Performance Requirements
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The PPP contract should clearly specify what is expected from the private party in terms of the quality and quantity of the assets and services to be provided. For example, this could include defining required maintenance standards for a road, or defining the required service quality and connection expansion targets for utility services provided directly to users. Performance indicators and targets are typically specified in an annex to the main PPP agreement. A key feature of a PPP is that performance is specified in terms of required outputs (such as road surface quality), rather than inputs (such as road surfacing materials and design) wherever possible. This enables the private PPP company to be innovative in responding to requirements as described in Farquharson et al (Farquharson et al. 2011, 34). For more guidance and examples on the differences between output and input specification, see Hong Kong's guidance on managing outsourcing contracts (HK 2007, 32–33), and Guidance on output specifications from the United Kingdom's Ministry of Defence (UK 2010a), which also sets out a process for developing the specification for a PPP project. Specifying outputs rather than inputs also keeps competition as open as possible and reduces the opportunities for corrupt practices. The World Bank's sourcebook on governance in the electricity sector describes a power sector procurement, in which a particular technology was specified in the RFP, with the intent of limiting competition and facilitating corruption. The PPP contract should set out the following: The following resources provide more guidance and examples on these three elements of setting performance requirements:
Find in pdf at PPP Reference Guide - PPP Cycle or visit the PPP Online Reference Guide section to find out more.
Updated: June 24, 2022
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