The new application of Performance Based Contract to dredging (also known as “draft-guarantee” contract) transfers to the contractor all sedimentation risks over long periods of time and pays for all his services via monthly fixed amounts. The method is so successful that in some cases the PBC has lead to novel financing via a toll of the waterway (converting to a concession contract).
Up to now, most dredging by port and waterway authorities has been paid through, (1) surveyed volumes and fixed price or, (2) a charter contract paid directly by the agency. These methods are known to harbor the risk of disputes, primarily arising from the contract documents when encountering adverse site conditions. PBCs eliminate most of those risks, and are especially advantageous to both the Owner and Contractor when: (1) there is a stable level of policy, (2) where sedimentation can be evaluated within reasonable assumptions of risk, (3) where all other risks are covered with reasonable contractual limits (for example, extreme weather conditions), and (4) there is a sufficient large volume to be dredged that allows for competitive bidding.
This paper discusses four successful applications of the PBC in Argentina and The Netherlands involving over 20 years of continuous dredging. Additional data is presented on the technical and quality aspects that are most significant to the PBC to preserve the quality and successfully complete the projects without claims and disputes.
Keywords: Performance Based Contract, adverse site conditions, site investigation, dredging.