This paper describes how the concept of warranties involves an increased shift of the burden of construction quality control, product performance and maintenance from the owner to the contractor. The expected benefits of warranty projects such as enhanced product quality and service life could be offset by their higher construction costs. Using data from a state highway agency, this paper evaluates the costs and benefits of pavement projects undertaken through warranty and traditional contracts in order to identify the more cost-effective practice. Effectiveness was measured in terms of average pavement condition and service life. On the basis of inflation-adjusted costs and other data, it was determined that warranty contracts generally have higher agency cost but lower user cost and superior pavements compared to their traditional counterparts. Also, over a relatively short analysis period of five years, the warranty contracts are 27-30% less cost-effective than their traditional counterparts. However, in the long term, the warranty projects were found to be 70-90% more cost-effective on the basis of service life, and 58-65% more cost-effective on the basis of both service life and pavement condition. The study results suggest that the higher cost-effectiveness of warranty over traditional projects is more discernible when both cost and effectiveness are viewed over the entire treatment life rather than only a part thereof, and when both agency and user cost are used in the analysis. The paper identifies certain areas of the study methodology that could lead to bias in the conclusions and advocates for caution in selecting warranty/traditional contract comparison pairs.
Samenvatting