2.8 Failure to draw up the operational specification is poor practice according to current PFI guidance. This recommends that the output specification, including the levels of performance required of the private sector party, be agreed before the contract is signed and form part of the contractual documentation.7 The failure to draw up an operating specification required under the original agreement meant that the relationship of the Armouries and RAI in key matters was not defined. This in turn made the early resolution of the disputes that arose, for example, about income generation difficult as there was no agreed standards or requirements with which RAI's measures to increase its income had to comply (paragraphs 1.48 and 1.56). The scope for such disagreement would have been reduced if there had been an operating specification which set down the pre-agreed requirements in each disputed area and if RAI's financial predicament had not been so great because of the reduced numbers of visitors.
2.9 The existence of an agreed operating specification would have complemented the operating committee, which was in place on this project, as a way of enabling the Armouries to raise, on an objective basis, the issue of non-maintenance of the new museum as this document would have detailed the agreed performance levels which RAI was to meet for maintenance (paragraphs 1.50 and 1.56). The failure to agree the specification made it impossible for the Armouries to demonstrate its claim, which RAI refuted, that RAI's level of maintenance of the new museum was contractually unacceptable and therefore required resolution. However, given RAI's financial situation once the museum opened, it was highly unlikely that RAI would subsequently agree to such a specification, despite the Armouries' efforts (paragraph 1.29).
2.10 Guidance also recommends that the contract contain details of how the private sector party's performance should be monitored and the criteria against which its performance will be assessed.8 On this project a detailed performance regime was not agreed (paragraphs 1.57 to 1.58). The existence of such a performance regime would have reduced the scope for disagreement over RAI's alleged non-performance of maintenance as the facts of the level of RAI's actual performance against the expected standards would have been clear.
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7 Standardisation of PFI Contracts 7.1.4, 8.1.2, and 9.1.2