Detail of Monitoring and Reviewing Operational Budgets and Contract Compliance

Monitoring Contract Operation

Kelly LeRoux, International City Managers Association

To monitor a contract effectively, each member of the contract administration team must understand the duties associated with his or her position on the team and must sympathize a number of basic bug that are common to public and private service delivery: customer satisfaction, timeliness, productivity, and performance problems. The team must sympathize the importance of pre-functioning conferences in laying the groundwork for efficient and effective performance and monitoring. Despite the intendance that has gone into the preparation of the contract documents, nearly contracts require amendments, and the team must empathise when and how to result them.

To monitor a contract finer, the team must select advisable measures of output or upshot, choose suitable monitoring methods, carefully document performance, and piece of work cooperatively with the contractor.

Preparing for contract monitoring

This section delineates what the contract administration squad needs to know and do before performance begins. It begins with the structure of the contract administration team and the responsibilities of the members; looks at several issues of basic importance in monitoring a contract; discusses the first step in contract administration, the pre-functioning conference; and concludes with an overview of the contract amendment process.

The contract administration team

Chapter 2 described several organizational models for a service contracting plan. Under the centralized model, a single contract director is responsible for contracts in several or all departments and is assisted by a contract administrator and field director for each contract established. In the decentralized model, each department has its own contract managing director and supporting teams that draw on the resources of the legal, purchasing, and finance departments for technical management. In the more common combination model, some contracts are handled centrally and others by individual departments. In the network model, a local government section contracts with i or more than core providers who may in turn rely on subcontractors to encounter the complex service needs outlined in the telescopic of piece of work. Whether they function in a centralized, decentralized, combination, or network model, all contract administration teams have the same goal: to work with the contractor(s) to develop and maintain an surround in which the contractor tin succeed in delivering loftier-quality public services at the agreed-upon cost.

Because of the multifariousness and flexibility of organizational structures used in service contracting, the term "contract administration team" used throughout this chapter does not refer to a large static team that handles all service contracts but to individual teams composed of a contract managing director and/or a contract administrator and/or a field manager and persons who do non bear these titles but perform like duties. For the sake of consistency, the emphasis in this affiliate is on the duties of the contract manager, contract administrator, and field manager.

Contract director responsibilities The contract manager reports to the local authorities manager, project manager, or-in a decentralized model-a department caput. As the team leader, the contract director is responsible for the success of the contract administration activities for each contract. The contract manager functions as coordinator, organizer, evaluator, mediator, and enforcer of the contract administration program.

As coordinator, the contract manager

· Coordinates the activities of contract administration teams

· Conducts scheduled meetings at least monthly with each team to review the status of individual contracts and the progress of the contracting program

· Reviews and acts upon the requests of all parties involved in a contract, working closely with the contractor and with the auditing, finance, legal, and purchasing departments.

As organizer, the contract manager

· Establishes what is to be evaluated for each contract and devises rating systems and monitoring methods to be used

· Establishes evaluation criteria, rating systems, surveys, and other monitoring methods to be used for each contract

· Assembles and trains the contract assistants squad

· Establishes procedures for review of contract problems or disputes

· Responds to management requests for new services or changes in existing services

· With the team, prepares default contingency plans for each contract

· Prepares and updates a contract assistants procedures manual.

Every bit evaluator, the contract manager

· Determines the acceptability of reports or other deliverables provided by the contractor

· Reviews contractor payment requests and approves or rejects them every bit required

· Monitors the functioning of the contractor in person when possible, working closely with the field manager

· Reports to the local government manager on contractor operation

· Evaluates the effectiveness of the contract administration teams in reaching their goals

· Establishes inspection schedules for functioning monitoring

· Plans and manages surveys of citizens and department clients

· Analyzes information nerveless during the contract term to identify ways to improve the effectiveness and efficiency of the service, implements the improvements with the electric current contractor either by mutual agreement or by contract amendment, and incorporates the improvements into future specifications for the service.

As mediator, the contract director

· Resolves conflicts betwixt the contractor and citizens or local authorities clients when such conflicts cannot exist resolved by the field manager or contract administrator

· Monitors team members, departments, and user agencies to prevent the development of an adversarial relationship that could affect the contractor's functioning

· Negotiates and approves amendments to the scope of work and attempts to resolve disputes with the contractor

· Negotiates and resolves agency demands on contractors that may exist across the contractor's responsibilities.

As enforcer, the contract manager

· Interprets contract provisions for the contractor, contract administration team members, and departments

· Decides what liquidated damages provisions or other default actions will exist taken if serious service issues arise.

Contract administrator responsibilities The contract ambassador functions at the section level and reports to the department managing director or the contract director or both. The contract administrator also functions as the contract manager in the manager's absenteeism. There is unremarkably 1 contract administrator in a department; this person is responsible for providing administrative support to the department field managers and administrative oversight for all the service contracts in the department. A department with many contracts may require more than one contract ambassador, each providing administrative back up to several field managers and oversight for their assigned contracts.

The contract administrator

· Directs, monitors, and reviews the field manager's performance

· In cooperation with the field managing director, assesses the contractor'due south functioning

· Ensures timely submission of required reports from the contractor and field manager

· For price reimbursement and unit of measurement toll contracts, monitors the contractor's expenditures to ensure that they stay inside expenditure forecasts and upkeep

· Reviews the contractor's payment requests and the field managing director'due south payment recommendations, processes approved payment requests, and forwards requests that accept been disapproved by the field manager or the contract administrator to the contract director for review and disposition

· Tracks payment requests as they travel through the accounts payable system to ensure that the local authorities meets the promised payment schedule

· Assists the field manager in reviewing the contractor'southward requests for amendments and forrad to the contract managing director recommendations for action on the changes

· Makes recommendations to the contract manager regarding enforcement of liquidated damages provisions or default procedures

· Maintains the chief contract files and ensures that insurance certificates, bonds, licenses, and other contract-related documents are electric current

· Monitors the contractor's compliance with small and minority-owned concern plans and Equal Employment Opportunity goals if applicable

· Helps prepare default contingency plans.

