Corporate Procurement & Supply Services
March 25, 2020
Industry & Associations Engagement
Supplier Performance Management Program
● Welcome, introduction & opening remarks
● Program Overview
○ Background, industry and jurisdictional review
○ Objectives
○ Process Lifecycle, Key Elements (Survey, Scorecard)
○ Performance Review
○ Probation, Suspension
○ Supplier Selection
● Next Steps
● Final remarks
Agenda
Welcome, introduction & opening remarks● Roxanne Kits - Branch Manager - CPSS / F&CS● Jesse Banford - Acting Branch Manager - Infrastructure Delivery / IIS
Program Overview
● Background, industry and jurisdictional review
● Objectives
● Process Lifecycle, Key Elements (Survey Scorecard)
● Performance Review
● Probation, Suspension
● Supplier Selection
CAPITAL INVESTMENT OUTLOOK / CITY OF EDMONTON 2019 -2022
THE PROGRAM
On January 1, 2016, the Supplier Performance Program was initiated for design and construction Contractor contracts, and design and construction related Consultant agreements.
The purpose of the program was:● To promote positive Supplier performance● To provide a standardized approach to formally measure Supplier performance on City of
Edmonton contracts to procure goods, services or construction● To ensure good value is derived from the contracted goods, services or construction● To establish processes to address concerns with Supplier performance.
Performance Evaluation categories and criteria were developed for design and construction related consultants and contractors:
● Construction Consultant● Construction Contractor● Construction Design Build
Background
Background
THE ECA OWNERS FORUM - PRIORITY 1 WORK
In 2019, a number of industry leaders, including the City of Edmonton, came together under the aegis of the Edmonton Construction Association (ECA) with the objectives to:● Create a common and consistent set of
guiding principles for supplier evaluation across owners groups
● Raise the bar in the industry, wherein suppliers who provide value and quality on projects are fairly evaluated and rewarded with opportunity, such that optimal value is realized for all parties involved in a building project.
THE JURISDICTIONAL REVIEW
In parallel, the City of Edmonton reviewed other Canadian Vendor / Supplier Performance Management programs and governance models to inform the development and enhancement of the current program, and also held discussions with some of those jurisdictions:
● Alberta Infrastructure● City of Ottawa● Infrastructure Ontario● Metrolinx (Ontario)● Public Services and Procurement Canada (PSPC)
There is a summary of the different SPM programs link
Background
Background
THE PLAN
In parallel to these initiatives, an internal working committee has been formed to● Revise and re-launch the SPM program
● Develop a detailed framework and governance structure
● Design and deliver the SAP Ariba tool to support the City’s SPM program
THE JOURNEY
Program Overview
● Background, industry and jurisdictional review
● Objectives
● Process Lifecycle, Key Elements (Survey Scorecard)
● Performance Review
● Probation, Suspension
● Supplier Selection
Supplier Performance Management (SPM) Program
What it is: A standardized approach to formally measure supplier performance on CIty contracts.
Why is it important: To ensure appropriate level of governance, structure, collaboration and communication are established with suppliers to reduce costs, alleviate risks, and drive continuous improvement.
Supplier Performance Management Framework
Supplier Performance Management Tool
SAP Ariba, SPM Module
Supplier Performance Management Program
Objectives and Outcomes
Overview of Program Structure
Strategy
The purpose of the SPMP is to monitor, evaluate and improve supplier performance and delivery to achieve better outcomes for the City and its citizens KEY DRIVERS AND GUIDING PRINCIPLES
Governance
ACCOUNTABILITY ● The CPSS Supplier Management Office (SMO) has managerial oversight and compliance
of the program and will be responsible to provide guidance
APPLICATION & THRESHOLDS● The Supplier Performance Program
takes effect on June 1, 2020 ● Performance is to be evaluated at
pre-set interim periods, significant project milestones, at the end of the contract or as the needs arises
● For all contracts, standing arrangements and call-ups where the estimated value is at/above $100,000 CAD* and deemed as high risk
*Performance evaluations may also be completed on projects where the contract amount is below $100,000 CAD and the risk is identified as low.
