5.2  Ratchet - Service Performance Shortfalls

5.2.1  Each accommodation will have a Deduction Threshold of 20 points. If Performance Deduction Points accrue at a level less than or equal to the Deduction Threshold there will be no deduction from the Monthly Unitary Charge on an accommodation by accommodation basis in the Contract Month. Only Performance Deduction Points incurred in excess of the Deduction Threshold will be used to calculate the deduction from the Monthly Unitary Charge.

5.2.2  The number of Performance Deduction Points that are accrued within a Payment Period for each Accommodation will trigger an escalation in the Performance Deduction Points awarded based on a banding mechanism, as shown below:

The bands shown above will partly depend on the number of KPIs and the number of instances of possible failure in a month.

5.2.3  The following example assumes a per point value of £[3] and shows how the escalator for Performance Deduction Points applies in calculating the deduction from the Monthly Unitary Charge:

PVy  =  the Performance Deduction Point Value of £3

Deduction Threshold  =  20 points in any one month.

Assume that within a single month, the number of points across all KPIs at Accommodation 1 accrued totals 120.  The deduction to be applied would therefore be:

This calculation would then be repeated for each Accommodation to determine the total Service Failure Deductions that apply in a month.