cinda brockman, cppm cf november 8, 2012 case study: metrics analysis versus conducting an internal...
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Cinda Brockman, CPPM CFNovember 8, 2012
Case Study: Metrics Analysis versus Conducting an Internal Company-wide Property Management System Analysis
Case Study: Metrics Analysis versus Conducting an Internal Company-wide Property Management System AnalysisThis session will cover a case study involving a major decision that Corporate Property made after analyzing company-wide metrics prior to performing the internal company-wide self-assessment for the property management system. The definition of Significant Findings versus Insignificant Findings will be discussed to explain the determination made by Corporate Property for Significant Findings on five (5) out of ten (10) processes. The end result for the outcomes were determined “Inadequate”. This presentation will cover how the Property Managers came together as a team to accomplish making the five (5) outcomes adequate.
Significant
Significant Findings versus Non-Significant Findings
Definition of Significant
The term “significant” is comparable to the term “material” as used in the context of financial statement audits (Generally Accepted Government Audit Practices). A significant deficiency can be established based on one criterion or several, i.e. a large number of smaller systemic findings that, taken in their totality, are material.
Significant Findings versus Insignificant Findings(continued)
Significant deficiencies are not always systemic. A contractor may have sound written procedures, however, do to poor management; the application of those procedures is problematic. For example, the contractor deploys a new IT system, adequate for property management in every respect, but the employees are not trained in its use. Consequently, the system is fraught with data input errors. In this case the data errors are not systemic, i.e., the system is not hardwired to produce flawed data, but the outcome yields a significant deficiency.
Significant Findings Such errors are symptomatic of larger management
problems that need to be addressed. If the contractor’s management does not take meaningful corrective action, then the contractor’s system can be deemed inadequate.
Insignificant Finding or an Immaterial Finding
An insignificant finding or an immaterial finding may result when the PA finds errors involving low dollar value assets, e.g., common hardware such as nuts, bolts, screws, washers-and there are variances between the record and the actual property count. If those variances are small and of low value, which is a judgment decision, these are generally considered insignificant or immaterial to the actual operations of the contractor’s property management system.
Corporate Property’s Metric Analysis Results Active property in property database where period of performance has
ended: Percent of business units that this statement is true: 100% Significant or Insignificant Finding? Significant
Active property in property database where items are being utilized when contract’s period of performance has ended: Percent of business units that this statement is true: 100% Significant or Insignificant Finding? Significant
Active property in property database where physical inventory has been performed on items where period of performance has ended: Percent of business units that this statement is true: 100% Significant or Insignificant Finding? Significant
Active property on contracts that should be transferred or dispositioned: Percent of business units where this statement is true: 100% Significant or Insignificant Finding? Significant
Five (5) Processes End Result for Outcomes = Inadequate
RecordsPhysical Inventory for FY10UtilizationRelief of StewardshipContract Property Closeout
Chart ExplanationsChart One:Active property in database where period of performance
has ended = Number of Days Late (6/18/10(Period of Performance (POP) End date + 60 Days)
Active property on contracts that should be transferred or dispositioned = Quantity Line Items Outstanding
Chart Two:Active property in property database where items are
being utilized when contract’s POP has ended = CRN/Utilization Code
Active property in property database where physical inventory has been performed on items where POP has ended = Last Inventory Date Active plus Acquisition Cost of Items Inventoried
BU
116 - 1
7458
133976
19475
88352
76316
157445
71498
BU
388 - 1
72504
168380
171991
129702
115741
151685
150294
150908
150918
150904
155431
150873
164030
164571
164799
176741
173059
163417
161323
164558
160085
176968
174331
138002
161703
176974
BU
502 - 1
34312
-
500
1,000
1,500
2,000
2,500
3,000
3,500
0
50
100
150
200
250
300
Chart 1 Group A
