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, 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. However, evidence shows that few abatement penalties have been applied in practice for under-performance (National Audit Office 2009: p.56). See Table 6.24 for identified sub-issues and case study example.
Table 6.24 Sub-issues Arising From Penalties and Abatements.
Sub-issues | Generic case study findings |
- Applying penalties and abatements - Incentive revisions | - Penalties and abatement should be consistently applied unless there is a properly justified case for not doing so |