Payment mechanisms for winter road maintenance services

Abstract

In countries with severe winters a major part of the annual budget for road maintenance is allocated on performance of winter road maintenance tasks. Finding appropriate remuneration forms to compensate entrepreneurs for performed road measures during winter is not an easy task in order to minimise or eliminate disputes and satisfy both client organisations and contractors. On the other hand improper reimbursement models lead either to the client’s annual budget imbalance due to unnecessary cost overruns or affect contractor’s cash-flow. Such cases in turn affect just-in-time winter road maintenance and then traffic safety. To solve such problems, a number of countries in cold regions like Sweden have developed different remuneration models based more on weather data called Weather Index. Therefore the objective of this paper is to investigate and evaluate the payment models applied in Sweden. The study uses a number of approaches namely; domestic questionnaire survey, analysis of a number of contract documents, a series of meetings with the project managers and an international benchmarking. The study recognised four remuneration models for winter maintenance service of which one based on weather data statistics. The study reveals the payment model based on weather data statistics is only applied for the roads with higher traffic flow and the model generates most uncertainty.