Measuring Contractor Performance September 22, 2004 Charles W. Covington-DMS State Purchasing...

Measuring Contractor PerformanceSeptember 22, 2004

Charles W. Covington-DMS State Purchasing Richard E. Chatel-Dept. of Children & Families

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Agenda

• What is Contractor Performance Management?

• Why Measure Contractor Performance?

• What Do Best in Class Do?

• What Can We Start Doing NOW?

• The Future

• Department of Children & Families-SMORES System

• Questions

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Definition ofContractor Performance Management

Contractor Performance Management is the process of measuring, analyzing and managing suppliers’ performance for the purpose of reducing costs, improving service mitigating risks and driving continuous improvement in value and services.

“You can’t improve what you don’t measure”.

Dr. Michael Hammer

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Agenda

• What is Contractor Performance Management?

• Why Measure Contractor Performance?

• What Do Best in Class Do?

• What Can We Start Doing NOW?

• The Future

• Department of Children & Families-SMORES System

• Questions

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Reasons to Measure Contractor Performance

• Ensures the State gets best value for the goods and services that are purchased with public funds.

• This step is an important component of “Roadmap to Excellence in Contracting”.

Reference: State of Florida Audit Report “Road Map to Excellence in Contracting”-Derry Harper, Chief Inspector General, June, 2003

• This is a fundamental step in the contract management process.

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Benchmark Studies

• Contractor Performance Management is a critical activity that is sub-optimally managed in public and private sectors. 70% of those surveyed rated this as a critical activity in contract management.

• Yet, only 54% have implemented a contractor management program and only measure performance of 33% of their vendors.

• 60% of those that have contractor management programs are less than satisfied with their program.

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Benchmark Studies-Performance

Performance is 27% better on average in the rated categories for those companies that have a Contractor Performance Program versus those that do not.

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Roadmap to Excellence in Contracting

1. Improve legislative and regulatory changes2. DMS to take leadership role in all

procurement and contracting matters3. Develop and implement a professional

development program for purchasing 4. Share best practices across eligible users5. Implement standard contract formats6. Implement a uniform vendor monitoring and

rating system

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Results of 494 Audit Findings

45%-Performance Monitoring20%-Procurement Methodology

17%-Contract Writing

10%-Payment

7%-Needs Assessment

1%-Contract Closure

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NIGP-Contract Management Cycle

1. Specify Need

2. Identify Contract Risks and Establish Contract Goals to Manage Risks

3. Select General Contract Type and Clauses

4. Performance Monitoring

5. Analysis

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Fast Track to Value

Validate & Profile

Category

Conduct Industry Analysis

Build Total Cost of

Ownership Model

Develop Category Strategy

Conduct Supplier Analysis

Build Supplier Selection Decision

MatrixConduct Auctions

Complete Prepare Fact-

Based Negotiation “Packages”

Negotiate Value

Propositions

Category Profile

Industry Profile

TCO Model

Category Strategy

Value Propositions

Benefits Realization

Develop

Measure Results & Trends

High-Level Data

Collection & Analysis

Fast Track to Value

Segment Purchases

Validate & Profile

Category

Conduct Industry Analysis

Build Total Cost of

Ownership Model

Develop Category Strategy

Conduct Supplier Analysis

Build Supplier Selection Decision

MatrixConduct Auctions

Complete Prepare Fact-

Based Negotiation “Packages”

Negotiate Value

Propositions

Auctions

FormCross-

Functional Sourcing

Teams

Develop

Results & Trend

High-Data

Collection & Analysis

Fast Track to Value

Segment Purchases

Validate & Profile

Category

Conduct Industry Analysis

Build Total Cost of

Ownership Model

Develop Category Strategy

Conduct Vendor Analysis

Build Vendor

Selection Decision

MatrixConduct Auctions

Complete ITB/ITN/

RFQ/RFP

Develop Value

Proposition Around Options

Make Award

Decision

In-ScopeCategories

CFSTs(Cross-FunctionalSourcing Teams)

Selection Decision Matrix

ITB/ITN/RFQ/RFP

Continual Vendor

Improvement

Profile Internally & Externally

Develop Strategy

Screen Suppliers &

Selection Factors

Conduct Auctions &

Shape & Negotiate

Value Propositions

Implement AgreementsAssess

Opportunities

Profile Internally & Externally

Develop Strategy

Screen Suppliers &

Selection Factors

Conduct Auctions &

Shape & Negotiate

Value Propositions

Kick-Off &

Profile Internally

& Externally

Develop Strategy

Develop Selection Factors &

Screen Vendors

Conduct Competitive

Event

Prepare Value

Proposition & Award

Implement Agreements

Kick-Off & Assess

Opportunities

-

FormCross-

Functional Sourcing

Teams

Develop Vendors

Award Decision (ITA)

Typical Deliverables

Key Worksteps

- and / or -

Strategic Sourcing Model

Steps 1 2 3 4 5 6 7

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Agenda

• What is Contractor Performance Management?

• Why Measure Contractor Performance?

• What Do Best in Class Do?

• What Can We Start Doing NOW?

