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Hong Kong has experienced an average annual growth in final energy consumption of 4.7 per cent over the last ten years. An initiative being undertaken by a small number of government and commercial organisations is to limit their own consumption of electricity through performance contracting. Performance contracting is essentially a partnering process, where a client organisation partners with an energy management firm to identify and achieve energy savings for the client organisation. The research undertaken for this project has identified a number of factors that are considered to affect the success of performance contracting in Hong Kong. In a survey of practitioners, who have experience of performance contracting, some of the key benefits of this approach identified include the fact that there are substantial energy cost savings to be made. These savings are guaranteed by the partnering energy saving company and there are overall improved operational and plant efficiency gains. Key requirements for the success of such schemes include the setting‐up of an agreed energy baseline against which to measure results and human factors such as commitment to the enterprise at all levels of the organisation and trust between the co‐operating organisations. The paper expands the discussion on the benefits, obstacles and necessary ingredients for performance contracting that are likely to be applicable not just to Hong Kong but to the successful implementation of any such scheme.

Public agencies contract out to pursue a variety of goals. But, these goals cannot be realized if the performance of contractors is not assessed and monitored. This study examines the state of performance measurement and contract monitoring in the U.S. transit agencies. We focus on three research questions: (1) What monitoring capacity exists within transit agencies? (2) What monitoring methods are used by transit agencies? (3) What performance measures are tracked by transit agencies? We find monitoring units are common in a third of agencies in the study. Service and customer complaints are the most common performance measures, while penalties and liquidated damages are the most frequent form of penalties. Finally, we find that transit agencies utilize a variety of output and outcome measures to monitor contractors.

The purpose of this paper is to understand how buyers and suppliers in supply chains learn to align their performance objectives and incentives through contracting.

Two longitudinal case studies of the process of supply chain alignment were conducted based on 26 semi-structured interviews and 25 key documents including drafts of contracts and service level agreements.

The dynamic interplay of contracting and learning contributes to supply chain alignment. Exchange-, partner- and contract framing-specific learning that accumulates during the contracting process is used to (re)design pay-for-performance provisions. Such learning also results in improved buyer-supplier relationships that enable alignment, complementing the effect of contractual incentives.

The study demonstrates that the interplay of contracting and learning is an important means of achieving supply chain alignment. Supply chain alignment is seen as a process, rather than as a state. It does not happen automatically or instantaneously, nor is it unidirectional. Rather, it is a discontinuous process triggered by episodic events that requires interactive work and learning.

Development of performance contracting capabilities entails learning how to refine performance incentives and their framing to trigger positive responses from supply chain counterparts.

The paper addresses supply chain alignment as a process. Accordingly, it stresses some important features of supply chain alignment.

Performance-Based Contracting (PBC) is widely accepted as a useful tool. It is believed that the use of PBC can assist the efficient utilization of the public resources. The objective of this research is to assess the extent of PBC application and the obstacles to applying it in the public procurement systems of developing countries. Interviews and factual analysis of procurement guidelines and contracts are used to collect data for this research. The analysis results indicate that the majority of public organizations have not yet used PBC even though it is allowed by the law. This is due partly to lack of clarity in the procurement laws and lack of capacity to use PBC.

This paper evaluates an Air Force performance-based service contract against the contracts that were prescriptive in the past. Department of Defense mandated that all service contracts be performance-based by 2005. The goal of the paper is to determine whether this contract, after becoming performance-based, is achieving greater cost savings and better outcomes for government, contractor, and taxpayers. The paper assesses the contract performance standards and how they are measured. The authors analyze the language of the Statement of Work (SOW) before and after it became performance-based. The contractor’s performance is evaluated. Positive incentives are identified and described. Finally, the paper addresses risk assessment issues.

In prior work, GAO found that contractors were paid billions of dollars in award fees regardless of acquisition outcomes. In December 2007, the Office of Management and Budget (OMB) issued guidance aimed at improving the use of award fee contracts. GAO was asked to (1) identify agencies’ actions to revise or develop award fee policies and guidance to reflect OMB guidance, (2) assess the consistency of current practices with the new guidance, and (3) determine the extent agencies are collecting, analyzing, and sharing information on award fees. GAO reviewed the Departments of defense (DOD), Energy (DOE), Health and Human Services (HHS), and Homeland Security (DHS) and the National Aeronautics and Space Administration (NASA)-agencies that constituted over 95 percent of the dollars spent on award fee contracts in fiscal year 2008.

