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Elements and Performance Criteria

1. Define a PBC
   • Main elements of the Performance Based Contract (PBC) are defined for employment within contract management practice
   • Goals of the PBC are defined to meet identified key contractual elements
   • Method of application required for the key elements of a PBC is identified and defined
2. Establish a PBC
   • Key stakeholder benefits are described within the PBC
   • Limitations and associated risks are identified and described within the PBC
   • PBC creation processes are applied and incorporate any risk mitigation measures identified
3. Design a PBC
   • Performance measure types are described in the PBC and are used to improve contract performance management
   • PBC reward and remedy types are described within the contract in conjunction with risk mitigation measures
   • PBC design principles are applied to maximise supplier motivation and encompass strategic contract management benefits

Range Statement

Range is restricted to essential operating conditions and any other variables essential to the work environment. Non-essential conditions may be found in the Companion Volume Implementation Guide.

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Performance Evidence

Evidence required to demonstrate competence in this unit must be relevant to and satisfy all of the requirements of the elements and performance criteria on at least one occasion and include: applying relevant risk mitigation measures within the Performance Based Contract (PBC) framework applying the principles of PBC to the management of strategic contracts defining the goals, benefits and limitations of a PBC in accordance with strategic business requirements defining the two key elements of a PBC to meet strategic contract management requirements defining the types of rewards and remedies and relevant performance measures used in a PBC to achieve strategic outcomes describing the process for creating a PBC identifying contract risks understanding how a PBC motivates the supplier and applying this in managing a PBC.

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Knowledge Evidence

Evidence required to demonstrate competence in this unit must be relevant to and satisfy all of the requirements of the elements and performance criteria and include knowledge of: communication techniques to effectively communicate decisions complex strategic contractual provisions contract strategy and construction Defence business units that incorporate PBC methodologies PBC design principles PBC features in comparison with a standard contract and key performance indicators PBC reward and remedy types government procurement processes and options strategic contract management benefits theory and benefits of PBC management.

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