An effective way for the public partner to hold its private partner accountable for performance is through the continuous application of contract administration and undertaking periodic strategic assessments to determine if VfM outcomes are being achieved. Without a strong understanding of the PPP service delivery environment, public partner contract managers will find it difficult to accurately evaluate operational performance (Edwards et al 2004: p.49). Therefore contract managers should develop pro-active approaches to ensure VfM propositions are maintained over time. Performance evaluation should be ongoing with the data collected potentially being used as a basis for developing control actions and managing emerging risks. This is particularly relevant where the private partner fails to maintain expected service standards, as stipulated under concession deeds, that then lead to penalty clauses being activated.
Interview participants (PF12; PF08; PT11; PF14; PT12; PF02; PF05; RK10) point to a variety of ways that performance/progress can be measured against the attainment of stated PPP outcomes during operations. These include:
• Reviewing progress against the public interest template - although these types of assessments are normally undertaken during conceptualisation and business case development, PT11 argues that such analysis could extend to the operational phase for determining whether the rights of users and consumers are still being protected as intended;
• Reviewing progress against business case objectives/justifications for contract amendments - despite being potentially effective ways to assess performance, PT11 and PT12 assert that government is not always proficient at conducting these types of appraisals. PPPs are, however, subject to the Gateway Review Process in Victoria (including Gate Six: Benefits Realisation - see Victorian Department of Treasury and Finance 2009) as well as in other Australian states;
• Reviewing progress against operational objectives - there may be certain objectives that have not been clearly established in business cases, or contracts, that government wants to track such as user satisfaction levels (PF08; RK10) by monitoring and measuring the quality of users' experiences; and
• Ex-post evaluations - in the UK, PPPs should undergo ex-post evaluations, for example, to assess the quality of the contract management function after handback (termination of a concession). However, this rarely happens in practice (PF14), and the recency of the use of PPP procurement does not yet yield a sufficient sample of completed concessions to explore the benefits of such evaluation. This means that valuable lessons learned that could be applied to other PPPs are being lost (or are not yet accessible) and that avoidable, costly mistakes are probably being repeated in other projects.
In all the interviews, it was clear that participants were more comfortable, and familiar, in dealing with the objective and measurable aspects of VfM. The more intangible public benefits sought in PPPs were less frequently raised by interviewees.