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Performance-based contracting (PBC) is an outcome-based product support strategy that provides efficient performance solutions for buyers. Suppliers under performance-based contracting are rewarded after achieving desired performance objectives. While current scholarship has deepened our knowledge of the benefits of PBC, the particular factors behind effective and efficient performance-based contracts (PBCs) are still vague. Thus, this dissertation will focus on essential dimensions for the successful PBC. There remains a great deal that is not understood about the success factors for effective PBCs. When looking at the critical criteria for the selection of suppliers in the context of PBC, even less is known. This dissertation contains three essays with the purpose of: (1) investigating the effect of supply chain collaboration and upfront investments on the benefits of the PBC; (2) exploring supplier selection criteria for successful PBC; and (3) examining the effect of contract length and fleet size on upfront investments for effective and efficient PBC. These three essays offer a solid foundation for theoretical and practitioner understanding for effective PBCs.

This research adds to the literature and provides insight to practice via three essays that increase understanding about the applications and consequences of the two new approaches to the after-sales service governance: warranty contract and performance-based contracts. First, we attempted to enhance our knowledge of the modeling of the after-sales service process. In the first essay, the research papers with analytical models of after-sales services to present current trends, issues, and future research directions in the literature are classified. In the second essay, the effect of the warranty contract on the supplier's product quality improvement efforts in the context of capital goods is examined. Three sets of optimization models reveal that the existence of a warranty improves product quality. In the third essay, the performance-based contract is examined in the context of the warranty contract. The numerical experimentations conducted demonstrate that the performance-based contract is superior to the warranty contract in terms of the supplier's product quality efforts and the customer's total cost of after-sales services. The alignment of incentives based on the product performance tackles the issues presented in the traditional after-sales service contracting. Collectively, the three studies presented in this research expand our understanding of after-sales service contracts. Thus, the research presents managerial implications and adds to the existing body of knowledge in after-sales service research.

In the late 1980s and early 1990s few transportation agencies around the world considered performance-based specifications as an alternative to improve the efficiency of the services provided to the public. These initiatives are better known as Performance-Based Road Maintenance (PBRM). PBRM calls for performance-based work, in which a desired outcome is specified rather than a material or method. This type of specification promises to be an excellent tool to improve government efficiency in maintaining transportation networks; however, without proper monitoring, it could likely yield adverse outcomes. Since PBRM is relatively new, the availability of reliable and comprehensive sets of guidelines to evaluate the effectiveness and efficiency of this type of specifications in the roadway maintenance arena is limited. Transportation agencies currently rely on criteria and procedures they have had developed from their traditional methods used to evaluate performance. Unfortunately, some of these procedures cannot appropriately assess the benefits, if any, accrued by the government as a result of implementing performance-based specifications for the maintenance of the roadway system. This research presents the development of a framework for monitoring PBRM more comprehensively and accurately. The framework considers the assessment of five main areas -- Level of Service Effectiveness, Cost-Efficiency, Timeliness of Response, Safety Procedures, and Quality of Services -- in order to guarantee the comprehensiveness and reliability of the evaluation process. The major contribution of this framework is to provide transportation agencies with guidelines for evaluating the effectiveness and efficiency of PBRM as an alternative delivery method to maintain and preserve the roadway system. / Ph. D.