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SPI QC Procedure Write Up
Memo From: Nancy Runyon, Vendor Management
To: Robert Klein
Subject: SPI QC Procedure Write Up
Date: Thu, 21 Oct 2004 12:28:23 -0400
Robert,
In response to your request that Vendor Management develop a more stringent quality control procedure, please see the following.
Over the past 2 months, Vendor Management has held meetings with all the Safeguard department managers to review the above. The meetings were put together to solicit ideas from the managers about quality control issues in general and to brainstorm about what additional quality control procedures the Vendor Management department might implement to improve the services we provide to our clients. Our primary goal with this project was to assure that all the subcontractors that Safeguard works with are thoroughly educated about and compliant with the industry's and SPI's requirements, and that their quality of work is consistent and sound.
I have updated you along the way about some of the initiatives we've developed and the experiences that have helped us refine our procedures. We experimented with a variety of approaches, and with each test run we learned more about where we need to focus our attention. We ultimately settled on a three-pronged strategy that consists of both internal and external measures to assure quality.
VM has now finalized and is ready to implement the new Safeguard Comprehensive Quality Control Program. The following is my report outlining the specific quality control procedures and staff that are now in place and that will keep us first in our field.
The Safeguard Comprehensive Quality Control Program
Our clients rely on Safeguard to assure that all work is performed in a professional manner by quality contractors, so ensuring the quality of the services we provide is vital to our continued success. This means that we need to know that each and every contractor and inspector we use is performing all assigned work in a competent and timely fashion, consistent with investor/insurer guidelines and client work orders. We have therefore developed and implemented a complete vendor quality control program that allows for continual review of contractors/inspectors and the work they perform. Specially trained staff, selected from within the company for their experience and understanding of our goals and standards, make up this new and stronger Quality Control department.
Internal QC Processes
The first prong of our strategy is Internal Processes. The VM staff members in the internal processes division will oversee the New Contractor Program, the Phantom Inspection Program, and the Bid Verification Program. A more detailed explanation of each of the internal programs is below.
New Contractor Program
Our internal process begins with the new contractor program. Before being assigned a single job as a Safeguard contractor, each inspector and contractor must complete an application, obtain E&O and general liability insurance, and complete a written exam on the investor/insurer guidelines . This exam is graded and reviewed with the inspector or contractor prior to the assignment of any work, to ensure that the inspector or contractor has the requisite familiarity with our clients' investor/insurer requirements.
After passing the test, all new contractors will go through a probationary period of at least sixty days. During this period, all work performed by the inspector/contractor is monitored by a specific Regional Coordinator and/or a property preservation specialist, who will then periodically review the new contractor's performance with the Internal Processes staff. At the end of the probationary period, there is a follow-up End-of-Probation quiz that the contractor must pass before probationary period will end.
Phantom Inspections
We continue our internal quality control processes with Phantom Inspections: Safeguard sends its property inspectors inspection orders with fictitious addresses. This helps Safeguard ensure that our inspectors are making a physical visit to each property, each time an inspection is ordered, and correctly reporting on property condition. Inspectors may be selected to receive phantom inspections (a) if they are new to Safeguard, (b) if Safeguard has reason to believe there may be inaccuracies in previous inspection reports, and (c) at random as part of regular quality control. Our system currently generates Phantom Inspections on 2% of our inspection volume.
Bid Verification
VM has also created a bid verification team made up of experienced property preservation specialists. These team members are responsible for verifying the accuracy and completeness of all bids over $1,500, both by their own review and with the opinion of a second contractor who is sent to the property to review the work bid. All submitted bids are subject to review by our regular property preservation specialists.
If the bid seems excessive on initial review, a bid verification specialist will contact the contractor and request a detailed explanation of the bid. In many cases, bids that appear excessive on initial review turn out to be justified once we have additional explanation of the work required and supplemental photo documentation. However, if the bid is ultimately deemed excessive, it is adjusted appropriately prior to submission to our client, and the contractor who submitted the excessive bid is placed on VM's problem contractor list to track for further review. If the accuracy of the contractor's bids does not improve, Safeguard will discontinue the relationship and stop assigning work to the contractor.
Since implementing this program, we have seen a 39% decrease in the number of bids cut by HUD.
Problem Contractor Program
The Problem Contractor Program is designed to monitor contractor problems and identify any errors or violations that indicate a contractor is having difficulty meeting Safeguard's standards. Contractors identified for inclusion in the program are subject to closer attention by VM, and the QC team documents any subsequent issues, the date such problems arose, and the action that was taken to remedy the situation. Whenever an issue with a problem contractor's performance arises, the Regional Coordinator responsible for that contractor's region will immediately contact the contractor to review the issue and its resolution. If the contractor's performance does not improve, the issue is escalated to the department manager and reviewed in the weekly Problem Contractor Meeting, where a decision is made about what further action should be taken with the contractor. Depending on the nature and extent of the problem, corrective action may include additional education, reduction of the contractor's workload, or removal from Safeguard's vendor list.