Application and Thresholds
Contract Value Risk Level Minimum Frequency of SPM Evaluations
<$100,000 High Closure
$100,000 - $500,000 Low 12 months
$100,000 - $500,000 High 6 months
>$500,000 Low or High 6 months
Standing Arrangement Risk Level Minimum Frequency of SPM Evaluations
Standing Arrangement Low 12 months
Standing Arrangement High 6 months
Call-Up Agreement Low Optional
Call-Up Agreement High Closure
Program Overview
● Background, industry and jurisdictional review
● Objectives
● Process Lifecycle, Key Elements (Survey, Scorecard)
● Performance Review
● Probation, Suspension
● Supplier Selection
Program Framework - Roles & Responsibilities
Oversight
● Monitor & report on compliance Citywide
● Administer suspensions and probations
● Review appeals and determine the appeal decision
Source● Define scope of work● Assess procurement & contract risk ● Develop Performance Management
Plans● Evaluate supplier submission &
past performance● Select supplier
Collaborate & Execute
● Conduct meeting to discuss expectations
● Monitor & ensure contract compliance
● Identify & address trends, risk and issue
Manage● Develop Performance Improvement Plan● Request corrective measures● Recommend probation or suspension
Measure
● Analyze, measure & document supplier performance
● Provide regular feedback
Supplier
Business Area Contract Manager CPSS Procurement Supplier Management
Appeal Committee CPSS Supplier
Management Office
SPM StructureA Performance Management Plan will be developed and initiated by the Contract Manager resulting in the creation of surveys issued to different participants or evaluators. Results will be rolled-up to a scorecard, discuss with the supplier and compared over a period of time based on the type of contract or project
Performance Management Plan
Surveys
Scorecard
Survey - Key Performance Indicators
Survey - Questionnaire
For each KPI there is a list of questionsEach question is scored and contributes to a total for the associated KPI by averaging each question scale score
Always meet -100%Usually meet - 80%Occasionally meet - 60% Never meet - 30%
Type of Contract / KPIs
Construction Services
Goods & Services
Information Technology (IT)
Infrastructure Professional
Services
Standing Arrangements,
Call-Ups (Construction)
Standing Arrangements, Call-Ups (Non Construction)
Quality 20% 25% 25% 25% 20% 25%
Delivery 20% 25% 25% 25% 20% 25%
Financial 20% 25% 25% 25% 20% 25%
Relationship Management
20% 25% 25% 25% 20% 25%
Health, Safety and Environment
20% 20%
Survey - Questionnaire
DELIVERY
Definition: Measure supplier’s effectiveness in maintaining the schedule for the completion of the contract, task orders, milestones, delivery, and administrative requirements in conformance with the contract.
Sample Survey Scoring Question
Note: Each available response choice are mapped to a pre-graded score value so that Ariba can auto-calculate the grading based on survey results.
Survey - Construction / Professional Services
Two specific questionnaires will be used for the Infrastructure Services projects
● Supplier Performance Management - Construction Survey Questions
Link
● Supplier Performance Management - Infrastructure Professional Services
Link
Group Discussion
Open discussion on the following aspects:
● Approach? Process?
● Application? Thresholds? Frequency?
● Key Performance Indicators?
● Questionnaire?
● Scoring?
Program Overview
● Background, industry and jurisdictional review
● Objectives
● Process Lifecycle, Key Elements (Survey, Scorecard)
● Performance Review
● Probation, Suspension
● Supplier Selection
Supplier Performance Evaluation
Supplier Performance Evaluation
Supplier Performance Review Process
Supplier Performance Appeal Process
Program Overview
● Background, industry and jurisdictional review
● Objectives
● Process Lifecycle, Key Elements (Survey, Scorecard)
● Performance Review
● Probation, Suspension
● Supplier Selection
Probation and Suspension Period● Unsatisfactory performance may also result in a supplier being put on
Probation or Suspension ○ Request is made by the Business Area, ○ Request is reviewed by the Procurement & Contract Management Steering Committee /
Appeal Committee ○ Decision is made by City Administration Executive Leadership Committee - currently
under review● “Probation” means a temporary period of time to correct poor performance and
may have additional conditions to meet until contract finishes or performance improves.
● “Suspension” means a specific type of Performance Standing where Bidders or Suppliers on Suspension are not allowed to respond to City procurement opportunities, or be awarded contracts for goods, services or construction, directly or indirectly, to the City. Suspensions are stated with a minimum period of time, conditions and reinstatement requirements.
Probation and Suspension Process
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CM sends recommendation with supporting
documentation to appropriate Business Area Branch
Manager
The Executive Leadership Team will make a written
decision with any revisions to the recommended terms
of the probation or suspension standing
Upon receipt, the Supplier Management Office will
communicate the request to the Supplier Management
Appeal Committee
If approved by the Business Area Branch Manager, the CM
will forward the recommendation to the
Supplier Management Office
Supplier Management Appeal Committee will
review recommendation and forward it to the City’s
Executive Leadership Team
Probation and Suspension
Probation and Suspension Once a supplier is to be put on probation or suspension, the Supplier Management Office will notify the Supplier
Program Overview
● Background, industry and jurisdictional review
● Objectives
● Process Lifecycle, Key Elements (Survey, Scorecard)
● Performance Review
● Probation, Suspension
● Supplier Selection
Supplier Selection - Supplier Performance The Supplier Performance Rating data will be refreshed on a quarterly basis and will be calculated on 3 year rolling average of individual Performance Evaluation Scores, taking into consideration all approved appraisals completed in the past 36 months.
When supplier doesn’t have a performance evaluation score in 1+ of the past 3 years, the denominator will be reduced accordingly
SPR = 3 (80%) + 1(60%) / 4 => 75%
*”Year 1” represents the most recent year that work / delivery was completed and performance for that year has a higher weight.
3 (average of Year 1* scores) + 2 (average of Year 2 scores) + 1 (average of Year 3 scores)
6
SPR =
Supplier Selection - Supplier Performance
Supplier Selection
Discussion
Open discussion on the following aspects:
● Performance Review Process?
● Probation and Suspension?
● Supplier Performance Rating?
● Supplier Selection?
Next steps and final remarks
Appendix
Appendix 1 SPM Roles & Responsibilities
Roles and Responsibilities
Roles and Responsibilities
Roles and Responsibilities