Public operating agencies utilize operations and maintenance (O&M) concessions to transfer responsibility for asset operation and management to the private sector. These comprehensive agreements involve both service and management aspects and can be useful in encouraging enhanced efficiencies and technological sophistication. Contractors can be paid either on a fixed fee basis or on an incentive basis, where they receive premiums for meeting specified service levels or performance targets.
Operations and maintenance concessions may be used as a means to transfer responsibilities for a single highway facility or a group of facilities. These contracts transfer responsibility for ongoing activities such as snow removal and grass mowing, as well as maintenance and major repairs. When in the purview of the public sector, decisions on major repairs can be affected by budget availability or other political sensitivities. Transferring that responsibility to the private sector may allow owners to take better advantage of lifecycle cost and asset management practices.
Asset management is a strategic approach to managing the ongoing maintenance needs of physical assets such as transportation infrastructure. It involves the economic assessment of tradeoffs among alternative maintenance investment options, and as such combines engineering and economic analysis to identify cost-effective investment decisions. The asset management approach emphasizes the preservation, upgrading, and timely replacement of highway assets through cost-effective planning and resource allocation decisions. It often results in the use preventive maintenance techniques, rather than waiting for a highway, bridge or tunnel to deteriorate significantly before rehabilitating it.