Overview
According to the management services agreement (MSA), the following is expected of MGM Springfield:
To ensure that [the MassMutual Center, or MMC] will continue to operate as an active multipurpose facility, and to operate and to competitively market its convention, meeting and ballroom space in a first class manner as well as to increase revenues, decrease expenditures and in general to maximize the utilization of the Facility by and for the benefit of the public.
In our opinion, to better facilitate MGM Springfield meeting these expectations, the Authority should have included in the MSA specific key performance indicators (KPIs) or metrics that would be used to determine to what extent established expectations were achieved. Executing performance-based service contracts, which are those that include KPIs, is one contracting practice that has been shown to be effective in improving contractor performance and lowering costs. Performance-based contracts allow a contracting agency to specify desired outcomes and decide how best to achieve them. According to the International Association of Venue Managers4 document Convention Center Performance Reporting Framework: An IAVM Handbook for Convention Centers,
Productivity Metrics are the most valuable metrics available to the venue operator for determining venue performance. They compare the output (Performance Measurements) of the venue with the inputs (Activity, resources, expenses, etc.) necessary to produce those outputs. Productivity metrics will commonly be expressed as percentages or ratios.
By establishing specific KPIs, the Authority could more effectively administer the contract to manage the MMC, drive and evaluate MGM Springfield’s performance, and hold MGM Springfield accountable for nonperformance or underperformance. We believe the Authority should consider including specific KPIs in its contract for the operation of the MMC.
| Date published: | February 16, 2021 |
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