Performance Based Specifications, TR-403, 1998

The goal in highway construction and operation has shifted from method based specifications to specifications relating desired performance attributes to materials, mix designs, and construction methods. Shifting from method specifications to performance based specifications can work as an incentive or disincentive for the contractor to improve performance or extend pavement life. This literature search was directed at a review of existing portland cement concrete performance specification development, and the criteria that can effectively measure pavement performance. The criteria identified in the literature include concrete strength, slab thickness, air content, initial smoothness, water-cement ratio, unit weight, and slump. A description of each criterion, along with the advantages, disadvantages, and test methods for each are identified. Also included are the results from a survey that was sent out to various state, federal, and trade agencies. The responses indicated that 53% currently use or are developing a performance based specification program. Of the 47% of agencies that do not use a performance based specification program, over 34% indicated that they would consider a similar program. The most commonly measured characteristics include thickness, strength, smoothness, and air content. Lastly recommendations and conclusions are made regarding other factors that affect pavement performance and a proposed second phase of the research is suggested. The research team suggests that a regional expert task group be formed to identify performance levels and criteria. The results of that effort will guide the research team in the development of new or revised specifications.

Financier’s credit risk: A Performance-Based Classification Model

The purpose of this study is to view credit risk from the financier’s point of view in a theoretical framework. Results and aspects of the previous studies regarding measuring credit risk with accounting based scoring models are also examined. The theoretical framework and previous studies are then used to support the empirical analysis which aims to develop a credit risk measure for a bank’s internal use or a risk management tool for a company to indicate its credit risk to the financier. The study covers a sample of Finnish companies from 12 different industries and four different company categories and employs their accounting information from 2004 to 2008. The empirical analysis consists of six stage methodology process which uses measures of profitability, liquidity, capital structure and cash flow to determine financier’s credit risk, define five significant risk classes and produce risk classification model. The study is confidential until 15.10.2012.

Risk under performance-based contracting in the UK construction sector

As a method of procuring the services of the built environment, performance-based contracting (PBC) seeks to link the building supplier to longer term commitments than has traditionally been the case in the construction sector. By rewarding the building producer according to the way that building or structure delivers the users' requirements, rather than according to a list of assembled parts, a number of additional risks are taken by contractors, including fitness for purpose, costs and briefing. The extent to which contractors recognize these risks and their methods of dealing with them vary considerably and are influenced by their attitudes towards risk. As the risks associated with PBC are seen as large, uninsurable, and vulnerable to changing client requirements, the majority of respondents would reject the use of PBC as a method of contracting. Nevertheless, PBC may be used under particular conditions, where rewards are deemed sufficient to compensate for the additional risk to the contractor of undertaking work on the basis of a stream of payments paid over the life of a structure depending on the satisfactory performance of the building or as part of a private finance initiative.

Ownership rights in performance-based contracting: A case study of English law

Clients and contractors need to be aware of the project’s legal environment because the viability of a procurement strategy can be vitiated by legal rules. This is particularly true regarding Performance-Based Contracting (PBC) whose viability may be threatened by rules of property law: while the PBC concept does not require that the contractor transfers the ownership in the building materials used to the client, the rules of property law often lead to an automatic transfer of ownership. But does the legal environment really render PBC unfeasible? In particular, is PBC unfeasible because contractors lose their materials as assets? These questions need to be answered with respect to the applicable property law. As a case study, English property law has been chosen. Under English law, the rule which governs the automatic transfer of ownership is called quicquid plantatur solo, solo credit (whatever is fixed to the soil belongs to the soil). An analysis of this rule reveals that not all materials which are affixed to land become part of the land. This fate only occurs in relation to materials which have been affixed with the intention of permanently improving the land. Five fictitious PBC cases have been considered in terms of the legal status of the materials involved, and several subsequent legal questions have been addressed. The results suggest that English law does actually threaten the feasibility of PBC in some cases. However, it is also shown that the law provides means to circumvent the unwanted results which flow from the rules of property law. In particular, contractors who are interested in keeping their materials as assets can insist on agreeing a property right in the client’s land, i.e. a contractor’s lien. Therefore, the outcome is that English property law does not render the implementation of the PBC concept unfeasible. At a broader level, the results contribute to the theoretical framework of PBC as an increasingly used procurement strategy.

Performance-based contracting in the construction sector

Construction procurement is complex and there is a very wide range of options available to procurers. Inappropriate choices about how to procure may limit practical opportunities for innovation. In particular, traditional approaches to construction procurement set up many obstacles for technology suppliers to provide innovative solutions. This is because they are often employed as sub-contractors simply to provide and install equipment to specifications developed before the point at which they become involved in a project. A research team at the University of Reading has developed a procurement framework that comprehensively defines the various options open to procurers in a more fine-grained way than has been known in the past. This enables informed decisions that can establish tailor-made procurement approaches that take into account the needs of specific clients. It enables risk and reward structures to be aligned so that contracts and payment mechanisms are aligned precisely with what a client seeks to achieve. This is not a “one-size-fits-all” approach. Rather, it is an approach that enables informed decisions about how to organize individual procurements that are appropriate to particular circumstances, acknowledging that they differ for each client and for each procurement exercise. Within this context, performance-based contracting (PBC) is explored in terms of the different ways in which technology suppliers within constructed facilities might be encouraged and rewarded for the kinds of innovation sought by the ultimate clients. Examples from various industry sectors are presented, from public sector and from private sector, with a commentary about what they sought to achieve and the extent to which they were successful. The lessons from these examples are presented in terms of feasibility in relation to financial issues, governance, economics, strategic issues, contractual issues and cash flow issues for clients and for contractors. Further background documents and more detailed readings are provided in an appendix for those who wish to find out more.