Field managing director responsibilities The field manager reports to the contract administrator and is the squad'due south principal link with the contractor. Field managers may be responsible for one or more than service contracts. The field director is in more than frequent contact with the contractor'south crews than any other team fellow member and must be alarm to identify service problems in the early on stages. Of the three squad members, the field manager is mostly the almost familiar with the operations of the contract and the exact duties and responsibilities of the contractor.

The field manager

· Checks the qualifications of the contractor's personnel against contract requirements

· Conducts scheduled and unscheduled inspections of the contractor's work to ensure that it is done equally required

· Reports on contractor functioning

· Monitors the contractor'south quality control program

· Reviews payment requests to be certain that items or hours charged friction match the contract prices and accurately reverberate the services that were received

· Alerts the contract ambassador to developing problems

· Helps develop default contingency plans

· Advises the contract manager of improvements that could be made in the scope of piece of work in current and hereafter contracts.

Service delivery issues

The key to effective contract assistants is to identify and address all problems before they get unmanageable. The following discussion addresses issues common to both public and private service delivery and offers guidelines to aid the contract administration team in dealing with them.

Customer satisfaction All customers deserve satisfactory service. To aid ensure that they receive it, the contract assistants squad should assess customer satisfaction. If evaluation systems and procedures were used to monitor in-house service delivery, they should remain in identify to evaluate client satisfaction with individual service delivery, specially when a service is delivered to private citizens. If no systems are in place to mensurate and evaluate customer satisfaction, comprise customer surveys, interviews, customer service lines, or some other similar mechanism into contract assistants activities.

TimelinessMonitoring delivery schedules to prevent or minimize lapses in service is a disquisitional office of the contract administration team. The squad reviews, approves, and monitors contractor work schedules to ensure that acceptable services are delivered when and where promised. When a service is delivered in house, schedule slippage tin often be corrected by shifting employees from other assignments to the trouble expanse until the service is back on schedule. In the case of contracted services, slippage must be addressed past the contractor, and a contractor is seldom amenable to spending the money necessary to bring a slipped schedule up to date. It is not uncommon for a contractor to demand extra payment for correcting slippage, claiming that the local government contributed to the trouble. The contract assistants team must be alert to correct slippage problems immediately.

Productivity Specific productivity standards-for example, the corporeality of piece of work to be performed past a work crew during one shift-should be part of every contract. These standards must be at least as loftier as those established for local government employees who formerly provided the service.

Record-keeping

Tape-keeping increases significantly under service contracting. Preparing functioning reports, keeping bond and insurance files electric current, tracking contract payments, and responding to contractor claims and disputes swallow a considerable corporeality of the contract administration squad'southward time.

To simplify record-keeping, the contract managing director should maintain an individual master file for each contract that contains the complete history of the contract, including all correspondence, reports, evaluations, insurance certificates, and so forth. Exercise non mingle correspondence relating to several contracts in a general correspondence file. Place correspondence regarding each contract in its own file. To proceed paperwork to a minimum, do non require a standard report or procedure if it is non essential for the monitoring of a specific contract.

The contract administrator (or the person who fills the equivalent position) is responsible for preparing and maintaining the main contract file. Although the field and contract managers may maintain their own files, everything in those files must be copied to the master file. The master contract file is the primal reference for the contract and should contain (at a minimum) all contract documents, including the contractor's bid response, the scope of work, amendments, bonding documents, current insurance certificates, and required licenses and permits, and all operation documents, such as correspondence, evaluations, reports submitted by contractor and the contract assistants team, payment requests, and copies of invoices

Careful monitoring is necessary to make sure that the contractor meets productivity requirements. When productivity falls below the established standard, the contract administration squad must act quickly to prevent further decline and to ensure that productivity is brought back to contract minimums.

Performance problems About problems that ascend with public or private delivery of a service are based on poor performance on the part of individuals. Information technology is important to exist aware that when issues arise with a contractor, the endeavour to resolve even unproblematic issues can potentially consequence in a formal contract dispute. A contract manager's request to a contractor to correct a trouble or perform a task may have picayune or no outcome unless information technology is made clear to the contractor that in that location has been a breach of a specific term or condition of the contract or that the task is part of the contractor's obligations nether the contract. If the contractor does not agree with the contract director, the problem may eventually crave resolution by the governing body or the courts.

The contract assistants team, specially the field manager, should intervene to prevent problems or conflicts from developing into formal disputes. Examples of intervention include meeting with a contractor whose repairs to equipment are being rejected at an unacceptable rate or informing a contractor that an employee has behaved belligerently toward a client.

Pre-performance meeting

Pre-performance meetings clarify the procedures to be used throughout the contract term and enable all parties to better sympathize one another's perspective and expectations. These meetings are especially important considering members of the contract assistants team may take different views of the contract due to their unlike responsibilities. The contract manager, for case, focuses on the relationship between the contractor's performance and service delivery goals. Both the department and the contract administrator are principally concerned with whether the contractor's operation meets section goals, contract requirements, and the project budget. A major part of the contract manager'southward job is to ensure that these sometimes-conflicting views do not interfere with the administration of the contract, that team members understand that the contract document lonely should govern their actions, and that contract administration must be a squad effort to succeed.

