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Procurement

Procurement Perspectives: Conducting performance reviews with suppliers and contractors

Most large organizations now follow the routine of formal and regular performance evaluations with all large contractors and vendors. In any organization, the goal of the appraisal process should be to improve the performance of the organization.

To that end, the more immediate requirements that need to be built into the process of evaluation are to increase communications, establish clear expectations, reinforce good performance, improve unsatisfactory performance and foster the further development of co-operation and teamwork between the organization and the construction industry.

I have completed many evaluations with contractors over the years and ideally a performance review or other evaluations involves a two-way communication between the client and the contractor, allowing both parties to share ideas, opinions and information.

When this process is done properly, it should not put the organization into the uncomfortable position of a judge, decreeing solely whether work either fits the bill or failed. For the process to enjoy credibility with the contractor who is being evaluated, it is essential that it be, and perceived to be, as we say in procurement, in an open, fair and balanced manner, with an opportunity for both sides to explain respective issues with the contract.

Too often I feel little is to be gained if contractors come to see performance sessions as no more than regularly scheduled private thrashings. We all know that evaluation of vendors is necessary, but it must not be conducted in a way that damages long-standing relationships and co-operative work between owners and contractors.

The performance reviews should provide feedback in both directions so that any problems may be identified and corrected.

Good performance must also be recognized and rewarded. Virtually all organizations of any size incorporate some form of contractor assessment.

Vendor performance reviews have considerable value in that it creates the clear impression that the process is not limited simply to top-down criticism.

A properly structured questionnaire, or performance document, will allow each organization who is being assessed the opportunity to tell their side of the story. It will help to clarify each respective participant’s own goal and understanding of how the organization is measuring performance criteria.

The contractor review process is of value to any organization only insofar as it focuses on matters that are relevant to the overall company’s performance. The relationship between the owner carrying out the assessment and the contractor being assessed is germane to this question only to the extent that it influences (i.e. has an impact on) the performance of the project.

I would say that the benefits derived from performance reviews more than compensate for the time that it entails to conduct this process with valued stakeholders.

I have been involved in vendor debriefs for decades and it is critical that they are conducted in a structured manner so that they don’t evolve into nothing more than a whining session.

I have always observed that rarely are any of these difficulties with construction projects insurmountable, however, the concerns on both sides need to be addressed nevertheless and resolved amicably.

Finally, some organizations also make use of 360-degree feedback while carrying out evaluations.

This approach is the most comprehensive and costly type of appraisal. It encompasses a full range of assessment techniques including self-evaluation, peer review and upward assessment from within the organization.

However, it also incorporates input from “stakeholders” who reside outside the formal limits of the organization itself, those with whom the organization deals, such as suppliers, customers, investors and the like.

The goal of 360-degree feedback is to encourage all-around support by each member of an organization. It leads to the maximum amount of information obtained on management performance and style; increased effectiveness and productivity of individuals and the organization as a whole; knowledge of training needs; and greater employee input in designing self-development plans.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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