This article is an excerpt from the 2020 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its April 2019 report entitled Ensuring Value for Money for Tree Maintenance Services, the Toronto Auditor concluded that the City of Toronto failed to properly manage its tree maintenance contracts. As the report noted, while the City pays an average $1.7 million per month to three contractors for tree maintenance services that include pruning, watering, and tree removal, its Urban Forestry department needed to “strengthen its oversight and monitoring of tree maintenance services to ensure value for money for the City” since, among other things, reported work locations in contractor work logs did not match their vehicle Global Positioning System (GPS) records.
In fact, the Auditor General noted multiple instances in which the City contractors submitted questionable work logs and billed the City for work that may never have been performed. For example, the Auditor General’s review of 45 daily logs against the GPS records found that over half of the logs included instances in which the crews did not stop near the trees noted in the logs or in which the crews went to locations that were not noted in the work logs and were not related to the assigned tree service locations (for example, coffee shops, plazas, residential houses, streets with no trees, etc.). The report also noted other issues in the work logs, including duplicate work listed in multiple logs from the same crews, as well as reported time spent on dead trees, or at locations with no trees or with trees that were scheduled to be removed or marked as “no work required’”.
In fact, the Auditor General provided the following example to illustrate the discrepancies between work logs and GPS records:
According to the GPS report, after leaving the City yard in the morning, the crew drove to a shopping center not on route to the tree service locations. The crew then drove to the assigned tree service area (total driving time of 53 minutes) and watered 18 trees for 171 minutes per the GPS report. In their daily log, the crew reported similar driving time as the GPS report but reported 215 minutes for watering these trees. After 11:30 a.m., the crew drove to several locations (e.g. gas station, side roads and streets) that are not shown in their daily log and do not appear to be related to City work. After deducting 60 minutes for allowable breaks and lunch, the time spent at all questionable locations totalled 151 minutes (2.5 hours), including driving time. In addition, the crew recorded in their daily log for watering five trees at two addresses but according to the GPS report, the vehicle did not stop near these addresses. The crew reported 100 minutes of work (include 25 minutes of driving time) on these five trees in the daily log.
Given the serious concerns arising out of the anomalies in the work logs, the Auditor General concluded that the City’s weak contract management practices were resulting in an estimated loss of productivity of $2.6 million per year. Furthermore, the Auditor noted the long-term adverse impact of the inaccurate maintenance records, since false logs could result in waiting “seven years before the tree receives the next scheduled maintenance services.”
As this case study illustrates, contracts do not manage themselves. Rather than trusting that contractors are meeting their contractual obligations, public institutions need to be vigilant in establishing contract management practices that monitor performance to ensure that taxpayers are receiving value-for-money for contracted services.
