2022-01-24

China PPP Center Fully Promotes the Full Life Cycle Performance Management of PPP Projects

(19-NOV-2021)


PPP project performance management is an important part of financial budget performance management. It is of great significance in implementing comprehensively deepening financial budget management reform, promoting the quality and efficiency of public services, and strengthening project life-cycle management. China PPP Center comprehensively and systematically promotes the full life cycle performance management of PPP projects, and serves the PPP reform to standardize sustainable and high-quality development. Recently, the staff in China PPP Center went to Guizhou to investigate the performance management of PPP projects, and to understand the implementation of the PPP project life-cycle performance management system at the local area.

At the research seminar, the relevant person in Guizhou Provincial Department of Finance introduced that after the Ministry of Finance issued the Government and Public Private Partnership (PPP) Project Performance Management Operation Guidelines (hereinafter referred to as the Performance Guidelines in March 2020, the municipal PPP center of Guiyang in Guizhou Province successively organized PPP project performance management training sessions for city-level projects and district/county projects, inviting project implementation agencies, project companies and relevant departments of the Municipal Finance Bureau to participate in the interpretation of performance management policies. Implementation agency in Guiyang also arranges departmental budgets for projects entering the operation period, which are used to entrust third-party agencies to carry out performance work to ensure the smooth development of performance evaluation activities.

China PPP Center mainly investigated the PPP project of the Xiaowanhe Environmental Comprehensive Improvement Project in Guanshanhu District, Guiyang. The PPP project has a total investment of about 1.135 billion yuan to comprehensively improve the environment of Xiaowan River (Jinzhong River). The construction content mainly includes four parts: source control and pollution interception engineering, river treatment engineering, water quality improvement engineering, and wetland park construction. The construction of the project was completed, and the Guanshan Lake District Government confirmed the completion of the project on February 28, 2020; the project entered the operation period on February 29. In December 2020, the performance evaluation committee led by the Guanshanhu District Agriculture and Rural Bureau carried out the performance evaluation of the Xiaowanhe Project in the three quarters of 2020 (March to November). Judging from the results of performance evaluation, the water quality standards cannot meet the contractual agreement due to the unstable water quality compliance rate of the project. According to the payment mechanism, the project failed to meet the 100% full payment standard.

The survey found that the indicator system designed by the performance evaluation committee is output-oriented, and the core indicators are mainly quantitative. The performance evaluation index system during the operation period of the project adopts a comprehensive scoring method. The assessment indicators are mainly set around the two core output results of river water quality and wetland park greening and conservation, with a weight of 100%, which is more stringent than the requirement of not less than 80% of the core output indicators in the Performance Guidelines. Among them, the weight of river water quality indicators accounted for 70%, mainly through online equipment and manual collection, and the evaluation results were obtained through quantitative calculations, which ensured the objective and fairness of the evaluation results.

In addition, the PPP project of the Xiaowanhe Environmental Comprehensive Improvement Project in Guanshanhu District, Guiyang combines project performance evaluation with work appraisal. City-level water quality online testing equipment is set up in different sections, and the test results are directly related to the annual work assessment of the district-level industry authorities so as to urge industry authorities to well perform their duties. This approach helps to unify government supervision and project management. At the same time, thanks to timely correction, it helps increase the enthusiasm of the project company, improve management efficiency and overall service level, and realize the sustainability of project output.

In order to improve evaluation efficiency and performance quality, the PPP project of the Xiaowanhe Environmental Comprehensive Improvement Project in Guanshanhu District, Guiyang also established an inter-departmental performance evaluation committee, which includes many departments such as finance,  auditing, and industry leaders throughout the entire process. They participate in project performance evaluation throughout the entire process, check the project evaluation process from different perspectives, strictly control operational risks, and improve evaluation efficiency and fairness.

The promotion of the PPP model in Guiyang and the development of performance management work show that the PPP model is developing in a standardized, sustainable and high-quality direction.

It is reported that, in order to promote the concept of PPP performance and guide the standardized implementation of full life cycle performance management, China PPP Center held a national financial system PPP project performance management work conference to analyze the PPP reform situation, interpret policy systems, and introduce performance management requirements and systems, and exchange local experience and achievement. In addition, China PPP Centercooperate with local governments to strengthen policy guidance, conduct special training in Shandong, Guizhou and other provinces, explain performance management policies to 24 cities, and introduce work priorities and performance systems.

It is worth mentioning that the PPP comprehensive information platform performance management system built by China PPP Center in 2020 has played an important role in realizing the informatization, intelligence and specialization of performance management.

It is understood that this system can track and record the data in the whole process of performance management. It is expected that information technology will be used to realize the synchronous verification and comparative analysis of regional, industry data and fiscal expenditure data in the system, to test the effectiveness of each link of the PPP project, so that the  performance process management can be monitored, the performance evaluation results can be recorded, the pay-for-performance can be traced, and the financial risk can be controlled.

The platform adopts the latest technological achievements such as blockchain, artificial intelligence, and big data to improve the verification and accuracy of PPP project information, and "show out" the quality of PPP operation. In conjunction with the Performance Guidelines, we further proposed standardized inspection requirements for all aspects of project operation, put forward quantifiable constraint standards, and quantified the quality of PPP operation. We further proposed standardized inspection requirements for all aspects of project operation, put forward quantifiable constraint standards, and quantified the quality of PPP operation in order to meet the requirements of Performance Guidelines. 

In order to improve the quality and efficiency of public service supply, protect the legitimate rights and interests of all parties, and further standardize the life cycle performance management of PPP projects,China PPP Center will carry out the following tasks in the next step:

First, further improving the top-level design. Promote the construction of performance targets and indicator systems for PPP projects by industry and field, prepare detailed rules for the implementation of performance management by industry, unify standards, and guide and standardize performance management.

Second, strengthening the performance management of the whole process of the project. Guide local governments to set PPP project performance targets and indicator systems in strict accordance with requirements, strengthen performance operation monitoring, and strengthen performance evaluation and the application of results. Promote equal cooperation between the parties to the contract and perform the contract in good faith, and create a good business environment so as to improve the performance management system and enhance the supervisory service capabilities.

Third, deepening research on frontier issues. Carry out research on the integration of PPP performance and budget performance. Adhere to the problem orientation, sort out the key and difficult problems in the PPP performance management practice, organize expert discussions, and explore the work path to solve the problem. Pay attention to the issues on summarizing and publicizing, and actively publicize and promote typical cases of PPP performance management and significant results.

 

China Finance News


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