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Developing Overarching Kpi for Effective Contract Management – Case Study

Presented by Ray Carter

Director – DPSS Consultants

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Previous Projects

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Clients Include

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Introduction

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Presentation

Context

Methodology

Old and New Paradigm

DPSS Kpi Model

Process and Outcomes

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The Context….

Strategic Business Partner – Transactional Relationship

Multi Site Operation

Critical Service

Cultural Issues – Master/Servant

Negative impact upon business performance

£100k - £150k Budget

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Negative Outcomes……

Disputes

Variations

Claims

Cost and Time Overruns

Lack of Trust

Lack of Flexibility

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Client Desired Outcomes

Understand the process of developing effective Kpi and

the DPSS model

Develop a valid set of Kpi (7max)

Understand the value of effective kpi

Develop an robust plan to enable effective reporting,

analysis and improvements

Appreciate the determinates of an effective relationship

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Project Methodology

Joint Workshop Based

To jointly select the top most important KPI from the

DPSS Model© that best supported the long term

relationship and thereby improve results

To develop and agree an implementation plan

Create system to facilitate continuous improvement

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Project Outcomes

To develop with Client and Contract team members a series

of robust and verifiable KPI, utilizing the DPSS Model to

enable the efficient and effective management of the

contract and thereby encourage innovation, responsiveness

and flexibility

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“Contract management is the process that ensures

both parties to a contract fully understand their

respective obligations and that these are fulfilled

as efficiently and effectively as possible to provide

the best value for money.”

Traditional Paradigm….

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The New Paradigm…..

“Contract management is a process by which a

contractor is motivated and enabled to achieve

extra value added, over and above that which

has been specified originally and assessable

against criteria in the original contract.

The process should be to the benefit of both

parties”

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Contractor Motivation- A Needs and Wants Approach http://www.supplymanagement.com/resources/students/2012/how-to-motivate-suppliers/

AVC

Esteem

Social

Security

Physical

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Stakeholders and Positions

x

x

Change Agents

Agreement with the project

Understanding of

the project

High

Low

Against For

Advocates

CEO

SMT

The only group driving change

Opponents

Site managers?

Blockers

Engineers

Followers

Finance

Indifferent

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DPSS Model

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DPSS Kpi Model

The DPSS Kpi © model is based upon the key

statements approach whereby all stakeholders

involved in the process are able to score

consistently.

It is also part of the model that the level of

performance required for each category is agreed

with the contractor and is dependent upon the

nature of the contract and the service.

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Overarching Kpi

Relationships

Flexibility

HSE

Responsiveness

Innovation

Site Concentric

Performance

Quality

Cost Management

Programme

Information flow

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The Aims of the Model

Delivering the outputs to the required standard

Ensuring contractors and clients are meeting

their contractual obligations

Early identification of problems to ensure prompt

remedial action

Seek innovations and service improvements

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Three Key KPI….

On site Relationships

Responsiveness

Flexibility

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KPI (1) – Relationship Key Statements 1. Poor, constant conflict, complete ongoing lack of communication, adversarial, non-cooperation. 2. Limited contact, adversarial, some conflict, focuses on obligations. 3. Common understanding of requirement and needs, recognition of need to co-operate, willing to negotiate conflicts/disputes, exchange of value constructively, trust. 4. Mature, professional/commercial approach, recognition of contribution of both sides to manage the relationships, nurturing and developing the relationship, free flow of information/ideas, concerning, free to open discussions, candid feedback, able to cope with stresses and strains. 5. Harmonious relationship, confident, jointly agrees objectives, mutual risk and rewards approach, commitment, constantly seeking opportunities to eliminate NVAs and to add value.

Our aim is to move from red to green

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KPI (2) – Responsiveness

Key Statements 1. Failure to respond to any requests for information, support or any assistance,

constant reference to contract terms. 2. Reluctant to respond, constant reference to the contractual obligations, unwilling to freely respond, very passive approach 3. Adequate response, more flexible approach, positive attitude, commercial interpretation of contract obligations. 4. High levels of responsiveness, being proactive, positive approach, appreciate the added value of being responsive. 5. Exceeding requirements, very proactive, seeks to respond before requested, culture of customer delight. Our aim is to move from red to green

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KPI (3) – Flexibility

Key Statements 1. Very rigid approach, unwilling to react to changing situation, seeks to only to

meet contractual obligations 2. Limited flexibility only when forced to deal with changing situation, unwilling approach. 3. Flexible on most occasions, seeks to interpret the contract to the benefit of both parties 4. Very flexible and co operative in the vast majority of situations, contractor seeks to be willing partner and strives to delight the client 5. Very flexible, always willing to respond to changing requirements.

Our aim is to move from red to green

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Example Worksheet For Each Site

Soft KPI Level

Jan

Target

level

Examples where it worked well (list the main ones)

Examples where it did not work well (list the main ones)

May levels

Flexibility 2 4 • Pre job orders together

• contractor supply equipment not in the contract

• client allow contractor to pre move kit

• Limited flexibility during Site move to off load client materials

• Shortage of water wells

• To supply with experience people

• Cannot Utilize contractor cars

Site – 25 -4

31-3

24-3

54-4

38-4

11-4

55-4

58-3

60-3?

59-3?

53-3

56-5

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Force Field Analysis – Flexibility Enhancers Backers Blockers Disarmers

Increase

Empower

1) Experience

people.

2) Office support

of local decisions.

1) Rigid Contract.

2) Unclear

program/ Copy

paste.

3) Negative

attitude of

some people.

4) Overloaded

duties and

paper work.

1) Review/ more

user friendly.

2) Clear and

specific

programs.

3) Training and

coaching.

4) More

assistants.

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Force Field Analysis – Relationships

Enhancers Backers Blockers Disarmers

Increase

Increase

Support

Increase

1) Management

support.

2) Training.

3) Team building.

4) Good planning.

5) Joint events.

6) Reward

system.

1) Lack of trust.

2) Lack of

transparency.

3) Lack of

communication

4) Equipment?

5) Poor attitude.

6) Lack of

experience.

7) New comers to

client and

contractor/

Don’t

understand the

culture.

1 & 2)Being

honest and open

3) More team

building and more

training/ coaching.

4) Joint

objectives.

5) Re-allocate

people based on

experience.

6) Better coaching

and induction/

special

relationship

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Variable

outcomes

effective not

efficient

Customer delight

demonstrated added

value

efficient and effective

High risk and low

reward

inefficient and

ineffective

Mechanistic

risk adverse

efficient not effective

Process

60

30

0 30 60

Survey Evaluation

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Actions

Set up of SLA between Client and Contractor

Set up a series regular facilitated joint events to

review Kpi and key business improvements

Joint training and development program

Review of the “contract”

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Outcomes to date

Improvements in Relationship, Flexibility and

Responsiveness

Reduced disputes/variations

Sense of “Ownership” of the relationship

Improvements in Productivity

On going Commitment

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Close Out

Any Questions?

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