1. Managing Contractor Performance Steph Forrest Associate Director, FM 11 July 2013

2. A little bit about the Victoria! 16,787 EFTS 20,885 headcount 1,824 FTE staff 4 campuses 220,000 m² GFA; 110,844 m² UFA 7 Faculties 29 Schools Property book value $673m; reinstatement value >NZ$1b

3. This substantial portfolio is managed by a very small in-house team – FM team comprises 13 people with only 3-4 of those dedicated to managing physical assets and maintenance service delivery

4. A little bit about the Victoria FM Service Delivery Environment! All trade and services delivery outsourced –Bundled Facilities Maintenance contract Lump sum fixed fee for management services, reactive maintenance, scheduled maintenance programme; plus further discretionary expenditure based on schedule of rates (total approx. NZ$5-6m) –Comprehensive Lifts Maintenance contract –Security Infrastructure Maintenance contract –Grounds Maintenance contract; Additionally various other service contracts including cleaning, security guard services Approximately 70 FTEs employed by maintenance service delivery contractors (grounds and built environment). Total value of contracts being managed by FM around NZ$10m (excl. capital development

5. Uniforum 2012 Chapter B results show Victoria as the one of the most highly out-sourced Universities in the FM arena at 85% However, highly out-sourced does not mean abdication of FM team responsibility/accountability Therefore FM team must have full visibility around all activity provided under the various contracts Contractors & sub-contractors must deliver seamlessly across the organisation as if they were an extension of University personnel

6. Maintenance Contract History 2005 - RFP to market for maintenance services aggregating three contracts (Kelburn; Pipitea/Te Aro; Karori) Contract commenced January 2006 1 year extension negotiated by mutual agreement to expiry of December 2010 Ongoing discussion throughout 2009 culminating in new service delivery proposal tabled in December - Statement of Commitment – committed to systems integration implementation, lump-sum fixed fees, outcome based, best practice SMP New contract model negotiated with transition in from 1 July 2010 – including technology implementation Full contract commencement 1 January 2011 initial 3 year term Achievement of KPIs provided for annual right of contract renewal

7. What systems deliver good monitoring of contractors performance? To measure performance you must have clear visibility and transparency of activity Vic demands integration to our system i.e. BEIMS - one source of the truth in real-time –Asset component information including condition rating; –Maintenance activity – scheduled and reactive; –Actual labour/materials costs against asset/activity. Rigid contractual obligations imposed on service provider(s) around data capture (and reporting) Vic has opted to capture asset component data at a relatively granular level (clearly defined asset hierarchy) Dictates requirement for technology in field for all technicians (including sub-contractors) and full systems integration between contractors work- flow management system and BEIMS

8. What are the key metrics used? Victoria has a suite of approximately 40 KPIs in our maintenance contract in 8 key result areas All of these have been considered to ensure they are SMART i.e. specific, measurable, achievable (2 levels – contract renewal/ financial incentive), relevant (to various stakeholders), time-bound. Seemingly large number, but for most the measurement is generated by operational data already captured within BEIMS or very apparent (was it done or not?) - relatively simple to report/verify, minimal subjectivity Exceptions –Customer satisfaction surveys –Internal/external data audits

9. Reporting

10. Customer Service

11. Response Priority

12. Schedule Maintenance Programme Performance Scheduled Maintenance SM1SM1 A best practice Scheduled Maintenanc e Plan (SMP) provided for client review and approval. 100% completion Detailed & robust SMP received 30 September Annually Full SMP provided in electronic format for review. Must be complete with detailed task list, costing and programmed date details. SM2SM2 Annual agreed and approved SMP regime loaded into BEIMS in entirety 100% completionBEIMS Records 31 December annually for subsequent year Full SMP loaded into BEIMS with appropriate detail ready for operational workflow management. SM3SM3 Scheduled Tasks completed in period for which they are planned – refer SM1 & SM2 100% of tasks completed of which 98% to be completed within their planned timeframe. BEIMS RecordsMonthlyException reporting included in monthly report for those SMP tasks which were scheduled for the month but not achieved. Annual report to include summary total wash up of all tasks scheduled for year and exception reporting of all those not achieved. The Service Provider shall pay a financial rebate (as a reduction of Fees and not a penalty) for those tasks not performed.

13. Communications/Meetings

14. Health & Safety/Security

15. Data Quality

16. Environmental Initiatives

17. How is the contract structured to maximise performance outcomes? Vic has adopted outcome based contract models to maximise performance outcomes Key maintenance contract structured to drive asset management behaviours, not simply trade services delivery E.g. Contractor obligated to submit best practice scheduled maintenance regime at contract commencement, review on an ongoing basis to ensure meets outcomes and FULL annual review based on asset condition data and maintenance activity history. Two levels of incentive around KPIs – –Global KPI achievement – powerful incentive – if achieves ALL KPIs in year then a right to a years contract extension –Two failures of Global KPI achievement means no right of extension. –Keeps senior management (often off site) focussed on performance and ensuring appropriate resources are committed to perform as stakes are high. –Individual KPI achievement – financial bonus incentive (budgeted)

18. How do clients ensure the contractor is reporting the correct level of details (not too much/not too little)? Put the onus on the service provider to submit sample reports at RFP or contract negotiation stage These can then be discussed and mutual agreement around what level of detail will finally be adopted The KPI framework should then include the requirement for that agreed level of information to be submitted The information/reporting obligation should be very clear, measurable, indisputable; and where possible driven from BAU information

19. Conclusion Contractual theory vs. operational practice Best Practice Exemplar Learning