(Effective 1st July 2022)
The Performance Based Contract (PBC) Policy and Guidelines which has been published as PK 1.8 by the Government of Malaysia effective 1st July 2022 is crucial in order to further enhance the implementation of the PBC method in Government Procurement especially in Maintenance, Repair, and Overhaul (MRO) Contracts to all Government Agencies.
PBC is an outcomes based contracting method that ties a range of monetary and non-monetary consequences to the contractor based on their accomplishment of measurable and non achievable performance.
The idea behind Performance-Based Contracting is one buys the result of a product use (e.g. value creation), not the part of repair services required to restore or maintain a product.
The simplified PBC Model shows the PBC process helps to determine the outcome and Performance Management Framework (PMF) resulting in a stronger strategic partnership between agency & contractor.
Based on experience, successful PBCs have proven its benefits by:
Enhanced ability to meet operational needs through consistent availability and reliability
Establish long-term relationships to ensure sustainable asset retention
Motivating contractors to achieve the levels set
Reduced Total Cost of Ownership