WHAT IS THE EFFECT OF PERFORMANCE MEASUREMENT ON PERCEIVED ACCOUNTABILITY EFFECTIVENESS IN STATE AND LOCAL GOVERNMENT CONTRACTS?

Designing and implementing performance measurement systems in public contracts is not easy. Little evidence is available on what measures work better in producing managerial benefits. This study evaluates the effect of different performance measurement practices on accountability effectiveness in government contracts. The findings suggest that performance measurement has a positive impact on government's ability to effectively manage contracts. More specifically, measuring costs, client impact, service timeliness, and disruptions, as well as specifying detailed processes for service delivery, are associated with higher perceived accountability effectiveness. At the same time, evaluating quality and client satisfaction, and using informal monitoring techniques have a negative impact on accountability effectiveness. The results of this study provide motivation for contract managers to optimize performance monitoring and reduce transaction costs by relying on measures that are more likely to improve contract implementation.