Performance Contracting

Performance contracting is an agreement between a service provider and a client where payment is based on achieving specific results or performance goals. It’s often used in areas like energy efficiency or education, where the provider commits to meeting predetermined targets. If the goals are met, the provider receives payment; if not, they may receive reduced payment or no payment at all. This aligns the interests of both parties, encouraging efficient service delivery and accountability, as the focus is on delivering measurable outcomes rather than just completing tasks.