Performance-based Contracts Research Articles

Совершенствование государственной политики по обеспечению сохранности автодорожной сети субъектов Российской Федерации

The level of transport infrastructure development directly affects the rate of economic growth. In 2018, in Russia, 67.1 % of the total volume of transported goods were delivered by road transport. However, we cannot talk about the full realization of the road transportation system since 57.6 % of public roads do not meet regulatory requirements. The available statistics indicate that, first of all, attention should be paid to the condition of the roads. The article analyzes the system for road maintenance in the constituent entities of the Russian Federation, considers the main regulatory documents governing the activities of road work suppliers and executive authorities in the field of road maintenance. The article examines and analyzes the advanced foreign experience in the field of technologies for servicing roads in the winter. As the result of analysis, the authors propose introducing performance-based contracts into the field of the road sector. The creation of an economically feasible form of performance-based contracts can lead to a decrease in the cost of road maintenance by 10-40 %.

Need for Sustain Funding to Health System to Prevent Excessive Morbidity and Mortality in Afghanistan

Introduction: Over the two decades, the Afghanistan health service delivery has been supported by the Afghanistan Reconstruction Trust Fund (ARTF), managed by World Bank (WB) under the contracted-out mechanism project called “Sehatmandi”. With this support the health system achieved substantial results in infant, child, and maternal health. The pausing of the WB funding to health sector after the collapse of the Afghanistan government on August 15, 2021, exposed the health system to a massive risk of losing the gains made over the last two decades. The study objective is to assess of the recent changes on the utilization of basic health services, infant, child, and maternal mortality post regime change.Method: It is a compression period cross-sectional study compares the utilization of health services over the four months period (June –September) for three consecutive years 2019 – 2021. In 2018, performance-based contracting was introduced, and a portion of the payment was linked to 11 key output indicators. For our analysis and comparison, we used 11 indicators linked with payment to NGOs, and reported by the Health Management and Information System (HMIS). For estimating the impact of recent changes on maternal, neonatal and child mortality, the LiST tool from https://list.spectrumweb.org/ was used to calculate the additional maternal, neonatal and child mortality baseline and 25, 50, 75 and 95 per cent reductions in RMNCAH intervention coverages.Results: Our data indicate that disruption of health services in 2020 due to COVID-19 and further aggravated in 2021 owing to increased insecurity and suspension of funding by the WB has resulted in significant decline in the utilization of health services. During August and September with the announced ban on financing health system. health service delivery utilization dopped to a range of 19 - 65 per cent points. Penta-3, CYP, cesarean section and antenatal care show more decrease. Utilization of child immunization was one of the initiators that with an imposed ban in certain areas, was already showed a negative trend. As Sehatmandi provides around 75% of health services, pausing fund to this program will result in 2,862 maternal deaths, 15,741 neonatal deaths, 30,519 child deaths and 4,057 still births.Conclusion: Sustaining the current level of health services delivery is crucial for avoiding excessive morbidity and mortality, particularly in vulnerable groups of the population, including women and children.Funding Information: None to declare. Declaration of Interests: None to declare. Ethics Approval Statement: We used secondary data and did not obtained ethical approval

Contracting Out of Health Services for Province-level Integration of Healthcare System: Effect on Equity

Background. The recently enacted Universal Health Care (UHC) Act prioritizes the provision of a comprehensive set of quality and accessible services. However, the devolution of health services has led to inequitable investments in healthcare resulting to disparities in health outcomes between areas. One of the strategies considered that could minimize these differences is the contracting out of health services to the private sector. This review focuses on mapping equity-related issues and concerns with regard to contracting out health services.
 Methods. A modified systematic search of literature using published journal articles through PubMed and Google Scholar and other pertinent reports and manuals was conducted on issues of equity and health service contracting.
 Results and Discussion. There is currently a dearth of literature on the effect of contracting services on health equity outcomes, particularly on the impact of contracting out on equity. Limited studies showed that contracting out can potentially improve equity by increasing service utilization. Mechanisms on how contracting out could potentially affect equity were also found.
 Results mainly suggest that concrete steps should be taken to ensure equitable access and improvement in health outcomes among population subgroups. To provide a framework in applying possible insights from the review, discussion of the literature review was framed in the context of establishing performance-based contracting. It was emphasized that including representatives from the underserved populations and patient groups during stakeholder consultations were crucial to provide localized context for the inclusive development of contracting arrangements. Other strategies that were highlighted included: establishing monitoring systems that disaggregate data between groups, selecting contractors that have the capacity to reach and provide services to the underserved, and making sure that these contractors are also open to data sharing for economic evaluation of services.
 Conclusion and Recommendations. Despite the paucity of data on the impact of contracting out services on equity, mechanisms explaining the effect of contracting on equity were put forward and illustrated. These findings can be considered by policy makers and program developers in the operationalization of service agreements between the public and private sectors.

