PART 1 Introduction Of

• Privatization Level • Maintenance Activities • Maintenance Costs

Pekka Pakkala Linkoping, Sweden April 15-16, 2002 NRA/BRA Presentation Source: Pekka Pakkala - Finnra

Client Role Changes

Drivers For Change: · Need To Outsource All Capital & Maintenance Projects · Need To Outsource Other Client Services (PMS & Others) · Fully Integrated Client Services & Cost Savings · Develop Project Partnering · Cultural Change & TRUST Between Client & Contractors · Developing Outcome Based Criteria (Performance Specs) · Changing to (Changing Skills) · Seeking Innovation & Better Asset Management · Aging Organization & Attracting New/Young Professionals · Hope => Young Professionals in IT Area · Risk Allocation - Which Ones to Transfer · Contractors Will be Responsible for Development & Innovation · Road User Satisfaction

Pekka Pakkala Linkoping, Sweden April 15-16, 2002 NRA/BRA Presentation Source: Pekka Pakkala - Finnra

1 Finnish Road Administration - 1 January 2001

n The Finnish Road Administration is a state agency operating in the administrative sector of the Ministry of Transport and Communications.

n The Road Administration is responsible for public road management. Its task is to administer, maintain and develop public roads, traffic conditions and road transport services in Finland as a part of the entire transport system.

n It is the duty of the Road Administration to promote well-balanced regional development through road management actions. Along with the main network, also the lower-standard roads must be kept in service and in proper condition.

n The Road Administration must contribute to research and development and other expert tasks within the road transport system.

n The Road Administration acquires services and products associated with road management from parties outside the agency.

Pekka Pakkala Linkoping, Sweden April 15-16, 2002 NRA/BRA Presentation Source: Pekka Pakkala - Finnra

FINNRA Today

Finnish Road Administration (FINNRA) is in charge of public roads, whose capital value is about 15 billion €.

Public roads on 1 Jan. 2001 78,000 km * Paved roads, 64% 50,300 km ** Main roads 13,300 km *** Motorways 549 km * Pedestrian- and bicycle ways 4,300 km * Roads with lightning 10,700 km * Bridges 13,800

Public roads carry 65 % of all road traffic in Finland.

At the end of 2000 the number of permanent personnel at FINNRA was 1 060.

The allocation for public road management is about 770 million € in 2001.

Pekka Pakkala Linkoping, Sweden April 15-16, 2002 NRA/BRA Presentation Source: Pekka Pakkala - Finnra

2 Phases in Road Organization’s Reform

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6 Phase 7

Identify Separate Privatize Client Client Corporatize Client Client Client Client Agency & and and Production Producer Producer Corporatize Privatize (Deliverer) Producer Producer

Road Fund

Decreasing Government Involvement

Pekka Pakkala Linkoping, Sweden April 15-16, 2002 NRA/BRA Presentation Source: World Bank, TNZ & Finnra

THE CLIENT-PRODUCER CONCEPT at the Beginning of 2001

FINNRA Producer Head- Head- quarters quarters

Regional Agencies Contract

* Road policy, strategies Agreements Maint- Const- Service enance ruction Enterprises * Safety, Road programs * Procurement of design * Carries out business activity, construction and main- * Business planning * Design, construction and tenance works maintenance works * Client services. * Responsible for profitability

Pekka Pakkala Linkoping, Sweden April 15-16, 2002 NRA/BRA Presentation Source: Markku Teppo - Finnra

3 PAYMENT METHOD IN THE CONTRACTS

Hybrid System • 75-80 % on lump sum basis • Winter maintenance as a whole • Gravel road routine maintenance • Pothole patching • Cleaning & Sweeping • Roadside vegetation control • Drainage & Culverts • 20-25 % on schedule of rates basis • Renewal of road signs • Guard rail replacement • Larger road surface repairs • Drainage repair • Renewal of gravel road surface • Repair of gravel road frost thawing sections

Pekka Pakkala Linkoping, Sweden April 15-16, 2002 NRA/BRA Presentation Source: Markku Teppo - Finnra

MAINTENANCE EXPENSES

MAINTENANCE COSTS BY SECTOR

DRAINAGE GRAVEL UPKEEP ROADS 7 % 17 %

CLEANING WINTER MAIN & CRACK 52 % REPAIR 8 % VEGETATION & TRASH 16 %

Pekka Pakkala Linkoping, Sweden April 15-16, 2002 NRA/BRA Presentation Source: Pekka Pakkala - Finnra

4 REGIONAL MAINTENANCE CONTRACTS Opening the Competition in 2001-2004

Ivalo

Kittilä Term of Contract Sodankylä Pello 2001-2004 Rovaniemi Kemijärvi Ke mi Ran Posio Kuu- poh ua sam j. Kemi et. o 2002-2005 Taival Ii -koski Pudasjärvi Piispajärvi