Vendor Report Cards
Safeguard monitors each inspector's and contractor's performance with a report card system. Any deficiencies in a subcontractor's performance are noted on the report card, and any subcontractor with recurring deficiencies is placed in the Problem Contractor Program described above.
Contractor Rating System
VM has implemented a rating system for all inspectors and contractors, based on evaluation of such factors as timely completion of orders, quality of work, how the contractor responds to and resolves any issues that do arise, etc. Any vendor issue that could cause a contractor to be placed in the Problem Contractor Program has a point rating associated with it. Points are assessed for violations, and if a contractor reaches certain point value, the contractor will be placed in the Program. Contractors who reach a maximum number of points will be removed from Safeguard's vendor list.
The top areas of concern that will result in points being assessed are:
- Slow response to inquiries and failure to answer questions
- Failure to complete work in a timely manner
- Excessive or unnecessary bids
- Failure to provide dimensions, descriptions, or quantities in bids or work updates
- Incorrect information about whether a property is in conveyance condition
- Failure to perform work in a manner consistent with the work order or investor/insurer guidelines
- Failure to notify Safeguard of property condition or to provide bids for all required work
- Incorrect labeling of photo documentation
- Failure to provide photo documentation to support bids submitted or work performed
- Incorrect pricing of work performed
- Failure to provide required photos or information in a timely fashion
External QC Processes
In addition to the above-described internal processes, we have developed several unique and aggressive external processes to ensure that quality expectations are met. These External QC Processes represent the second and third prongs of our strategy: the second prong, focusing on property checks and work review, consists of Inspector Rotation and the Re i nspection (REINS) Program; and the third prong, the Field QC Representative Program, focuses on intensive and personal contractor field review. Each program is explained in more detail below.
Rotating Inspectors
In order to ensure that the information supplied by each inspector is accurate, and to reduce the chance of inspections of incorrect properties, the system regularly rotates the inspectors assigned to inspect each property, so that a different inspector visits the property at least every third inspection.
Reinspection (REINS) Program
Under the Reinspection Program, an independent field inspector is sent to verify that a work order executed by a property preservation contractor has been completed properly. Ten percent of reinspections are selected at random; ninety percent are performed to review work completed by contractors in Safeguard's Problem Contractor Program.
On a REINS order, the field inspector is provided with a work scope detailing all exterior and interior work that the contractor reported completing. The inspector will review the work performed against the scope provided by Safeguard and will provide photo documentation of any work that was not completed or that was completed below standards.
The internal VM REINS team reviews all results from the REINS inspectors, and if any discrepancies are discovered, the contractor who performed the work is instructed to immediately return to the property to complete or correct the work. VM also reviews the situation to determine whether the offense is an isolated incident or a recurring problem with the contractor and to take the appropriate corrective action. If infractions of this type are significant enough that VM decides to remove the contractor from Safeguard's vendor list, the internal team will also review all of the contractor's recent work updates to assure that there are no unresolved issues at other properties.
Field QC Representative Program
VM has added additional staff to create the Field QC Rep Program: Safeguard employees who will travel the country to work directly with the contractors on quality review. The visits will include a site visit to the contractor's office to ensure that he or she has the equipment and staff necessary to make proper use of Safeguard's reporting technology and to promptly complete, track, and update the work that Safeguard assigns. The QC Field Rep will also have direct contact with any subcontractors who perform work for our contractor to assure that they have all been adequately prepared to perform work that meets Safeguard's standards and expectations.
Before the end of any new contractor's probationary period, a Field QC Representative will make another field visit to the new contractor's work region. The Field QC Rep will also visit a selection of properties where the contractor has recently completed work to verify that there are no deficiencies in the work performed, and then will accompany the contractor on a job to evaluate the contractor's efficiency and professionalism.
The Field QC rep will submit a report detailing the findings of the visit, and based on that report, the VM QC staff will make a decision about whether to continue to use that contractor. If Safeguard does decide to continue to assign work to the contractor, the Field QC rep will make periodic subsequent visits to assure that work remains up to standard and that any issues that may have warranted additional education have been addressed.
Field QC Representatives will also make property visits on a random basis for overall quality control and to properties serviced by contractors who are being monitored in the problem contractor program, to verify that those contractors' performance continues to improve.
Robert, these enhanced QC processes and programs represent the culmination of our recent weeks of evaluation and experimentation, but they are also informed by Safeguard's years of experience analyzing and addressing the whole range of complications that arise in our industry. With that said, I have to tell you how much I appreciate the contributions of all of our department managers, as well as many customer service and preservation staff, who provided us with examples of problems they've encountered and the solutions they've come up with. With all of their help, we have developed a comprehensive QC program that we think is unequaled in the industry. Most important, with the implementation of this intensified quality control program, we are reaffirming our commitment to our most important goal: assuring that every day we are safeguarding our clients' interests.
Nancy Runyon
Vendor Manager
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