PBC as a Solution for Public Procurement Problems: Some Ethiopian Evidence

Abstract

Public procurement in developing countries is associated with a number of problems. Performance-based Contracting (PBC) is suggested as a solution for such problems. Here, we investigate whether this suggestion can work in the public procurement of developing countries. We use qualitative data from different sources in three complementary approaches: secondary data, focus group discussion using the World Café method, and interviews. Based on the agency and transaction cost economics theories, the analysis results indicate that using PBC in public procurement is believed to minimize some of the most common problems of public procurement in developing countries. Specifically, PBC is expected to reduce problems of accountability, corruption, and cost and time overrun, and to improve quality.