Figure 5: The “rolling wave” Award Term model
In order to enable contracting parties to
smoothly transition into PBC, Performance
Implementation Plan (PIP) is a provision
that facilitates the gradual introduction of
performance measurement regimes until a
performance baseline is established, consistent
with the ramp up of contractor services under the
contract. Where the contract does not require
a ramp up, or the ramp up is of short duration,
or when a contractor has previous experience in
implementing a PBC, then PIP may not be required.
Through PIP, the initial months after the
contract start date will be divided into phases.
Appropriate percentages of at-risk margin is then
allocated to each phase to balance the risk and
reward during transition period.
● ●
● ●
Performance Management
The management aspect of a PBC must be clarified
in a PMF. This is essential so that parties are
aware of their respective roles and responsibilities
in ensuring the contract is properly administered
in a structured manner. Most importantly, at
least three decision-making committees must
be established to review the performance of the
contractor. The recommended frequency, purpose
and composition of the committees are as follows:
● ●
Monthly Performance Review: This
review is to be conducted at least once
a month. The purpose is to confirm the
result of all performance measures,
ascertain the resultant APS for the KPIs
achieved for the month and determine the
total performance payment that should
be paid to the contractor. Since PBC is
a self-regulating contract, disputes on
KPI calculations must be resolved based
on consensus. The composition of this
committee normally involves the buyer’s
on-site representatives and the contract
managers of both parties.
Half Yearly Contract Review: This review
is to be conducted once every six months
to concur to the decisions of the Monthly
Performance Review Committee and to
ensure proper contract governance. In
addition, this committee is responsible
for finalising the scores of SPMs and SHIs
and performance levels attained by the
contractor throughout the evaluation
period. The composition of this committee
includes the buyer’s capability sustainment
m an ager s an d t he p ro c urem ent
departments of both parties.
Annual Performance Review: The highest-
level review committee is to sit once a year
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