Performance Specifications

Performance specifications are those in which the product payment is directly dependent upon its actual performance. Typical of these specifications are warranty, limited warranty and design-build-operate contracts. Contractors are held responsible for the product performance within the context of what they have control over. The contractor is given a great deal of leeway in providing the product, as long as it performs according to established guidelines. In this case, the contractor assumes considerable risk for the level of service the product provides by paying for or providing any necessary maintenance or repair within the warranty period.

Warranty Specifications

Warranty specifications are one type of performance specification that receives attention. In a warranty specification, the agency specifies pavement performance only and the contractor warrants the pavement for performance over a specific amount of time (usually 2 to 7 years although some have been done up to 20 years). During the warranty period, any defects attributable to construction are repaired at the contractor’s expense.

There are two basic types of pavement construction warranties, the second of which, performance warranties, is what is typically meant when referring to a “warranty specification” (Huber, 2002^[1]):

1. Materials and workmanship. Almost all HMA construction is covered by a short duration (usually 1 year) materials and workmanship warranty. This type of warranty assigns risk to the contractor for following agency specifications in regards to materials and workmanship. If a problem or defect is detected within the warranty period, the agency usually uses a forensic analysis to determine the cause. If it is determined that specification non-compliance caused the problem, it is repaired at the contractor’s expense. Otherwise, the agency assumes repair costs. This type of warranty is almost universal, rarely collected on and is usually covered by sureties at no additional charge to the contractor.
2. Performance. This type of warranty assigns a large portion of the pavement performance risk to the contractor. During the warranty period the agency monitors pavement performance and any unacceptable performance attributable to construction is remedied at the contractor’s expense. Because the contractor assumes greater risk he/she is allowed to control most construction aspects.

For specifying agencies, warranties represent an advancement in specifications over end result specifications because they can specify actual pavement performance rather than material characteristics that are only indicative of pavement performance (Table 1 gives an example of performance standards used by the Indiana DOT). Thus, warranty specifications are best able to align the sometimes competing influences of economic incentive, innovation, customer requirements and pavement quality. This alignment, when achieved, allows market forces and economics, rather than specifications alone, to drive pavement quality.

Table 1. Indiana DOT Pavement Performance Thresholds for a Five Year Warranty Specification (from Andrewski, 2002^[2])

Although warranty specifications are being used in other countries, most notably in Western Europe, they are used somewhat sparingly in the United States for several reasons. First, the industry has been somewhat reluctant to change. Second, the Federal Government places severe legal restrictions on warranty use. Third, performance tests need further development so they can accurately and fairly invoke warranty clauses. Finally, the surety industry may have the largest say. Contracting agencies usually limit their risk by requiring a bonded contractor. Bonding agencies may or may not accept the risk associated with a 2 to 7 year performance warranty. They are especially wary since contractors typically have no say in pre-construction pavement design, and no control over post-construction pavement use (Hancher, 1994^[3]).