Performance of public undertakings: a framework for appraisal
Abstract
Analysis of the performance of public undertakings has often been related to the working of private
sector companies. This is a meaningless exercise because the latter have primarily commercial or profit
objectives, while the former have been set up for a variety of considerations, of which the commercial
objective is* only one.
To avoid fuzziness about performance appraisal, it is essential that the non-commercial objectives of
a public enterprise should be identified and quantified before it is set up.
The author suggests that the profit and loss account of public undertakings should be split in two
parts, commercial and non-commercial, and each part should be appraised on the basis of predetermined
standards. Annual budgets and standard costs should be framed for all such undertakings and the weights
assigned to various objectives should be clearly established.
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