Payment mechanisms for winter road maintenance services

Abstract

In countries with severe winters, a major portion of the annual budget for road maintenance is allocated to winter road maintenance. Thus it is important to identify an appropriate basis for the remuneration of the entrepreneurs who carry out the maintenance tasks, one that minimises or eliminates disputes and that satisfies both client organisations and contractors. The objective of this study is to investigate and evaluate the payment models applied in Sweden for winter road maintenance services and suggest possible improvements. Inadequate reimbursement models lead either to unnecessary cost overruns that affect the client's annual budget or cause cash flow problems for the contractor, which can result in safety issues. To solve the problems associated with paying for just-in-time road maintenance, cold region countries such as Sweden have developed various remuneration models, including some based on what is known as the Weather Index. The study uses a domestic questionnaire survey, analysis of a number of current contract documents, a series of meetings with project managers followed by an international benchmarking investigation. The study identified four winter maintenance remuneration models of which one is based on weather data. The study reveals that the payment model based on weather data statistics is applied only to roads with higher traffic flow and generates the most uncertainty about costs. Possible improvements should include more reliable weather data obtained from weather stations and bonuses related to customer satisfaction.