The third theme relates to raising public employee capability, expertise (Edwards et al 2004, p.63; Organisation for Economic Co-operation and Development 2007, p.20) and accountability (RK06; PF12; PT10) in managing oversight of PPP contracts to achieve intended VfM outcomes.
Broadly speaking, performance and compliance can be improved through enforcing accountability and responsibility of management staff. For instance, employee performance and capability can be benchmarked against job descriptions as well as relevant outputs and outcomes specified in contract management manuals to assess the extent to which staff are effectively discharging their duties, with review forming part of regular employee appraisal processes. If the private partner is accountable to its stakeholders and shareholders for monitoring its own performance, service delivery outputs should be tested/validated by the public partner against the concessionaire's contractual obligations (even if a trusting relationship exists between the partners, it is prudent for the public partner - as custodian of VfM for the state - to ensure that the declared level of performance actually matches what has been delivered). This could include, for example, adherence to agreed policies, frameworks and procedures; progress made against work plans and technical assessments e.g. public safety reviews; the achievement of outputs and outcomes against KPIs and milestones; improvement made to the delivery of services arising from stakeholder feedback; and the implementation of audit recommendations. Other types of review could include periodic reviews to assess the level of progress made with regard to the achievement project business case objectives/justifications made for amending the contract; and overseeing benchmarking and competitive market testing to determine the relative quality and competitiveness of existing services with that of similar providers (although review mechanisms exist in contracts, testing may not always take place, in practice (PT05)). Many of these assessment processes require high levels of expertise to implement; proficiencies that may not be immediately nor consistently available through contracting out the assessment services to external consultants or contractors.
A further potential risk for the public partner, in relying too heavily on external contractors and consultants, is that they may not adequately (or be requested to) transfer appropriate technical knowledge to public employees (PT05), nor do so in a timely way, which may result in the public partner paying high market rates for longer than necessary or being left unexpectedly to deal with skills-gaps if external providers should leave suddenly. The public partner can bolster its contract management capabilities by distilling and documenting key commercial and project learning. This may include developing better knowledge continuity between project phases; creating and maintaining a document library for corporate and commercial documents; applying the contract management/administration manual more effectively; and improving succession planning and hand-over processes. On a wider scale, sharing of PPP information, knowledge and wisdom between public sector bodies would enhance public governance capability for PPP.
Although weighted towards a compliance-orientated approach to contract management, there may be merit in using a 'calendar of deliverables' to support junior public partner contract managers in managing tasks as specified under a concession deed. This is suggested by PF12 and derives from direct experience in designing and implementing an Access database for employees to use that links each task with a corresponding delivery date - a systematic approach that also involves assessing and then reporting on the extent to which each obligation is met using a pre-defined methodology. According to PF12, such a system can easily be configured to meet the requirements of individual PPP contracts in a way that 'takes users step-by-step through what they need to do, how it should be done and when to do it'. Furthermore, this type of approach is beneficial for mitigating some of the knowledge and experiential risks that the public partner faces; it can be used to build corporate, commercial and project knowledge; and be used to raise levels of accountability and performance of both contract management team members and the private partner.
A number of interviewees raised the subject of appropriate monetary reward for high public sector employee performance i.e. using financial incentives. PT06, for example, stated that for government to obtain and then retain experienced and capable project directors, remuneration ought to be competitive with that offered by the private sector. However, in practice, this may not be the case as at an Australian state level, pay levels do vary significantly (PT11). This implies differences between jurisdictions as well as staff awards in different contract management environments within the same state.