Pavement Type Selection: What is the Ideal Process (and what Role does Competition Play)? Leif G. Wathne P.E. ACPA.

Pavement Type Selection: What is the Ideal Process (and what Role does Competition Play)?Leif G. Wathne P.E.ACPA

Pavement Type Selection• One of the more challenging and controversial

decisions administrators face• Balancing materials, structural design and

performance against initial and life cycle costs• Increasingly important given constrained

resources and growing needs• $90 billion spent on highways in U.S. annually!• Needs exceed $200 billion…

Pavement Type Selection• Earliest US guidance - 1960 AASHO

Guide on Project Procedures – Aim “to assure the public of full

value for their highway dollar.”– Established process based on

transparency, and sound engineering while leveraging benefits of free market dynamic through healthy and spirited competition

1960 AASHO Guide• Lists a host of factors: Traffic, materials,

weather, pavement performance, cost, etc.• Much improvement in understanding and

modeling since 1960 (design, performance modeling, cost analysis, etc.)

• Despite such advancements, authors warn that PTS process only meaningful in presence of competition between industries.

1960 AASHO Guide• In section on cost comparisons (LCCA):

doubt as to the validity [of such analysis] arises in the case where on[e] type of pavement has been given monopoly status by the long-term exclusion of a competitive type.

• I.e., the cost-data is not meaningful… • “…desirable that monopoly situations be

avoided…” • Often not recognized or considered

appropriately by decision makers today

Current U.S. Practice• Vast differences across US… despite

guidance and policy• National research effort into PTS• Comprehensive guidance, based on

1960 guidance– Formal and transparent– Life cycle cost analysis framework– Weighing economic and non-economic

factors– Use of alternative bidding – Also notes: consider alternatives that

stimulate competition

Suggested process

Role of Competition• Cannot afford to forgo any opportunity to

make highway investment go farther!• Competition between industries assures the

highest return on taxpayer investment –Drives down cost– Spurs innovation– Improves quality

• Realized over 50 years ago by highway officials and, it is also true today…

Analysis of Bid Prices

----------------> Increasing Competition ----------------> ----------------> Increasing Competition ---------------->

Competitive Paving Program?

0-10%

10-20%

20 + %

From 5-year rolling average balance of DOT pavement type, based on Oman Systems bid tabulations.

Competitive Paving Program• Same data viewed through a break-even analysis…

MORE PAVEMENT FOR SAME INVESTMENT!

Role of Competition• Complex relationship between a number of

factors (# bidders, volume of market, etc.)• We can say however:– Clear trend of lower prices for both pavements with

increasing levels of competition (regardless of process)– Variability in unit prices decreases with increasing

competition• Confirms what officials recognized 54 years ago• No downsides- allows agencies to purchase more

pavements for same investment!

In Conclusion…• Pavement type selection

process is only meaningful and equitable if made in the context of a competitive market place!

• Competition represents the most significant opportunity for highway agencies to extend the purchasing power of their investment!

Dēkuji!