The contract administration team holds two divide pre-performance meetings: the beginning with the section or departments involved and the second with the contractor.

Section meeting The section meeting is facilitated by the contract assistants team and attended by staff from all the departments involved. In this meeting, the contract managing director defines the roles of the team members, reviews the forms and procedures to be used, and responds to whatever concerns or procedural questions department staff may take. Specially when contract administration is centralized, this meeting helps assure department managers that although the details of monitoring and administration may exist handled by team members exterior the department, the section volition continue to influence how the contract is administered and the quality of service commitment.

The coming together allows a department to question, comment upon, or recommend changes to the procedures that take been developed earlier the team commits itself to them at the pre-performance meeting with the contractor. This is peculiarly important when the contracted service is closely related to the central mission of a department. For example, a contract for temporary clerical help is usually assigned to a primal contract administration office and may be monitored by each department using the service. Although the contract is seldom monitored exclusively by the personnel section, it represents a service that is like the service provided through that department. Although not charged with overall contract administration and monitoring responsibilities, the personnel department is concerned nearly such issues as the minimum qualifications of personnel hired under the temporary help contract, the rate of pay for temporary personnel, and benefits of temporary personnel. The personnel department wants assurance that all employees, including temporary contract help, are qualified to perform their assigned tasks, are aware of their rights and responsibilities, and are treated fairly. Involvement of the department in the pre-performance coming together enables it to provide input during the contract administration process and establishes information technology as a resource for the team.

Contractor meetingAfter the section meeting only before the beginning of contract performance, a pre-performance coming together is held with the contractor. The purpose of this coming together is to institute a mutual understanding of contract requirements and the responsibilities of both the local regime and the contractor under the contract. The coming together as well helps make service get-go-upwards as smooth as possible.

The participants and the structure of the meeting can vary considerably. Typical participants include the contract administration team, staff from the departments involved, the contractor, and the contractor's staff person responsible for monitoring service delivery. In contracting for trade services (plumbers, carpenters, etc.), equipment repair services, or mowing services, a meeting betwixt the contractor, the department involved, and a member of the contract assistants team is sufficient. Services that affect essential operations, such every bit public transportation, refuse collection, or recycling, may crave the attendance of the unabridged contract administration squad, representatives from the departments involved, a representative of the local government manager, and possibly a member of a citizens' advisory committee.

An agenda should be prepared that includes topics such as the following: the identification of participants and a description of their authorization, review of the contract documents, the local authorities'due south responsibilities, the contractor's responsibilities, operation expectations and monitoring, quality control, resolution of service complaints and contract disputes, contract enforcement, and payment procedures. When appropriate, combine the contractor's conference with a site bout to review field weather condition that could affect performance. The accompanying sidebar describes these agenda items in more detail.

Amendments to the contract

The local government and the contractor are required to perform only those duties described in the contract documents. Because even the well-nigh comprehensive contract documents may neglect to address clearly some aspects of service delivery, the responsibilities of the parties, or other important issues, amendments are almost inevitable.

Either the local government or the contractor may request an amendment, but both parties must agree to it unless the contract specifically allows unilateral changes by the local government (east.yard., the incorporation of new legislation that does non touch on the contract price, the time of performance, the quality of service, or the establishment of a new toll structure for subsequent years on the basis of a formula set forth in the contract). Amendments must exist approved by the legal department to be sure that the rights of both parties are protected. They are bounden merely if signed by the principals of the contractor's firm and local government officials authorized to execute contracts for the parties to the contract. Local government section heads, contract managers, contract administrators, and field managers are seldom, if ever, authorized to approve or sign contracts or contract amendments.

Although pocket-size changes or clarifications that do not affect price, time of performance, or quality of service are sometimes made informally through a letter of the alphabet of agreement, the safest course is to outcome a formal amendment to the contract. The alphabetic character of understanding-which is usually signed by only one political party to the contract-has considerably less legal condition than a formal subpoena, which must be executed by both parties. A seemingly inconsequential result that is dealt with through a letter of the alphabet of understanding may open the door to later contract disputes.

It is non unusual for a contractor to attempt to utilise the amendment process to correct a pricing fault in the bid response. Requests from the contractor for boosted compensation or a change in the level of service must be examined advisedly to determine whether the request is valid and reasonable. If the asking for an subpoena stems from the fact that the contractor underestimated the effort or expense required to do the piece of work or overestimated its chapters to provide the service, the amendment is not justified and should non be agreed to.

Valid amendments have a common chemical element-the work covered is beyond the telescopic of work defined in the original contract documents. If the local government requests work that is not clearly within the scope-for example, adding a new edifice to a custodial services contract-an amendment is justified. If an amendment affecting the contract price is determined to exist valid, the contractor must provide a detailed breakdown of the proposed cost increase to demonstrate that there are no unwarranted extras congenital into the amended price.

Pre-operation conference agenda items

Authority of participants Identify representatives of both the local authorities and the contractor and land the limits of their authorisation.

Review of the contract documents Review the contract documents in detail. Clarify whatsoever ambiguities and make the clarifications part of the written record of the coming together. If necessary, meliorate the contract to avert futurity bug of interpretation. Review the contract amendment process. Stress the need for written amendments and remind attendees that exact changes are not binding on either of the parties. Define what the local regime considers acceptable justification for an amendment.

Local government responsibilities Review the local government'south obligations under the contract. Clinch the contractor that the local government will bide past the contract and will provide an environs in which the contractor tin provide the service with the least interference.

Contractor responsibilities Review the contractor'south responsibilities described in the contract. They generally include following contract requirements: post-obit the established staffing plan; providing a responsible on-site managing director; assigning qualified personnel to the contract; providing the equipment required to practice the assigned tasks; maintaining records of expenditures, deliverables, and progress; submitting required reports on schedule; and maintaining a clear line of communication for prompt resolution of problems.

