P.O BOX 19117-00501 NAIROBI-KENYA Email:

November, 2010
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Table of Contents 1.0 INTRODUCTION ....................................................................................3 2.0 PERFORMANCE CONTRACTING ...................................................4 2.1 Definition of Performance Contacting ....................................4 2.2 Performance Contracting Processes ........................................5 3. SIGNIFICANCE OF PERFORMANCE CONTRACTING ..............8 4. CHALLENGES FACING PERFORMANCE CONTRACTING ... 10

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1.0 INTRODUCTION Globally, governments have been known to be associated with long bureaucratic procedures marred with inefficiency, lack of accountability thus high level of corruption and wastage of resources which translate into poor economic performance. Many governments have however been trying to put in place measures to reverse this notion and the attitude towards governments in service delivery that comes along with it. In my opinion, Kenya’s Public Sector being one of the countries that has suffered “damaged image” both locally and internationally, resorted to reforms in the public sector to gain the confidence of the public and change this “bad image”. This article therefore focuses on Performance Contracting; the Kenyan Context, its significance to the public sector and the challenges.

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2.0 PERFORMANCE CONTRACTING 2.1 Definition of Performance Contacting This is a mechanism under Public Sector Reforms that aims at improving performance of the Public Sector through; setting clear objectives, setting SMART (Simple, Measurable, Accurate, Realistic and Time-bound) targets, specifying agent performance in terms of results (outputs) & assigning accountability for those results, increasing the transparency of the accountability relationship in public institutions, establishing clear reporting, monitoring and evaluation mechanisms of the projects & providing a basis for assessment of performance. It also provides a basis for renegotiation for the performance (The first three Public Institutions in every category is given presents as a reward). The Performance Contracting process is normally done on quarterly basis. At the end of every quarter, each Institution should submit their quarterly reports and finally annual report to their reporting agency. A feedback with comments on the report is normally sent back to the Institution for improvement. The targets are majorly derived from the Institutions Strategic Plan especially the implementation matrix section in which it is expected that the time-frame for each activity is outlined.
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2.2 Performance Contracting Processes (a)Target formulation- The Institution formulates the targets in accordance to the following categories in descending order; Financial Indicators, Service Delivery Indicators, Non-financial Indicators, Operational Indicators and finally Dynamics Indicators The targets in most of the categories are similar for all the Public Institutions except the Operational Indicators which are basically derived based on the mandate of the Institution. In that way, the wider the scope of the Institution in terms of service delivery, the many targets under the Operational Indicators Category. Before implementing the targets, the institution should develop a Work-plan/implementation schedule based on its Departmental Plans. The Plan should indicate detailed key activities to be accomplished in order to realize the targets at the end of the Contract Year. (It is on the basis of the steps that the targets will be evaluated at the end of every quarter) (b) Negotiations- The targets as set by the Institution are verified on the basis of; available resources (both Financial and human capital requirement), time-frame, relevancy to the existing policy documents (Vision 2030, Medium-Term Plan 2008-2012, Sector Plan and Institutions’ Strategic Plan)

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(c) Vetting Process- The targets are re-examined and evaluated by checking their backgrounds i.e if it a new or a continuing target. A target once started can be implemented in phases based on it’s time-frame in the Institutions’ Strategic Plan. (d) Signing- The Contract is normally signed for the sake of accountability and show of commitment by the relevant Senior Management Authority and the Institutions Accounting Officers. In the case of the Ministries; The Minister and the Permanent Secretary (the Accounting Officer) signs, while for the State Corporations such as Public University for instance; the Permanent Secretary of the mother Ministry, the Vice Chancellor and chairman of the council Signs while the Minister for Finance countersigns (e) Implementation- The Institutions implements their vetted and signed Contract following their commitment to each target. Public Institution may realize some difficulty in achieving some targets within the prescribed time-frame due to financial problems (beyond the control of the Institution) such as the grants money in which case the Institution is expected to do all that it is within its control. (f) Reporting- The Institutions normally report on quarterly basis in addition to the annual report to their Reporting Authorities Ministries and State Corporations
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Report to the Public Sector Reforms and Performance Contracting Office in the Office of the Prime Minister whereas the other downstream Institutions report to the relevant Ministries.

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3. SIGNIFICANCE OF PERFORMANCE CONTRACTING Helps in fast-tracking; Institutions Strategic Plan, the aligned Sector Plan, Kenya’s Medium-Term Plan 20082012 and the Kenya’s Vision 2030. For achievement of the set targets, the institutions have to develop intense monitoring and evaluation system hence ensuring proper coordination of projects It has instilled discipline to Public Institution’ Management by ensuring adherence to work-plans, Strategic Plans, Sector Plans and the Vision 2030. Enhanced accountability in the pubic service as it defines who does what, when and how. It has led to enhancement of the efficiency in service delivery as the Institutions set higher targets every contract period. It gives room for recognition of the Public Servants hence improves the performance. Some Public Institutions have realized that working to achieve the set targets does not only help them perform better but also aid in the institutions’ operations.

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It has led to a competitive Public Service as compared to the old fashioned style and also enhanced their growth and development.

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4. CHALLENGES FACING PERFORMANCE CONTRACTING Lack of adequate skilled personnel in Performance Contracting in most of the institutions Lack of good-will by some Institutions where the Heads have not appreciated the process Rejection by some institutions (some institutions refuse to be part of the process) though this has been changing with time The long bureaucratic procedures of Public Institutions makes it hard for them to realize some targets especially to institutions in the lower-stream as they may have to wait long to receive funds from the headquarters (motherinstitutions). This may delay the execution of activities within the stipulated time.

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