Privatizing long-term road maintenance

It’s bad enough that we don’t have enough good roads; maintenance of the roads we have also leaves much to be desired. How long does it take, for example, for a pothole or cracks on a road to get fixed? How long does it take for the problem to even get noticed by the government entity concerned?

Back in the 1990s when I was still in the government, I recall two specific instances when I was delayed in my trip to the office due to bad traffic congestion at certain points on my route. The congestion was, in one instance, simply due to a large pothole in the road, and in the other, due to an uneven break across the road where a pipe had apparently been laid. In both instances, all passing vehicles had to slow down to a near halt to avoid jolting their passengers and damaging their suspension systems, thereby backing up all approaching traffic up to a kilometer long and beyond. After enduring such delays for some time, I made a call to my Cabinet colleagues in the Department of Public Works and Highways (DPWH), to draw their attention to the problem. Lo and behold—in both instances, traffic flowed smoothly the very next day! I could not tell whether my being a high official made a difference then, or whether someone—anyone—simply had to bring it to their attention.

We often hear the lament that we Filipinos don’t have a culture of maintenance. We like to build new things, but hardly pay attention—and allocate appropriate budgets—for maintaining them. This appears to hold true for both public and private structures, whether roads, bridges, buildings, or other facilities. Preventive maintenance seems almost an alien concept to us, and reactive maintenance—doing repairs when the problem is already there—is, more often than not, late in coming. The recent welcome renovation and remodeling of Terminal 1 of the Ninoy Aquino International Airport is a case in point. One wonders why it didn’t happen much sooner, and had to wait until we had attained notoriety for having the reputedly worst airport terminal in the world, before someone finally acted.

Extreme traffic congestion is now a fact of life in Metro Manila and other major cities in the country. In not a few instances, congestion and traffic slowdowns are simply due to a pothole or break in the road needing repair. Is there a way we can ensure that repairs and proper remedial measures are done promptly before they impose much larger costs on everyone? Will we have to perennially curse the DPWH or the local governments for failure to maintain our roads properly and promptly?

Well, there is a way, and Canada, among others, has demonstrated how. The Canadian province of British Columbia pioneered the outsourcing of long-term road maintenance to the private sector, and entered the first round of performance-based contracts in road maintenance nearly three decades ago. The underlying principle behind the move was that the government’s role is to manage—that is, to plan, facilitate and catalyze the economy—while the private sector should deliver government programs when it can do so effectively, subject to protection of the public interest. To minimize dislocation of road maintenance government employees, they were assisted in setting up contractor companies that could bid for the maintenance contracts, while others simply transferred to existing contractor firms. The provinces of Alberta and Ontario later followed the example.

Under the system, the government bids out multiyear road maintenance contracts covering all surface maintenance including pavement patching, graveling and grading, as well as drainage, landscape, structural, signage and emergency maintenance and repairs. Not included are upgrading/replacing roads or structures, resurfacing, rehabilitation, engineering and geotechnical work, electrical maintenance, avalanche control, and a few others. From 3-year contracts initially, 10-year contracts are now granted. Contractors are paid one-twelfth the annual contract price every month if performance standards are met. The specified standards are performance-based, proactive rather than reactive, and customer-oriented. Standards set the objective (what, why), general specifications (what, where), and detailed specifications (where, when, how much). Contractors determine the methods (how) for delivering performance commitments.

Public acceptance by Canadians of the performance-based road maintenance contracts was reported to be generally positive. Most of the original “privatized” government employees were satisfied with the outcome of the privatization process. The employee-owned companies were largely successful, and the ex-government employees earned ample dividends as shareholders. And the government claimed to have saved up to 35 percent against what road maintenance would have cost had it been done by the government. Chances are, it got even better results in terms of quality and promptness of the work.

We know from experience that public-private partnerships (PPPs) can work well in infrastructure construction. As experience in Canada and elsewhere shows, PPPs for road maintenance work well, too. The concept is actually not new to us; the DPWH has done it with World Bank and Japanese funding, but covering only national highways, and still only to a limited extent. Maybe it’s time local (city) governments tapped PPPs for long-term maintenance of our city streets as well. Where poor road conditions contribute to traffic congestion, this may yet be another answer to alleviating our bad traffic conditions. –Cielito F. Habito 

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