Operational KPIs are developed during the procurement phase. This means that they tend to be designed, often by lawyers and project teams that have limited operational experience, at a time when the least amount of information is known about the service delivery specifics of PPPs (PF10; PF12). It is therefore important to have flexibility (PF08) between the partners to review KPIs to ensure that the services being delivered actually match what was intended as part of the original business case (PF05). Such flexibility then allows the partners to take steps to address consequential misalignment between expectation and practice. Moreover, if KPIs are not well constructed, it may be difficult for the public partner to hold its private partner to account for underperformance (PT06):
'If the KPIs are [ineffective], then you're going to have trouble holding [the private partner] accountable, without doubt… If you get that wrong, if you don't have people that are of the calibre that you need, you pay for it big time in PPPs.'
Modifying KPIs usually means they can be adjusted to their 'right' level (PF12). However, the extent to which the modification contributes towards the achievement of VfM may depend upon a range of factors including: the timing of negotiations; how much leverage the public partner has over its private partner; and the level of employee ability to broker the best deal for the public partner. As PF02 explains:
'When you're modifying an existing contract [or specification], you're doing it non-competitively. As government, you're going to have to test and look really closely at what's changing and what the value was that you were getting... It [also] depends on the balance of power in a particular negotiation. If the [private partner] is bleeding, and if they need you to do something to avoid some kind of default, then you might have the negotiating advantages as the public [partner], whereas if you're under specified performance, then the negotiating leverage is on the other foot. It just depends on where the balance of power lies.'