Functioning expectations and monitoring Describe the level of performance expected and provide the contractor with copies of the forms to exist used for evaluation and monitoring. Review the forms in detail so that the contractor understands the performance standards and the evaluation methods. Encourage the contractor to recommend improvements in service delivery methods or productivity during the contract term. Constitute a schedule for follow-up meetings to review both contractor and local regime performance.

Quality control If the contract requires the contractor to accept a quality control programme, review and discuss the program. A contractor'southward quality control program may be similar to a local government's contract administration and monitoring or quality comeback programme. It should accept the same elements: inspection and observation on a scheduled and unscheduled basis; procedures for early identification of service delivery problems; and provisions for written records and reports.

Resolution of service complaints Review the procedures for prompt resolution of complaints generated by citizens or local regime clients. Review any complaint forms devised for the contract and the information required from the contractor to complete them. If the contractor is responsible for managing the complaint procedure independently, describe the nature and frequency of any reports required.

Contract disputes Review the procedures for handling disagreements betwixt the local government and the contractor. Provide the contractor with copies of ordinances, regulations, or procedures governing disputes. Review the time limits for dispute resolution, identify the local government staff responsible for settlement of disputes, and describe the administrative appeals procedure.

Contract enforcement Explicate the liquidated amercement provisions of the contract and describe the conditions that trigger their enforcement or enforcement of other similar provisions of the contract.

Payment procedures Considering many contractors are not familiar with local regime payment procedures, review the payment procedure from the time payment is requested by the contractor to the issuing of a check. Explicate how processing of the check tin be delayed by errors such every bit inserting incorrect payment terms on an invoice, failing to properly identify the section for which the work was performed, or failing to give a purchase social club number. Discuss the level of item or format of the invoice required nether the contract.

Functioning monitoring

This section covers the basics of performance monitoring, focusing on two approaches: measuring outputs and measuring outcomes. Measuring outputs involves a relatively straightforward method of counting service components produced. This might include number of intakes conducted in a given month, number of acres mowed, number of meals served, number of adjourn miles paved, number of health screenings performed, and so on. Outcome monitoring, also known as operation measurement, is a much more difficult task. Assessing outcomes involves request whether clients were helped and what impact the service is having.

Information on output is more often than not gathered past the contract administration team. Information on outcome, or results, may exist derived from multiple sources, including data collected from users of the service. [ane]Both output and consequence monitoring are based on information that must exist gathered and recorded, and this affiliate covers a number of approaches to obtaining data and documenting functioning, including observation records, discrepancy reports, field diaries, surveys, and customer hotlines.

Any monitoring method or combination of methods may be appropriate for a given contract. Role of successful contract administration is selecting the method that will provide the most timely and authentic data to the local regime at the least cost.

Whatever the method used, it is important to recall that a unmarried monitoring report provides only a snapshot view of performance; inspections and observations over time are required to create a comprehensive motion picture of boilerplate contract functioning.

Getting started

The start xxx days of the contract term influence the character of the long-term relationship between the contract administration team and the contractor. For any contractor new to the local government, erratic performance during the first month is to exist expected. Being patient and working with the contractor to resolve contract start-upwards problems volition assist create a long-term relationship characterized by cooperation and mutual respect.

Contract documents commonly institute a range of acceptable functioning, only contractors seldom perform at the upper end of the range, particularly when beginning a new contract. For example, even an experienced contractor may take underestimated the effort required to perform some aspects of the service and overestimated others. These miscalculations may cause performance to exist uneven until the contractor makes the necessary adjustments in personnel and equipment to residual service in all contract areas.

During the start-up period, the contract assistants squad needs to monitor intensively but leniently. The signal is to assistance the contractor get on the right path just not to interfere with the contractor'due south work. Performance problems are sure to arise, but the team should help rather than criticize the contractor. Whatever idealized notions the team may have had about service contracting will quickly be tempered by the realization that the contractor faces the aforementioned service commitment issues that the local government faced with public service delivery-and may make the same mistakes in trying to resolve them.

Monitoring output

There are several choices for gathering information on outputs. Ane option is direct monitoring, which occurs while the piece of work is being performed. Another option is follow-up monitoring, which occurs after the work is completed. Monitoring by exception is another approach, which may contain either directly or follow-up monitoring merely is triggered only past specific complaints about service. Both direct and follow-up monitoring tin be conducted according to a schedule or at random. The next five sections explore these options in item.

Straight monitoringDirect monitoring is used mainly during contract start-upwardly and occasionally during the contract term to ensure that the work is beingness performed according to established procedures or standards. Although it tin be helpful in determining exactly how the contractor delivers the service, excessive apply of direct monitoring can antagonize the contractor'south employees and create tension between them and the observer.

Follow-up monitoringFollow-up monitoring is the inspection method used near frequently. Its purpose is to answer general and specific questions such as the following:

· Does the work meet contract requirements?

· Is the contractor on schedule?

· Have the required number of units of service been delivered?

· Are clients satisfied with the service?

· Has the work surface area been left in adequate condition?

· Is the grass mowed to the correct height?

· Are all the balance rooms clean?

· Has all trash been removed from the curbside?

