Service usage

Payments based on usage or transaction level may be appropriate where the level of usage is a strong indicator of the service benefits being provided. Service areas where such a payment element may be used include transport (through the use of fares in rail projects and shadow tolls in road projects), water and wastewater treatment services, and some information technology services which provide transaction-based services. Usage-based payments can expose the contractor to significant levels of demand risk; however, this can provide strong motivation for maintaining and enhancing service delivery where demand can be affected by the private party (for example, in an education accommodation project where the facilities can be leveraged to generate revenue from users such as sporting clubs or private education/training businesses).