Performance Contracts and Service Delivery in Public Institutions

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ABSTRACT
Extreme and major changes are increasingly occurring in the environment in which public institutions operate. An obvious manifestation of the responses towards this turbulent environment is the introduction of performance contracting in Makerere University as part of the broader public sector reforms aimed at improving efficiency and effectiveness in management. The main objective of this paper was to look at a critical review of performance contracting in public institutions. The scope of the study was limited to Makerere University and the impact of performance contracts on service. The paper concludes that performance contracting as an implementing tool in strategic planning is of great importance under the New Public Administration at Makerere University. There is, however, need for a good definition of outputs and solid performance measures which will be able to promote Makerere’s internal performance through a well customer-oriented ability of employees to further promote its external performance.

TABLE OF CONTENTS

DECLARATION2
APPROVAL3
DEDICATION4
ACKNOWLEDGEMENT5
ABSTRACT6
ABBREVIATIONS8
SECTION I9
1.0Introduction9
1.1 Origin of Performance Contracting12
SECTION II20
2.0Literature Review20
2.1Implementation of Performance Contracting20
2.2Monitoring and Evaluation of Performance Contracting22
2.3Impact Evaluation25
2.4 The Effects of Performance Contracting29
SECTION III38
3.0Empirical Discussions38
3.1The Situation at Makerere University before Embracing Performance Contracts38 3.2Introduction of Performance Contracts at Makerere University43 3.3The Effects of Performance Contracting in Makerere University44 3.4Conclusion53

3.5Recommendations54
Bibliography55

ABBREVIATIONS

BARSBehavioral Anchored Rating scale
FYFinancial Year
HEIsHigher Education Institutions
ICTInformation and Communication Technology
MUKMakerere University Kampala
MUASAMakerere University Academic Staff Association
NPMNew Public Management
OECDOrganization for Economic Cooperation and Development
UGCUniversity Grants Committee
URAPUniversity Ranking by Academic Performance


SECTION I
1.0Introduction
Contractualisation in the public sector has become paramount worldwide with the spread of the New Public Management doctrine which emphasizes the adoption of private sector practices in Public Institutions (Hood, 1995). The origin of the phenomenon finds its roots in the Nora Report presented in 1967 to President George Pompidou in France. This report recommended giving more autonomy to public enterprises while contracting with them to set clear goals and compensation schemes for social objectives. This move has reached the developing world, where performance contracts were introduced. In Asia, the Performance Contract concept has been used in Bangladesh, China, India, Korea, Pakistan and Sri Lanka. In Africa, performance Contracts have been used in selected enterprises in Benin, Burundi, Cameroon, Cape Verde, Congo, Cote d’Ivoire, Gabon, the Gambia, Ghana, Guinea, Madagascar, Mali, Mauritania, Morocco, Niger, Senegal, Togo, Tunisia, Zaire, Kenya and later Uganda.

The development of performance contracts has indeed gone along with giving more autonomy to public organisations, complying with a specific vision of the role of the government, setting objectives, evaluating, appointing and rewarding the managers, providing resources and doing nothing else (Williamson,1975). A rigorous performance contract exercise reveals the true costs and benefits associated with a particular public enterprise. This, in turn, provides a valuable basis for Privatization. Similarly, the Performance Contracts with government departments are being used extensively in organization for economic cooperation and development (OECD) countries to improve the delivery of public services and effectiveness of government machinery. In quest...
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