Institutional pluralism and water user behavior in rural Africa

• The study examines user commitment to professional service providers for rural water infrastructure emerging in Africa to advance the water SDG. • Institutional pluralism is analyzed in terms of community, public, private and failed rural management arrangements applying cultural theory. • Risks of different management cultures can be pooled under a pluralist arrangement in the form of a professional maintenance service. • A novel methodological approach draws on panel data from 1215 households, sensor data from daily handpump usage and community responses. • Contract commitment is associated with organizational, affordability and operational factors as well as environmental context. The Sustainable Development Goal of providing everyone with safe and reliable drinking water services combines a moral imperative with an entrepreneurial opportunity. We examine water user behavior in the face of institutional change brought about by a professional service provider maintaining rural water infrastructure in Kenya. We ask (1) which factors are associated with households and waterpoint user groups contracting a service provider that guarantees rapid repairs; (2) how do factors vary between different management cultures defined by cultural theory of risk; and (3) can the professional service provider address the risk factors? By applying the cultural theory of risk framework, we capture the institutional diversity of community, public, private and failed management on the ground in dealing with operational, financial, institutional and environmental risks. To identify the factors associated with institutional change towards a pluralist arrangement – enabled by the professional maintenance service provider incubated in rural Kenya – we model data from 1215 households at actively managed handpumps with sensor data from daily handpump usage and community responses to this entrepreneurial approach. The predictors of behavior change of rural water users to commit to the new service provider include organizational factors of managing payments, affordability, and operational factors such as distance and water quality, which vary in importance across the management cultures. This learning can be harnessed to reduce risk and inform future policy and practice. As professional maintenance services for rural water infrastructure are emerging across Africa, which promise to increase value for rural water users, government, and investors through performance-based contracts, it is important for policymakers and implementers to understand which factors predict shifts in institutional behavior by water users. This research recommends seeking cooperative solutions across systems, where current policy effectively separates communities from the state or markets.

Using Feedback to Improve Accountability in Global Environmental Health and Engineering.

Engineered environmental health interventions and services in low-income and resource-limited settings-such as water supply and treatment, sanitation, and cleaner household energy services-have had a less than expected record of sustainability and have sometimes not delivered on their potential to improve health. These interventions require both effectively functioning technologies as well as supporting financial, political, and human resource systems, and may depend on user behaviors as well as professionalized service delivery to reduce harmful exposures. In this perspective, we propose that the application of smarter, more actionable monitoring and decision support systems and aligned financial incentives can enhance accountability between donors, implementers, service providers, governments, and the people who are the intended beneficiaries of development programming. Made possible in part by new measurement techniques, including emerging sensor technologies, rapid impact evaluation, citizen science, and performance-based contracting, such systems have the potential to propel the development of solutions that can work over the long-term, allowing the benefits of environmental health improvements to be sustained in settings where they are most critical by improving trust and mutual accountability among stakeholders.

Current Problem of Education Management: Subjective Attitude of University Teachers to Changes in Higher Education

The beginning of the 2000s has been marked by the processes of large-scale reform of the higher education system in Russia. The implementation of the ideas of modernization has been entrusted to university teachers. The actual results of the announced transformations largely depend on how teachers perceive and treat the ongoing changes. The article considers the subjective attitude of teachers to the following changes in higher education: introduction of competency-based approach in higher education, reduction of classroom time and contact work with students, technologization of the learning process, introduction of performance-based contracts for teachers, and increase in the proportion of remote training (including full-time students). The research results have shown that most of the teachers who took part in the survey, regardless of the length of service in the university, are rather indifferent to the changes in the higher education system. The influence of most changes on the content and specifics of the teachers’ work, on the quality of the teachers’ work (the quality of the students’ preparation), as well as on the professional development is assessed by the survey participants as insignificant. This indicates that most of the changes, according to the subjective opinion of the teachers who took part in the study, do not have significant impact on the real situation in higher education. The obtained empirical data are of interest for psychology, management and management of higher education.

