7. Performance Bonuses
• PG Targets to match Financial Targets => Given
• Beyond PG Target => Share the Revenue Upside
• O&M highly motivate to maximize revenue
• Efficiency gains through innovative solutions
Bonus Structure Matters
• Are bonus targets reasonably achievable?
• Are bonus levels worthwhile?
• Are bonus reasonably balanced with Penalties?
Contract Scope Flexibility Matters
• Industry Basics => Specifying a baseline scope is good
• Beyond Basics => O&M provider drives scope
• Outcome => time & resources spent on best returns
Contracting For Efficiency