Skip to content

P3 VALUE Webinars
Performance Requirements for Design and Construction in Public-Private Partnerships

February 09, 2017
Related Materials


Center for Innovative Finance Support

Build America Transportation Investment Center

U.S. Department of Transportation Federal Highway Administration

Office of Innovative Program Delivery


Jagannath Mallela, Ph.D.
WSP | Parsons Brinckerhoff

Jagannath Mallela

Presentation Overview

  • Why use performance requirements?
  • Overview of performance requirements
  • Writing performance requirements
  • Role of Alternative Technical Concepts (ATC)
  • Implementation Considerations

Why Performance Requirements?

P3 Service Delivery

  • Integrated delivery of assets and services
    • Design, construction, finance, operations, maintenance
  • P3 partner is singly responsible
    • Both Design-Build (DB) and O&M contractors work for P3 Partner
  • Better value for money
    • Cost certainty
    • Potential cost minimization
    • Potential for optimizing investment intervals

P3 Service Delivery graph

View larger version of graph

Realizing P3 Opportunities

  • Effective transfer of risks
    • Majority of DB and O&M risks transferred to P3 Partner
      • Asset and operational risks
      • Design-build risks
    • Risk retention with prescriptive requirements
  • Potential for efficiency gains
    • Level of integration - More than sum of its parts
      • Larger contract size & increased coordination
      • Design-build efficiencies
    • Flexibility in making decisions
      • Innovations to maximize asset lifecycle and operational performance (e.g. safety, mobility, community impacts)

Concerns with Prescriptive Design Requirements in P3s

  • Lost opportunities for efficiency gains
    • Fewer opportunities are available when design decisions are already made
    • Limited potential for innovation and optimization due to over-specificity of design details
  • Risks are shifted back to the owner

An Example with Pavement Design

The P3 Developer shall use one of the following pavement types: hot mix asphalt (HMA) or Portland cement concrete (PCC) pavement. The P3 developer shall use pavement designs that meet the following requirements.

HMA Pavement PCC Pavement
Minimum HMA Thickness = 10 inches. Use stone mastic asphalt with PG 76-22 on the top two layers.
Minimum Thickness for Granular Base = 12 inches
The acceptance of HMA shall be in accordance with XYDOT Standards & Specifications
Minimum PCC Thickness = 12 inches
Transverse Joints = 15 feet
The acceptance of PCC shall be in accordance with XYDOT Standards & Specifications

Any proposed changes to the above specified pavement sections requires approval by the Department.

Where is scope for innovation and risk transfer?

Project Influence Curve graph

Adopted from D.D. Gransberg, 2006

View larger version of Project Influence Curve graph

Business Case for Performance Requirements

  • To ensure effective transfer of risks to P3 partner
  • To maximize realization of efficiency gains
    • Remove constraints to innovate
    • Encourage lifecycle perspectives
    • Provide continuity across phases


Submit a question using the chat box

Overview of Performance Requirements

What are Performance Requirements?

Performance Requirements chart

View larger version of Performance Requirements chart

Text of Performance Requirements chart

What are the expectations on how the facility should perform? Performance requirements define what is needed to be done to accomplish the objectives of the project
Stakeholder Expectations » Essential Functions » Performance Requirements » Performance Criteria
Essential Functions define how well the highway facility needs to perform as well as the objectives for a successful delivery of the facility. Performance criteria are measures that demonstrate a specific owner requirement has been met

Hierarchy of Performance Elements

Hierarchy of Performance Elements chart

Adopted from D.D. Gransberg, 2006

View larger version of Hierarchy of Performance Elements chart

Text of Hierarchy of Performance Elements chart

Hierarchy of Performance Elements Example Contract Document
Essential Function → Surface for vehicular traffic → Project Scope
Performance Requirement → Safe, smooth, durable & cost-effective pavement → P3 Agreement Technical Provisions
Performance Criteria → Maintain an IRI of less than 160 inches/mile → P3 Agreement Evaluation Plan
Performance Specification → Construct with an IRI less than 65 inches/ mile with 0.1-mile base length → P3 Partner's Plans & Specifications
Prescriptive Specification → Use 10 in. of PCC with 550 psi flex. strength → P3 Contractor's Shop Drawings

Current Practice: Use of Performance Requirements in  Various Technical Areas

Technical areas where an agency is more likely to be flexible in design requirements

  • Geometric design
  • Work zone management
  • Ancillary assets
  • Drainage/storm water management
  • Landscaping and aesthetics

Technical areas where an agency is more likely to be prescriptive in design details

  • Pavements
  • Bridges - types, structural elements & materials


Submit a question using the chat box

Writing Performance Requirements

Writing Performance Requirements

  • Beginning with project scoping, identify the needs:
    • User and stakeholder needs
    • P3 goals: Project delivery, operational and performance management
  • Prepare a list of functional requirements
    • Must-haves, needs and project constraints
  • Focus on project delivery as well as service delivery
    • Project delivery: Target cost, quality and schedule outcomes
    • Service delivery: Post-construction asset lifecycle and operational performance needs (life-cycle costs and levels of service targets)

