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The KPI That Triggered a Million-Dollar Grass Cut
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This was a highway PPP. Long-term. Availability payment model. ​ The contract had a classic performance regime: KPIs tied to lane availability Routine inspections Pavement condition Safety response times … and one that seemed innocent: “Vegetation height shall not exceed 10 cm in the median or shoulders.” ​ Now, that sounds reasonable. ​ The contract even attached photos showing “desired condition.” Everyone nodded in the negotiation room. “Sure, 10 cm max grass. Easy.” ​ Then came Year 3. A wet spring. A week of rain. Mowers couldn’t get in without damaging saturated shoulders. ​ Grass in some areas grew to 12 cm. Yeah… 12. ​ Did traffic stop? No. Did it affect safety? Not at all. But did the Authority’s Monitoring Team trigger a KPI breach and penalty? Oh, yes. ​ “Non-conformance. Vegetation height exceeds threshold. Deduction: $275,000.” Thank you. ​ The Project Co pushed back: “Come on. We’ll cut it this week. No users complained.” ​ Constructive and reasonable agency response: “KPI breached. Contractually defined. Deduction stands.” ​ How typical. ​ They escalated. ​ An engineer (on the Project Co side) wrote a 23-page memo arguing that vegetation had “minimal to no impact on functionality, safety, or user experience” and should be subject to grace periods during abnormal weather. ​ At least, they did not spend $50k in consultants to write that… I have seen some of those! ​ The agency lawyer replied with a one-liner: “Contract does not reference weather exceptions for KPI 3.4.1. Clause stands.” ​ The Project Co had to either: Swallow the deduction (and lower IRR), Trigger a dispute resolution process (costing more in legal fees), or Accept it and renegotiate next year during KPI refinement talks. ​ They took the hit. ​ Here’s where it gets worse: Someone from the maintenance contractor later joked in a meeting: “You know what would’ve been cheaper? Hiring goats.” ​ Lesson? Maintenance KPIs are not about reasonableness. They’re about trigger logic. If it’s binary and the Authority wants to play hardball, you're toast. ​ If you’re ever drafting a PPP contract, build in: Tolerance bands Grace periods during abnormal conditions Dispute buffers before penalties And for god’s sake, make sure someone with dirt under their nails reviews the KPI list, not just lawyers and MBAs. ​ Because the only thing more humiliating than paying $275,000 in deductions… …is explaining to your board that it was for grass. ​ More interesting stories? Here you are! ​ More of this, below.
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Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | C-Suite Executive | Mentor, Coach, Strategic Consultant | Real Estate Investor | 👇JOIN +2k readers 👇
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