Thesis:

Influence of contract management on performance of public institutions in the energy sector in Nairobi, Kenya

The performance of energy sector parastatals is crucial for Kenya's economic development and reducing business costs. Consequently, the government is actively renegotiating energy contracts and implementing new policies to restructure energy operations. Issues such as fund mismanagement and poor internal control have led to the privatization or commercialization of some institutions, aiming for better efficiency and profitability. However, reports from the Office of the Auditor General reveal that these efforts have not yielded satisfactory performance, obstructing the delivery of affordable energy services. The purpose of this study was to examine the influence of contract management on the performance of public institutions in the energy sector in Kenya. Specifically, the study aimed to evaluate the influence of contract planning, assess the influence of contract documentation, investigate the influence of contract relationship management, and analyze the influence of contract monitoring and evaluation on performance of public institutions domiciled within Nairobi county, Kenya. The study was anchored on the contract compliance theory and the theory of public contracts. The study used a descriptive design, targeting parastatals operating in the energy sector. The population consisted of 1,118 staff members from these organizations, with a sample size of 294 respondents selected. Stratified sampling was employed to categorize respondents, followed by simple random sampling to select participants from each of the nine organizations. Middle-level and lower-level staff completed structured questionnaires, while an interview guide was used to gather qualitative data from top-level managers. A pilot study was conducted at the Kenya Pipeline Limited offices in Mombasa branch. Both descriptive and inferential statistics were used in the data analysis, which was carried out using SPSS. Regression analysis and correlation were employed to ascertain the connections among the variables under investigation. A multiple linear regression analysis was used. For analysis, the qualitative data were categorized into themes and subthemes. Graphs, charts, and narratives were used to display the findings in order to give a thorough summary. Results showed that contract planning significantly and positively influenced performance of Kenyan public institutions in the energy sector (β = 0.140, p = 0.018). There was a positive and insignificant influence of contract documentation on performance of public institutions in the energy sector (β = 0.099, p = 0.136). Contract relationship management had a positive and significant influence on performance of public institutions in the energy sector (β = 0.183, p = 0.000). Contract monitoring and assessment had a positive and significant influence on public institutions' performance in the energy sector (β = 1.291, p = 0.000). This study concludes that maintaining a payment schedule for suppliers and incorporating change management provisions positively influence performance. The study concludes that proactive contractor involvement, active feedback-seeking and effective collaboration influence project performance. Effective contingency planning measures mitigate risks during contract execution. The study recommends that public institutions in the energy sector should prioritize comprehensive contract planning and ensure structured payment schedules for suppliers. Energy sector institutions must establish monitoring frameworks, contingency planning and contractor incentives.