Public agencies will focus on purchasing services, defining and monitoring performance specifications in a PPP project. These specifications can include other design requirements such as aesthetics if they are deemed essential for the project. However, the public agency will avoid over-specifying the design requirements so as to give the private sector room to innovate and/or offer a more cost effective alternative proposal.
In a PPP project, the provider needs to factor in the whole lifecycle cost of designing, building, maintaining the facility for the contract duration. Therefore, the PPP provider needs to consider any upgrading works required and include it in the tender bid.
The government makes regular payment streams for the services delivered accordingly to service specifications. The integration of design-build-maintain provides the PPP provider the economies of scale and incentives to build for maintainability in the long term.
Performance targets, benchmarking and service level review points will need to be specified in a PPP contract to ensure service levels are met. The PPP provider will suffer reductions in unitary payments if the performance targets are not met.
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