American Society of Civil Engineers

Avoiding Performance Failure Payment Deductions in PFI/PPP Projects: Model of Critical Success Factors

by Lukumon O. Oyedele, (School of Planning, Architecture and Civil Engineering, Queen’s Univ. Belfast, Belfast BT9 5AG, UK E-mail:

Journal of Performance of Constructed Facilities, Vol. 27, No. 3, May/June 2013, pp. 283-294, (doi:

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Document type: Journal Paper
Abstract: The overall aim of this paper is to identify critical success factors that would help Private Finance Initiative/facility management (PFI/FM) contractors to avoid performance failure payment deductions in Public Private Partnership/PFI (PPP/PFI) projects (constructed facilities). Using focus groups discussions, 36 possible factors that could influence performance failure payment deductions were identified and put together in a questionnaire survey. Analysis included reliability analysis that enabled identification of 29 reliable factors from the initial 36 factors. Using linear multiple regression, the best seven predictors that could help PFI/FM contractors to avoid performance payment failure deduction were identified from the 29 reliable factors. With the aid of another set of data and Spearman’s rank correlation analysis, the seven predictors referred to as critical success factors were validated to confirm their dependability and wider applicability. The seven critical success factors include: (1) good working relationship with client, end-users, subcontractors, and suppliers; (2) minimal use of subjective measures as key performance indicators (KPIs); (3) a functioning help desk in place to receive service requests and complaints;, (4) explicit and realistic performance standards, criteria, and weighting systems; (5) quality of service delivery that meets requirements of output specification; (6) use of the Just-in-Time approach compared with a prescheduled maintenance regime; and (7) PFI/FM contractor active participation in the design process. The research findings would help both PFI/FM contractors and private project consortiums to maximize their profits/returns on investment by improving their performance and avoiding payment deductions in PFI projects. Public sector clients and occupants/users of their facilities would also achieve full value for money by enjoying facilities that adequately meet their needs and requirements.

ASCE Subject Headings:
Financial factors
Private sector

Author Keywords:
Private Finance Initiative (PFI)
Public Private Partnership (PPP)
Facility management
Performance management and failure
Payment deductions
Critical success factors
Service quality and delivery
Key performance indicator
Unitary charge
Output specification