A Dissertation Submitted in Partial Fulfillment of the Requirements for the Award of Master Degree of Science in Procurement and Supply Chain Management of Mzumbe University
This study aimed to assess the determinants of Value for Money (VfM) in outsourcing of services in Tanzania’s public organisations. The study specific objective comprised of exploring the relationship between outsourcing decision making drivers on VfM, assessing the effect of contract detail on the achievements of VfM in outsourcing of services, finding out the effect of management factors on VfM, and identifying the challenges encountered in carrying out outsourced services in Tanzania’s public organisations. The study adopted explanatory and descriptive research design where a sample of 69 respondents was obtained from TANESCO. Questionnaire interview and documentary review were used as data collection techniques. Data were analyzed both quantitatively and qualitatively where factor analysis, multiple regression analysis, and correlation analysis techniques were used. Factor analysis was used to summarize data and remove un-interrelated data, while multiple regression was used to establish the associated relationship as the study hypothesised and correlation analysis was used to determine the strength and direction of the existing relationship between variables.
It was revealed that cost reduction, core focus, innovation, contract clause, and service level agreement were positive and significantly related with VfM in otsourcing of services. whereas contract duration failed to establish a significant relationship with VfM. However, the contract duration should not be too short or too long in the sense that too short contract duration limit the service providers to do large investment while long term service contracts are likely to become absolete.
Therefore, the present study recommends that in order for the public organisations and other agencies to attain VfM in outsourcing of services they should make sure that they use clear and well defined contract clause and SLA in their outsourced contracts and use of competent and experienced service providers and clients. Also, the respective authorities such as PPRA, GPSA, and PSPTB should emphasize the government entities on adopting appropriate outsourcing strategies in order to enhance achievements of VfM. This is because the study observed that outsourcing can impact attainments of VfM and performance of organizations.