Under a P3 agreement, the P3 private partner is the single point of responsibility for an integrated delivery of design, construction, maintenance and financing of a highway facility. When done correctly, P3 project delivery facilitates the transfer of more risk to the private sector, potentially resulting in a reduction of total cost of ownership. To realize the full benefits, this contractual arrangement must allow the P3 private partner to integrate fully the O&M considerations with decisions relating to design and construction. The use of performance requirements in the P3 agreement technical provisions is critical to ensure integration between the two phases.
Using performance requirements, a public agency can communicate technical requirements of a project without impairing the P3 private partner's flexibility to innovate and propose alternative solutions. In lieu of prescribing "methods", the performance requirements clearly lay out the project scope and the public agency's expectations and constraints early in the procurement process, while transferring the contractual responsibility and risks to the P3 private partner to achieve them. To have a set of well-written performance requirements, the public agency should conduct the project scoping exercise to effectively identify what technical requirements are needed to achieve the purpose of the proposed facility. Also, project scoping is the phase where the public agency will have more influence to define the risk landscape for both parties. Furthermore, the agency may critically evaluate the proposed performance requirements through a round table style, risk evaluation "vetting" exercise by bringing in stakeholders from the pertinent internal disciplines of the agency, especially the operations and asset managers.
Recognizing that it may be challenging to prepare 100 percent pure performance-based requirements, the public agency may have to use a few limited prescriptive criteria. In such instances, and wherever appropriate, the agency may effectively use the ATC process to solicit "equal to or better than" solutions from the P3 proposers. Note that the ATC process has proven to be high successful for all project delivery methods, including Design-Bid-Build, Design-Build and P3.
With performance requirements, the P3 private partner has the responsibility to prepare design packages and deliver construction plans and specifications; further, the risks of ensuring performance, as mandated by the performance criteria, through design details and construction quality lie with the P3 private partner. On the other hand, the agency's role is limited to providing oversight and monitoring whether or not the design and construction process is in accordance with the P3 private partner's management plan.
Incorporating the use of performance requirements in P3 projects is not without implementation challenges. The agency will need to adopt organizational change management strategies, including institutional capacity building and refinements to the procurement process to facilitate drafting effective performance requirements, measuring compliance, promote an audit-based performance-oriented approach among agency staff that is vastly different from the traditional prescriptive mindset, and engaging stakeholders for buy-in. Agencies may need to adopt deployment strategies, such as technical assistance, hiring of procurement experts and/or specialist advisors, and obtaining input from "champion" agencies. Legal perspectives will need to be considered, such as the applicability of the "Spearin" Doctrine, differing site conditions and the legal interpretations of performance requirements.