# of Days LateQuantity
CRN
# o
f D
ays L
ate
(6/1
8/1
0 -
(P
OP
end D
ate
+ 6
0 d
ays))
Quantity
Outs
tandin
g
DCMANON-DCMA
As of 5/14/10
BU
116 - 1
7458 - B
133976 - A
19475 - A
88352 - B
76316 - B
157445 - A
71498 - B
BU
388 - 1
72504 - A
168380 - A
171991 - A
129702 - A
115741 - B
151685 - A
150294 - A
150908 - A
150918 - A
150904 - A
155431 - A
150873 - A
164030 - A
164571 - A
164799 - D
176741 - A
173059 - A
163417 - A
161323 - A
164558 - A
160085 - A
176968 - A
174331 - A
138002 - A
161703 - B
176974 - A
BU
502 - 1
34312 - A
03/08/09
03/28/09
04/17/09
05/07/09
05/27/09
06/16/09
07/06/09
07/26/09
08/15/09
09/04/09
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
Chart 2 Group A
Last Inventory Date
CRN with Utilization Code
Last
Invento
ry D
ate
Acquis
ition C
ost
DCMANON-DCMAA, B, C, D =Utility Code
As of 5/14/10
BU
68 - 8
3022
96335
18531
BU
224 - 1
77737
BU
347 - 6
6575
79302
30722
130855
131199
131409
127730
115961
121817
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
0
20
40
60
80
100
120
140
160
180
Chart 1 Group B
# of Days Late
CRN
# o
f D
ays L
ate
(6/1
8/1
0 –
(P
OP
End D
ate
+ 6
0 d
ays))
Quantity
Outs
tandin
g
DCMANON-DCMA
As of 5/14/10
BU
68 - 8
3022 - A
96335 - A
18531 - A
A BU
224 - 1
77737 - A
BU
347 - 6
6575 - E
79302 - A
30722 - D
130855
131199
131409
127730 - A
115961 - A
121817 - A
1/14/04
1/13/05
1/13/06
1/13/07
1/13/08
1/12/09
1/12/10
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000Chart 2 Group B
Last Inventory DateAcquisition Cost
CRN
Last
Invento
ry D
ate
Acquis
ition C
ost
DCMA NON-DCMA A, D, E = Utility Code
As of 5/14/10
BU
17 - 1
71730
94200
122966
21812
131426
131974
125512
139015
140537
155529
148151
152006
129400
156046
157639
142128
158649
138068
142709
116497
121381
152668
166711
118896
170993
18447
36243
175222
109836
157818
157818
BU
43 - 1
6997
117825
BU
62 - 1
46421
BU
67 - 1
51412
36711
163096
123549
111100
142927
BU
113 - 1
7407
BU
134 - 1
73203
176466
BU
147 - 1
50812
172804
BU
364 - 1
05843
-
500
1,000
1,500
2,000
2,500
3,000
0
200
400
600
800
1000
1200
1400
1600
1800
Chart 1 Group C
# of Days Late
CRC
# o
f D
ays L
ate
(6/1
8/1
0–
(PO
P E
nd D
ate
+ 6
0 d
ays))
Quantity
Outs
tandin
g
DCMA NON-DCMA
As of 5/14/10
BU
17 - 1
71730 - A
94200 - C
122966 - A
21812 - C
131426 - A
131974 - D
125512 - D
139015 - A
140537 - D
155529 - A
148151 - D
152006 - A
129400 - D
156046 - A
157639 - A
142128 - A
158649 - B
138068 - A
142709 - D
116497 - B
121381 - B
152668 - A
166711 - A
118896 - B
170993 - A
18447 - A
36243 - D
175222 - A
109836 - A
157818 - A
157818 - A
BU
43 - 1
6997 - F
117825 - D
BU
62 - 1
46421 - A
BU
67 - 1
51412 - C
36711 - A
163096
123549 - A
111100 - A
142927
BU
113 - 1
7407 - A
BU
134 - 1
73203 - A
176466 - A
BU
147 - 1
50812 - D
172804 - A
BU
364 - 1
05843 - A
10/10/06
4/28/07
11/14/07
6/1/08
12/18/08
7/6/09
1/22/10
8/10/10
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
Chart 2 Group C
Last Inventory DateAcquisition Cost
CRC
Last
Invento
ry D
ate
Acquis
ition C
ost
DCMANON-DCMA A, B, C, D, F=Utility Code
As of 5/14/10
BU
27 - 1
50622
169327
124601
144723
113387
113762
145729
180422
BU
36 - 1
0957
10001
105264
30700
101637
147299
180216
BU
139 - 1
61831
169965
149861
BU
304 - 3
209
164633
-
500
1,000
1,500
2,000
2,500
3,000
0
20
40
60
80
100
120
140
Chart 1 Group D
Days LateQuantity
CRC
# o
f D
ays L
ate
(6/1
8/1
0 -
(P
OP
End D
ate
+ 6
0 d
ays))
Quantity
Outs
tandin
g
DCMANON-DCMA
As of 5/14/10
BU
27 - 1
50622 - A
169327 - A
124601 - N
144723 - D
113387 - A
113762 - A
145729 - A
180422 - A
BU
36 - 1
0957 - A
10001 - A
105264 - B
30700 - B
101637 - F
147299 - A
180216 - A
BU
139 - 1
61831 - A
169965 - A
149861 - A
BU
304 - 3
209 - A
164633 - B
5/5/03
5/4/04
5/4/05
5/4/06
5/4/07
5/3/08
5/3/09
5/3/10
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
Chart 2 Group D
Inventory DateCRC
Last
Invento
ry D
ate
Acquis
ition C
ost
DCMA NON-DCMA A, B, D, F, N = Utility Code
B
As of 5/14/10
The best time to fix the roof is when the sun is shining.
JFK
Team Building Activity Group activity to come up with working solutions
Appoint a leader who will present the solutions Appoint a scribe to take the notes
Prior to upcoming audits, business units need to come up with working solutions and realistic timeframe(s) to make the outcomes = Adequate
Leader will present to group
Working Solutions for the 5 Outcomes to Change from “Inadequate to Adequate” The team effort begins with Business Unit Property, Program
Management, Contracts, Procurement, Subcontracts, then Group level followed by Corporate.
Records Use Report created by Corporate Contracts and property system
downloads for Property Reports Property needs to use Property database to verify if active property
remains prior to closing any contract whether it is DCMA or Non-DCMA administered.
