Performance Measures

Unquestionably, performance measures or key performance indicators (KPIs) are central to the most recent PPP projects observed in the nations the scan team visited. Each country uses KPIs to generate the outcomes it desires for its PPP projects, and they are the basis for incentives and penalties-primarily during a project's operations phase. In most cases, KPIs are used to define target performance levels, and KPI schedules specify formulas for calculating metrics or points that serve to determine whether these targets are being met.

For instance, Spain has used KPIs to manage safety, heavy vehicles, congestion, winter weather conditions, and toll collection times, as well as other elements. Table 7 provides examples of the metrics used. In some cases if the PPP contractor maintains or exceeds the level of performance specified for the majority of the contract term, the contract period is extended by a predetermined number of years. In this case, the incentive is back-loaded.

The United Kingdom has tied its KPIs for the M25 Motorway to its payment mechanism to the PPP contractor. The payment mechanism is comprised of the following potential adjustments:

Table 7. Examples of KPIs in Spain.

KPI Area	Measurement
Safety	A = N108 / L365*AADT Where: A = accident rate N = number of accidents with victims L = length of highway under management (km) AADT = average annual daily traffic The accident rate is compared with the previous year's rate; an increase results in a penalty, while a decrease results in a bonus of up to 5% of the annual service payment.
Heavy Vehicles	IF at least 90% of the time during the first 35 years of concession. at least 35% of total heavy vehicle traffic in the corridor uses the highway AND at least 90% of the time during the first 35 years of concession, at least 40% of total heavy vehicle traffic use is at night, THEN the concession period is extended 1 year.
Winter Weather Conditions	Road closure = €1,800/hour in fines Tire chains required = €600/hour in fines

♦ Lane availability (principal element)

♦ Route performance

♦ Condition criteria

♦ Safety performance

♦ Unplanned events

♦ Proactive management

Table 8 describes several of the adjustments possible.

In Victoria, the KPIs associated with the EastLink project focus on customer service, road maintenance, landscape and environment, and tolling accuracy. Failure to comply with KPIs can result in up to $17 million annually in deductions for the PPP contractor. Any deductions collected from the concessionaire will be distributed to EastLink's users rather than retained by the government, since the users are the ones not receiving the paid-for service.