In support of contract management Zachary Christensen Contract Analyst Division of Purchasing Contracting with and monitoring vendors performance Vendor Performance His promises were as he then was Mighty but his performance ID: 707525
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Development of Vendor Performance Ratings/ Scorecards-In support of contract management
Zachary Christensen
Contract Analyst, Division of PurchasingSlide2
Contracting with and monitoring vendors performanceSlide3
Vendor Performance
His promises were, as he then was, Mighty; but his performance,
as he is now, Nothing.
William ShakespeareSlide4
Vendor Performance…Slide5
What the vendors think and what we think….Slide6
All organizations are perfectly designed to get the results they are now getting. If we want different results, we must change the way we do things.Tom Northrup
Change– The only one who likes change is a wet baby….
That which we persist in doing becomes easier to do, not that the nature of the thing has changed, but that our power to do it has increased.
Ralph Waldo EmersonSlide7
Agenda:
What is this?
When should you use them?
Who should be involved?
When do you start the process?
What should be included?
How do you document?
What happens when there’s an issue?
Creating a path going forward– TOOLS! Yay!
Vendor Performance Ratings & Scorecards! Wahoo!!!!Slide8
What is Vendor Performance Ratings/Scorecards/ Contract Management?
Applying contract management focus and techniques to a given procurement to ensure the goods/services meet all requirements
Process to ensure the desired characteristics of goods and services are effectuated which creates a hierarchical ranking from poor to excellent.
Tool that is used to measure the performance and effectiveness of vendors and suppliers that6 provide goods or services.
Effective Contract Management. Slide9
Example reportsSlide10
Will not apply in all cases/ procurements. Should only apply when one or more of the following criteria are met:
When should you use a VPR/ SC?
Design/ development effort
A risky procurement- non-standard
Complicated Statement of Work
Considerable technical and management involvement
Complex pricing and contractual requirements
Contains management fees, cost plus, performance milestones
Critical item
NOT
COTS itemsSlide11
Who should be involved?
IT DEPENDS! (my favorite answer…)
Generally should not be an individual project. It requires the interaction of many disciplines and activities to ensure success.
Procurement team
Agency/customers
Engineers
Quality Assurance/ Control
Project manager
Other stakeholders
SMEs/Technical Experts
Other departments - Finance, Risk, etc. Slide12
When should the process start?
Cognology
reports that poor hiring (of vendors) can lead to failure rates of more than 50% of projects.
Need to start before
a solicitation is even drafted.
What is the nature of your procurement? What are the deliverables? Are there deadlines?
What milestones need to be met?
What consequences will ensue if the procurement is late or doesn’t happen?
Can you track performance? If so, how? When?
What problems or challenges can happen with this procurement?Slide13
Communication…. You have to speak up.
You MUST
let vendors know, in the solicitation:
That there will be a Performance Rating System
How they will be evaluated
What happens if they are found to be deficient. Not only is this the right thing to do….. It’s required by Administrative Rule (see R33-5-203)
This should be addressed during contract kickoff meetings, and should be an item that should be regularly addressed between you and the vendor. There shouldn’t be any surprises. Slide14
What should be included in VPR or Scorecards?
It depends!
You can only manage what you measure…
General categories which may be included:
Pricing
QualityDelivery
Service
Milestones
RiskSlide15
PricingFactors may include:
Competitive Pricing—should be comparable to others with similar vendors
Price Stability—should stay reasonably stable
Price Accuracy—should be few price increase requests
Notice of Price changes—should provide adequate notice of changes and include appropriate justifications
Sensitivity to Cost—sharing cost saving measures? Knowledge of market? Sharing insights?
Billing—are invoices accurate? Compliant with terms?
Total cost of ownership—Not just upfront costsSlide16
QualityFactors may include:
Compliance with Contract/PO- Does the product/service comply with
Ts
& Cs?
Conformity to Specs/SOW-Were specs followed?
Reliability/ durability-Within reasonable limits?
Support—quality support provided? Immediate response or delays?
Warranty—are issues resolved in a timely manner or does legal need to flex some muscle?
Current Technology– is state of the art offered or is obsolete provided? Are updates/enhancements included/immediately provided or does a demand have to be made?Slide17
DeliveryFactors may include:
On time—comply with expectations? Close to promised date?
Right product/quantity—did you get what you expected or did you need to fix it after?
Lead time—comparable to the market or better?
Packaging—sturdy, suitable, marked, undamaged? Pallet needed?
Documentation—Are proper documents included (packing slips, invoices, manuals,
etc
)Slide18
ServicesFactors may include:
Knowledge—experts in market or have to learn
Support- technical support? Maintenance? Repair? Installation? On site or phone?
Emergency support– if there’s a problem will they repair or replace? Are they available only certain times?
Problem resolution– How do they respond to issues? Do they keep you updated? When are your concerns addressed?Slide19
Milestones/ DeliverablesFactors may include:
What is due– are deliverables due throughout the contract?
Milestones—what are included in the contract? How are the milestones to be measured?
Documents
Drawings
Data files
Products/ goodsSlide20
RiskSlide21
How do you document?
Your Vendor Performance Rating System should be memorialized in your contract.
Contract Kickoff Meeting- Discuss and finalize, get vendor buy-in
Vendor suggestions- Helpful if uncertain of metrics or ambiguous
Milestones & due dates
Deliverables & due dates
Issues/problems and CAP
At State Purchasing, we include this in many of our Approved Vendor Lists, in the instructions for use.
Habitat Restoration Services
ESCO
ESCO Third-Party Reviewer USBE Teaching Services UOT Tour Guide
UOT Bus Rental ServicesSlide22
What happens when issues arise?
There should be no surprises.
You should be in frequent communication with your vendors and should know what is happening.
If you have documented, you should have a pre-agreed upon method for resolution, generally a corrective action plan.
The CAP will identify the problem, and will address the deficiencies identified.
Additional possibilities include greater involvement:
Technical meetings
Risk based assessments
Readiness reviews
Monthly/ weekly phone calls
Site visits/on-site placement/surveillanceFeedback reviewsSlide23
Great Thought Zac, but…. I’m busy enough already!
ONIVA Survey of Government Procurement Professionals shows that nearly 40% of staff are working extra hours and are overworked
Burning the candle…
My
candle burns at both ends,
It
will not last the night,
But
Ah, my foes, and oh, my friends,
it
gives a lovely light Edna St. Vincent MillayCreating effective partnerships, spending time upfront helps prevent future problems. Slide24
How do we start?Utah Public Procurement Place has scorecard capabilities, which we will be released once it’s vetted
Contract Administration and Monitoring Guide from Purchasing
Start including performance measures in applicable contracts
Work with vendors to create more effective partnerships
Communicate, communicate, communicateSlide25
Why?Slide26
How much?Slide27
The only thing not to do, the only mistake possible to make, is to stand shivering on the beach, not to plunge in and breast the waves. Breast the waves!
-
Dorothy CanfieldSlide28
Questions? Comments?