Post by mstjuste on Sept 1, 2021 16:03:31 GMT
Risk Management Scenarios:
Scenario #1: Go/No Go Analysis
Easterseals TX is contemplating going after a new contract for vocational training of individuals leaving jail or prison. Building on our current Career Design School, the RFP requires that the company develop an innovative Culinary and Facilities Management Program and place people in jobs with at least 6-month retention. The contract will be awarded in January and would need to be launched in March.
This is a performance-based contract where a significant portion of the revenue (70%) comes from meeting performance milestones. The milestones include the following:
• 300 people trained annually
• 50% of those trained are placed in jobs
• 60% are still employed in the same job 6 months later
The past provider was challenged in recruiting program participants and did not meet job placement or job retention milestones.
As the Company Executive, you are about to enter into a Go/ No Go discussion with your team. You will be leading the discussion, and you need to be fully prepared for the discussion. The questions below need to be considered. Based on the information provided how would you respond to these questions? What other questions should you consider to ensure you’ve addressed all areas of risk?
Questions:
• What are the major (obvious and not so obvious) risks of this contract?
What should be done early to ensure that the contract does not fail?
What are some of the tripwires that the program director needs to be able to monitor should the company move forward?
The deliverables are ambitious and require a great deal of organization, structure, resources, relationships, recruitment, staffing, and is extremely time-sensitive. It’s important to communicate possibility/potential for success with urgency. It’s important to set up practices of Quality Assurance, Compliance, Training (Mental Heatlh, Sexual Harassment, Trauma-Informed Care, Cultural Sensitivity, Note-taking/Documentation/Timekeeping) to ensure staff is equipped to professionally support and service individuals to be engaged in our programs.
Financial Risk is great because we earn based on placements. We start off in debt. So we need to exceed the demands of the contract before the start date by ensuring relationships are in place to guarantee we meet our measures.
Education and qualifications may be a factor. Systems must be in place to ensure coaches and clients/individuals most apt to benefit from vocational training have resources at their disposal (e.g., SST training, Security Guard Training, IT training, MS-Office Certifications, HSE Diploma/ESL training) and all this must be tracked.
Many will still have records outstanding or don’t have documents necessary to have names cleared in system. Without expungement a great deal of this will lead to people getting hired pending background check and fired after the results come back.
How will that measurement occur?
Fedcap already has a tracking system or 2 that should be used to their full potential: Oracle and FedcapCARES. Both systems can be used for documenting, timekeeping, client-tracking, retention and quality assurance but it has to be used religiously and efficiently. All systems will have bugs and won’t be perfect but you’ll need an IT team specifically dedicated to these systems to ensure efficiency and functionality. Oracle can be used in training and tracking staff development with regard to their qualifications. In addition, it can be a great resource for internally staffing potential candidates for the contract.
• How can you negotiate this contract to mitigate as much risk as possible?
I love disclaimers. There has to be a “cushion” for the worst possible scenario.
There has to be a commitment made in advance by the donor/grant/contract owner to ensure that the funding needed is timely otherwise, the date for start up gets pushed back at no cost to Easterseals TX. This HAS to be in writing. However, There also has to be a timeline between when funds are approved and a grace period where program implementation begins. There also has to be “milestones' ' in Talent Acquisition, Job/Business Development, Partnerships, and Recruitment.
Additional Questions
Will we have enough jobs for those formerly incarcerated? Statistics show they are willing to work ->
“Among 25-44 year old formerly incarcerated people, 93.3% are either employed or actively looking for work, compared to 83.8% among their general population peers of similar ages. Though unemployment among formerly incarcerated people is five times higher than among the general public, these results show that formerly incarcerated people want to work.”
What Kinds of Jobs are we providing in this program? How do we ensure staff doesn’t simply get bodies into jobs for the sake of placements? Will we place candidates in jobs where they earn a substantial income to take them above poverty level?
“Ex-prisoners fare poorly in the labor market. In the first full calendar year after their release, only 55 percent reported any earnings, with the median earnings being $10,090. Of those with earnings, 4 percent earned less than $500, 32 percent earned between $500 and $15,000, and only 20 percent earned more than $15,000.”
What processes will we have in place for Mental Health coming from a traumatic environment like prison?
What process will we have in place for counseling and life coaching to ensure there’s no reoffense? Getting placed in a job after imprisonment for several years with (hidden triggers that may not yet be uncovered) may require a great deal of follow up from Job Developers and Career Coaches. At least one or more mental health professionals should be onsite not as a requirement but as an option for those who are willing to seek help when needed.
Scenario #2: Fraud, Control and Compliance
You have been assigned to manage a new Fedcap Group contract with a City agency that begins in December. Your counterpart at the City insists that you initially meet at a very expensive restaurant for dinner and drinks. A few weeks later, you receive a small, personalized holiday gift that is sent to your home.
