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Article
Publication date: 23 March 2010

Maria Rey‐Marston and Andy Neely

This paper seeks to measure in a quantitative way the degree of alignment among a set of performance measures between two organizations.

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1285

Abstract

Purpose

This paper seeks to measure in a quantitative way the degree of alignment among a set of performance measures between two organizations.

Design/methodology/approach

This paper extends Venkatraman's test of coalignment to assess the alignment of a set of performance measures governing a contractual inter‐organizational relationship. The authors applied the test and present coefficients of misalignment across three sets of measures: those used by a service provider involved in the research, those used by customers contracting the services, and those documented in 11 contracts studied.

Findings

Results confirmed a high degree of alignment between target and actual operational performance in the contracts. The alignment of customers' financial objectives and contracts' operational metrics was low. Calculations show poor alignment between the objectives of the provider and the contribution received from the contracts.

Research limitations/implications

Some limitations of the conclusions include the small sample of contracts used in the calculations. Further research should include not only actual contracts, but also failed ones.

Practical implications

It is possible that misaligned goals, represented in misaligned performance measures, lead to tensions in intra‐firm relationships. If these tensions are not addressed properly the relationship could be unstable or terminated prematurely. This method of measuring alignment could detect early potential dangers in intra‐firm relationships.

Originality/value

This paper extends Venkatraman's test of coalignment to assess the alignment of a set of performance measures governing a contractual inter‐organizational relationship. Management researchers and business professionals may use this methodology when exploring degrees of alignment of performance measures in intra‐functional and inter‐firm relationships.

Details

Measuring Business Excellence, vol. 14 no. 1
Type: Research Article
ISSN: 1368-3047

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Article
Publication date: 1 March 2017

Stephen E. Celec, E. Joe Nosari and Dan Voich

A common justification for state term commodity contracts is that they are beneficial to taxpayers because of savings that result from the price concessions expected from…

Abstract

A common justification for state term commodity contracts is that they are beneficial to taxpayers because of savings that result from the price concessions expected from volume purchasing. With the growing popularity of performance based budgeting in state legislatures, there is a clear need for performance measures to document these taxpayer benefits. Based on a survey of state purchasing offices and a review of the major purchasing associations and the academic literature, this paper develops guidelines and a set of performance measures for evaluating the financial benefits of state term commodity contracts.

Details

Journal of Public Procurement, vol. 3 no. 1
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 24 August 2020

Alexandre Simon, Herbert Scheidl, Renan Stenico Campos and Gleison Matana

This paper analyzes managerial practices currently used for outsourced logistics activities in mechanized cutting, loading and transportation (CLT) of sugarcane in a…

Abstract

Purpose

This paper analyzes managerial practices currently used for outsourced logistics activities in mechanized cutting, loading and transportation (CLT) of sugarcane in a Brazilian company using performance-based logistics contracts (PBL) as reference.

Design/methodology/approach

The methodology draws on literature review, design of an analysis model, small group meetings with academics/industry professionals and practical application through a case study. The model is based on PBL and its construction involved choosing the analysis axes, defining evaluation items and respective measurement scale and the means and sources of data collection.

Findings

When comparing the evaluation results with PBL recommendations, it is possible to see that there are still many improvement opportunities. In contracting axis, decision-making process was poor-rated due to the absence of strategic considerations to support outsourcing decision. Procurement, contract and implementation are in intermediate level. Performance management is the most mature axis. However, quality analysis showed intermediate level. In relationship axis, the most relevant gap is the lack of expectations alignment. Remaining items showed intermediate levels of compliance but still need focusing on communication, establishing a structured relationship management development.

Originality/value

This study contributes first to develop an analysis model based on PBL to evaluate the level of relationship integration between company and logistics service provider, and second, to apply the model to an empirical case in a CLT company operation. As a result, the analysis model presents guidelines for the company, not to just contract/rent equipment and manpower but hire results.

Details

International Journal of Productivity and Performance Management, vol. 70 no. 7
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 1 July 2001

Hilary A. Davies and Eric K.S. Chan

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…

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1507

Abstract

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.

