Performance Contracting

Performance contracting is a construction delivery method option for public sector entities that has been available in many states for more than 25 years and provides tremendous benefits to those who use it. However, the benefits are typically discussed as savings to utilities and maintenance budgets. They are reviewed in technical terms only, not financial ones. But what are the financial benefits of performance contracting? More than a technical solution, performance contracting stands as a strong financial and economic solution for public sector entities in need of facility improvements. This article looks at how performance contracting reduces risks and increases value for owners.

PC CYCLE

Review of PC Guidelines Review of PC guidelines is carried out to incorporate emerging issues and factor lessons learnt with a view to improve the process in the subsequent period. The review is carried out annually and is spearheaded by Public Service Performance Management Unit, through a consultative forum involving MDAs and other stakeholders.7.2 Pre-Negotiations Consultations During this stage, MDAs are required to create a common understanding of the scope of their operations, core business, financial and human resources, emerging issues and other factors that may affect performance. The consultations should also involve other Institutions whose operations may affect achievement of the MDA’s performance targets.

It is also during this phase that consensus should be sought on the nature and level of commitments and obligations of one MDA to the other. 7.3 Negotiation of Performance Contracts During this stage, it is ensured that performance indicators and targets are in line with priorities set by the government for each MDA, they support achievement of the mandate of the organization and are aligned to MTP III, Sustainable Development Goals, relevant Sector Performance Standards and the approved budget estimates for the financial year. The negotiated performance contract should be initialled by the negotiating parties and presented to the Public Service Performance Management Unit for vetting (quality assurance) before signing.