As the contract begins, you get the sense that the City Agency is not very well organized. Our billing vendor keeps sending invoices that are rejected because they do not have the proper billing codes. Our accounts receivable starts to grow. As the months go by, you have difficulty arranging a meeting to resolve issues. You soon learn that the City Agency contracts with another Not For Profit to provide similar services. A few months later you hear that your counterpart from the City has left his job with no explanation given. As time goes on, our billings decrease dramatically and our contract after one year is not renewed, we eventually have to write down a substantial amount of unpaid receivables.
Questions:
Was a fraud committed?
It's possible but requires more investigation.
Everything shared so far points in that direction.
Are there any compliance issues?
Absolutely. Large gifts, extravagant spending, lack of organization while there's decrease in billing indicates that an audit is necessary.
What were the risks involved with this contract?
Financial-Money spent that's unaccounted for. Unknown budget.
Reputational-City Agency hasn’t started and key stakeholder bails early after extravagant spending
Structural-No organization present. No meetings, no direction, no accountability.
How could you have mitigated them?
I could have met with City Agency staff or major stakeholder, setup mandatory internal audit, communicate concerns
What specific controls should we have implemented?
Before agreeing to manage the contract have meeting with all stakeholders and set structure in place for monthly/bi-weekly updates
Checks and Balances - Ensure that financial team is part of process early and keeps account of all spending so that funds are not depleted from contract
Ongoing internal audits to ensure compliance
Are there any lessons learned?
Can’t always be a “YES” man/woman. We have to assess risk and be clear about structure, process, budget, staffing, and all risks involved before taking on a contract that was a failure to begin with.
Sometimes, you can’t just assume the best/worst. It never hurts to investigate and be in communication about concerns.
It’s important to see potential risks before they occur. It’s easier to mitigate risk when it’s anticipated or planned for. Expect The Unexpected.
Scenario #1: Go/No Go Analysis
Easterseals TX is contemplating going after a new contract for vocational training of individuals leaving jail or prison. Building on our current Career Design School, the RFP requires that the company develop an innovative Culinary and Facilities Management Program and place people in jobs with at least 6-month retention. The contract will be awarded in January and would need to be launched in March.
This is a performance-based contract where a significant portion of the revenue (70%) comes from meeting performance milestones. The milestones include the following:
• 300 people trained annually
• 50% of those trained are placed in jobs
• 60% are still employed in the same job 6 months later
The past provider was challenged in recruiting program participants and did not meet job placement or job retention milestones.
As the Company Executive, you are about to enter into a Go/ No Go discussion with your team. You will be leading the discussion, and you need to be fully prepared for the discussion. The questions below need to be considered. Based on the information provided how would you respond to these questions? What other questions should you consider to ensure you’ve addressed all areas of risk?
Questions:
• What are the major (obvious and not so obvious) risks of this contract?
- Individuals who have been incarcerated may or may not have had formal training, various educational/reading levels (maybe no high school diploma which is required first nowadays)
- It’s going to require a lot of spending before it starts (venue, cooking equipment, staffing/recruitment)
- It’s going to require the buy-in of several companies to accept previously incarcerated individual
- Are any of them sex offenders? Murderers? Would they qualify? How would we place them when there are several who won’t accept that individual due to the previous offense?
- How many of those trained will be placed in jobs by Easterseals versus other sources? Will those placements count since they’re being trained by Easterseals TX or not?
- How can we guarantee retention? What is the current rate of retention for criminal/justice involved individuals who have been employed recently?
- How do we guarantee meeting our milestones? There has to be agreement in advance to have new hires from our program.
- Do we have relationships in place to ensure we meet our deliverables?
- How do we guarantee 300 participants in our program? Will it be voluntary or a requirement as part of the re-entry process?
- This has to be put in writing to ensure this is the case otherwise there will be a need for heavy recruitment.
- Is there a cap or limit to who can apply and where they can apply from? (e.g., type of offense, years offense committed, recently released, etc.)
What should be done early to ensure that the contract does not fail?
- Must develop relationships to ensure “qualified” trained graduates get placed
- Must have retention staff and structure in place to ensure ongoing motivation and accountability
- Must have staffing and recruitment and program curriculum and structure completely setup before January and fully staffed by February
- Must have legal counsel to ensure we don’t violate any laws concerning individuals, staff and potential employer
Must have signed agreements by all stakeholders
Have a system in place that assists individuals who are serviced with criminal record expungement. Otherwise, a quick-hire can become a quick-fire which can lead to all kinds of disaster.
What are some of the tripwires that the program director needs to be able to monitor should the company move forward?
The deliverables are ambitious and require a great deal of organization, structure, resources, relationships, recruitment, staffing, and is extremely time-sensitive. It’s important to communicate possibility/potential for success with urgency. It’s important to set up practices of Quality Assurance, Compliance, Training (Mental Heatlh, Sexual Harassment, Trauma-Informed Care, Cultural Sensitivity, Note-taking/Documentation/Timekeeping) to ensure staff is equipped to professionally support and service individuals to be engaged in our programs.
