Public infrastructure maintenance: risks and the downside of performance based contracting

A trend towards performance-based contracting (PBC) can be observed in public infrastructure maintenance. PBC is an approach of tying the contractor’s payment to specified performance. We investigated PBC for the maintenance of highways and roads in the Netherlands. Functional specifications tend to change constantly, and the client tends to jump in and take over responsibilities, which contradicts PBC principles. Incentives encourage undesirable behaviours by contractors. At the end of a project a contractor may not take responsibility for cost, quality or time problems. Clients should recognize and acknowledge the actual balance of power in the relationship with their (main) contractors.