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