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.