Outcome-based performance measurement

An outcome-based specification should be linked to the measurement of performance by reference to the achievement of those outcomes. The measurement system can also recognise where performance is impaired by limited capacity, and contractual systems can then enable adjustment of the workflow if certain suppliers become overloaded. This approach was adopted in Annex 3 case studies 4 and 8 where the framework contracts stated the process by which success measures and targets could determine variations in the award of project contracts.

Review participants express concern that value improvement opportunities can be missed where performance measures:

■  Are not outcome-based

■  Are not applied transparently

■  Are inconsistent or subjective

■  Are used primarily to penalise suppliers rather than reward them

■  Are not used as a basis to award further work

■  Are not relevant to the client's required or desired outcomes

■  Are not used for feedback to suppliers

■  Are not used to drive continuous improvement.

Gold Standard framework contracts state how performance measurement against a Project Outcome Profile recognises achievement of required and desired outcomes, including who evaluates the suppliers' performance against outcome-based specifications, how feedback is shared in order to drive continuous improvement and how performance measurement is used to reward and incentivise excellence. Outcomes should be objectively measurable, and mutual trust between the framework provider, clients, manager and suppliers can be damaged where measurement is conducted privately or subjectively.

 

The Connect Plus Trial Project highways framework reports that it established a 'Balanced Scorecard' process which 'enables Connect Plus to understand and measure progress towards its declared objectives of:

■  Creating and maintaining a group of directors and facilitators empowered with the skills and behaviours to support and lead the cultural change and role model collaboration

■  Delivery of a whole life approach

■  Minimising the impact of maintenance works

■  Maintaining project facilities

■  Enhancing knowledge of project facilities

■  Respect for the environment

■  Reduced risk'.

 

 

Recommendation 14: Incentivise innovative solutions by creating specifications for frameworks and call-offs that focus on required client outcomes

To identify and incentivise improved project outcomes through a mutually beneficial approach to sharing ideas and innovative solutions, this review recommends that framework providers, clients and managers use specifications that focus on required client outcomes, that they include a whole life carbon assessment which minimises GHG emissions, that they use a 'Project Outcome Profile' linking performance criteria to supplier incentives, and that they clarify which intellectual property rights are relevant to the needs of clients and suppliers.

Specific actions include:

Framework strategy

■  Consider:

■  how the framework can deliver client outcomes using outcome-based specifications

■  how the framework can use a Project Outcome Profile to set clear programme and project outcomes that align with government strategic priorities

■  what IP rights the client or clients need and what IP rights are important to supplier business models

■  how to develop a whole life carbon assessment with the wider supply chain, reflecting ways of minimising GHG emissions across the life of the assets to be procured through the framework.

Framework procurement

■  Use specifications that focus on client outcomes rather than programme or project scope.

■  State how IP might arise from the framework and how IP will be managed through the life of the framework.

■  Evaluate supplier solutions accompanied by whole life carbon assessments and proposals for minimising GHG emissions across the life of the assets procured through the framework.

■  Make clear the criteria for performance measurement, how they will be applied and how they will affect the award of future work and other supplier incentives.

Framework contract

■  State:

■  clear IP rights and responsibilities which reflect what IP the client or clients need and what IP rights are important to supplier business models

■  a mutually beneficial, open and collaborative approach for sharing ideas and innovative solutions

■  the criteria for performance measurement, how they will be applied and how they will affect the award of future work and other supplier incentives.