Details

Facilities, vol. 19 no. 7/8
Type: Research Article
ISSN: 0263-2772

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Article
Publication date: 15 November 2019

Nickson Herbert Odongo, Daoping Wang, Obadia Bishoge and Tsitaire Jean Arrive

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

Abstract

Purpose

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

Design/methodology/approach

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.

Findings

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.

Research limitations/implications

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.

Practical implications

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.

Originality/value

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

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Article
Publication date: 26 April 2011

Partha Priya Datta and Rajkumar Roy

As enterprises focus on offering integrated product/service bundles, performance‐based contracts become ever so important in ensuring effective delivery. Performance‐based…

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6491

Abstract

Purpose

As enterprises focus on offering integrated product/service bundles, performance‐based contracts become ever so important in ensuring effective delivery. Performance‐based contracts fall under the result‐oriented category of industrial product service systems (PSSs). The paper aims to present a conceptual framework for operations strategy in performance‐based industrial PSSs that will help manufacturing companies configure their operations to support effective delivery of integrated product/service offering.

Design/methodology/approach

This paper first develops a conceptual framework for operations strategy in performance‐based contracts by identifying the key elements after a detailed systematic review of literature. A major shift in support and maintenance logistics for complex engineering systems over the past few years has been observed in the defence and aerospace industries. Availability contracting, a special type of performance‐based contracts, is replacing traditional service procurement practices. Two exploratory case studies involving defence availability contracts are conducted for making inferences regarding the operations strategy.

Findings

The important findings of this research are a set of elements of operations strategy guiding the development of a conceptual framework, a set of operating principles and processes supporting effective delivery of performance‐based service contracts.

Originality/value

The true value of this research is to open up the novel area of result‐oriented industrial PSSs operations strategy by capturing the key characteristics of operations using both literature and empirical evidence.

Details

International Journal of Operations & Production Management, vol. 31 no. 5
Type: Research Article
ISSN: 0144-3577

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Article
Publication date: 1 March 2016

Olga Smirnova, Juita-Elena (Wie) Yusuf and Suzanne Leland

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…

Abstract

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.

Details

Journal of Public Procurement, vol. 16 no. 2
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 1 April 2017

Baynesagn Asfaw Ambaw and Jan Telgen

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…

Abstract

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.

Details

Journal of Public Procurement, vol. 17 no. 3
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 1 March 2007

Natalia Buchanan and Donald E. Klingner

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…

Abstract

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.

Details

Journal of Public Procurement, vol. 7 no. 3
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 10 August 2010

Phillipp Hypko, Meike Tilebein and Ronald Gleich

In view of a lack of understanding of the consequences of performance‐based contracting (PBC), this paper aims to reveal deeper insights into the mechanisms inherent to…

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3543

Abstract

Purpose

In view of a lack of understanding of the consequences of performance‐based contracting (PBC), this paper aims to reveal deeper insights into the mechanisms inherent to PBC and explore which benefits and uncertainties may result for providers and customers.

Design/methodology/approach

Conducting a comprehensive literature review and drawing on insights from agency theory as a framework, the auhtors analyzed a broad range of academic publications on the benefits and uncertainties of PBC and developed testable propositions from the provider's and the customer's perspective.

Findings

With PBC, in comparison to the conventional selling and supporting of machinery or equipment, the manufacturers are more likely to acquire customers for highly innovative technologies, to increase their profit, and to improve customer loyalty. Manufacturers, however, have to deal with uncertain revenues and costs which affect their profit. The customers are more likely to receive increased performance at decreased costs. Concerning the performance, however, the customers enter into an uncertain relationship of dependence.

Originality/value

This is the first paper to analyze the benefits and uncertainties of PBC in manufacturing industries systematically from an agency theory perspective. The paper further develops extant research by outlining the mechanisms of PBC and relating the benefits and uncertainties that are scattered over a broad body of literature. The paper proposes several promising avenues for further research.

Details

Journal of Service Management, vol. 21 no. 4
Type: Research Article
ISSN: 1757-5818

Keywords

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