Once the disposition of property is provided, property need to change the status of the record to first reflect the disposition given, i.e. “shipped, abandon, etc.” and then change the status to “inactive” and then “close” the record.
Property need complete documentation for processing their dispositions and keep in the contract property files for surveillance and final property closeout packages.
If contract ends what should property do? Be proactive in asking Contracts if the contract is being transferred to another contract, period of performance extended or disposition is needed.
If the property is to be dispositioned, property need to remove the property and secure in a locked room prior to requesting disposition and keep in the secured area until final disposition instructions have been completed.
If you have a follow on task order, have the property incorporated into the proposal so you do not have to request property transfer or disposition. The proposal has to be referenced in the contract.
Working Solutions for the 5 Outcomes to Change from “Inadequate to AdequatePhysical Inventory
Revised the Government Property Policies and Processes Manual on how annual inventories would be performed.
Prior to commencement of the Physical Inventory each year, Corporate Property will provide Property Administration with the listing of contracts that meet each year’s contract period of performance end dates criteria.
A Physical Inventory Certification(s) will be required for contracts with accountable property.
Physical inventory plans by location will be required each fiscal year of Property Administration (AIA ILP 4-03) and forwarded to Corporate Property prior to commencement of the inventory.
Property Administration will be evaluated and measured on the implementation and outcomes of the inventory plan.
A physical inventory of all government property based on the prescribed population which includes all property regardless of value.
Working Solutions for the 5 Outcomes to Change from “Inadequate to Adequate Physical Inventory (continued)
Population: The criterion for the population to be inventoried is as follows:
1. For FY12 Physical Inventory a 100% physical inventory will be required for all contracts with a period of performance end date that expired by the end of FY2011 (January 23, 2011). This will ensure that Property Administration has time to disclose and report excess property to the Government when it is no longer required to fulfill contractual obligations, transfer accountable property to another contract or relieved of accountability through Loss Reports.
2. For FY13 Physical Inventory a 100% physical inventory will be required for all contracts with a period of performance end date that expired by the end of FY2012 (January 20, 2012).
3. For FY14 Physical Inventory a 100% physical inventory will be required for all contracts with a period of performance end date that expired by the end of FY2013 (January 31, 2013).
Working Solutions for the 5 Outcomes to Change from “Inadequate to AdequateRelief of Stewardship
READ the contract to see who has the authority to disposition property; was it delegated from CO to COTR, etc.
Based on what the contract states request the authority from delegated person and have contracts write the letter(s) and submit accordingly.
Once letter is written, follow up on a weekly basis or bi-weekly basis with contracts to have the issue resolved. Do not wait for 8 months etc. and do nothing!
Once authorization is received, property needs to have all of the applicable documentation in place prior to shipping or transferring the item(s).
Documentation is the key and is the new buzz word for DCMA.
Working Solutions for the 5 Outcomes to Change from “Inadequate to AdequateUtilization
Property needs to run reports on their own to know when a contract is going to be expired; then remove the property and put in a secure storage area.
Follow on contract – if property is still being utilized then state in the proposal that the property is needed and it will automatically be incorporated but the proposal has to be referenced in the contract.
Ensure in Property Database that the status is clearly identified.
Look at the value of the property that needs to be either transferred or dispositioned. Ensure that the items are truly not in use.
Working Solutions for the 5 Outcomes to Change from “Inadequate to Adequate Property Closeout
Corporate Property created a Contract Property Closeout List that Property Administration had to complete and submit with their contract property closeout package.
A Shared Service Center Contract Closeout service was created that consolidated the Closeout service in a standard way across the enterprise which included property. (Prior to this service, each business unit did their own thing) Processes were standardized and streamlined to increase efficiency resulting in
faster closeouts, better government compliance, and increased cash flow. Additional Tactics to Ensure Coordination:
SSC to provide property administration with reports regarding contracts currently being addressed by SSC and subcontracts with property components.
SSC to schedule monthly coordination meetings between property managers and SSC Closeouts to proactively communicate priorities
Develop escalation process in the event that conflicting priorities arise Results of SSC for Property: Intangible Benefit Hassle reduction for staff by no longer having to perform closeout functions Improved external customer service by having on POC for customer
requests/questions. Improved compliance with FAR requirements to avoid disallowance of costs due to lack
of proper backup and late billings
Working Solutions for the 5 Outcomes to Change from “Inadequate to Adequate”By the property team working together and with other functional areas of the company to be proactive internally to change 5 outcomes from “Inadequate to Adequate”, the company’s property management system is acceptable by DCMA in accordance with the terms and conditions of DFARS 252.245-7003, and approved. No deficiencies were found and the company was assessed as low risk and is placed on a triennial basis with a review scheduled in GFY15.
SummaryREAD THE CONTRACT!UPDATE AND ENSURE RECORDS ARE
CLOSED IN PROPERTY DATABASE!DOCUMENT, DOCUMENT, DOCUMENT!COMMUNICATE WITH ALL FUNCTIONAL
DISCIPLINES, INTERNAL AND EXTERNAL!BREATHE IN; BREATHE OUT!