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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
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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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