·

The monitor's monitor

Responsible contractors place as much or more value on effective monitoring equally the local government and their internal quality command measures may be more than stringent. For some contractors, elaborate internal monitoring mechanisms may exist a requirement of accreditation, certification, or membership in manufacture-specific associations. In addition, to protect their investment in the contract and to prevent undue interference, contractors oftentimes familiarize themselves with contract law, local ordinances, and state and federal regulatory requirements. Substantially, they monitor the local government monitors to be certain that they do not overstep their authorization

Monitoring by exceptionMonitoring by exception is a common and oft necessary part of a contract administration program. Monitoring all contracts with the aforementioned attention to detail is costly, and the local government that can beget to practise and then is rare. For every contract requiring intensive monitoring there are probably several candidates for monitoring by exception.

If a service is essential to the community or if there is a risk that a customer can really exist harmed past services of poor quality (decline collection and social services are examples), then monitoring by exception cannot be relied on every bit the sole monitoring method. However, monitoring past exception is usually acceptable for contracts that meet two criteria: (ane) the piece of work performed is piece of cake to mensurate and is conducted primarily at a contractor's site rather than on local regime property (fleet repair and blueprinting services are examples); and (ii) the delivered product (eastward.k., the work of a painting or plumbing contractor) is the criterion past which the contractor's proficiency is evaluated. Monitoring by exception is also appropriate for services that users evaluate continuously as a matter of grade. For example, in the case of personal services (those delivered past a specified individual), a user will just not rehire an unsatisfactory contractor; in the case of temporary assist, a dissatisfied user volition dismiss the assigned employee.

The principal disadvantage of monitoring by exception is that the contractor and the contract administration squad may be caught off guard by a trouble that might have been picked up by more intensive monitoring. For instance, if a contract for repair of a small bus fleet used for supplemental public transportation is monitored by exception and a vehicle breakup occurs every bit a result of the contractor's utilise of rebuilt transmission or engine components rather than new components, as called for in the contract, the unabridged armada could crave all-encompassing repairs to correct prior unauthorized work-a situation that might take been prevented by periodic examination of the contractor's repair piece of work orders. Periodic exam can be helpful in identifying a trouble early enough to prevent a crisis later.

Scheduled monitoring Scheduled monitoring for some types of services is necessary to ensure systematic review of performance. Generally, scheduled monitoring occurs on a monthly or quarterly basis. The contract may have a program for scheduled monitoring built in from the offset or may initiate scheduled monitoring if service issues begin to develop or if the local authorities receives significant complaints from service recipients.

When an increase in productivity creates a problem

Although one goal of service contracting is to improve productivity, increased productivity can point trouble. In lump-sum, fixed price contracts, it is in the best interest of the contractor to increase productivity because all productivity increases contribute to profit. But when productivity increases are achieved by lowering the quality of service, what benefits the contractor may damage service recipients. Thus, the contract administration squad must examine unusual improvements in productivity as carefully as it would a drop in productivity.

Scheduled monitoring is arranged in advance with the contractor'south project officer or field supervisor and can occur during or after performance. At the specified time, the local government's field or contract manager inspects or reviews the service with the contractor's representative. Because scheduled inspections allow the contractor to alert employees beforehand, the service is often an example of the best the contractor tin can deliver. This tin be a benefit: issues identified during a scheduled inspection-when the contractor has presumably made a potent effort-indicate that the contractor may be misinterpreting contract requirements and should review them with the field or contract manager. Similarly, if the level of quality achieved for the scheduled inspection is higher than that noted in previous reports, it may indicate that the contractor is capable of improving operation, particularly when monitored closely. The contractor should be advised that the functioning observed during the inspection is a welcome improvement and will be the new standard against which future work will be measured.

Random monitoringRandom monitoring is direct or follow-up inspection of the contractor's functioning undertaken without the contractor's advance knowledge. Although random monitoring should not be relied on as the sole indicator of performance quality, it does provide a view of performance that is non usually obtainable through scheduled inspections. Another reward of random monitoring is that it encourages the contractor to maintain acceptable service levels even when local authorities observers are not nowadays. The sidebar on this page provides an illustration of random monitoring using "mystery shoppers."

Monitoring outcome

Equally noted earlier, consequence monitoring is the analysis of the results of a service. In a street maintenance contract, for instance, the number of potholes repaired is a measure of output, whereas an outcome analysis might focus on the smoothness of the repaired roadway or on the reduction of hazards to pedestrians. Every bit another case, social services contracts unremarkably examine recidivism rates, employment attainment, client satisfaction, and quality of life indicators as outcome measurements. The sidebar higher up provides more examples of issue measures. Criteria for measuring outcome should exist included in the contractor evaluation section of the original scope of piece of work. The sections on surveys and hotlines later in the chapter are especially pertinent to issue monitoring.

Few contracts today are established without detailed performance expectations. However, local governments must practice caution in the way these expectations are structured. Outcomes and operation expectations must exist carefully structured so every bit not to stifle innovation with excessive rigidity or create incentives for the contractor that are at odds with the interests of clients. The sidebar on folio 79 highlights some strategies for avoiding these risks.

Documenting functioning

Because no unmarried method of data drove can nowadays a consummate movie of a contractor's mean solar day-to-24-hour interval performance, objective evaluation of performance must be based on information received from several sources. A random inspection, for example, may provide a snapshot view that does not necessarily represent average functioning. A complaint may be groundless or unrelated to actual service commitment. Contractor reports and deliverables required under the contract may or may not exist reliable.

This section discusses a number of approaches to gathering and recording data on performance-from forms to diaries, surveys, and hotlines. Whatever the source of data, the goal of the contract administration team is to tie together all bachelor information to create a comprehensive picture of a contractor'southward performance. The forms and techniques described tin be adapted for use in any service contracting program.

