The regular use of the P3 Procurement model to deliver new public infrastructure and improve the quality of service delivery is increasing on a global basis. As many hundreds of P3 projects enter the operational phase, it is becoming clear that most are working well and delivering significant benefits for public authorities and service users alike. It is equally clear that the value created by P3 projects is maximised when public-private relations are underpinned by a properly designed contract management framework, which outlines the service outputs that the authority requires, the P3 performance reporting methods, and the regime under which the payment due to the private partner is determined. The key to successful partnering is to ensure that the legal requirements of the contract are translated into a performance management system which is clear and operationally relevant to all users.
The performance measuring system (PMS) allows public authorities to measure and monitor performance and/or quality of service delivered by the private partner against the standards set out in the output specification. P3 performance reporting deals with what is being measured (in terms of the authority’s requirements) and how it is to be measured. Normally, the object of measurement is a matrix of key performance indicators (KPIs), which are oriented around results rather than processes. The method of measurement is usually based on weighting, where each element of the service delivered is given a weighting based on the level of salience for the authority. Three main approaches to measuring performance are evident:
• the performance scoring system, in which the performance score is derived by grouping services into ‘bundled services’ and weighted in proportion of the total services based on their salience for the public authority;
• the fixed deductions method, which is normally used for specific incidents (such as a power cut in an operating theatre of a hospital) where failures are of fundamental significance for the client and the services it is responsible for; and
• the penalty points method, in which penalty points are agreed for each incident, reflecting the requirements of the authority, with the total points accumulated compared periodically to an agreed baseline to determine payment deduction.
The contract management challenges posed by P3 projects can be addressed when specifications and processes are clear and understood from the outset. From the public sector perspective, this process provides the necessary reassurance that they will be able to monitor and obtain information from the performance management software via P3 performance reporting, once the contract is operational. By taking this approach, a partnership relationship is fostered and developed at an early stage, and a relationship based on trust can be formed.
Once “go live” has been reached and the contract is in its operational phase, the performance management software will be utilised to provide P3 performance reporting including trend analysis of availability, performance, quality and service failures. Due to the auditing requirements of P3 contracts, performance management software is required to deliver consistent, auditable and transparent management of data, ensuring that any issues are dealt with quickly and encouraging close and trusting relationships between the partners.
The performance of the service provider must be monitored on a real-time basis and in a transparent manner through the use of remote monitoring and running of P3 performance reporting. It is also essential that the system is able to be audited quickly and easily and that the integrity of the data is maintained at all times. This level of operational capability is simply not achieved by generic spreadsheet software.
Guest Post by Hollie Gibson