseminated.
One approach for states' consideration is known as quality
control/quality assurance (QC/QA). QC/QA provides contractors with
greater flexibility in determining the construction processes they
use as well as greater responsibility for the resulting outcomes. As
detailed in chapter 4, QC/QA contracts hold contractors responsible
for their own quality control activities (e.g., testing the
characteristics of the asphalt mix). The state performs quality
assurance tests to determine whether the product meets the
performance characteristics outlined in the contract. The QC/QA
approach can be coupled with provisions for adjusting payments to
reward or penalize contractors for a given project's conformance to
the desired quality levels. For the process to work successfully,
the performance characteristics sought in the contract must be both
measurable and clearly linked to the actual quality and durability of
a project.
Another approach under consideration is prequalification, in which a
state highway agency may evaluate contractors on the basis of quality
indicators and performance factors before selecting a contractor on
the basis of the bids that are ultimately submitted. Typically
contractors already face a type of prequalification when they obtain
bonding because surety underwriters assess contractors' stability and
fiscal capability of undertaking a job of the anticipated magnitude
of the project in question. Prequalification goes a step further by
permitting a state highway agency to compare competing contractors on
the basis of their past performance.
States are also using an approach known as partnering to improve the
contracting process. Under a partnering agreement, participants in a
project form a cooperative team to identify common goals and resolve
disagreements; the objective is to minimize the adversarial
relationship that can develop in the course of a problematic
construction project. With an emphasis on participatory dispute
resolution, partnering aims to minimize the use of litigation as a
means of resolving conflicts. By fostering a cooperative atmosphere,
partnering also has the potential to improve the climate for
warranties by ensuring that all parties to the warranty are fairly
represented in developing equitable specifications and by minimizing
the chances that misunderstandings will occur.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III
RESOURCES, COMMUNITY, AND
ECONOMIC DEVELOPMENT DIVISION
WASHINGTON, D.C.
------------------------------------------------------- Appendix III:1
Barry T. Hill, Associate Director, Transportation Issues
Gary Jones, Project Director
Yvonne Pufahl, Project Manager
Miriam Roskin, Staff Evaluator
Phyllis Turner, Reports Analyst
CHICAGO REGIONAL OFFICE
------------------------------------------------------- Appendix III:2
Joseph Christoff, Assistant Director
Sarah Brandt, Staff Evaluator
Barry Kirby, Staff Evaluator