Performance-based compensation vs. guaranteed compensation: contractual incentives and performance

Top management from retail banks must delegate authority to lower-level managers to operate branches and service centers. Doing so, they must navigate through conflicts of interest, asymmetric information and limited monitoring in designing compensation plans for such agents. Pursuant to this delegation, the banks adopt a system of performance targets and incentives to align the interests of senior management and unit managers. This paper evaluates the causal relationship between performance-based salaries and managers’ effective performance. We use a fixed effects estimator to analyze an unbalanced panel of data from one of the largest Brazilian retail banks during the period from January 2007 to June 2009. The results indicate that agents with guaranteed variable salary contracts demonstrate inferior performance compared with agents who have performance-based compensation packages. We conclude that there is a moral hazard that can be observed in the behavior of agents who are subject to guaranteed variable salary contracts.

A performance based study on gender recognition in large datasets

[EN]Gender recognition has achieved impressive results based on the face appearance in controlled datasets. Its application in the wild and large datasets is still a challenging task for researchers. In this paper, we make use of classical techniques to analyze their performance in controlled and uncontrolled condition respectively with the LFW and MORPH datasets. For both sets the benchmarking protocol follows the 5-fold cross-validation proposed by the BEFIT challenge.

The Church Music Program: The Effect of Moving from Performance-based to Education-based Emphasis in a Church Music Program

This research project sought to answer the primary research question: What occurs when the music program in a church changes its emphasis from performance to education? This qualitative study of a church choir included participant observation of Wednesday evening and Sunday morning rehearsals over a 12 week period, individual interviews, group interviews, written responses, and written and visual assessment of musical skills. The goal was a rich description of the participants and emerging themes resulting from the shift in emphasis. Analysis of data occurred through inductive processing. Data was initially coded and then the codes were categorized into sub-themes, and finally into major themes. Early analysis of the data began with reflection in a researcher journal. Following the completion of the study the journal was entered into a word processor, as were transcriptions of videotaped rehearsals, and written reflections from the participants. After all data had been reviewed repeatedly and entered into the word processor, it was coded, reexamined, and finally categorized into sub-themes and themes. After coding and identification of major themes and sub-themes the finding were challenged by looking for disconfirming evidence. Finally, after the completion of the analysis stage, member checks were conducted. The results of the analysis of data revealed themes that could be associated either with the choir or the director. The key themes primarily associated with the choir were: Response to the change in rehearsal format; Attitude toward learning; Appropriateness of community learning model; and, Member's perceptions of the results of the program. The key themes associated with the director were identified as: Conductor assuming the role of educator; Conductor recognizing the choir as learners; Conductor treating rehearsals as a time for teaching and learning; and, Conductor's perception of the effectiveness of the change in focus. The study concluded that a change in focus from performance to education did not noticeably improve the sound of the choir after twelve-weeks. There were however, indications that improvements were being made by the individual members. Further study of the effects over a longer period of time is recommended.

Application of the agency theory for the analysis of performance-based mechanisms in road management

El WCTR es un congreso de reconocido prestigio internacional en el ámbito de la investigación del transporte, y aunque las actas publicadas están en formato digital y sin ISSN ni ISBN, lo consideramos lo suficientemente importante como para que se considere en los indicadores. This paper develops a model based on agency theory to analyze road management systems (under the different contract forms available today) that employ a mechanism of performance indicators to establish the payment of the agent. The base assumption is that of asymmetric information between the principal (Public Authorities) and the agent (contractor) and the risk aversion of this latter. It is assumed that the principal may only measure the agent?s performance indirectly and by means of certain performance indicators that may be verified by the authorities. In this model there is presumed to be a relation between the efforts made by the agent and the performance level measured by the corresponding indicators, though it is also considered that there may be dispersion between both variables that gives rise to a certain degree of randomness in the contract. An analysis of the optimal contract has been made on the basis of this model and in accordance with a series of parameters that characterize the economic environment and the particular conditions of road infrastructure. As a result of the analysis made, it is considered that an optimal contract should generally combine a fixed component and a payment in accordance with the performance level obtained. The higher the risk aversion of the agent and the greater the marginal cost of public funds, the lower the impact of this performance-based payment. By way of conclusion, the system of performance indicators should be as broad as possible but should not overweight those indicators that encompass greater randomness in their results.