Monitor performance

Understand how to manage performance against the deliverables set out in the contract.

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Why monitor performance?

Performance monitoring:

  • provides assurance that the service provider is performing in accordance with contract requirements
  • provides assurance that the service provider is meeting service standards
  • tracks if deliverables meet time and quality standards
  • can provide early warning of problems
  • supports risk mitigation strategies
  • supports performance improvement

Monitoring performance occurs throughout the life of the contract.

Tailor monitoring activities to suit the contract, considering the contract:

  • value and duration
  • scope
  • complexity
  • risk level

Contract management activities must address the Standing Directions 2018 made under the Financial Management Act 1994, that require an Agency to facilitate contract performance, including:

  • establishing effective internal control to manage the contract
  • regularly monitoring contractor performance

Performance monitoring under procurement-related policies:

  • gives surety that the service provider is performing in accordance with contract requirements
  • can provide early warning of problems
  • supports risk mitigation strategies
  • supports performance improvement

Monitoring performance occurs throughout the life of the contract.

Tailor monitoring activities to suit the contract, considering the contract’s:

  • value and duration
  • scope
  • complexity
  • risk level

How to monitor performance

Step 1: Assess how the supplier is performing

For construction

Supplier performance and shared reporting regime (Instruction 8.2) sets out:

  • when to assess performance
  • which template to use
  • how to submit performance reports.

For goods and services

Contract management – goods and services guide discusses:

  • service level agreements
  • key performance indicators
  • customer satisfaction survey

Integrate procurement-related policies into performance review meetings.

Conduct meetings at the frequency required in the contract.

Extra meetings may be needed to address issues as they arise.

Additional monitoring requirements may apply under procurement-related policies.

Review contract documents to identify the procurement-related policies in the contract.

Procurement-related policies may include:

  • Local Jobs First – local industry development
  • Local Jobs First – Major Projects Skills Guarantee
  • Social Procurement Framework and Building Equality Policy
  • Fair Jobs Code
  • Other policies or commitments made in the contract

For each policy, review contract documents to identify:

  • commitments
  • monitoring requirements

Periodic reporting may be required under the procurement-related policies – see Periodic reporting under procurement-related policies.

Review contract documents to identify monitoring requirements.

Monitoring activities may include:

  • performance against performance measures listed in the contract
  • performance against dates for delivery
  • performance against quality requirements
  • complaints raised
  • about service delivery
  • user feedback

Monitoring activities related to Procurement related policies may include:

  • supplier reporting on performance against commitments (eg. employment, training, circular procurement commitments)
  • continued compliance (eg. renewal of Fair Jobs Code certificates)
  • investigation of complaints regarding performance or compliance with procurement-related policies

Implement processes to monitor these requirements.

Create and maintain records that will support monitoring activities.

Step 4: Communicate findings to service provider

Communicate findings of review meetings to the service provider.

Pass this information on in a timely manner.

Step 5: Invite service provider to respond

Invite the service provider to respond to findings of performance review.

Invite service provider to comment on Agency performance.

Step 6: Report outcomes of performance review meetings

Follow Agency processes to report the outcome of review meetings.

For goods and services contracts, Contract management – goods and services guide sets out a scalable framework for reporting.

Step 7: Compare planned and actual performance

Regularly compare actual performance with planned:

  • quality standards
  • performance targets
  • budget
  • schedule
  • delivery dates

Step 8: Implement remedies, if needed

If shortcomings are identified, determine and implement remedies.

Remedies must be:

  • consistent with the contract
  • proportionate to the shortcoming
  • aimed to redirect performance to meet the contract

Step 9: Review risks and issues

Review risk assessment and issues register at least once a year.

  • risk management plan, as required
  • contract management plan, if needed

Maintain records on risks that have materialised and other issues, and how these are being resolved, for example, in an issues register.

Step 10: Manage probity and conflicts of interest

Manage probity – consider issues raised at Probity issues by stage and task.

Conflicts of interest can arise during this task. Identify, declare and manage these.

Step 11: Address Agency rules

Consult Agency procurement team for advice on meeting:

Follow Agency specific rules on when to seek an approval and who can give the approval.

Follow Agency specific rules for recording decisions and storing records.

Step 12: Create and retain records

Follow Agency specific processes to record performance monitoring activities. Good record keeping helps to:

  • manage risk
  • provides auditable evidence of events and decisions

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