(1) Notwithstanding section 1h, the department may conduct pavement demonstration projects to evaluate new construction methods, materials, or designs that do not have actual Michigan historical project maintenance, repair, or resurfacing schedules or costs recorded by the pavement management system. The department may conduct a pavement demonstration project that may be all or a portion of that project using either concrete or asphalt as determined by the department. Each demonstration project shall include measurable goals and objectives for determining the success of that project. The department shall measure the interim success of each demonstration project each year and make a final report for each demonstration project following the demonstration life of the project, which may be shorter than the actual pavement life of the material used for the project, that assesses the cost-effectiveness and performance of the pavement materials and design used in the project and compares the results to the pavement material identified under the department's standard pavement selection process.

    (2) A demonstration project shall not be conducted without the approval of the department. If a proposed demonstration project is rejected, the department shall provide an explanation of the reason for the rejection to the person that proposed the demonstration project. Demonstration projects shall be selected using any of the following criteria:

    (a) Pavement designs intended to increase pavement life expectancy in a manner that will result in lowered life-cycle costs.

    (b) Pavement designs intended to improve performance, including, but not limited to, friction, surface stress, reduction of noise, and improvement of ride quality.

    (c) Comparisons of performance of various types of pavement.

    (3) If the difference between the total cost of contracts awarded for demonstration projects under this section using asphalt and concrete in any contiguous 3-year period is more than, or is anticipated to be more than, 25%, the department shall submit a detailed letter of explanation to the chairs of the senate and house of representatives transportation committees, the senate majority leader, and the speaker of the house of representatives explaining why there is a difference and recommendations on how the department will reduce the difference to below 25% over the next 3 years. As used in this subsection, "total costs" means the initial engineer's estimated costs of the pavement design portion of the project. Nothing in this subsection requires that any individual demonstration project be duplicated with both asphalt and concrete.

    (4) The director shall provide an annual report, not later than July 1 of each year, to the senate and house of representatives transportation standing committees and the senate and house of representatives appropriations subcommittees on transportation regarding the status of each demonstration project.

    (5) A lack of Michigan actual historic project maintenance, repair, and resurfacing schedules and costs as recorded by the pavement management system does not preclude the department from conducting a pavement demonstration project under this section.

    (6) The department shall strive to reduce the equivalent uniform annual cost of demonstration projects described in this section by 5% over the 10-year period following the effective date of the amendatory act that added this subsection.