2022 - World Bank - Assessment of Performace Based Contracts

More than 30 years of implementation of PBCs has resulted in a broad base of global experiences with PBCs and demonstrated their strengths across diverse environmental, economic, and engineering circumstances. Proponents of PBCs claim that they have the potential to significantly reduce lifecycle costs compared to traditional contracting approaches. The most frequently cited research on the efficiency of PBC versus traditional contracting modalities was done by Pekka Pakkala (2002, updated in 2007). The comparisons between PBCs and traditional contracting approaches in those studies need to be treated with caution, however, as both studies report potential savings rather than confirmed and proven savings based upon comparative analysis of the actual spending on PBCs and traditional civil works contracts. The research effort described in this report sought to carry out an evidence-based analysis of the cost-effectiveness of PBCs by undertaking a comprehensive ex post performance assessment of road projects and road assets from the viewpoint of evaluating different long-term road asset management strategies. In doing so, this research activity also attempted to answer the following question on adoption of PBCs as much as possible: Are PBCs actually leading to more efficient road asset management than traditional civil works/maintenance contracts?