The fear of receiving a bid protest is said to affect acquisition strategies, yet it has not been empirically explored. Based on the Public Value Framework and interviews with contracting personnel, this research tests a model of antecedents to and consequences of the fear of a protest. Survey data was obtained from a sample of 350 contracting personnel. The fear of protest is mitigated by having sufficient procurement lead time and by source selection experience, and increased by protest risk. Fear of protest increases compromised technical evaluations, added procurement lead time, and transaction costs, while it decreases contracting officer authority and is associated with source selection method inappropriateness. Compromised technical evaluations, in turn, decrease contractor performance while contracting officer authority increases contractor performance. Thus, findings suggest that, indeed, the tail is wagging the dog. The research concludes with several managerial implications, study limitations and future research directions.

To build a more comprehensive understanding of factors affecting the success of service contracting, the purpose of this paper is to investigate the influences of service complexity, contract structure and contracting process on the buyer-perceived supplier performance in business-to-business (B2B) services.

A research model is developed based on transaction cost economics and the research on service contracting. The model is tested by the survey data collected. Professional focus groups on LinkedIn are used to generate the list of potential respondents. The sample consists of 177 purchasing professionals from 25 countries.

The results indicate that three major contract dimensions and follow-up management practices positively influence buyer-perceived supplier performance. Furthermore, service complexity amplifies the effects of incentives designed in the contract and the buyer’s follow-up contract management on perceived supplier performance.

The sample consists of respondents from 25 countries and provides good geographic coverage. However, the results should be generalized with caution because not all countries were represented equally.

The study suggests a framework and guidelines for purchasing managers to improve the design and management of service contracts to secure good performance from their supplier.

This paper contributes to understanding the performance-enhancing aspects of designing and monitoring service contracts in B2B contexts. It also adds to the knowledge of the role of service complexity in successful B2B service purchasing.

Many road authorities considered contracting out road maintenance to the private sector based on performance measures as an alternative and better solution than traditional methods of contracting. It highlights issues of interest to road authorities in the context of saving maintenance costs and managing contracting times effectively. This method is named as performance based maintenance by contracting (PBMC) and has substantial success records in minimizing infrastructure maintenance costs in many developed and developing countries over the last two decades. It has received the attention of researchers and practitioners. However, the literature on PBMC is reasonably high although the concept of PBMC is relatively new. The purpose of this paper is to carry out a comprehensive state of the art review of the literature that has been conducted in the recent years.

A total of 62 published report and journal articles related to performance based maintenance by contracting for road network system has been analysed and reviewed in this paper.

This paper analyses the literature on PBMC and presents examples of developed and developing countries that have been successfully maintaining their road network systems using PBMC as their preferred method of contracting.

The potential of reducing maintenance costs, increasing the quality of works and reducing the chance of corruption in the long run in developing countries are the challenging issues for PBMC, which needs more attention. This paper can be used as a base or platform for future research in the area of PBMC such as developing optimal policies and cost models.

This paper would be useful for the research on PBMC. It would be beneficial for the engineers or professionals in improving the performance of road maintenance and management.

The purpose of this paper is to provide a systematic review of numerous writings addressing quality performance-geared contracting (PC) and self-stated performance.

The study systematically reviewed 134 refereed papers across various fields published between from 2000 to 2018. A categorization framework of PC is suggested addressing fundamental dimensions of its plan and management.

The relative analysis of pertinent articles advancing interdisciplinary perspective encourages learning and provides knowledge about quality management in organizations especially at individual and organizational levels.

The outcomes indicate that much of the present-day wide-ranging performance contracting studies do not have robust theoretical grounds. Studies are also inclined to certain theories for instance agency theory and play down other theories with the likelihood of contributing to quality management.

Performance contracting between citizens and public entities is important in that the written contract limits what the public entities, for instance, the government can and cannot do and informs on the rights and privileges of citizens, thus contracts to form the core of a free society.

This review demonstrates that performance contracting is useful in performance improvement if proper job design and contract management exist.