High Turnover Cited For Palo Alto Contract Woes
Failure to properly oversee and record utility work performed in 2009 may have cost the city of Palo Alto, California, $281,000.
Flawed Contract Monitoring
According to the San Jose Mercury News, the city hired Casey Construction, Inc. for trenching and underground electric work. According to a report from the City Auditor's Office, there were several flaws in the way the service was both monitored and recorded by Palo Alto's Utilities and Administrative Services departments. The audit suggests there is no proof that work that was paid for was appropriately planned and then carried out, inviting the potential for fraud. The city has been advised to implement new policies and procedures to increase oversight and record keeping. Not only are city officials in the process of doing so, many have spoken out regarding why these problems existed in the first place. Utilities Director Valerie Fong said a large part of the problem stemmed from a 40 percent staff turnover over the last few years, presumably meaning there was a lack of understanding as to what was supposed to happen according to the terms of the agreement, and who was supposed to monitor this activity when new people were brought on.
Speaking at a City Hall press briefing, Fong indicated steps are being taken to both alleviate future risk and prevent such occurrences.
"We're really committed to improving our processes, our procedures and our training to ensure that the contracts are properly executed and administered," she said.
Contract Life Cyle Managment Systems Can Minimize Contract Risk
It's important for organizations, regardless of their industry, to ensure all aspects of a contractual agreement are being correctly carried out. Staff turnover is one of many factors that can impact this process, but turnover alone shouldn't impede a company's ability to properly oversee work and record important details. Should something go wrong that could potentially derail a project, or if one side isn't holding up its end of the agreement, these issues should be recognized immediately and dealt with accordingly.
CLM Task Tracking and Reassignment
Contract Life Cycle Management (CLM) solutions, especially those that offer a high degree of intuitiveness and ease of use, can effectively eliminate such issues. While ease of use makes it straightforward for a new person coming onto an existing project to learn how to use a CLM solution, having the ability for pending tasks and deliverables to be automatically reassigned to that new individual is equally important. By scheduling deliverable dates and receiving notifications when those dates are impending, businesses can track contract deliverables and effectively alleviate the risk of missing important deadlines. If tasks need to be completed at a certain time, email alerts are also sent to appropriate parties to ensure they understand what needs to be done and to indicate when the task has been completed.
Managing Complexity
Properly engineered CLMs automatically take care of task reassignment when someone leaves and is replaced by another. Imagine the requirement to track hundreds of individual contract deliverable items across a multitude of contracts, all tied to a specific individual who leaves your company. Now imagine the work required to quickly and accurately transfer the tracking of all deliverables to another individual. Enabled CLMs make this reassignment automatic and effortless. While the new person responsible might not fully understand the task to be completed, when their calendar is automatically populated with pending tasks and when they receive email reminders, automatically rerouted from the prior responsible person, he or she will immediately understand that something needs to be done. As a new person, will they automatically know what to do? Perhaps not, but knowing a task for which you are now responsible is pending, they should certainly be able to determine how best to proceed.
Turnover should have a limited impact if the right solution is in place. When a new employee takes over a responsibility and there are outstanding tasks that the new employee must now manage, they can be redirected quickly, so nothing is missed.
CLMs Keep All Parties Informed
In addition, contract obligations and actions can be monitored at all times by an array of personnel. For example, if a contractor is obligated to complete a particular component of a project at a given date, those tasked with signing off on the action, as well as those providing overall contract oversight can have visibility into the process and react quickly if anything appears to be running late or has been overlooked. This reduces the chance of contractors falling behind schedule, costs escalating unknowingly and ultimately failing to meet obligations.
Had Palo Alto been equipped with such a system, it could have prevented many these problems from occurring.
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