Oulu 2003-2006 Puolanka Suomussalmi Pulkkila Kajaani Kuhmo 2004-2007 Kokkola Iisalm Pietarsaa Pyhäjärvi Kiuru - i vesi Nurmes Oravainenri Veteli Nilsiä Lapua Pihti- Pielave Juuk pudas si a Vaasa Alajärvi Kuopi Sein Kars- Suonen o JoeIlomantsi ä- Alavus Viinijärvi tula - joki n- Kristiinan- Koskenjoki- Suolahti Leppä kaupunki suu Kauhakorva- Jyväskyl -virta Keuruu Kit joki Virrat Savon- ä länt Pieksä ee Kan- Park -mäki Jä Juva linna kaan- JkyläJkylä itit a-no m- Mer pää Orivesi Mikkeli i- sä Heino karv Har Kangas- Pada la iaPori Tampere Mäntyharju -ja- ala s- Imatra Huittinen Hämeen- Savitaipale valt joki Laitila Pöytyäa Forssa linna Kouvola Riihimä Lahti Lappeenran ki Ra ta i- Somero Num- MäntsäläLo Lieto Hyvinkää - Kotka si mi Por- vii o Es voo Paimio Salo Kar - Va sa - po n- Tam jaa o taa -mi- saar i

Pekka Pakkala Linkoping, Sweden April 15-16, 2002 NRA/BRA Presentation Source: Finnra

5 Routine Maintenance in Latvia

Aldis Lacis Road Maintenance Division, Latvian Road Administration

6/5/02 Aldis Lacis 1

State Road Management in 1990

Ministry of Transportation

State Company “Latvijas autoceli” (Latvian Roads)

26 State Companies Regional Road 11 State Road Several small Administration Construction State Construction (Road Maintenance Companies Companies Enterprises)

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1 Stage 1 of State Road Service Reorganization (1991 – 1993) Ministry of Transportation Road Transport Department

Latvian Road Administration

Road MaintenanceSt Enterprises RegionalRegional Road Road Administration State Road Service Administration Contract

Contractors

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Stage 2 of State Road Service Reorganization (1994 – 1995) Ministry of Transportation Road Transport Department

Latvian Road Administration Road Regional Road Road Maintenance Enterprises State Service Administration Contract

Contractors

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2 Stage 3 of State Road Service Reorganization (1996 –2002) Ministry of Transportation Road Transport Department Contract Latvian Road Administration

District units of Latvian

State Road Service Road Administration State Joint stock Company Contract

Contractors 4 Road Maintenance JSC

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Asphalt pavement condition (Inspection Year 2001)

1600 1400 1200 1000 800 Good Km 600 Fair 400 Bad 200 0 Main 1th class 2nd class Road functional class

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3 Pothole patching on the state roads

6

5 5,03 4 4 3,92 3,86 3,81 3,76 3 3,03 3,05 3,02 2,95

2

1

0 1998 1999 2000 2001 Forecast 2002

Patched area (100 000 sq.m) Expenditures (million USD)

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Structure of routine maintenance works year 2001 Shoulders, drainagies Road and supervision Winter vegetation 3% 48% 10%

Road safety Bridges and Pavements equipment coulverts 32% 5% 2%

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4 Patching technologies 1998

With paver With asphalt 12% With cold concreate winter mix throw and roll 5% 40% Witth asphalt concreat cutting edges 8%

With bitumen emulsion and crushing stones 35%

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Patching technologies 2001

With cold winter mix With asphalt With paver 2% concreate 5% Witth asphalt throw and roll concreat 12% cutting edges 2%

With bitumen emulsion and crushing stones 79%

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5 Revenues for the State Road Network, million EUR

129 Establisment of the SRF EC Funds 112 Loans 87.7 89.3 83.3 84.2 State Road 52.8 Fund 47.3 State 24.2 consolidated 14.3 budget 11 9

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

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Financing of road works

100,0 90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 expenditure million USD 10,0 0,0 93 94 95 96 97 98 99 00 01 Expenditures for routine maintenance per year Expenditures for periodic maintenance per year Expenditures for reconstruction per year Estimated routine maintenance per year Estimated periodic maintenance per year Estimates reconstruction per year

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6 Finances Needed to Eliminate Repair Backlog – 519 Million USD

Gravel Asphalt pavements pavements

148 214

123 34

Bridges Traffic safety

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Latvian Road Administration

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7 Performance based contracting for road marking. u Public wants to drive safe u Objective - road markings in accordance with standard always and everywhere

2000 km of state main roads...

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Works contracting u Works specification based contract

ð Best specification ð Best contractor ð Best price ð Best time

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8 ð Almost good result

? is it according to specification ? shall it perform ? is it contractor’s fault ? ...

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u Product performance based contract

ð Product performance requirements ð Clear contract conditions ð Reliable contractor ð Good price ð Any time

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9 Almost good process

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Lessons of year 1 u Quality of road surface shall be respected u Quality related payment terms shall apply

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10 The End ...

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