There is a range of performance monitoring mechanisms that can be used during both the construction and operations phases of a PPP, which are typically associated with payment (e.g. payment deductions to penalise underperformance) to incentivise the Project Company's better performance. These mechanisms typically include:
• construction milestones reliant on completion of agreed sections of work, subject to quality requirements
• construction look-forward or look-ahead tests
• review and analysis of compliance with KPIs
• review of quality control and quality assurance procedures to ensure that quality systems are in place and effective
• informal audit processes, or conducting surveys and interviews to gauge user satisfaction
• independent monitoring by the Procuring Authority to verify the accuracy of the reporting delivered to the Procuring Authority
• independent calibration of measurement equipment used in the delivery of the service to verify its accuracy
Monitoring of performance will have different characteristics during the construction and operations phases. Construction milestones are the primary performance monitoring tool available to the Procuring Authority during the construction phase, while KPIs are the primary performance monitoring tool during the operations phase. Where the operation of existing assets takes place at the same time as construction and expansion activities (e.g. on a brownfield project or one with phased commencement of operations), operational KPIs and construction milestones may be combined.