Performance management includes:
- receiving and reviewing suppliers' or providers' reports
- regularly reviewing suppliers' performance and delivery against contract
- aiming for continual improvement
- monitoring to ensure delivery meets requirements, including quality, standards and service levels
- mitigating risks
- proactively managing under-performance.
Deciding what to monitor
Monitoring ensures that the agreed outcomes and outputs are delivered on time and on budget. It includes:
- collecting data related to performance - from monitoring meetings, reporting, and audit or accreditation
- assessing how well requirements are being met and outcomes are being achieved
- taking action to address any opportunities to enhance outcomes or manage problems.
Monitoring imposes costs on your agency and your supplier. To make sure it's cost-effective, consider:
- preparing a straightforward reporting template
- how often reporting is needed
- matching the frequency of monitoring and reporting to the risk and strategic importance of the service.
Don't ask for reporting if you won't use it.
Audit review (or accreditation review for social services procurement) may also be part of your service delivery management.
What to monitor
Document what you're monitoring in a contract management plan (or Outcome Agreement Management Plan if you are managing a social service contract).
Creating a contract management plan
- Have the targets for the period been met?
- If not, is the reason externally or internally driven (ie staffing issues or lack of need for service)?
- Is there over-delivery in other contracted services?
- Is the data being accurately counted?
- How much does any shortfall in delivery equate to in financial terms?
Delivery of services
- Have the services been delivered as described?
- Does the supplier have a clear understanding of your expectations?
- Has the supplier changed its service orientation? If so, why? Are there other demands that we are not aware of? Is the reason external (lack of need for service) or internal (funding, staffing or premises issues, or delivered already and no funds to continue)?
- How does the supplier capture quality/outcome information?
- Are there any client surveys available?
- Does the supplier have the current capacity to deliver (sufficient/skilled staff)?
- Have there been client complaints?
- Is the report on time and does it contain the right information?
- Are you giving timely feedback?
- Does the supplier understand the reporting form or do they need assistance?
- Is the supplier financially secure?
- Are there signs of financial stress such as a request for a “top-up”?
- Is there a possibility of fraud?
- Is a financial audit required?
- What did the last Accreditation Review identify?
Compliance with other terms and conditions of the contract
- If there is non-compliance by either party, what is the impact?
- Is there justification for amending the clause by way of variation (discuss with your legal team)?
- Discuss health and safety - multiple events or near misses are a concern.
- Understand the current governance of the supplier.
- Are there any changes in management or governance?
- Is there any restructuring underway with the supplier or agency?
- Is the relationship positive?
- What is the supplier's view of the agency’s contract management?
- Have there been multiple changes of relationship manager?
- What are the pain points for the supplier?
Use a contract management plan (or Outcome Agreement Management Plan) to track any changing risks or issues and the agreed actions. Act promptly on problems and agree what actions will be taken.
Monitoring health and safety standards
Under the Health and Safety at Work Act 2015, purchasers and suppliers must proactively manage purchased services to ensure workers and other people (including customers) are not put at risk from work carried out under those contracts.
Your contract management plan should include:
- health and safety actions
- details of governance arrangements
- worker participation, and
- the approach to oversight of notifiable events.
You should also:
- check and ensure that the supplier is meeting any agreed health and safety standards and requirements
- take action on the information you receive about notifiable events, incidents and near misses and follow up any concerns
- find out about worker participation
- encourage suppliers of services to share health and safety approaches.
Record any agreed actions, new risks or issues in your contract management (or Outcome Agreement Management Plan).
Avoiding and managing problems
When suppliers are delivering well and achieving good outcomes, acknowledge their efforts and results.
When managing non-performance or under performance:
- remember the issue is performance, not the person or the organisation - keep the discussion from becoming personal
- deal with the matter promptly - if the monthly report shows the supplier is not achieving, don’t wait until you have 3 months of reports before raising the issue.
Document any discussion of performance issues, and follow up verbal discussions with an email, letter or a remedy plan so that you have a record in writing. You may need to vary the contract (or Outcome Agreement) to reflect the resolution of the problem.
If there are serious problems:
- follow the dispute process, or
- issue the supplier with a notice of breach.
Seek advice from your legal team and a manager or senior manager if needed - your agency should have an internal policy for escalating and managing issues.