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

Measuring Contractor Performance September 22, 2004 Charles W. Covington-DMS State Purchasing Richard E. Chatel-Dept. of Children & Families. Agenda. What is Contractor Performance Management? Why Measure Contractor Performance? What Do Best in Class Do?

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

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  1. Measuring Contractor Performance September 22, 2004 Charles W. Covington-DMS State Purchasing Richard E. Chatel-Dept. of Children & Families

  2. 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

  3. 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

  4. 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

  5. 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.

  6. 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.

  7. 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.

  8. Roadmap to Excellence in Contracting • Improve legislative and regulatory changes • DMS to take leadership role in all procurement and contracting matters • Develop and implement a professional development program for purchasing • Share best practices across eligible users • Implement standard contract formats • Implement a uniform vendor monitoring and rating system

  9. Results of 494 Audit Findings 45%-Performance Monitoring 20%-Procurement Methodology 17%-Contract Writing 10%-Payment 7%-Needs Assessment 1%-Contract Closure

  10. NIGP-Contract Management Cycle • Specify Need • Identify Contract Risks and Establish Contract Goals to Manage Risks • Select General Contract Type and Clauses • Performance Monitoring • Analysis

  11. Strategic Sourcing Model Develop Selection Factors & Screen Vendors Profile Internally & Externally Prepare Value Proposition & Award Kick - - Off Screen Screen Shape & Shape & Conduct Competitive Event Kick-Off & Assess Opportunities Profile Profile Conduct Conduct Develop Strategy Implement Agreements Develop Develop & Suppliers & Suppliers & Negotiate Negotiate Implement Internally & Internally & Auctions & Auctions & Strategy Strategy Selection Selection Assess Value Value Agreements Externally Externally Opportunities Factors Factors Propositions Propositions 1 2 3 4 5 6 7 Steps Develop Value Proposition Around Options Prepare Fact Prepare Fact - - Level High High - - Fast Track to Value Fast Track to Value Fast Track to Value Measure Based Based Data Data Complete Complete Complete Results Results Negotiation Negotiation Collection & Collection & ITB/ITN/ RFQ/RFP & Trends &Trend Build Build Build “Packages” “Packages” Analysis Analysis Build Total Build Total Build Total Validate & Validate & Validate & Supplier Supplier Vendor Key Worksteps - and / or - Cost of Cost of Cost of Profile Profile Profile Selection Selection Selection Ownership Ownership Ownership Segment Segment Make Award Decision Category Category Category Decision Decision Decision Negotiate Negotiate Model Model Model Purchases Purchases Develop Develop Vendors Develop Matrix Matrix Matrix Value Value Conduct Conduct Conduct Propositions Propositions Form Form Auctions Auctions Auctions Conduct Conduct Conduct Develop Develop Develop Conduct Conduct Conduct Cross Cross- - Industry Industry Industry Category Category Category Supplier Supplier Vendor Functional Functional Analysis Analysis Analysis Strategy Strategy Strategy Analysis Analysis Analysis Sourcing Sourcing Teams Teams Value Propositions Benefits Category Profile TCO Model In-Scope Categories Selection Decision Matrix ITB/ITN/RFQ/RFP Typical Deliverables Realization Industry Profile Category Continual Vendor Improvement Strategy Auctions Award Decision (ITA) CFSTs (Cross-Functional Sourcing Teams)

  12. 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

  13. Benchmark-Best in Class • Track the performance of a broader portion of the supply base • Standardize supplier performance measurement procedures across the enterprise • Collaborate with suppliers on performance metrics, reporting, and improvements • Automate key supplier performance measurement activities

  14. 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 Typical Measurements Most Measure These: Other:

  15. 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

  16. 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!

  17. State Purchasing Forms DMS Home Page

  18. Vendor Complaint-Pur Form 7017

  19. Vendor Complaint-PUR Form 7017

  20. Vendor Complaint-PUR Form 7029

  21. Request SP Assistance-PUR Form 7029

  22. State Term Contract Performance Input

  23. The Survey

  24. The Survey

  25. The Survey

  26. The Survey

  27. The Survey

  28. Survey Results

  29. Survey Results

  30. Survey Results

  31. Survey Results

  32. Survey Results-Multiple Vendors

  33. 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

  34. 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

  35. 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

  36. Statewide Monitoring Reporting System(SMORES)Presented ByRichard Chatel , Assistant Staff DirectorThe Office of Contracted Client ServicesSeptember 22, 2004

  37. The Situation …

  38. Contract Performance Units • Decentralized • Hundreds of Contracts • Multiple Report Formats • Limited Resources

  39. …And What They Needed • A Single Database • Standard Report Formats • Common Terminology • Ability to Analyze Data • Reduce Admin Overhead • Improved Turn Around

  40. The Solution…

  41. CPU Review of Provider OUR FOCUS Data Review and Analysis Corrective Action by Provider Ad Hoc Data Queries CAP Process

  42. Statewide DCF Intranet

  43. The Application…

  44. SMORES Data Entry • User is Assisted by Prompts • Monitoring Report Data is Entered in the Central Database Following each Performance Review of the Provider

  45. Starting a Report • Create a NEW Report or Work on An Existing Report.

  46. Six Reporting Components

  47. Detailed Findings • The six reporting components have detailed Findings Categories

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