Key Performance Indicators (KPIs): what are they, why are they important and where do they come from? 

KPIs are measurable values that demonstrate how well a service is performing. They may be high level, focussing on overall performance, or low-level, focussing on detailed requirements. As part of your school or Trust’s contracts with your service suppliers you should ensure that you have terms or clauses in your legal agreement referring to Key Performance Indicators (KPIs). 

The importance of KPIs is that they are measurable. This allows you to track successes and evidence failings in the service. If the KPIs are well thought out, robust and suitably stretching then you can be confident that the service is performing well.  

If your supplier is not meeting their KPIs, then you can hold them to account and ensure that improvements are made. You may have terms in your legal agreement / contract that allow you to claim money back from your supplier if they are underperforming. If a supplier persistently fails to meet the KPIs, then this could be deemed as a material breach of contract and can be grounds for early termination (so long as you have a clause in your legal agreement stating this!).  As I am sure you are likely to know from experience, if suppliers want to walk away from a contract early it seems to be very easy for them to do so.  Often the lack of time and financial resources required of a school or Trust to fight this means you end up being left with no choice but to let the supplier walk away.  However, terminating a contract early when you want to do so is, of course, a totally different kettle of fish.  It is often extremely challenging and the setting and measuring KPI’s is one of the ways you can do so. 

If you do not already have a set of KPIs you wish the bidders to adhere to (and that’s really the ideal scenario if possible) then as part of your tender process, you should ask bidders to propose sample KPIs. Bear in mind that suppliers are already geared up to monitor these proposed KPIs through their own systems, which makes it easier for them. However, these are not set in stone. When it comes to formalising the KPIs after contract award, you are able to propose additional KPIs.  

Don’t forget that they must be measurable, with a scoring mechanism or pass/fail criteria. You can also remove KPIs that aren’t of value to you – there is little point in monitoring just for the sake of monitoring! 

KPIs that are SMART (Specific, Measurable, Achievable, Realistic and Timebound) usually work best for all parties.  And with Achievable that doesn’t necessarily mean easy – stretching is good. 

Don’t forget that they don’t need to remain the same throughout the life of the contract.  Why not make them SMARTER by ensuring they’re also Evaluated and Revised as the contract progresses. 

And when it comes to monitoring, KPIs are a vital source of evidence as part of your ongoing contract monitoring – you should be reviewing these as part of your standard formal meetings with your supplier.  

We recommend you regularly score the KPIs alongside your supplier.  Whilst some self-scoring by the supplier is helpful when you’re a busy SBL you shouldn’t devolve all responsibility to the supplier.  It’s imperative that the first review is done together and then at regular intervals after that.  This enables you to ensure they are aware of your expectations “what does good look like.”  Their definition of what is ‘clean’ may not be the same as yours, for example.  Similarly, their assessment of presentation of the meals at lunch service may also differ.  It’s important there is a shared understanding of what is and isn’t acceptable. 

And finally, under the new Procurement Act 2023 there is a requirement for contracts valued at >£5m to have a minimum of three Key Performance Indicators set and a performance report published annually.  This clearly evidencing the increasing importance placed on this element of monitoring your contract performance. 

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