Performance-based pay-adjustment factors for public–private partnership road projects

Purpose The present study proposes a methodology for assessing the pay-adjustment factor for public–private partnerships (PPP) road projects. Both the agency and user costs, as well as all maintenance activities performed throughout the concession period, are included. Design/methodology/approach The AASHTOW are mechanistic-empirical pavement design tool that was used to predict the pavement performance considering the cases where the pavement is compliant and noncompliant with the standard construction specifications. RealCost was then used to estimate the increase in both the agency and user costs resulting from the out-of-specification pavement construction. Three characteristics of the asphalt-concrete (AC) were addressed: the air voids percentage, the binder content and the thickness of the AC layer. Findings The findings of this study implied that the most critical parameter is the thickness of the AC layer, as it yields the highest pay factor values, followed by the air-voids content and finally the binder content. Briefly, the use of low-quality materials in the base layer and the subgrade notably affected the pay-factors determined for the cases of noncompliance with the AC layer thickness and the air void content. Similarly, high traffic volumes resulted in a significant increase in the pay-factor for off-target air void content. With respect to the noncompliance with the binder content, low values of the pay-factors were obtained, given the fact that high-quality asphalt materials (high PG-grade binders) are generally used in PPP road projects. Finally, the main contribution of this research is the proposed framework that helps the two main parties involved in a PPP road project to accurately assess the pay-adjustment factor, thereby contributing to the avoidance of dispute occurrence. Originality/value The noncompliance of contractors with the standard construction specifications set by transportation agencies is a major concern in all pavement construction projects. In traditional road procurement strategies, the owner imposes “pay-adjustment factors” on the contractor in case the latter delivers an out-of-specifications pavement. Pay-factor assessment methods available in the literature consider only the time to the first heavy maintenance activity and the increased agency cost. Such methodologies are not suitable in the context of long-term complex PPP road projects.