What is Performance Contracting for Construction?
Performance Contracting is an approach where a private contractor is given the responsibility to achieve a defined set of goals, based on performance rather than methods. In other words, where the outcome of the project is clear, and mutually understood between the owner and the builder. This approach can save time and money and makes management of the job and communication between parties more efficient. For several years, performance contracting has been successfully used in construction, including in highway rehabilitation and maintenance.
The idea is that the goals of the projects will be better defined and more easily communicated to the contractor. You can relay what you want to achieve and have that agreed standard to hold the contractor accountable for. The contractor is more efficient because he/she has the flexibility to determine how to achieve the specified result, rather than being required to use a specified method. He/she will perform profitably and competitively without compromising quality. They, then also share in the rewards for a job well done.
What is needed to make this work?
· Clearly described and agreed to project outcomes, not only including desired materials, qualified labor and sound quality standards, but also time constraints and requirements.
· Contractor-actuated plan that is innovative and competitive that will produce the desired result.
What are some unexpected by-products of Performance Contracting?
· Reduced costs
· Faster job completion
· Better quality
· Minimized or eliminated discord
After you have selected the contractor for your next job, talk with them about the Performance Contracting approach. You may find that your apprehension to start a new project is gone, and your stress during the process is greatly reduced………… another great benefit well worth mentioning.
