Performance management involves:

•  performance monitoring-collecting data on performance;

•  performance assessment-deciding whether performance meets the entity's needs; and

•  taking appropriate action-such as understanding and extending features of good performance, correcting areas of underperformance, or amending the contract requirements to meet changing needs.

Performance management must be undertaken throughout the life of the contract and for all contracts, whether they are straightforward or complex. Along with performance indicators and standards, arrangements for monitoring and assessment should have been set out and agreed in the contract and contract management plan, along with action that would result from underperformance.101

Clear links should have been established in the contract between payments for performance and the effect of non-compliance or underperformance on those payments, and the intent to invoke penalties contained in the contract if necessary.

The performance monitoring and assessment arrangements should also have been reviewed at the contract start-up stage and any necessary plans, tools or systems developed.

Systematic monitoring underpins performance assessment and they do not occur in isolation from one another. In practice, performance will be assessed and feedback and reports provided throughout the monitoring process.

Performance management must be undertaken throughout the life of the contract and for all contracts, whether they are straightforward or complex.