The best way for the public partner to hold its private partner accountable for performance is through the continuous application of contract administration (AECOM 2007: p.84-85). This is important because if performance is not well managed, it can put VfM outcomes at risk (National Audit Office 2009b: p.55).
Edwards et al (2004: p.49) state that, without a strong understanding of the service delivery environment (e.g. lack of performance data as a reference to the establishment of KPIs), public partner contract managers will find it difficult to accurately evaluate operational performance. Therefore contract managers should develop a hands-on role to ensure VfM propositions are maintained over time. This, of course, will be tempered by the extent to which the private partner is required to report appropriately under contractual agreements (Partnerships Victoria 2003a: p.46). In Victoria (Australia), regular monitoring is supplemented with periodic Gateway Reviews. 'Gate 6' is a component of a formal review process, undertaken by the Department of Treasury and Finance or its nominees, that compares the benefits set out in project business cases with the achievement of these benefits at key points during operations (Department of Treasury and Finance 2009a: p.9).
Performance evaluation should be ongoing in nature with the data collected being used potentially as a basis for developing further, or refining existing, control actions (Partnerships Victoria 2003a: p.47) and managing emerging risks (Partnerships Victoria 2003a: p.16). This is particularly relevant where operators fail to maintain expected service standards as stipulated under concession deeds that then lead to penalty clauses being activated.