Performance based contracting, the problems facing operators and suppliers [of railways]

Performance based contracting is now becoming widespread, with commercial risk being transferred to the suppliers of railway equipment/systems to make investment more attractive to railway operators. Performance based contracts require the railway operator to be able to specify needs in performance terms, while the suppliers need to be able specify these performance requirements into a detailed technical design. This is by no means easy for either the operator or the supplier. This paper looks at the execution of the Docklands Light Railway System Prime Contract, an example of a performance based contract. It describes how system performance requirements were translated into detailed design requirements with the aid of a system model. The paper reviews the processes used to test and demonstrate the performance of the Railway. The paper concludes with a review of the performance measures used during the execution of the contract