Identifying Performance Requirements/ Criteria

criteria chart

View larger version of Performance Criteria flow chart

Text of Performance Criteria flow chart

Requirements →
Essential Functions → Performance Requirements → Performance Criteria → Design Decisions
Performance Requirement → Multiple Technical Solutions ← Performance Criteria
What is needed to meet the essential functions of a P3 project?
  • User and other stakeholder needs
  • Operational goals
  • Performance management goals
  • Project delivery goals
How to achieve to ensure essential functions are met?
  • Lifecycle perspective
  • End-of-Term conditions
  • Who bears the risk?
  • Consequences of cost, schedule, performance
  • Enforcement vs Link to payments

Identifying Performance Requirements/ Criteria: "Improve Mobility" Example

mobility example

View larger version of the Improve Mobility Example flow chart

Text of Improve Mobility Example flow chart

Requirements →
Essential Functions → Performance Requirements → Performance Criteria → Design Decisions
Ask "what is needed?" →   ← Ask "how to achieve?"
Improve Mobility → Reduce Travel Time → Adequate Capacity → Level of Service C or better → Number of Lanes
Design speed > 60 mph → Hor. Curves with x Radius
Free Turning Movements → Eliminate Left Turns → Interchanges and Ramps
Reduce Deceleration → Right Only Lanes

Function Analysis System Technique is suggested

Identifying Performance Requirements/ Criteria: "Reduce Cost" Example

performance example

View larger version of Reduce Cost Example flow chart

Text of Reduce Cost Example flow chart

Requirements →
Essential Functions → Performance Requirements → Performance Criteria → Design Decisions
Ask "what is needed?" →   ← Ask "how to achieve?"
User Requirement Essential Function Performance Requirement Performance Criteria Design Decisions
Reduce Whole Life Cost → Functionally and Structurally Adequate Pavement → Adequate Pavement Structure → Fatigue Cracking less than 10 percent → Pavement Thickness
HMA Compaction
HMA Composition
Quality of HMA Mix
Asphalt Binder Grade
Base Thickness
Quality of Base Materials
Subgrade Strength
Total Rutting Less than 0.5 inches →
Smooth and Safe Riding Surface → IRI less than 120 inches/mile →
HMA Rutting less than 0.25 inches →

Writing Performance Requirements: Some Considerations

  • Optimal risk allocation between contracting parties
  • Whole life perspective
    • Use of performance analysis
  • Need for re-evaluating environmental commitments
  • Enforcement through non-compliance points and disincentives
  • Use of performance specifications to relate construction quality with performance

Performance Specifications

performance specifications

View larger version of Performance Specifications chart

Text of Performance Specifications chart

Prescriptive Performance
Method Specifications End-Result Specifications PRS PBS Postconstruction Performance
  • QA
  • Incentive-Based
    • Time
    • Traffic
    • Quality
  • Warranties
  • Maintenance Agreements

Performance specifications provide the vital link between construction quality characteristics and performance

Source: SHRP2 R07, Scott et al, 2014

Linking Construction Quality to Performance: An Example

construction example

View larger version of flow chart

Text of flow chart

Essential Function
  • Pavement Surface for Vehicular Traffic
→ Performance Requirement for Pavement Surface
  • Safe, Smooth and Durable Riding Surface
→ Performance Criterion for Pavement Rutting
  • Maintain rutting to less than 0.40 inch
Owner's Domain
Performance based designs

Performance Specifications
P3 Partner's Domain  
Design Decisions
  • Select a bitumen grade of PG 70-22
  • Limit air voids to 7 percent and bitumen content to 5 %t

Criteria for Construction Acceptance
  • Bitumen grade PG 70-22 or better
  • Air voids within 7 ± 0.50 %
  • Bitumen content within 5 ± 0.25 %

Implementing Performance Specifications

  • Degree of readiness depends on technical areas:
    • Pavements & work zone management - more mature
    • Bridges & geotechnical - yet to mature
  • Known challenges with performance specifications
    • Understanding factors influencing performance
    • Robustness of performance predictions - Need long-term data
    • Standardization - repeatability and reproducibility
    • Availability of technology and skills


Submit a question using the chat box

Alternative Technical Concepts

Alternative Technical Concepts

ATCs are suggested changes submitted by proposing teams to the contracting agency's supplied basic configurations, project scope, design or construction criteria.

An ATC is a request by a proposer to modify a contract requirement, specifically for that proposer's use in gaining competitive benefit during the bidding or proposal process. An ATC must provide a solution that is equal to or better than the requirements in the Invitation for Bid (IFB)/RFP document.

