Performance Benchmark & Target Review
Performance Benchmarks or Targets tend to be based on historical asset performance data. However, some projects manage existing assets, and others are creating completely new assets. How do we set or review benchmarks and targets of each?
New or Existing Assets
As part of the Southern Dutch High Speed Rail Link, apm helped the Dutch Government to design the Performance-Penalty regime of the Private Finance Initiative contract. With no existing assets, we employed our Asset Modelling techniques combined with reliability and availability methods and data from similar existing rails systems to derive an appropriate regime and associated benchmarks. This process was not only bought into by the Dutch Government but also by the Private Finance Initiative funding organisations and technical specialists on the project.
In developing benchmarks and targets, apm not only focuses on understanding the average historical asset performance, but also on understanding the potential variance on performance. On the Tube Lines project, we found that on average it was possible to perform under the benchmarks on average, but due to large variations in the performance data, there was great potential to easily go above the benchmarks, which was a great risk to the Consortium. The analysis allowed us to support the client in advising on benchmark changes or the inclusion of adequate risk funds.
When designing Performance Benchmarks, apm’s ability to analyse variations in performance data has been consistent and fundamental to the design and management of performance risks on many Private Finance Initiative and Public Private Partnership projects.