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Performance management is essential for effective service delivery

11 July 2012

Most PPP contracts use a payment mechanism to incentivise the FM contractor. To guide clients and providers through the complexities, leading facilities management software company, Service Works Group, has published a White Paper outlining how to manage performance effectively through payment mechanisms.

Public Private Partnerships (PPPs) / Private Finance Initiatives (PFIs) are being used around the world to procure new public infrastructure and services. Most of these contracts (as well as some more conventional outsourcing arrangements) use a payment mechanism, to incentivise the FM contractor to provide the services to the required standard or incur financial deductions.

Because of the nature of PPP / PFI contracts, payment mechanisms are a complex but important part of the facilities management scene. The value of PPP / PFI projects is maximised when public-private relationships are underpinned by a properly-designed contract management framework, which outlines the service level that the client requires, the methods for measuring and monitoring performance and the regime under which the payment due to the private partner is determined.

To guide both clients and providers through the complexities, leading international facilities management software company, Service Works Group, has published a White Paper outlining how to manage performance effectively through payment mechanisms.

With expertise gained from the management of over 160 PPP / PFI contracts globally, Service Works’ White Paper addresses some key considerations that should be addressed when designing a payment mechanism for effective service delivery:

  •  How demanding should the contractual definitions of availability and service performance standards be?
  • How quickly, in terms of response and rectification periods, do problems have to be solved?
  • What scope should the private partner have to provide alternative services/ locations instead of having deductions applied, in order to give them greater flexibility to avoid deductions, or for allowing ‘unavailable’ facilities to be used?
  • What are the appropriate levels of deductions for unavailability or poor performance?
  • What are the appropriate mechanisms for repeated or widespread failures?
  • At what level should performance deductions be capped?

When payment mechanisms are effectively calibrated, and service delivery is monitored and measured using integrated performance management software, PPP / PFI contracts can deliver long term value for all stakeholders. The aim is to build and strengthen the operational partnership, giving an audit trail for compliance purposes while helping to manage a service provider’s risks by providing measurable cost savings, improvements in time control and higher productivity.


For a complimentary copy of the PPP Performance Management through Payment Mechanisms white paper, please email info@swg.com  providing your full contact details.

About Service Works:
Service Works Group is the provider of P3rform, the world’s leading PPP / PFI performance technology solution. The company has extensive experience providing performance management and payment mechanism solutions to PPP / PFI contracts in the UK, Canada and Australia. For example, consortium partner Spotless chose the company’s payment mechanism software for the New Royal Adelaide Hospital project, Australia's largest health public private partnership and also its most technologically advanced.

Visit www.swg.com  or call +44 (0)20 8877 4080.


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