Effects of Contractual Agreement on Performance of Procurement Function in Selected University Campuses in Nakuru, Kenya

The purpose of this study was to assess the contribution of contractual agreement on performance of the procurement in selected university campuses in Nakuru County. The target population of the study comprised of 400 employees and sample size comprised of 80 employees. These employees were drawn from departments related to procurement functions. Data was analyzed using descriptive statistics such as frequency, percentages and inferential statistics; Pearson Chi-square test. The results shows contractual agreement was evident in almost all campuses surveyed (96%) but a significant section of the respondents could not tell exactly the kind of procurement contractual relationships (38%). Most respondents agree that contractual agreements contribute to positive trust among partners (53.3%). The null hypothesis postulated was rejected and concluded that contractual agreement contribute positively towards supplier loyalty and commitment (P=0.001). These contractual agreements however dot not always comes with affirmative benefits but sometimes with shortcomings such as the amount of time and effort involved in building this trust. It also results in that higher switching costs if problems were to arise with the supplier and there is a sharing of proprietary information, strategy, planning, and goals. Contractual relationships between the university and source partners must be supported from the entire organization. More importantly, for a procurement organization to operate both efficiently and effectively in such a complex environment communication strategy need to be created and suitable contractual agreement determined prior and fostered throughout the organization.