Performance-based contracts: Promoting quality road maintenance and economic efficiency

Traditional road construction contracts have been in use for many decades despite a significant drawback: they are based on the amount of work executed, which can create the wrong incentive for some contractors to maximize profits by inflating the volume of work. Furthermore, construction contracts don’t take long-term maintenance into account, which can result in subpar road conditions and a lack of accountability. This approach can lead to inefficiencies, higher costs, and a misalignment of incentives between governments and contractors. The bottom line is road users end up paying more.

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