Performance based budgeting models and contract management approaches should not be assessed separately. Because of the inherent differences in coordination mechanisms, motivational effects, and time horizons, these approaches constitute complementary tools that may support university management on all levels in agreeing on common objectives as well as reducing information asymmetries. Commitment -the degree to which the partners involved feel responsible for achieving objectives -is a critical success factor in this context. As a result, both contract and performance based budgeting can be considered as communication tools for fixing prior objectives.