Improvement of the Legal Regulation of Academic Researchers’ Labour in Russia and Abroad

The paper investigates the issues of a legal status of scientists, researchers and persons involved in conducting scientific research (supporting personnel), analyzes changes under the Federal Law No. 157-FZ of May 25, 2020, “On amendments to the Labour Code of the Russian Federation with regard to the establishment of the limit age for replacement of positions of heads, deputy heads of state and municipal educational organizations of higher education and scientific organizations and heads of their branches,” determines the directions of improvement in legislation associated with insufficient legal regulation of working hours of scientific workers. The author examines the issue of scientific workers’ labor norming and substantiates the necessity of implementing labor standards for scientific workers in order to exclude their overworking. In addition, the paper focuses on problems related to the introduction of researchers’ performance and efficiency indicators that have appeared due to the introduction of an “effective contract” (a performance-based contract of employment).

Нормативне забезпечення запровадження довгострокових контрактів на експлуатаційне утримання автомобільних доріг для забезпечення їх експлуатаційного стану

Introduction. The research level of the implementation of long-term contracts for road maintenance has increased significantly over the past few years. Over the last year several basic regulatory framework have been developed and approved, which allow to start the practical implementation of such contracts. The issue of determining the cost of long-term contracts for road maintenance to ensure their operational condition will be disclosed by the authors. Problem Statement. One of the main problems that preceded the work on research and development of methodological support was and still is the low quality of the operational condition of roads in Ukraine. According to the Global Economic Forum experts, who assess the quality of roads in 141 countries, in 2019 Ukraine took 119th place with a score of 3.0 out of 7 possible [1]. An important factor is the tendency to a certain degree of neglect of operational maintenance in favor of larger investment projects (reconstruction, repairing and even construction). Irregular and improper maintenance of roads significantly increases the cost of subsequent reconstruction or overhaul. Purpose. The purpose of the article is to highlight the basic theoretical principles and justification of the developed mechanism for determining the cost of long-term contracts for road maintenance and related regulations that ensure its implementation. Materials and methods. When writing the article the theoretical method of scientific research was used. The method of analysis was used in terms of the developed regulatory framework to determine the cost of long-term contracts for road maintenance. Results. In this article the current exploratory works in the development of regulatory framework for the functioning of long-term contracts for road maintenance to ensure their operational condition were analyzed. The result of the work is the disclosure of the mechanism for determining the cost performance-based road maintenance contracts and in particular all the documents on which it is based. Conclusions. The results of the analysis allow us to conclude that local developments that aim to implement the long-term contracts for road maintenance to ensure its’ operational status have reached a level where they can be actively used to upgrade road maintenance. The in-depth analysis of the effectiveness of such contracts and the nature of methodological recommendations disclosed in the article convinces of sufficient regulatory support for this type of contracts under consideration and determines further steps for the development of this direction.

Ensuring access to medicines at a fair price? Innovative contracting experiences in France

Abstract Issue Innovative contracting models are developed to ease price-setting negotiations in case an extremely expensive drug has not proven sufficient efficiency in clinical trials. As disruptive HIV treatments are expected in the near future, French patient organizations evaluated the ability of these innovative contracts to ensure accessible medicines at a fair price. Description Performance-based schemes condition prices paid by the State to the efficiency of the medicine observed through real-world data. In France, thirteen performance-based contracts have been concluded between 2008 and 2015. They are presented as a triple solution: innovative treatments are available to patients, manufacturers access markets, and states ensure healthcare within limited budgets. Establishing the added value of these models implies determining if they allow rapid access to treatments with substantial savings for payers, while ensuring rigorous price and cost transparency. Results Performance-based contracts indeed ensure patient access to treatments, but other mechanisms (such as temporary use authorizations) already serve this purpose. Regarding expenditure reduction however, these schemes have not proven their worth. The Court of Auditors' evaluation showed they do not generate substantial savings, as final prices correspond to those that would have applied with the European price guarantee. Lastly, as contracts are protected by business secrecy, the public cannot access neither to actual prices negotiated by payers, nor the amount of public investment that have been used for the research and development of the drug. Lessons The derogatory nature of performance contracts invites us to consider them on a case-by-case basis if ensuring access to a specific innovation is necessary. These contracts are certainly innovative, but they cannot be presented as technologies providing access at a fair price. Finally, their contractual and derogatory nature raises serious transparency issues. Key messages Performance-based contracts should be considered as alternatives to existing administrative channels provided that they lead to substantial savings and are drawn up in full transparency. Patient organizations need to assess innovative schemes such as performance-based contracting to ensure access to treatments without undermining historical struggles for fair and transparent pricing.

