Michigan driven to maximize warranties on the road
Sunday, December 22, 2013
LANSING — As motorists complain about the frequency with which certain state highways need repairs, the Michigan Department of Transportation is trying to make greater use of warranties under which contractors can more easily be held responsible if their work doesn’t hold up.
The department awarded 145 road jobs with warranties this year, up from 135 such jobs a year earlier and 130 in 2011, according to reports filed with the state Legislature.
The warranties typically cover materials and workmanship for two to five years. Some bridge-painting projects also come with warranties. The contractor is not held responsible for design-related problems, since design is a responsibility of the department.
Public Act 79 of 1997 requires the department to secure warranties of not less than five years for state road projects, where possible.
Since 2000, MDOT has administered 3,175 warranty projects, about 13% of which have required corrective action, the department says.
M-6, a 20-mile freeway connecting I-96 east of Grand Rapids in Kent County with I-196 near Hudsonville in Ottawa County, opened in 2004 and was constructed under warranty, department spokesman Jeff Cranson said.
The road required crack sealing in 2004 and 2006 and a short section of milling and resurfacing in 2006 — all was covered by the warranty at an estimated cost of $205,000, he said.
The road-building industry has warmed to the use of warranties, said Mike Nystrom, executive vice president of the Michigan Infrastructure & Transportation Association.
“It ensures that quality is built into the projects; that even the labor force is encouraged out on the job site to make sure everything is being built per the owner’s specifications,” Nystrom said.
Still, “a contractor can only offer up a warranty on that which they can control,” he said.
Disputes over warranties are resolved by a “conflict resolution team” composed of two people chosen by the department, two chosen by the contractor, and one person mutually selected by the department and the contractor.
Cranson said there are pros and cons of using warranties.
Warranties help draw contractors’ attention to quality during construction and protect taxpayer dollars “by eliminating the true lemons and premature failures,” Cranson said. They also allow the department to better address public concerns about the quality of work performed and help foster innovation through new materials and processes, he said.
On the downside, there is a cost for the department associated with administering warranties. The cost of the warranty bonds the contractors are required to purchase — typically about $10,000 each — is likely also passed on to the department, he said.
There is also likely a cost associated with shifting risk from the department to the contractor, but that’s difficult to calculate, he said.
“Warranties, at times, can be difficult to enforce,” Cranson said. “But I think the numbers showing the amount of completed corrective action show that the department has been doing its due diligence.”