4.4.1  Definitions

Key definitions relate to:

According to Mwita (2000), 'performance management' is a systems-based method of developing an 'achievement culture' by linking together organisational objectives through the modification of behaviours, outputs, and outcomes. This definition is similar to the perspective offered by Armstrong (in McAdam, Hazlett and Casey 2005) who emphasises the importance of inter-connectedness of people and information in achieving objectives, by stating: "[performance management is a] strategic and integrated process that delivers sustained success to organisations by improving the performance of people who work in them and by developing the capabilities of individual contributors and teams". This definition is closely aligned with the version chosen for this research, and one that has been adopted by the Australian Commonwealth Government - "Performance management in the [Australian Public Service] is the use of inter-related strategies and activities to improve the performance of individuals, teams and organisations" (Management Advisory Committee 2001: p.14). Although it is in itself a broad statement, it does apply directly to government and can be used for PPP.

A 'Key Performance Indicator' (KPI) or performance 'measure' / 'indicator' (Wall and Martin 2003), is a type of performance measure used to evaluate the success of the delivery of services and other endeavours in both public and private organisations. Pallister and Isaacs (1996: p.376) assert that KPI management is integral to long-term organisational success and that indicators should be used to identify both strengths and weaknesses. Operational indicators relate to the success and profitability of the supply of services including productivity and output. This differs from a view offered by Cox, Issa and Ahrens (2003): according to the latter, KPIs are used to assess task-based employee performance. For this research, however, KPIs are defined as indicators that are used to evaluate the achievement of intended VfM outcomes, and are used for comparing actual performance against specified targets in terms of establishing the effectiveness and efficiency of service delivery.

Performance evaluation for this research is defined as a systematic (and continuous) process of gathering, monitoring and analysing data against KPIs to determine how well the private partner is performing against its contractual obligations (Australian National Audit Office 1996: p.3; Grimsey and Lewis 2004: p.159). For public partner contract managers, evaluation includes preparing options that may be taken against under-performing service providers e.g. whether to apply penalties or abatement (Burney and Swanson 2010; Atkinson et al 1997). Without making comparisons between baseline measures and actual performance, it would be impossible to determine how well or poorly (Behn 2003) a service provider is performing.