Measuring up

Measurement

Lying at the root of performance measurement is the need to identify the critical success factor (CSF), which provides the foundation for the measurement and management processes designed to ensure successful delivery. For example, having established that the effective provision of support services is essential to achieving core corporate goals, it follows that the primary CSF must be to provide the support necessary to ensure the achievement of individual, departmental and corporate targets. It is vital to consider exactly what needs to be done to achieve core corporate goals and what needs to be avoided that might otherwise hinder that achievement. That leads naturally to identifying, assessing and managing the risks inherent in the course of business.

That in turn leads naturally to the KPI, against which regular measurement will demonstrate whether the identified risks are being managed effectively and the CSFs are likely to be met. The KPI must be carefully selected to give relevant and effective indications of success or failure in aspects of the service that are crucial to success.

Performance

Performance is not only a matter of a service being provided; the KPI can frequently relate to the impact of the service provision on the client organisation of such factors as the people providing the service and their background. Are their qualifications and experience up to the standard specified? Is their attitude to the client and its personnel acceptable? Is their appearance within the specified requirements? Are they being effectively trained?

Within these considerations are service elements that can be measured and recorded.

Quantity Have the supplies been delivered, the requisite number of meals served, the relevant tasks completed?

Time Has the service been delivered on time, was it available when needed, were call out times achieved?

Cost Are financial targets or cash flow forecasts being met, is the service within budget?

These measures will tell only part of the story, however, and must be set in the context of the quality issues. It is frequently difficult to define and measure quality in the provision of services, because subjective elements figure prominently in judgements of quality. It is therefore vital wherever possible to set standards against which objective measures of quality can be made.

Specific service levels need to be set against items of service that are critical to the achievement of corporate targets. The panel opposite is an example of a sample statement of performance indicators and service levels for a contract covering the operation of building services. To make such indicators work it is necessary to define the problems that relate to call out response times.

This approach should result in the production of an effective tender specification with a clear statement of the client’s minimum performance management requirements. The invitation to tender will then be structured so as to get bidders to submit their proposals for detailed performance management, which will be an important aspect of tender evaluation. The post-tender negotiations that must inevitably take place will then enable client and short-listed bidders to develop the proposals into an effective contract specification.

Developing the specification in this way facilitates very clear linkage between performance levels and performance incentives. It is not essential for incentives to mean paying more money. For example, demonstrable overall cost savings can be shared, which means that the client pays less and the contractor receives more – it might sound utopian, but it is achievable. Alternatively, incentives can be linked to non-money issues such as the client’s willingness to provide references to other prospective customers of the contractor or to offer them tours of the facilities to demonstrate what is being done.

The overriding importance of performance management can be summed up in the maxim: ‘What gets measured gets done’, or ‘What gets measured gets funded’. Without effective performance management the whole point of contracting out is lost.