Reliability-Based Decision Support Framework for Major Changes to Social Infrastructure PPP Contracts

Abstract

In the operational phase of public-private partnership (PPP) contracts, undue delay in addressing real needs may lead to poor service outcomes; conversely, commencing variations to a PPP agreement on the whim of end-user runs the risk of reducing the value created by detailed structuring and considerations undertaken in establishing agreement. This difficulty is exasperated as there is generally a lack of understanding by the end-user as to the specifics of service delivery performance requirements contracted. In order to address this question, this study, for the first time, develops a reliability-based decision support framework (RDSF) that incorporates end-user’s perceived service quality (i.e., how satisfied it is with the space, operation and maintenance activities) with those specified in the PPP agreement, and further identifies when the gap between end-user’s expectations and contractual obligations warrants reconsideration. This developed framework is then implemented to test the data gathered from three PPP schools in Australia based on both a current snapshot of performance data, i.e., abatements as gathered through contract documents and end-user’s perception through in-depth interviews, and a projected scenario of the future as well. Reliability analysis used here compares time-dependent risk profiles of current and expected performance and thereby identifies major changes in a PPP contract that would sensibly require reconsideration. The specific results indicate there is no current difficulty between end-user’s perception and the contract. However, the projected long-term scenario demonstrates how the decision framework can identify areas for review and changes if end-users are more dissatisfied with the service being achieved. The RDSF is capable of quantifying current service performance, considering the engagement of the end-user. Thus it enriches theories in the field of performance management system (PMS), and also contributes to knowledge regarding an evidence-based test for justifying possible agreement modifications or additional works in social PPPs operations. In addition, guidance for performance improvement strategies in aspects of the dissatisfied area is also provided. Application of this approach would assist in maintaining the long-term value for money of social infrastructure PPP agreements.