• The Future

• Department of Children & Families-SMORES System

• Questions

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Benchmark-Best in Class

1. Track the performance of a broader portion of the supply base

2. Standardize supplier performance measurement procedures across the enterprise

3. Collaborate with suppliers on performance metrics, reporting, and improvements

4. Automate key supplier performance measurement activities

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Typical Measurements

• Quality• On-time delivery• Service• Price• Total Cost of Ownership• Contract Compliance• Lead Time • Responsiveness

• Technical support• Innovation• Added value• Price variance• Invoicing• Customer support• Accuracy of Quote

Most Measure These: Other:

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Immediate Action Needed

What is Contractor Performance Measurement?

Why Measure Contractor Performance?

What Do Best in Class Do

What Can We Do NOW

Department of Children & Families-SMORES System

The Future

Questions

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What Can We Do Now?

• Hold periodic meetings with vendors and key users to assess performance. Frequency of meetings depend on contractor performance and strategic importance of goods or services.

• Send complaint to vendor-PUR 7017 form• Request SP assistance-PUR 7029 form• Complete periodic surveys using link on State

Term Contracts and

DOCUMENT DOCUMENT DOCUMENT!

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State Purchasing Forms

DMSHomePage

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Vendor Complaint-Pur Form 7017

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Vendor Complaint-PUR Form 7017

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Vendor Complaint-PUR Form 7029

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Request SP Assistance-PUR Form 7029

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State Term Contract Performance Input

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The Survey

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The Survey

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The Survey

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The Survey

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The Survey

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Survey Results

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Survey Results

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Survey Results

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Survey Results

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Survey Results-Multiple Vendors

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Immediate Action Needed

What is Contractor Performance Measurement?

Why Measure Contractor Performance?

What Do Best in Class Do `

What Can We Do NOW

The Future

Department of Children & Families-SMORES System

Questions

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Improvements are a Work in Progress

• Leverage MFMP eProcurement System• Develop Standardized Processes • Leverage Current Robust Systems

– Department of Revenue– Department of Children and Families– Department of Transportation– Federal PPIRS-www.ppirs.gov.

• Develop an electronic file for contract management to include contract performance

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Some Systems are Now in Place

What is Contractor Performance Measurement?

Why Measure Contractor Performance?

What Do Best in Class Do `

What Can We Do NOW

The Future

Department of Children & Families-SMORES System

Questions

Statewide Monitoring Reporting System(SMORES)

Presented By

Richard Chatel , Assistant Staff Director

The Office of Contracted Client Services

September 22, 2004

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…

The Situation

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Contract Performance Units

Decentralized Hundreds of Contracts Multiple Report Formats Limited Resources

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…And What They Needed

A Single Database Standard Report Formats Common Terminology Ability to Analyze Data Reduce Admin Overhead Improved Turn Around

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The Solution…

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Data Review

andAnalysis

Ad Hoc Data

Queries

CAP Process

Corrective Action by Provider

CPU Review of Provider

OUR FOCUS

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Statewide DCF Intranet

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The Application…

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SMORES Data Entry

User is Assisted by Prompts Monitoring Report Data is Entered in the

Central Database Following each Performance Review of the Provider

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Starting a Report

Create a NEW Report or Work

on An Existing Report.

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Six Reporting Components

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Detailed Findings

The six reporting components have detailed Findings Categories

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Automatic Data Validation

Numerous Checks on Entries Validation Against Other Data Automatic Error Correction

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Viewing Data…

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Viewing Monitoring Reports

The monitoring report results may be viewed immediately after data entry is completed

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Searching For Data

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Viewing the Results

Immediate Access to All Reports Complete Findings Links to Provider Info

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Analysis…

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Performing Queries on Data

Immediate Access to All Reports “User Friendly” Query Capability

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Major Findings by Component

344

119

58

90

67 22

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Major Findings by District

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6

26

136

53 4

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Improvements…

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Corrective Action Plan (CAP)

Improved Access for Contract Mgrs Better Turn Around Time for CAP

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Generating the CAP Form

Corrective Action Plan (CAP) Contract Manager’s Task

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An Improved Process...

EXIT CONF

CPU has 30 days to generate the Monitoring Report, but MAYdecide to complete report earlier.

NOW 3 days from actual report completionwill be allowed for data entry in SMORES

SMORES

Contract Manager has more timely access to SMORES

Contract Manager has 7 days to notify the provider ofCAP requirements, AND has earlier access to SMORES.

30 DAYS

3 DAYS 4 DAYS

3 DAYS

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Training…

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SMORES Training Opportunities

Complete On-line Training Site

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Answers to Questions

Instructions & Tutorials On-line Expert Help Available

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Summary...

Statewide Contract Monitoring Database Accessible Web-based Format CAP Processing Capability

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Bob Fierro Suncom 291-

8852Dick Chatel Suncom 293-7479Karen Stanford Suncom 293-7479

Call Us...

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Agenda

What is Contractor Performance Measurement?

Why Measure Contractor Performance?

What Do Best in Class Do `

What Can We Do NOW

The Future

Department of Children & Families-SMORES System

Questions

71

Thanks for Participating in this Session

Your Questions and Comments are Important!

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