Performance-based Contracting in Sanitation Delivery

This study reviews three performance-based sanitation contracts to identify preconditions for improving the effectiveness of these approaches in improving sanitation service delivery in India.

Globally, 2.5 billion people do not have access to improved sanitation facilities and 15% continue to defecate in the open – a practice that has serious public health and environmental Implications. The situation is particularly exacerbated in developing countries where explosive population growth and unplanned expansion of urban areas pose significant socio-economic challenges to the delivery of water and sanitation services. This study aims to identify preconditions for improving the effectiveness of performance-based contracting approaches in sanitation service delivery. Based on empirical evidence on performance contracts implemented across the world, the study paper provides a framework for incorporating the key factors governing the design and effectiveness of performance-based contracts and how they can be applied to the sanitation context.
Selected performance agreements executed between public entities and private companies towards service delivery in sanitation and related sectors such as water supply and solid waste management were reviewed. The following cases were examined in detail:

  • Performance-based management of water supply system in Mysore, Karnataka
  • Concession agreement on Municipal Solid Waste in Chennai, Tamil Nadu
  • Model Concession Agreement on Public Toilets in Hyderabad, Andhra Pradesh

Key Findings

Findings suggest that introducing a performance perspective to sanitation service delivery will undoubtedly offer good benefits in terms of improved sector results and outcomes and improved effectiveness of public investments. The contract preconditions and principles discussed in the paper offer a framework for better contract design and implementation and a higher probability of achieving sanitation related goals.

The case discussions featured in this study underscore the potential benefits and pitfalls of performance-based approaches and the challenges of private sector engagement in service delivery. Performance based approaches are intended to play an important role in making public service delivery more results-oriented. While they do hold promise and merit to this end within the sanitation sector, evidence suggests the need for a measured approach in their adoption and use. Key lessons from these case examples also corroborate the role of some or all of the above-mentioned capabilities in steering performance contracts towards desired sector outcomes. 

Thematic Area

Institutions and Society

Project Leads

Sujatha Srinivasan




Bill and Melinda Gates Foundation (BMGF), Department of International Development (DfID)


Institutions and Society