Performance Contracts: Shaking Up The Municipal Water Market?
Published on by Water Network Research, Official research team of The Water Network in Business
Performance contracts promise to shake up the municipal water market — and to open the drinking water and wastewater sectors to new heights of innovation, efficiency, and funding opportunities. As Steve Hoffman wrote inPlanet Water: Investing in the World's Most Valuable Resource , "the water industry is being rationalized from a delivery-based approach to a solution-based system."
Instead of manufacturers delivering equipment to an installation and driving away, or consulting engineers wrapping up most of their work once a new facility is online, performance contracts put the risk — and the reward — of performance on the supplier side. Contracted operators deliver water for a negotiated sum, or earn their pay as incentives for achieving agreed-upon goals — for instance, cost savings over previous systems. Utilities reduce their up-front expenditures, their risk and, often, the need to go to voters for bond measures.
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