In addition it is worth pointing out at this juncture

In addition, it is worth pointing out at this juncture that for certain indi-
cators, exceeding the target is not necessarily desirable. For example, if the
Performance Agreement target for the provision of additional hospital beds
is 4000 in the case of a government agency in the health sector, it is not clear
that it is desirable from a national point of view for this program to provide
6000 beds in the absence of excess demand for additional beds. Likewise, in
the case of project implementation, it is often reasonable to say that finish-
ing the project much ahead of the scheduled date may be undesirable if the
matching end-use facility and systems are not available.
Once we have the raw scores for all three criteria, the next step is to
multiply the raw scores by the respective weights for the three criteria and get
the weighted raw scores as shown in the last column of Table.3. The sum
total of this column gives us the Composite Score of 4.35.
How to Interpret Composite Scores
The primary function of the composite score is to provide an effective link
between managerial performance and incentives. The composite score shows
the degree to which the government agency in question was able to meet
its commitments. If it had met all its commitments in the Performance
Agreement, it would have received a composite score of 5. On the other
hand, if it had done a miserable job on all fronts, it would have received a
composite score of 1. The fact that it got a score of 4.35 in our hypotheti-
cal example implies that its performance was close to “excellent,” all things
considered.
The second function of the composite score is to allow us to compare
and rank the performance of all government agencies signing Performance

1±³
Agreements. While the commitments of all Performance-Agreement-signing
programs are different and one-to-one comparisons of their commitments
cannot be made, the “ability” to meet these commitments is certainly com-
parable. For example, while it is meaningless to compare individual criteria
of different ministries, their composite scores can still be compared.
Appendix II: Suggested Best Practice Evaluation

1±´ Public Enterprises: Unresolved Challenges and New Opportunities
Appendix III: Perceptions’ Analysis:
Role and Relevance of the MoU as an Instrument
10´
Among the Manufacturing Industries (Light, Medium and Heavy Engineering
PSEs) the general opinion is that the MoU has had a positive impact on the
productivity of the enterprise and has helped bring out latent infrastructure,
in way of Social, Physical and Financial into play. They also claim that it
has increased both accountability and autonomy which has in turn helped
in shifting the focus of the management from the peripherals to key areas.
They advocate public enterprise governance along the lines of corporate
governance. They feel that the MoU has adapted to the changes that have
come about with globalization and is highly relevant both in the Indian and
globalized context.