Performance management in logistics outsourcing: a study on sugar-energy industry

PurposeThis 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/approachThe 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.FindingsWhen 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/valueThis 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.

Can multiple contractors self-regulate their joint service delivery? A serious gaming experiment on road maintenance planning

The next step in the use of innovative, dynamic and performance-based contracts for service delivery by contractors could be use of monetary incentives to stimulate self-regulation of the network. Because it is currently unclear how performance-based payments in network tenders can effectively encourage network members to coordinate their own operations, a serious game was performed that simulates road maintenance planning to study changes in decision making and the emergence of network coordination. The experiments show that monetary incentives influence decision making, but their effect may be opposite to their intended aim and can lead to a competitive network. It was, however, also found that this competitiveness is not shown in networks where members are familiar with each other. This leads to the conclusion that penalty-based incentive mechanisms probably interfere with self-regulation and that the social dimension of contractor collaboration is paramount to the success of network-based contracting of construction activities.

Match quality and contractual sorting

This paper examines the impact of match-specific heterogeneity on compensation arrangements. In a stylized contractual choice problem we show that employers may have an incentive to offer performance-based contracts when match-specific productivity is high. We test the empirical content of this hypothesis using the NLSY79, which contains information about individual job histories and performance pay. We find that better match quality does affect pay arrangements, employment durations and wage cyclicality. Direct evidence on the accrual of job offers to workers lends support to the hypothesis that employers use performance-related compensation to preserve high-quality matches.

Effectiveness of Performance Based Contracts in Managing Road Maintenance

Budget limitations require the need for a special strategy in maintaining national roads. The main problem with Indonesia’s road maintenance is the fact that the functional and structural conditions of the roads are damaged before their design life. The damage is caused by several factors, including (1) inadequate planning and design, (2) errors during construction, (3) lack of supervision of vehicle loads during road operations and (4) inaccurate road maintenance strategies. This study uses the Qualitative Analysis method. This study outlines the benefits of implementing a Performance Based Contract (PBC) in handling road maintenance. The data used are primary data obtained from interviews and direct observations. The secondary data obtained by literacy studies from the literature, planning documents and budgeting. Data analysis was performed by comparing the implementation of a performance-based contract system (PBC) with a conventional system. The results of the study concluded that the PBC pilot project in handling road maintenance was far more efficient and effective. If PBC is to be implemented broadly, it is recommended to prepare regulations that can reduce obstacles in its implementation.

Operations & Maintenance Optimization of Wind Turbines Integrating Wind and Aging Information

Operations & maintenance (O&M) of wind turbines (both onshore and offshore) are heavily affected by weather conditions, particularly wind conditions. Current O&M models focused mainly on negative impacts of wind conditions on turbine reliability and maintenance, while ignoring potential maintenance opportunities emerging from dynamic wind velocities. This article addresses this issue by constructing a novel weather-centered O&M framework, integrating wind impacts on: (a) energy production, and (b) maintenance plans. Both the positive (maintenance opportunities) and negative impacts (maintenance delays) of wind conditions are quantified in the framework. Accordingly, a weather-centered opportunistic maintenance policy is developed to enable a flexible maintenance resource allocation. The maintenance model is formulated, and analytical properties regarding optimal maintenance ages are discussed. Furthermore, the net revenue of wind turbines is evaluated using the performance-based contracting (PBC), which captures dynamics of both power generation and operational costs. Experimental results demonstrate the superior performance of our framework in revenue improvement, particularly when facing high failure risks and production losses.

