Performance monitoring is a key aspect of the Procuring Authority’s role in managing the PPP contract. The principal objective of performance monitoring is to ensure that the Procuring Authority is receiving the service the Project Company has agreed to deliver, and to confirm the risk allocation on an ongoing basis as agreed in the PPP contract.
A key benefit of the PPP model is that significant risk is transferred to the Project Company because it is well-placed to, manage that risk more efficiently. The Project Company is typically responsible for both construction and operation of the project assets, and is best placed to engage and manage its contractors and the involvement of other stakeholders. The priority of the Procuring Authority is therefore to ensure that the performance monitoring mechanisms set out in the PPP contract are properly followed, and that risk as allocated in the contract remains with the Project Company. The resources required from the Procuring Authority should not be underestimated.
This section provides a background to performance monitoring in Subsection 3.2.1 (Background) and provides guidance on managing the performance of the Project Company. The key elements to successfully managing performance are summarised below and detailed in Subsection 3.2.2 (Guidance):