I would like to expand on those comments here without dismissing the concept of basing performance funding on the outcomes of such examinations.
Academicians regularly use tests to measure competence in an outcome-based manner.
I have often written in past reports about the importance of adopting outcome rather than process-based quality indicators. This indicator is certainly an outcome-based indicator. At the time students are likely to take such exams, the process of undergraduate education is at or near completion. The motivations of the test taker will also likely impact the outcome. The second exam was the PE exam itself.