Setting out challenging but achievable and measurable performance requirements and service levels is key in ensuring that infrastructure PPP projects achieve value for money.
According to the G20’s think tank on infrastructure, a PPP contract should clearly outline what is expected in a given project up to and including required operations and maintenance standards.
Unfortunately, performance management has often been overlooked thus watering down the value for money requirement in most infrastructure PPP projects implemented in Africa.
Well-designed and structured Public-Private Partnership (PPP) contracts have been used across the globe to better provide public assets and services. On the contrary, Professor Jean Shaoul is of the view that PPP is an enormous financial disaster and recommends that no rational government with the interest of citizens at heart should follow the direction of PPP.
Could effective performance management in PPPs turn the tides and reassure stakeholders to continue pursuing PPPs as a model to procure and finance infrastructure?
Performance requirements comprise technical and output specifications that a private party in a PPP arrangement is required to achieve. They represent quality standards that the private party has to meet so as to be paid or to be granted a right to charge a fee in government-pays and user-pays PPPs respectively.
Setting out challenging but achievable and measurable performance requirements and service levels is key in ensuring that infrastructure PPP projects achieve value for money.
With a clear vision of what the project needs to achieve during the tenure of the PPP contract, procuring authorities need to build very clear key performance indicators (KPIs) during the preparation phase of the project.
They should identify the growing needs of the society and ensure the performance regime is efficient in monitoring performance all through the tenure of the PPP contract. Thorough performance management framework will detail how the performance of the private party will be monitored and measured, how the private party will be paid, when deductions will be made and where necessary how bonuses will be paid to the private party.
According to the Global Infrastructure Hub, quality output specifications should be dynamic to reflect efficiency, be in line with codes and standards, and reflect business success, users’ satisfaction, product requirement and future potential of the project’s performance requirements.
According to the G20’s think tank on infrastructure, a PPP contract should clearly outline what is expected in a given project up to and including required operations and maintenance standards, required service quality, and expansion targets.
Procuring authorities should build well-crafted performance requirements templates that allows the private sector to generate value for money solutions through effective management, team structure and financing innovations while at the same time providing for certainty that the procured solution aligns with project’s vision.
Components of output specifications should cover functional requirements, management requirements, design and construction requirements, maintenance, lifecycle, operations and hand back requirements.
As Africa plans to invest heavily in infrastructure as part of the “Build Back Better World” strategy to recover from the adverse impacts of the Covid-19 pandemic, there should be a clear understanding that the future of PPP will remain a function of quality performance requirements.
Unfortunately, performance management has often been overlooked thus watering down the value for money requirement in most infrastructure PPP projects implemented in Africa. In bettering our societies through PPP therefore, we must always get it right from the very first beginning by ensuring that the right performance requirements are embedded in PPP contracts.
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