KPIs can be used as a mechanism to calculate the level of payment that will be made by the public partner to its private partner (Javed, Lam and Zou 2013), commensurate with the operator's performance (Mandri-Perrott 2010: p.152). If the desired levels of performance are not achieved, a warning notice or penalty points may be issued. The accumulation of penalty points will typically lead to an abatement being applied although abatement can be enforced without consideration of points depending on the seriousness of the performance shortfall or breach of contract.
The National Audit Office (2009b: p.56) states that historically in the UK, only a small percentage of penalties in practice have been applied for under-performance. It is claimed that the rationale for non-enforcement can be justified on a number of fronts, but typically, penalties can be deferred to improve working relationships between the partners (or to prevent them from deteriorating further) or to off-set under-performing services with other services rendered (National Audit Office 2009b: p.56). It appears, in practice, the threat of applying abatement may have the desired effect by providing "sufficient incentive" for the private partner to improve its performance in line with the contract and service specifications (Ernst & Young 2008: p.13), at least in some instances.