Mystery shoppers

To ensure that contractors' interactions with clients fulfill contractual performance requirements, Genesee Canton Community Mental Health (GCCMH) in the state of Michigan uses a "mystery shopper" programme to randomly monitor its contractors. The Client Services unit of GCCMH enlists the help of client volunteers who are provided with training and a set of protocols for randomly assessing how the contractor responds to client requests for assistance. The client is assigned a set up of expectations to evaluate during a single encounter with the contractor. For example, the client may contact the agency by phone or visit the site in person and make a asking for service. The client may be asked to study on whether they were treated with respect; how long they were put on hold if they phoned; whether they were given an appropriate response to an emergent care request; and, if they presented a asking in a foreign language, whether the contractor followed the appropriate protocol for accessing a translator.This program has been highly constructive in helping GCCMH monitor contractors and involve clients in the process, and it keeps contractors "on their toes." Contractors detect the feedback helpful and use it as a performance improvement tool.

What does an upshot measure look like?

Outcome measures assess the extent to which a program has accomplished its intended results. The principal question in outcome measurement is: Has the programme or service made a difference? Outcome measures should assess some aspect of the upshot, issue, or quality of a service. They are outcomes the public would probable be interested in, non simply the amount of work done or resources consumed. Typically, outcomes are broad program goals that are measured through a series of measurable indicators. Some examples include:

Outcome: Timely access to services

Indicator 1: Intake appointments scheduled within 48 hours of initial request for services

Indicator two: Clients assigned a caseworker within vii days of initial intake

Indicator 3: Later on-hours emergent care calls answered inside 15 minutes

Issue: Economic revitalization

Indicator 1: Number of new businesses start-ups

Indicator ii: Reduction in unemployment rate

Indicator 3: Clearance of 25 percent of blighted land area

Consequence: Client satisfaction

Indicator 1: Number of complaint calls received per month

Indicator 2: Number of echo complaint calls

Indicator 3: Average customer satisfaction rating of service on almanac survey

Source: Adapted from Compassion Capital Fund National Resource Centre, Measuring Outcomes (Washington, D.C.:

National Resources Center, 2005), available at www.acf.hhs.gov/programs/ccf/resource/gbk_pdf/om_gbk.pdf.

I of import note to call up: adept tape-keeping procedures are as essential to service contracting as they are to whatsoever other local government office. For example, any written material relating to a contract-a memorandum issued past the field director or contract manager, for example-must be forwarded to the contract administrator and stored in the master file for that contract. Similarly, if the contract administrator receives a document that affects the contractor'southward performance or amends the contract documents, the administrator should forwards a copy to the field manager for information and reference.

Overcoming the problems of performance contracting

Specifying the blazon and level of operation expected from contractors can get a long way toward structuring the monitoring process, but it is not a foolproof method. Performance contracting has several downsides, including the fact information technology may inhibit contractors' inventiveness, stifle overachievement, and encourage innovation in cost-cut but non in service delivery. Robert Behn and Peter Kant offer eight strategies for avoiding these and similar pitfalls associated with performance contracting:

1. Link performance measures that are used to monitor contractors to the local authorities'due south mission. This reminds the contract administration team of the underlying purpose of contracting.

2. Create contracts based on outputs that are linked to mission; are like shooting fish in a barrel to measure out, empathize, and reproduce; and facilitate benchmarking.

3. First with measures that are simple and adjust the complication with time and experience.

4. Monitor many indicators of performance and monitor them ofttimes

five. Be prepared to acquire, change, and conform. Apply knowledge gained through the process to
improve time to come versions of the contract as well as new contracts.

6. Piece of work collaboratively rather than adversarially with contractors.

7. Pay contractors not simply for concluding outputs only as well for significant and well-defined progress.

viii. Choose contractors with a track record of desirable performance.

Source: Adapted from Robert D. Behn and Peter A. Kant, "Strategies for Avoiding the Pitfalls of Operation Contracting,"
Public Productivity and Management Review 22, no. iv (June 1999): 470-489.

Contract administrator's checklist The contract administrator'south checklist (Exhibit i at the end of the chapter) lists the licenses, certificates, bonds, and insurance and the reports, forms, and other deliverables required of the contractor during the contract term. The checklist is prepared by the contract administrator at the first of the contract term and is reviewed at specific intervals-anywhere from monthly to annually-to ensure that all items are current. Although the contractor's failure to provide the required items on time is a factor in the evaluation of performance, the checklist is more an aid for the contract administrator than an evaluation course in the strict sense.

Ascertainment record An observation record (Exhibit 2) is used to document observations of contractor functioning, primarily by the field manager but also past the contract administrator and contract manager whenever they observe service delivery.

Complaint record The complaint record (Exhibit three) is used to record and follow up on complaints received from citizens or local regime clients. To allow easier tracking of a complaint from receipt through concluding disposition, a separate class is used for each complaint.

Discrepancy report A discrepancy report (Exhibit 4) is used to document a condition that is or could lead to a breach of contract. It is prepared by the field manager or contract administrator, canonical by the contract managing director, and forwarded to the contractor for cosmetic action with a cover letter if necessary. If the contract director thinks that a written response is necessary, he or she recommends in the discrepancy report that the contractor reply to the complaint in writing. A copy of the original complaint report may also be sent to the contractor with the discrepancy report. If the local authorities does non accept an official discrepancy report form, a elementary memorandum citing the discrepancy should be issued to the contractor and a copy placed in the contract file. The primal is to put the problem in writing so that information technology becomes part of the operation history.

On the discrepancy form, the contract manager requires the contractor to respond within a specified time. After reviewing the contractor'south response, the contract managing director decides whether farther activity should be taken to preclude recurrence of the trouble. A copy of the completed form is so returned to the contractor with a embrace letter expanding on the entries, if necessary.

