how to manage contractor performance

contractor performance in the procurement

Author: Liz Busch

Despite how well we plan our procurement projects, your contractor’s performance may not be what you were expecting.

Some government organizations have clear measures and expectations, and systematic approaches to managing contractor performance. As an example, a Google search gives you these results:

Are we seeing a theme here?  Many levels of government have developed performance expectations for their construction-related procurements, but perhaps not so much for their services contracts. Read on for some useful tips that may help.

Evaluation Format

If your organization has evaluation forms for contractor performance, use them.  If not, create one.  Be sure that the form is suitable for your contract(s), which may require edits to an existing form.  Keep it simple and relevant, so it’s easy to complete but captures what needs to be addressed.

Kick Off Meeting

Most issues with contractor performance are due to different interpretations of the deliverables. A kick-off meeting before the contractor begins delivering services can help with this.

This meeting is an opportunity for all parties to discuss their expectations, which may uncover misalignments about scope, timelines, quality measures, etc. You should also explain your approval processes, as your contractor – particularly if they have limited experience working with your organization – may have unrealistic expectations about what this entails.

If your solicitation and/or contract includes performance metrics, discuss how each one will be measured.  Share your evaluation format with the contractor and explain how you will use it.  Listen to any contractor suggestions on how to improve this process, as they may have ideas that you like.

If you find areas where you are not aligned, treat this as an opportunity to fix a problem before it occurs.  Look for solutions that are a win-win for all.  If compromises must be made, balance them so that neither party feels resentful.

Schedule regular check-in meetings.  The frequency depends on the length of the contract, critical delivery times, and availability of the parties.  If your monitoring activities include site visits, time these meetings when you are on site anyways.  Otherwise, hold virtual meetings.

Document everything major that you agreed upon.  This could be as simple as an email where you summarize your discussion and decisions and ask the contractor to either agree or address anything incorrect or incomplete.  This provides confirmation that you are on the same page, and documents what was discussed and agreed upon.

Regular Feedback

Attend the check-in meetings you scheduled and provide the feedback forms as you said you would. Even if everything is going well, this is an opportunity for you to thank the contractor for their efforts. Appreciation goes a long way to ensure that you become and stay one of your contractor’s clients of choice!

If everything appears to be going well and you get busy, don’t cancel your check-in meetings.  This may signal to the contractor that the contract is not that important to you, and therefore it becomes less important to them. 

If you have any concerns with the contractor’s performance, stick to facts when documenting and discussing them with the contractor, without any personal judgements or biases. It may be that the contractor is not aware of what you have observed, or that something outside their control is causing the issue.  In fact, you, as the owner, may be part of the problem observed.

These regular meetings are also an opportunity for the contractor to bring forward any issues that you may not know about but that are negatively impacting the deliverables.

Just like you did in the kick-off meeting, listen to the contractor’s perspective, develop solutions for any issues or concerns that everyone can agree to, and confirm in writing with the contractor what has been agreed upon. This may require a contract amendment, if the solutions agreed upon are significant enough to warrant a change to the contract.

Escalation Procedures

Sometimes, a problem may arise with a contractor that the day-to-day contract managers cannot resolve on their own.  Most government contracts have contractual clauses that address escalation for these circumstances, but the language is usually generic. 

Be sure that you know who to go to from your organization for issues that can’t resolve on your own.  Have your contractor identify who this person is for their organization as well and make sure that these individuals have the authority to make decisions on behalf of their respective organizations. You can save a lot of time if these people are identified early, just in case they’re needed.

Significant Issues

If you and your contractor uncover an issue where agreement may not be possible, develop your “BATNA” (best alternative to a negotiated agreement).  What will you do if you need to cancel the contract?  Just having a BATNA gives you some leverage when negotiating changes to resolve significant issues, as you have a viable alternative to agreeing to whatever the contractor wants.

Also consider the contractor’s BATNA, as this will be an indicator of how willing they are to make compromises.  For example, if they are not making money on their contract with you, they may prefer to end the contract so that they have the capacity to take on other clients where profits are more likely.

Before cancelling or refusing to offer a planned option to renew or extend, be sure you know your own internal processes.  Many government organizations expect that their legal counsel or senior executives will be consulted or will make these decisions.  You want to be sure that the process you follow to manage significant performance issues with your contractor aligns with your organization’s expectations.

Effective Management of Contractor Performance in Public Procurement

In public procurement, ensuring contractors deliver as promised is a challenge many organizations face. Like many other regions, public sector procurement or government procurement in Canada requires a meticulous approach. Some government bodies have established clear benchmarks and expectations and systematic methodologies to manage contractor performance effectively. This is crucial because the public sector often deals with large-scale projects that impact many stakeholders.

For professionals in this field, undergoing procurement training in Canada is invaluable. Such training equips them with the skills to navigate the intricacies of contractor management. Moreover, obtaining a procurement certification can further solidify one’s expertise, making one more proficient in addressing challenges in contractor relationships.

Consultants specializing in public procurement offer guidance to organizations navigating the challenges of contractor management. Their expertise becomes crucial significantly when projects don’t progress as anticipated. These consultants provide strategies and insights to rectify performance issues, ensuring projects remain on track.

Further specialization in the field can be achieved through procurement specialist training. This training delves deeper into the nuances of procurement, preparing individuals to handle even the most intricate procurement scenarios.

For organizations seeking external expertise, purchasing consulting services can be beneficial. These services offer tailored strategies, ensuring streamlined procurement processes and setting high-performance standards for contractors.

There are no guarantees that every contract you manage will result in success, but these tips may help to keep unsuccessful contracts to a minimum.

We invite you to checkout our training and service offerings pertaining to public sector procurement.

Author: Liz Busch

Disclaimer: The views and opinions expressed in this article are those of the Subject Matter Experts and do not necessarily reflect the official policy or position of The Procurement School.

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