Performance-based contracting - Part 2 Save article Remove saved article

In last month’s column, I discussed how performance-based contracting is increasingly touted as an indispensable tool in the toolkit of municipalities working with private sector suppliers. I noted the recent report by the C.D. Howe Institute, entitled “A Bridge Over Troubled Waters: Alternative Financing and Delivery of Water and Wastewater Services” (dated May 2011). The commentary, as the report is called, advocates a greater role for private suppliers in the provision of water and wastewater services, and emphasizes the importance of negotiating binding, long-term contracts that articulate robust performance standards, with clear consequences for failure to meet such standards. While the commentary is focused on water and wastewater management services, the contractual approach to ensuring performance applies whether the municipality is contracting for water and wastewater management services, or for any other service, for many years or even a few months.

There is more to performance-based contracting, however, than simply negotiating strong contracts. The broader objective of performance-based contracting involves a mindset shift away from “buying” and contract compliance to one of collaborative, performance-oriented teamwork, with a focus on program or project performance, improvement, and innovation. Obviously, the latter approach is much more demanding, as it focuses on putting in place a true working relationship, which must be nurtured over time if it is to be successful.