Depending on the nature of the discrepancy, it may exist appropriate to enquire the contractor to submit a brief corrective action plan. The corrective activeness plan does not need to be lengthy simply should address why the discrepancy occurred and describe action taken to prevent future discrepancies.

Summary evaluation study The summary evaluation study (Exhibit 5) is a brief evaluation of functioning during a given period. It should be prepared 30 or 60 days later contract start-up and every 90 to 120 days later on that. Summary reports are prepared more often when performance threatens to fall below contract standards.

The study is prepared by the contract director using information received from all bachelor sources during the evaluation period (personal observations, team member observation reports and memoranda, complaints received, etc.).

Contract status reportDepending on the type of service, the local government may require status reports from contractors on a routine basis as part of the performance monitoring process. If the local government is paying the contractor for the service fully or in part through federal funds, status reports from contractors are probably required. A monthly narrative status report prepared by the contractor may fulfill a grant requirement or provide management or the governing torso with information on contracts of special interest to them. All reports are reviewed thoroughly by the contract administration team and the affected department for completeness and accuracy.

Exercise not crave a report without a valid reason. Reporting is not necessary or practical, for example, for contracts for trades services or whatsoever short-term personal service or consulting contract. When in doubt almost whether to include a reporting requirement, require a quarterly report "at the discretion of the contract manager." It is much easier to waive an existing reporting requirement than it is to ask for a report that was not required in the contract.

Establish an outline of the topics or areas that must be addressed in any contract status report required and let the contractor choose the response format. The outline may include items such as the post-obit:

· Specific tasks, units of service provided, number of clients served, or deliverables provided since the final reporting period and a summary of activities to date

· Problems encountered in service commitment or in adhering to upkeep or project schedules and how they were resolved

· In price reimbursement contracts and contracts under which work is to exist completed in phases, a comparison of the progress to engagement with targeted and actual contract dollars spent

· A forecast of tasks, deliverables, or services to exist provided during the adjacent reporting period

· An assessment of the quality of cooperation received from the local government staff

· Recommendations for improvements in service delivery, level of local government involvement, and so forth.

Field diaryField notes include information on conditions conditions, favorable and unfavorable observations of contractor performance, and records of telephone and confront-to-face conversations with the contractor. Because the observations recorded in field notes are included in more than formal documentation of performance such equally discrepancy reports and evaluation forms and may be required to justify the assessment of liquidated damages or to support legal action against the contractor, it is essential that they be accurate.

1 style to help ensure accuracy and protect the integrity of field notes is to record them in a field diary. Traditionally, a blank difficult-covered book has served this purpose. Increasingly, construction inspectors rely on electronic systems to record observations in the field. Specialized software such as Field Manager allows inspectors to tape inspection details on an electronic reporting pad while in the field and later transfer the information to the local government's main computer system.[2]

The field diary provides a dated record of each inspection, observation, and problem encountered during the contract term. Every entry must exist authentic and defensible: the diary is not to exist used to express opinions or repeat hearsay but to record events or activities directly observed. Like nearly contract administration documents, the diary may be a part of the public record under liberty of information laws.

The sidebar below lists recommended procedures and typical entries for a field diary. The field managing director should use a separate diary for each contract. Contract administrators and contract managers, who have less frequent contact with individual contractors, practice non have to utilise a divide diary for each contract. They tin insert their observations and comments into a single diary, identifying the contract to which each comment applies. However, when monitoring highly visible or sensitive contracts, it is advisable for each member of the contract assistants squad to have a split up diary for each such contract.

Maintaining a field diary

Procedures

1. Number all pages consecutively in ink.

2. Brand entries in ink, if possible. Do not erase entries. Cantankerous out errors and enter the correct information.

3. Exercise not tear pages from the diary. If an unabridged folio needs to exist corrected, cantankerous information technology out with a large "10" and mark information technology "VOID."

4. Make entries directly into the diary at the time that events are observed. Practise not make split notes to be entered into the diary afterward.

5. Make an entry for every calendar twenty-four hour period. If naught of significance occurred that twenty-four hour period, enter "No significant activity," "Sunday," "Holiday," etc.

6. Sign or initial each twenty-four hour period's entries immediately subsequently making the last entry for the day. Do not leave a space between the terminal entry and the initials or signature.

vii. The diary may be supplemented with photographs that should be numbered, marked with
the fourth dimension and engagement the photo was taken and the photographer'due south proper noun, and stored permanently (along with the negatives) in the primary contract files. Digital cameras are useful because they can shop photos electronically and provide a backup for this component of the field diary. Photos should exist identified in the diary by appointment and number, and electronic files containing photos should be labeled the same.

eight. If a single diary is being used for several contracts, enter the contract number and date
immediately before each entry.

Typical entries

one. A description of the conditions, if atmospheric condition affects contract performance.

2. A record of the type of monitoring (directly, follow-upwardly, exception, scheduled, random).

3. All favorable and unfavorable observations.

4. A summary of any substantive contract-related telephone conversations.

5. A clarification of whatever event or activity not in keeping with contract requirements, including
the name of the contractor's supervisor who was notified, the date and manner in which the contractor was notified, and any other action taken or observations fabricated.

6. A summary of the content of any noun discussions held with the contractor, on or off the job site.

seven. A description of any problems with reports or incorrect invoices submitted by the contractor, including notes on whether they were returned for correction

Surveys Surveys are effective ways to monitor services provided to citizens or to clients within the local government. Because citizen surveys are usually outcome oriented, constructing them may exist comparatively difficult and may require professional assist. Surveys of local government clients are generally simpler to construct, conduct, and evaluate than citizen surveys. They ordinarily address basic bug (eastward.g., whether the citizen is satisfied or dissatisfied with the service) or the number and quality of contract outputs.

