Procuring, Managing, and Evaluating the Performance of Contracted TMC Services
Chapter 4 – Evaluating Contracted TMC Services
There’s an old adage that says you can’t improve what you don’t measure. Measuring progress or status is a critical element in answering the question of “How do I know it’s good when I get it?”
This chapter allows the reader to develop an understanding of the performance measurement process as well as its application to the evaluation of contracted TMC services. A key to understanding these concepts is that performance measurement should be a systematic and ongoing component for evaluating these types of contracts. Although there are challenges to establishing and maintaining a performance measurement process, agencies can obtain substantial benefits in terms of improved service, cost savings, and efficiencies by using performance measures to evaluate contracted TMC services.
The purpose of this chapter is to introduce and briefly explain the concepts of performance measurement as they relate to the task of evaluating the outsourcing of services or tasks that take place for TMC operations. As explained previously, a key to outsourcing is establishing performance based contracts. Previous chapters have focused on the key questions of “What do I need?” and “How do I get it?” This chapter focuses on the final key question, which is “How do I know it’s good when I get it?”
The answer is through the use of performance measurement. This chapter introduces the use of performance measurement for evaluating outsourced operations, establishes a performance measurement process, examines topics pertaining to the ensuring quality in the performance measurement program, and presents a small set of sample measures.
The reader new to the concept of performance measurement is referred to Appendix A to this report. The Appendix presents a more complete introduction to the topic of performance measurement, starting with a brief history, and covering topics such as benefits, challenges, common classification schemes, and guidelines for selecting appropriate measures.
The Use of Performance Measurement for Outsourcing
Performance measurement allows decisions to be made based on data gathered via a scientific approach. It employs a methodology where data are gathered to determine progress towards specific objectives that the organization has set. Using a consistent methodology allows an agency to collect and evaluate information for the purpose of achieving multiple goals, such as increasing efficiency and meeting customer expectations. Tracking these measurements, both over time and compared to the overall goals, shows agency progress as well as setting accountability criteria for judging and paying on performance related contracts.
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