Negotiated outcomes

There may be instances when the application of penalty clauses are relaxed by the public partner for strategic reasons when its private partner under-performs e.g. to improve a deteriorating working relationship between the public partner and consortia or being responsive to new / emerging service delivery challenges. The latter example may lead to the modification of contractual clauses e.g. extending the cure period by a certain amount of time to address service delivery shortfalls in return for a pledge or guarantee by the concessionaire to improve its service outputs beyond its existing KPI targets. Such compromise may benefit taxpayers in terms of providing assurance to government of sustainability of contract, thus reducing the risk of service provider failure over the short-term. However, the failure of the private partner to meet negotiated terms ought to result in abatement being applied retrospectively. The public partner could approve and regularly monitor the implementation of rectification plans on a monthly basis to ensure that milestones and adjusted KPIs are being met. From an internal perspective, negotiated outcomes may be sought, for example, when a contract manager needs to review and then report upon complex service delivery outcomes within a shorter than normal timeframe. Compromise may be achieved through the use of an employee incentive program, for example, as part of a wider employee scheme (see 'Motivation / incentives' above).