Abstract: One of the key cores of the PPP model is the payment based on performance. The scientific rationality of the performance payment mechanism is the guarantee for the successful implementation of the PPP model. In the performance payment process of PPP projects, performance supervision agency can adopt two strategies:careful supervision and non-careful supervision. Project company can adopt two strategies of earnestly accomplishing performance goals and not completing performance goals. The result of performance payments is the result of a game between the performance supervision agency and the project company. The evolutionary game method is used to analyze the evolutionary equilibrium strategy of performance supervision agency and project company in performance payment. It is found that there are three evolutionary stable equilibrium strategies and two kinds of unstable equilibrium strategies. The system dynamics are simulated for five evolutionary states. Simulations show that the simulation results of the three stable equilibrium strategies are consistent with theoretical analysis. One of the two types of unstable equilibrium strategies is an equilibrium strategy that does not exist, and the other is an unstable equilibrium strategy that exhibits regular fluctuations. For the performance-based payment mechanism, a volatility-unstable equilibrium strategy is introduced, and dynamic performance payment is introduced to optimize it and evolve it into a stable and balanced strategy. And theoretically verified the effectiveness of the introduction of dynamic performance payment to make the fluctuation unstable equilibrium strategy into a stable equilibrium strategy. Provide some reference for the government departments to design and improve the performance payment mechanism of PPP projects.

Key words: PPP project, performance payment, evolutionary game, system dynamics, optimization