Supply chain collaboration in performance-based contracting: an empirical study

PurposeDespite the significant increase in the adoption of performance-based contracting (PBC) in various industries, the primary value drivers of it are still not clear. Considering a lack of empirical evidence for PBC, this study investigates the effects of collaboration between the suppliers to understand the value offerings created in PBC by empirical findings. The purpose of this paper is to examine how supply chain collaboration (SCC) affects PBC benefits.Design/methodology/approachUsing data from 381 survey participants who hold the title of manager or above, hypotheses are tested using structural equation modeling (SEM).FindingsThe results reveal that a strong and positive relationship between SCC and PBC benefits.Research limitations/implicationsOne of the limitations of this research is the collection of data through the Amazon Mechanical Turk online service. The experience level of participants in PBC and the absence of validation of these scale items by industrial experts are other limitations of this study. Nonetheless, the authors found convincing evidence that SCC has a positive effect on PBC benefits.Practical implicationsThe findings highlight the importance of SCC to increase financial, operational and non-financial benefits of PBC for practitioners. The findings offer guidance for managers aiming to increase PBC benefits through SCC.Originality/valueThis is the first study to empirically examine the impact of SCC for better PBC and contributes to the body of knowledge by providing empirical findings in a PBC context. This research also develops valid and reliable instruments to measure PBC benefits through rigorous empirical and statistical analysis that can be used in future studies.

Portfolio Pumping and Fund Performance Ranking: A Performance-Based Compensation Contract Perspective

We collect compensation policy data from 60 Chinese mutual fund companies, which covers 88% of assets under management by all active stock and stock-oriented hybrid mutual funds in China. Using the collected data, we investigate the portfolio pumping from a performance-based perspective. We find that portfolio pumping is stronger for funds ranking around critical points of performance distribution (i.e. top one-tenth, one-fourth, one third and one half cutoffs). Moreover, this finding is mainly driven by funds from companies setting these critical points to grade managers’ bonus levels. Our findings provide evidence of portfolio pumping motivated by performance ranking, instead of flow-performance relationship that prior studies documented.

Hidden costs in different stages of advanced services – A multi-actor perspective of performance based contracts

Performance based contract (PBC) is an innovative advanced service strategy for offering product service solutions. PBC aims at increasing customer value and reducing the costs of operations. However, manufacturers incur unquantifiable “hidden costs” while implementing PBC. This paper uses agency theory and service-dominant logic to build a theoretical framework to study the hidden costs of PBCs. The research uses a multiple exploratory case study approach to unravel the drivers of hidden costs during the design, delivery and adaptation phases of PBC. This paper derives findings from five PBCs from the UK defence industry. The analysis reveals four major hidden cost drivers (supplier relations, contract complexity, customer relations, and cost estimation problems) of PBC. The research refines the theoretical framework by linking the hidden cost drivers, PBC life cycle stages and engagement of the service network partners. It develops a set of propositions for guiding future research and managerial practices.

Framework Development of Performance-Based Striping Maintenance Contracts

AbstractState DOTs have been using traditional contracts with prescriptive specifications to procure road maintenance work. However, performance-based contracts (PBCs) have been used for design-bui...

Operation Maintenance Contract Scheme in Railway Infrastructure Project

Railway plays a significant role in improving connectivity and generates economic growth of a nation. The contract in railway has been discussed to improve industry railway competitiveness in the past decades not only in developed countries but also developing countries such as Indonesia. The country attempt to build railway tracks across the country, but the contract for operation and maintenance remain a question. The paper attempts to support the mechanism of operation and maintenance contract and use railway project in the country as the case study. The research uses a combination of qualitative and quantitative approaches through the in-depth interview and questionnaire survey. It distributed to key stakeholders related to railway and infrastructure project consist of a government institution, private investor, a state-owned enterprise, and local-owned enterprise. The result shows that performance-based contract is the most suitable for the railway industry. It shall consider duration and the contract value to select the best contract. The project prefers to be managed by private investors or local-owned enterprise. Business entity selection shall consider their company reputation, licensing requirement, and healthy financial structure.

Reliability and condition-based maintenance modeling for systems operating under performance-based contracting

Performance-based contracting motivates service providers to implement effective maintenance policies so as to boost profits and improve system performance at a lower cost. This paper deals with reliability and condition-based maintenance modeling for single-unit systems operating under performance-based contracting. For a system subject to degradation and sudden shocks, there involves three states: normal, degraded and failed. Once entered into the degraded state, the system deteriorates faster and becomes more susceptible to shocks. The degradation conforms to a two-stage inverse Gaussian process with random effects characterizing unit-specific heterogeneity in the population. Furthermore, the arrival of sudden shocks follows a doubly stochastic Poisson process. A reliability model is developed based on degradation-based and shock-based failures modeling. Afterwards, the long-run maintenance cost rate and the average system availability are evaluated. Optimal inspection-based preventive replacement policy is obtained by maximizing the expected profit rate to the service provider. Finally, a numerical example along with sensitivity analysis of model parameters is presented to demonstrate the applicability and solution procedure of the proposed models.