Alberta Highway Maintenance Model Attracts US Interest
Two decades of success by Alberta private contractors in maintaining provincial highways is attracting attention south of the border.
Recently, two ARHCA representatives were invited to give a presentation about Alberta’s delivery model for highway maintenance to the 2017 Tri-State Meeting of the American General Contractors Associations. The group now includes four states: Wyoming, Montana, Utah and Idaho.
Interest in out-sourcing has grown among the US group’s members since Montana began looking at the option.
The presentation by Moh Lali, ARHCA Consultant for Industry Issues, and Fred Desjarlais, Vice President of Volker Stevin Canada, attracted such strong interest that that the session was extended to two hours to answer all the questions from American contractors.
The ARHCA team described how Alberta Transportation made the switch to private contractors in 1996 after researching best practices in BC, the United Kingdom, Australia and New Zealand.
Twenty-one years later, Alberta contractors are responsible for 32,500 km of primary and secondary highways under a system that has evolved through four rounds of tendering.
A major benefit for Alberta’s provincial government has been lower costs for taxpayers. A study by KPMG showed costs fell 17% after the second round of tenders – from $7,445 per km to $6,150. Since 2003, the current contract costs are still decreasing and are about the same as they were in 2003. When inflation is taken into account during that period, there are further significant savings.
Contractors have also seen positive results. Companies have been able to diversify operations, achieve better utilization rates for staff and equipment, and stabilize revenue sources.
Challenges outlined in the presentation included price pressures because of highly competitive bidding, difficulties retaining staff when the economy is strong, and capital costs of up to $20 million per contract area for equipment and facilities.
Looking ahead to future contracts, the ARHCA speakers described goals that include more performance-based specifications to increase flexibility and encourage innovation, as well as ideas to reduce capital cost requirements for contractors and provide for greater stakeholder engagement and feedback.
In addition to sharing Alberta’s experiences, the ARHCA representatives had the opportunity to learn more about what’s new with our US neighbours. Here are some highlights:
Please contact Moh Lali for a copy of the presentation or with questions about Alberta’s highway maintenance program.