Incorporating Climate Risk in PBC Contracting Recommendations Task 5 Report

Climate change has negative implications for infrastructure and transportation investments, especially within performance-based contracting (PBC) and Output and Performance – based Roadway Contracts (OPRC) due to their performance requirements. In order to effectively protect these important investments in World Bank client countries, it is necessary to accurately predict and value climate impacts. then integrate adaptation measures that will reduce collective risk into the contracting terms.

PBC projects face a number of pressing climate related issues based on the status quo contracting arrangements and terms which assume a static climate.

1. Climate change presents serious challenges to operations and maintenance and long-term viability of roadway assets
2. Climate risk is difficult to identify, quantify and predict since historic data does not reliably represent future climate
3. By not sufficiently accounting for climate change, the economic and social benefits of projects are not fully realized

Managing these uncertainties is key to development successful, resilient roadways through the PBC model. Further understanding these critical points allows for reallocation of risk to the stakeholder parties best suited for handling the impacts.