The study found that projects employing a true PBC framework resulted in substantially lower costs and improved system readiness / capability when compared to non-PBC arrangements.
[12] An analysis in 2015 has suggested that greater benefit is achieved under a PBC strategy where the supplier is a "total service provider" with ownership of the assets being supported.
[6] Commissioners (central or local government) may face a number of challenges that may make a pure payment by outcomes approach either impractical or sub-optimal in terms of achieving the aims of PbR models.
These challenges largely stem from commissioners’ ability to manage different risks and responsibilities, especially in relation to their understanding of desired outcomes and their measurement.
United States federal law defines performance-based acquisition [14] and treats it as "the preferred method for acquiring services".
[citation needed] Recently, Australian Defence has initiated an escalation of the use of PBCs with the strategic aims of improving capability outcomes and reducing total cost of ownership.
[17] PBC frameworks are currently being used in numerous defence-related projects, including:[citation needed] PBC is becoming more popular[citation needed] in a broader range of private and public sector organisations as they seek to reduce costs and create a closer link between expenditure and performance goals.
Areas in industry where PBC is applied include:[citation needed] There are many cases of Payment by Results (PbR) models being used to achieve domestic policy goals, in particular the delivery of social or community services, with payments linked to the results a provider achieves, rather than its inputs and processes.
The use of PbR models is often promoted as a way to drive service improvements and achieve increased value for money by aligning incentives to desired outcomes.
This is where the commissioner (central or local government) is fully able to contract in terms of the outcomes it wants and to transfer the financial risk of non-delivery to providers.