Public Act 79 of 1997 requires MDOT to use full replacement cost warranties of not less than five years on construction projects when appropriate. More recent appropriation acts have required MDOT to work with the construction industry to develop “performance warranties” whereby the contractor’s responsibility is limited to those aspects of the work that they had design control over. Michigan joins some 11 other states with warranty requirements of some type. However, a recent state audit found that between 2002 and 2005 only about one-third of projects, worth about $1 billion, included warranties.
Warranties, along with designs that are based on higher performance specifications, are a key tool for making sure Michigan taxpayers get their money’s worth on projects. As such, it is critical that MDOT develop specifications that assure a longer road life, and that they have appropriate monitoring of work, and follow-up, to assure that repairs are completed under any warranties. However a broader issue has to do with the type of warranties that are used, and the 1998 Transportation Study Committee recommended legislation permitting and encouraging design and build warranties, but not imposing restrictions that impeded experimentation. It is difficult for contractors to warrant the full costs of replacement for work they did not design, or for which they were not responsible for material specifications. As such, MDOT should consider using more “design, build, warrant” projects where it establishes the desired road life performance levels at a higher level, and the contractor is responsible for at least the design dimensions that impact the roads life and condition, does all construction for the project, and then is responsible for warranty costs of keeping the road in the required condition.