Maintaining Roads : The Argentine Experience with Output-Based Contracts

The Argentine government is using
output-based contracts with the private sector for
rehabilitation and maintenance of its nonconcessioned road
network. The multiyear lump sum contracts, funded by the
government, specify required road service outputs and use
incentive-based payment schedules to ensure the quality of
the work. After three years of operation the 60 contracts
(averaging US$10 million) in the first phase are working
well. By 2002 around 75 percent of Argentina's
nonconcessional roads should be operating under output-based contracts.