Critical Success Factors for Performance-Based Contracts (PBC)
By Dr. Adrian Burde, P.E., M.ASCE
A summary of lessons learned from the Woodrow Wilson Bridge project (Virginia U.S.):
- Define clear performance standards and expectations. Agencies should clearly define performance standards that are easily recognized by objective analysis to minimize disagreements during the execution of the project.
- Select a procurement process that permits the Agency negotiate the proposed level of resources and scope of work. The level of commitment of a participant with the success of the project is somewhat associated with his/her confidence in the amount and quality of resources committed to the project.
- Be aware of the managerial style on the performance of the project team. Promoting open communication and inclusion were essential for developing a collaborative environment to sustain the success of the project.
- Bring and retain highly qualified personnel. Connections with complex facilities such as drawbridges or stay cable bridges tend to attract more highly qualified personnel than other transportation projects increasing the probabilities of success.
- Innovation. Innovation is a driving force at the core of the performance based maintenance contracting approach.
The critical success factors for performance-based contracts (PBC) are common to many other contract methods. The presence of knowledgeable staff and the willingness of upper management to succeed, accompanied by frequent and positive interactions to facilitate the development of trust among the members of the project, are primary factors in the success of the project.
Above all, communication is of the essence. The owner agency should make significant effort in communicating, internally and externally, the performance requirements of the contract until all the parties involved in the project understand how the end product should look like. The owner agency and the contractor(s) should discuss the performance requirements and the resources needed to meet the contract requirements during the procurement process. This process, which normally takes place during the negotiations of the contract, is vital and highly contributes to the success of the project. Open, friendly, and honest communication between the agency and the selected contractor should continue thought out the implementation of the contract. The managerial style adopted by both parties should facilitate the exchange of ideas.
In PBC, the owner agency allows the contractor to decide on the best maintenance plan needed to meet or exceed the performance requirements; however, in my experience the willingness of the contractor to include agencies’ recommendations into the planning process has led to the formation of a collaborative environment and a sustained level of service that meets or exceeds the agencies’ expectations on a routine basis.
In summary, PBC benefits from good managerial style and a group of people with vast experience in delivering transportation services. “Superior performance is ultimately based on the people in an organization. The right management principles, systems, and procedures play an essential role, but the capabilities that create competitive advantage come from people – their skill, discipline and capacity to solve problems and to learn.” (Hayes et al., 1988, p. 242)
Meet Dr. Burde and other PBC practitioners at the IRF's Performance-Based Contracts Executive Seminar, held March 6-12, 2016 in London.