Demirag, Istemi, Melvin J. Dubnick, and Iqbal Khadaroo, “Exploring the Relationship Between Accountability and Performance in UK’s Private Finance Initiative.” Presented at Conference on Governing the Corporation: Mapping the Loci of Power in Corporate Governance Design, Queen’s University, Belfast, 20-21 September 2004.
Abstract:
There is growing evidence to suggest that accountability is implicated in New Public Management (NPM) reforms and performance measures. This paper explores and theorizes the nature of this ‘problematic’ relationship using four assumptions: warrantability, tractability, measurability and feasibility in the Private Finance Initiative (PFI) literature. We argue, using value for money (VFM) in PFI as a mechanism to connect accountability to performance, that the concept of accountability has lost its meaning through increased societal expectations, loss of trust to public authorities and their promises of accountability, and increasing conflict of objectives between public and private interest groups. We conclude that existing literature on accountability fails to consider the linkages between accountability and performance and that further theorizing and hypothesis testing is needed using the four assumptions made in this paper in the context of the new emerging empirical evidence.
AI-Generated Summary:
This document critically examines the relationship between accountability and performance in the UK’s Private Finance Initiative (PFI) within the context of New Public Management reforms.
Relationship Between Accountability and Performance
- The paper explores how accountability influences performance, especially in PFI projects.
- It argues that societal changes have weakened the traditional meaning of accountability, affecting its link to performance.
Overview of the UK’s Private Finance Initiative
- PFI involves private firms building and operating public assets in exchange for payments, aiming for better value for money (VFM).
- It leverages private sector management techniques, with VFM serving as the key performance measure, but faces criticism over transparency and cost.
Definitions and Types of Accountability
- Accountability is complex, involving answerability, justification, and managing expectations among various stakeholders.
- Four processes—communitarian, contractual, managerial, and parliamentary—are designed to enhance PFI performance through different mechanisms.
Communitarian Accountability
- Focuses on stakeholder participation and consensus, promoting transparency and long-term interests.
- Criticized for limited political engagement and lack of transparency in PFI decision-making.
Contractual Accountability
- Based on legally binding contracts that create liabilities and obligations.
- Challenges include contract complexity, incomplete terms, and difficulties in ensuring value for money over long periods.
Managerial Accountability
- Involves performance monitoring, service quality assessment, and financial health of contractors.
- Emphasizes the importance of evaluating efficiency and effectiveness, but often lacks comprehensive post-project evaluation.
Parliamentary Accountability
- Ensures government oversight through audits and reports, mainly by bodies like the NAO.
- Criticized for being reactive and limited in questioning policies, with external costs often borne by taxpayers.
Assumptions Linking Accountability and Performance
- Four assumptions are examined: warrantability, tractability, measurability, and feasibility.
- These assumptions underpin the belief that accountability directly improves performance, but face criticism regarding empirical support and practical challenges.
Challenges in Accountability-Performance Link
- Evidence on whether PFI improves accountability and VFM is mixed and often inconclusive.
- Difficulties include tracing benefits, transparency issues, and the complexity of measuring long-term performance outcomes.
Challenges in Measuring Value for Money (VFM)
- VFM and accountability are difficult to quantify and often subjective.
- Post-project evaluations of VFM are rare due to measurement challenges.
Issues with Accountability Processes in PFI
- Many accountability mechanisms are not feasible; future service changes are hard to specify.
- Risk transfer to private contractors is difficult to verify, questioning its feasibility.
Relationship Between Accountability and Performance
- Four types of accountability exist: communitarian, contractual, managerial, and parliamentary.
- Assumptions include feasibility, tractability, measurability, and warrantability of accountability processes.
Theoretical Foundations and Assumptions
- VFM aims to improve public service value for taxpayers, users, and stakeholders.
- Its effectiveness depends on incentive mechanisms and the ability to link accountability to performance improvements.
Critical Perspectives and Research Gaps
- The link between accountability and improved VFM remains problematic.
- Further empirical research is needed to understand how accountability mechanisms influence behavior and performance in PFI.