One of the key differences between traditional Infrastructure procurement practices and the public private partnership process is the use of an identifiable and measurable output specification. The output specification details the service requirements of government and seeks to improve the procurement and management of public infrastructure by focussing on the relevance, effectiveness and efficiency of a service provided, rather than its means of delivery.
Output specifications should describe the level and quality of the service sought by the procuring agency. Evaluation of competing project delivery options involves a like-for-like comparison of those options against the specified service requirements. It follows that specifications should be sufficiently flexible to permit the emergence of competing project delivery options, but also sufficiently detailed to ensure that all such alternatives deliver a common minimum standard of service.
The procuring agency should be indifferent (subject to public interest considerations) as to how a particular service requirement is met, provided that the required service standard is achieved in a timely and cost-effective manner (having regard to risks being assumed). This focus on output rather than input provides the greatest scope for private sector innovation in delivery of the service.
The output specification should include unambiguous, measurable performance requirements and should clearly identify the relative importance of each.
Public expectation of improvements in levels of service over time requires careful consideration when developing the output specification. Agencies should avoid restricting service standards in project agreements to the agency's existing standards of service, unless such standards are expected to continue to satisfy public expectations over the life of the partnership.
In practice, developing the output specification is a particularly challenging task that requires a significant change in approach from traditional procurement practices. It is likely that, in developing output specifications, the government project team may require assistance from external advisers.
Output specifications will differ between agencies and between projects within an agency. As such, inclusions for the output specification may include, but are not limited to, the following:
∙ site location
∙ extent and quality of service required
∙ latest date for commencement of service
∙ project life (not to be confused with asset life)
∙ transitional arrangements (usually only applicable for brownfield sites)
∙ state, federal and local government policy positions
∙ agreed positions in relation to local communities, suppliers, employment, and other third parties
∙ performance measurement and reporting requirements
∙ variation mechanisms
∙ condition of project infrastructure at end of project life
∙ upgrade or expansion requirements during the project.
Poorly developed and articulated output specifications may result in sub-optimal procurement outcomes.