Citizen or customer surveys capture feedback from service recipients and are therefore a valuable means of monitoring contract performance. However, a reliable survey requires some understanding of survey techniques, statistics, and data analysis-skills that the local regime contract administration staff may not have. An improperly conducted citizen survey may have side effects that offset its potential benefit. For instance, the selection of i sample group may provoke resentment among groups non selected to participate or a poorly worded survey question may be perceived equally biased or misleading. When the results of a survey are criticized past citizens or the governing torso, its value tin can be macerated, no thing how valid the results.

The contractor'south employees

The contractor-not members of the local government contract administration team-is responsible for the supervision of its employees while performing contract tasks. During the monitoring process, team members must be careful not to do anything that would interfere with the human relationship between the contractor and its employees. Avert direct communication or contact with the contractor's employees and discuss contract matters simply with the contractor's supervisor or field representative. Practice non direct a contractor's employee to perform or to stop performing any task. Directions given to a contractor's employees past a local government employee could exist interpreted as the local government'due south direct supervision of the work crew and could alibi the contractor from liability for damage that may result from the order.

Nevertheless, when dealing with emergency situations, a local government employee may be forced to gild the contractor's supervisor or employees to perform or not perform a job. Before an emergency arises, the contract manager should obtain the communication of the legal department on the liability of the local government if an emergency condition requires a team member to order a contractor'south supervisor or employees to perform or stop performing a job.

To create the all-time climate for acceptance of a survey and protect the integrity of the results, the survey must exist properly planned, conducted, and evaluated. The all-time course of action is to obtain the endorsement of the governing torso to hire an independent professional survey firm. For local governments that find this cost-prohibitive, those on the contract assistants team responsible for survey blueprint should familiarize themselves with survey methods.[3]

Internal surveys are usually one- or two-page questionnaires that ask users to record their level of satisfaction with the service, describe any service problems they encountered, and comment generally on service quality and contractor performance. They are circulated to department users at to the lowest degree once during the contract term (at contract midpoint) or, if needed, twice during each contract twelvemonth, usually in the fourth and 8th months. Some department surveys ask for the user's level of satisfaction with the contractor each time a service is delivered. This works well, for example, when evaluating contracts such as temporary assistance contracts, trades contracts, and others nether which the service is provided intermittently.

A useful by-production of a user survey is that information technology creates a record of contractor functioning that can be used to help qualify or disqualify the contractor the next time the service is let for bids. As is true for the results of every contract monitoring method, the contract administration team must share both positive and negative survey results with the contractor. Apply positive results to encourage connected good functioning and negative results to establish a plan for improvement.

Hotlines Hotlines, toll-free numbers, and client service lines are dedicated telephone numbers for registering service complaints. This method of monitoring allows service delivery issues to be detected rapidly and anonymously if the service recipient does not wish to be identified. Hotlines are specially helpful when the service covers a large geographical area that cannot be constantly monitored by contract administrators (due east.g., park maintenance, mowing, tree trimming, refuse drove, transportation) and for vulnerable client populations who may otherwise be reluctant to report complaints. To obtain the best results from a hotline, be certain the number is broadly publicized where users are likely to see it-in news releases, Web sites, department publications, and newsletters and at the worksite.

Conclusion

A contract administration program is held together not by forms, surveys, diaries, or other monitoring tools just by the contract administration squad. Effective contract monitoring depends more on the skills of the contract monitors than on the particular monitoring methods or forms used.

The contract administration team must work to accurately detect and record functioning just it must also work with contractors to maintain adequate performance and correct poor performance. Although most contractors cooperate readily with the team to resolve bug, some are more hard to piece of work with. Squad members must be able to recognize the dissimilar styles and needs of contractors and employ the tools of contract assistants flexibly in order to encourage the best possible functioning from each contractor.

Contract monitoring tin be one of the most labor-intensive aspects of contract administration, and funds and personnel must be carefully rationed and put to best employ. A service that required only coincidental and infrequent inspection nether a previous contractor may require constant attention when delivered past a new 1. Contract managers must balance the fourth dimension and money required to monitor a contract against the potential for disruption of essential service delivery. If the risk of disruption is depression, less intensive monitoring may be adequate. Each contract and each contractor is different. At that place is no single right way to monitor a contract.

Exhibit 1: Sample contract administrator'south checklist

Exhibit 2: Sample ascertainment tape

Exhibit 3: Sample complaint record

Exhibit 4: Sample discrepancy record

Exhibit 5 Sample summary evaluation report

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Kelly LeRoux, ed, "Monitoring Contract Performance" in Service Contracting: A Local Authorities Guide, 2^nd ed., 151-174 (Washington, DC, ICMA, 2007) Reprinted with permission.

[i] For a helpful source of information on how to collect and analyze outcome data, see Harry P. Hatry et al., How Effective Are Your Community Services? Procedures for Functioning Measurement, 3rd ed. (Washington, D.C.: ICMA, 2006); and Harry P. Hatry, Operation Measurement: Getting Results, 2nd ed. (Washington, D.C.: Urban Establish Press, 2007).

[ii] Information on the format, content, and use of field diaries is based in office on the discussions of field diaries in Edward Fisk and Wayne Reynolds, Construction Project Administration, 8th ed. (New York: Prentice Hall, 2005), 55-57.

[3] Local governments that accept qualified staff and want to conduct their citizen surveys in business firm can observe methods and guidelines for conducting citizen surveys in Thomas I Miller and Michelle Kobayashi, Citizen Surveys: How to Do Them, How to Use Them, What They Mean, 2d ed. (Washington, D.C.: ICMA, 2000).

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