Financial Risk is great because we earn based on placements. We start off in debt. So we need to exceed the demands of the contract before the start date by ensuring relationships are in place to guarantee we meet our measures.
Education and qualifications may be a factor. Systems must be in place to ensure coaches and clients/individuals most apt to benefit from vocational training have resources at their disposal (e.g., SST training, Security Guard Training, IT training, MS-Office Certifications, HSE Diploma/ESL training) and all this must be tracked.
Many will still have records outstanding or don’t have documents necessary to have names cleared in system. Without expungement a great deal of this will lead to people getting hired pending background check and fired after the results come back.
How will that measurement occur?
Fedcap already has a tracking system or 2 that should be used to their full potential: Oracle and FedcapCARES. Both systems can be used for documenting, timekeeping, client-tracking, retention and quality assurance but it has to be used religiously and efficiently. All systems will have bugs and won’t be perfect but you’ll need an IT team specifically dedicated to these systems to ensure efficiency and functionality. Oracle can be used in training and tracking staff development with regard to their qualifications. In addition, it can be a great resource for internally staffing potential candidates for the contract.
• How can you negotiate this contract to mitigate as much risk as possible?
I love disclaimers. There has to be a “cushion” for the worst possible scenario.
There has to be a commitment made in advance by the donor/grant/contract owner to ensure that the funding needed is timely otherwise, the date for start up gets pushed back at no cost to Easterseals TX. This HAS to be in writing. However, There also has to be a timeline between when funds are approved and a grace period where program implementation begins. There also has to be “milestones' ' in Talent Acquisition, Job/Business Development, Partnerships, and Recruitment.
Additional Questions
Will we have enough jobs for those formerly incarcerated? Statistics show they are willing to work ->
“Among 25-44 year old formerly incarcerated people, 93.3% are either employed or actively looking for work, compared to 83.8% among their general population peers of similar ages. Though unemployment among formerly incarcerated people is five times higher than among the general public, these results show that formerly incarcerated people want to work.”
What Kinds of Jobs are we providing in this program? How do we ensure staff doesn’t simply get bodies into jobs for the sake of placements? Will we place candidates in jobs where they earn a substantial income to take them above poverty level?
“Ex-prisoners fare poorly in the labor market. In the first full calendar year after their release, only 55 percent reported any earnings, with the median earnings being $10,090. Of those with earnings, 4 percent earned less than $500, 32 percent earned between $500 and $15,000, and only 20 percent earned more than $15,000.”
What processes will we have in place for Mental Health coming from a traumatic environment like prison?
What process will we have in place for counseling and life coaching to ensure there’s no reoffense? Getting placed in a job after imprisonment for several years with (hidden triggers that may not yet be uncovered) may require a great deal of follow up from Job Developers and Career Coaches. At least one or more mental health professionals should be onsite not as a requirement but as an option for those who are willing to seek help when needed.
Scenario #2: Fraud, Control and Compliance
You have been assigned to manage a new Fedcap Group contract with a City agency that begins in December. Your counterpart at the City insists that you initially meet at a very expensive restaurant for dinner and drinks. A few weeks later, you receive a small, personalized holiday gift that is sent to your home.
As the contract begins, you get the sense that the City Agency is not very well organized. Our billing vendor keeps sending invoices that are rejected because they do not have the proper billing codes. Our accounts receivable starts to grow. As the months go by, you have difficulty arranging a meeting to resolve issues. You soon learn that the City Agency contracts with another Not For Profit to provide similar services. A few months later you hear that your counterpart from the City has left his job with no explanation given. As time goes on, our billings decrease dramatically and our contract after one year is not renewed, we eventually have to write down a substantial amount of unpaid receivables.
Questions:
Was a fraud committed?
It's possible but requires more investigation.
Everything shared so far points in that direction.
Are there any compliance issues?
Absolutely. Large gifts, extravagant spending, lack of organization while there's decrease in billing indicates that an audit is necessary.
What were the risks involved with this contract?
Financial-Money spent that's unaccounted for. Unknown budget.
Reputational-City Agency hasn’t started and key stakeholder bails early after extravagant spending
Structural-No organization present. No meetings, no direction, no accountability.
How could you have mitigated them?
I could have met with City Agency staff or major stakeholder, setup mandatory internal audit, communicate concerns
What specific controls should we have implemented?
Before agreeing to manage the contract have meeting with all stakeholders and set structure in place for monthly/bi-weekly updates
Checks and Balances - Ensure that financial team is part of process early and keeps account of all spending so that funds are not depleted from contract
Ongoing internal audits to ensure compliance
Are there any lessons learned?
Can’t always be a “YES” man/woman. We have to assess risk and be clear about structure, process, budget, staffing, and all risks involved before taking on a contract that was a failure to begin with.
Sometimes, you can’t just assume the best/worst. It never hurts to investigate and be in communication about concerns.
It’s important to see potential risks before they occur. It’s easier to mitigate risk when it’s anticipated or planned for. Expect The Unexpected.