Para 4.1.2 — NONCONSULT_MANUAL

4.1.2. Output-Admeasurement 1. Alternatively, the quantum of services can be ascertained by measurement of the quantum of outputs delivered of the required performance standards (output admeasurement – numbers, length, area, volume, weight, value, etc., or a combination thereof), say the area of office cleaned or tonne-Kilometre of transportation or value of goods inspected. Since contracts based on Out-put admeasurement specify the unit rate of service output, it is referred to as Unit-Rate contracts also. 2. The contract specifies a unit rate of the output of services, and the financial evaluation is done based on the total price of the indicated quantum of service at the contracted unit rate plus taxes. In actual practice, this could be more complex – as in taxi hiring for 8 hours with a maximum kilometre of 250 Km included in the price, but every additional Km/ hour may be charged extra. There may also be additional charges for night duty, etc. 3. Output admeasurement contracts are simpler to administer since the procuring entity will only ascertain performance standards and the quantum. It need not monitor the inputs deployed and the methodology employed. Therefore, wherever feasible, output admeasurement should be the preferred choice. 4. However, in many services, it may be part of the quality assurance plan and Service Level Agreement (SLA) to ensure that specified quantum of inputs is deployed for the services, although payments are still based on output admeasurement. 5. Depending on the situation, output admeasurement may be suitable mainly for Lump-sum and Percentage Based types of contracts (as described in following paras) and in special circumstances for Time-based and Indefinite Delivery type of contracts. Output admeasurement may be suitable for Services like - transport services, logistics, clearing and forwarding, courier services, drilling, aerial photography, satellite imagery, mapping, and similar operations.

Risk Mitigation a) Insufficient Deployment of Resources: Service Provider may not deploy sufficient resources which may lead to poor quality and Time Over run. Stipulate in the Tender Document that the quantum of input deployments (Personnel, equipment, materials, etc.) shall also be quoted but shall be used only to monitor performance standards. b) The quality of the Output/ deliverables is not linked to the payment. There may be tendency for the service provider to cut corners on quality of the output/ deliverables by saving on resources employed. Disputes may arise due to different possible interpretations of quality and scope of Output/ deliverables. Such contracts should be used mainly for contracts in which the quality and scope of the required output of the service providers are clearly defined and are measurable. The contract should include provision for evaluation of quality and scope of deliverables and certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables. It’s important to include a Service Level Agreement in such contracts. c) Time and Cost over-run: As time is not linked to the payment. There may be tendency for the service provider to save on deployment of resources which may result in time-over-run. While the payments are not linked to time, the contract should be monitored per month to ensure that the output per month is in line with planned and estimated time-line. This type of contract should include an upper limit of total payments to be made to the service providers for the assignment to safeguard against excessive prolonging of time and payments. After this limit is reached or the period of completion is exceeded, the CA should review the justification for the extension of the contract.

Manual for Procurement of Non-Consultancy Services, 2025 6. Output Admeasurement Contracts - Risks and Mitigations