ATCs to Foster Innovation

  • Contract tool to attract innovative and alternative ideas from bidders
    • Proven & time-tested process
    • Risk transfer to P3 partner
  • Rare need for ATCs when using performance requirements
  • For P3s, ATCs contribute:
    • To evaluate bidders' ideas on case-by-case basis (both control and opportunity)
    • Re-evaluate agency's mandatory requirements and constraints


ATCs - an Intermediate or Alternative Step to Performance Requirements

What qualifies as an ATC?

  • Value: Must generate a cost, schedule or life cycle benefit
  • Deviations with RFP requirements and agency standards (design criteria, specifications, etc.)
    • Design Exceptions vs Design Variances Approval
  • "Cardinal Change" doctrine - Are the changes within the contract scope?
    • Handling permitting and NEPA commitments

Source: NCHRP 44-09

Interpreting "equal or better than" criteria

  • Compare against the baseline concept (3-step process)
  • Similar methodologies
    • Caltrans value analysis methodology
    • Performance-based practical design
  • Other considerations
    • Unintentional NEPA/Permitting commitments
    • Divesting ownership rights

3 step process

Three Step Process for ATC Review & Decision-Making

Text of 3 Step Process graphic

Establish the Intent - Value Assessment - Make Decisions


Submit a question using the chat box

Implementation Considerations

Drafting Performance Requirements

  • Involve interdisciplinary teams in drafting requirements
    • e.g., environmental, maintenance, operations team
  • Link performance standards to proposal evaluation criteria
  • Determine the methodology and frequency of monitoring
  • Consider future changes to service requirements and end-of-term conditions
  • Allow sufficient time for drafting
  • Consider involving independent advisors

Organizational Cultural Change

  • New demands, new skills and new perspectives
    • Understanding performance consequences of design decisions
    • Training needs, particularly on legal issues, dispute resolution, and risk management
    • Audit approach to oversight and quality acceptance
  • Potential role of an independent engineer
    • Sharing the benefits of "duty of care"

Performance-Based Decision Making

  • Need for performance-based decision making
  • Long-term performance data is foundational
    • Performance prediction models
    • Performance specifications
  • Parallel FHWA study to capture performance metrics of P3 and non-P3 cohorts
  • Need for more robust and integrated asset management systems

decision making chart

View larger version of Decision Making flow chart

Text of Decision Making flow chart

Performance Data → User Needs → Functional Requirements → Performance Requirements & Criteria → Design Decisions & Construction Quality → Use of Constructed Facility and Performance Models & Specifications

Best Practices

  • Capacity building and knowledge management
  • Involving multi-disciplinary teams in drafting performance requirements
  • Robust contract administration and support process
    • Re-engaging advisors who drafted performance requirements
    • Reducing propensity to micromanage
    • Hiring third-party consultants/specialists to support the delivery
  • Enforcement mechanisms
    • Detection of early deficiencies
    • Linking performance to payments
  • Robust asset and operational management process
    • Need for performance data
    • Continual update to performance models

Legal Perspectives

  • Spearin Doctrine: Who is responsible for defects in the plan, design, or specifications provided to the contractor?
    • Developed for D-B-B
    • Less certain on contractor-provided designs
    • Basic principles apply - prescriptive requirement, differing site conditions, inaccurate information
  • Prescriptive vs Performance Requirements
    • Focus NOT on words "design" and "performance"
    • Evaluates whether "instructive" or "outcome" based
  • Differing site conditions
    • Provide an opportunity to P3 proposers to conduct their own investigations
    • Shared risks - use risk "allowance"
  • Order of precedence
    • Likelihood of disputes when technical proposal is directly incorporated into P3 agreement
  • "Brand name or equal" clause
    • Will be treated as a performance requirement
    • Should be a reasonable number of vendors


Submit a question using the chat box

Upcoming P3 Webinar

  • February 16    P3 Projects in the U.S.

To register for the webinar, please visit:

FHWA P3 Toolkit:

Fact Sheets
  • Ten concise single-sheet discussions of key P3 concepts for a non-technical audience
  • P3 Concessions for Highway Projects
  • Risk Assessment
  • Value for Money
  • Financial Structuring and Assessment
  • Establishing a P3 Program
  • How FHWA Reviews P3s
  • Model Toll Concession Contracts
  • Model Availability Payment Contracts
  • P3 Project Financing
  • Risk Assessment
  • Value for Money
  • Benefit-Cost Analysis
Discussion Papers
  • Revenue Risk Sharing
  • Performance Requirements for Design and Construction in P3s
Analytical Tools
  • P3-VALUE
Informational Reports
  • Successful Practices for P3s
  • Highway P3 Projects in the U.S

Contact Information

Jagannath Mallela
Director, Research & Innovation Solutions

WSP Parsons Brinckerhoff

Patrick DeCorla-Souza
P3 Program Manager

USDOT Build America Bureau
& FHWA Center for Innovative Finance Support
(202) 366-4076

back to top