Life cycle cost comparison between performance based and traditional contracts for roads in indonesia

Abstract

Implementation of Performance-based Contracts (PBC) for road maintenance in Indonesia still requires various studies, especially related to potential long-term cost efficiencies that can be achieved by the road agencies by shifting the application of traditional contracts to PBC. This study assesses the effectiveness ofPBC compared to traditional contract implementation based on a case study on one of the PBC pilot projects in Indonesia. The effectiveness of the PBC reviews in terms of project life cycle cost efficiency was calculated. LCC calculations were conducted by considering the influence of the length of contracted road, the initial conditions of contracted road, and the duration ofPBC project. The LCC calculation shows that the implementation ofPBC generally has the potential to generate LCC efficiency compared to the traditional contract. This study also proved that the implementation of PBC can guarantee the performance of road services during multi-year contracts and also provide other benefits for the road agency and road users.