Another pressing problem appears to be with the payment mechanism. Around half of respondents agreed, either strongly (14%) or to some extent (36%) that the payment mechanism supported the effective management of the contract and yet 25% of respondents found it fairly difficult to use and 5% very difficult. 90% of payment mechanisms did not provide incentives to over-perform on the service levels specified in the contract. It is recognised that it is standard policy not to have incentives for over-performance as the public sector should set out what it needs and buy that. Clearly, as PFI develops we would hope that an incentive structure to reward over-performance (where it is agreed to be of value) should be built into the contracts.
There is more encouraging news with the dispute mechanism. Our survey results show this offers a good indication of the health of a contractual relationship and in 80% of cases it has not been used at all. Of these, 64% report a very good relationship and 67% a very good overall performance. 15% of contracts have used the mechanism between one and three times. It seems that where the dispute mechanism is resorted to regularly it has an adverse effect on relationships.