Case 121 Carson Manor In late November, Ms. Elaine Taylor, director of supply for the city of Winston, was reviewing proposals for the Carson Manor study. Three consulting groups had responded to a request for proposal (RFP) to study the operation of the city-owned nursing home. Ms. Taylor knew that her recommendations for selection of a consultant would have to be completed by mid-December. page 360 CARSON MANOR Carson Manor was opened about 30 years ago for persons requiring nursing care. Carson had a bed capacity of 470. Staff totaled 235 with nonmanagement personnel unionized under the District Service Workers Union Local 325. Day-to-day operations of the Carson Manor were the responsibility of the Carson Manor administrator, who reported to Mr. Henry Davis, the citys director of social services. Policy and budget plans were developed by Mr. Davis and his staff in conjunction with Carson administrative staff and the Carson Manor Committee of Management (CMCM). The CMCM consisted of five aldermen who were appointed or volunteered to fill these positions. The CMCM reported to another aldermanic committee, with broader community service concerns, called the Committee for Community Services. This committee reviewed major expenditures and decisions impacting community service policy. All major expenditures were then reviewed by the Board of Control, consisting of the mayor and four elected controllers, prior to being sent to city council for final approval. As director of social services, Mr. Davis reported to the city administrator, Mr. J. Peterson, who in turn reported to the mayor. The combined elected and appointed reporting structure is shown in Exhibit 1. PURCHASING AND SUPPLY DIVISION (PSD) The PSD had purchasing and disposal authority for the citys engineering, fire, landfill/sanitation departments, and social services division, and for city hall building support. The city operated separate purchasing departments in the public utilities commission, the libraries, and the police department. Purchasing authority was granted to the PSD director and her buyers by municipal bylaw. This bylaw outlined the limits of purchasing authority and formed the basis of the PSDs Policy Manual for Purchasing, Tendering, and Disposal. The main objective of the PSD was to respond to the needs of other departments and divisions for goods and services at minimum cost, consistent with desired quality, delivery timing, and reliability. The PSD had expertise in the purchasing and tendering of goods and certain services, such as equipment rental, maintenance contracts, and engineering/architectural consulting. However, it had not dealt extensively with management consulting service procurement at that time. Elaine Taylor became director of PSD two years ago at the age of 35. Prior to this, she was chief buyer and assistant director of purchasing for the city of Forestview, similar in size to Winston. Elaine reported to the city treasurer, Mr. R. Holbright, and .

1. Case 121
Carson Manor
In late November, Ms. Elaine Taylor, director of supply for the city of Winston, was reviewing
proposals for the Carson Manor study. Three consulting groups had responded to a request for
proposal (RFP) to study the operation of the city-owned nursing home. Ms. Taylor knew that her
recommendations for selection of a consultant would have to be completed by mid-December.
page 360
CARSON MANOR
Carson Manor was opened about 30 years ago for persons requiring nursing care. Carson had a
bed capacity of 470. Staff totaled 235 with nonmanagement personnel unionized under the
District Service Workers Union Local 325.
Day-to-day operations of the Carson Manor were the responsibility of the Carson Manor
administrator, who reported to Mr. Henry Davis, the citys director of social services. Policy and
budget plans were developed by Mr. Davis and his staff in conjunction with Carson
administrative staff and the Carson Manor Committee of Management (CMCM). The CMCM
consisted of five aldermen who were appointed or volunteered to fill these positions. The
CMCM reported to another aldermanic committee, with broader community service concerns,
called the Committee for Community Services. This committee reviewed major expenditures and
decisions impacting community service policy. All major expenditures were then reviewed by
the Board of Control, consisting of the mayor and four elected controllers, prior to being sent to
city council for final approval.
As director of social services, Mr. Davis reported to the city administrator, Mr. J. Peterson, who
in turn reported to the mayor. The combined elected and appointed reporting structure is shown
in Exhibit 1.
PURCHASING AND SUPPLY DIVISION (PSD)
The PSD had purchasing and disposal authority for the citys engineering, fire, landfill/sanitation
departments, and social services division, and for city hall building support. The city operated
separate purchasing departments in the public utilities commission, the libraries, and the police
department. Purchasing authority was granted to the PSD director and her buyers by municipal
bylaw. This bylaw outlined the limits of purchasing authority and formed the basis of the PSDs
Policy Manual for Purchasing, Tendering, and Disposal.
The main objective of the PSD was to respond to the needs of other departments and divisions
for goods and services at minimum cost, consistent with desired quality, delivery timing, and
reliability. The PSD had expertise in the purchasing and tendering of goods and certain services,
such as equipment rental, maintenance contracts, and engineering/architectural consulting.

2. However, it had not dealt extensively with management consulting service procurement at that
time.
Elaine Taylor became director of PSD two years ago at the age of 35. Prior to this, she was chief
buyer and assistant director of purchasing for the city of Forestview, similar in size to Winston.
Elaine reported to the city treasurer, Mr. R. Holbright, and dealt directly with other department
and division heads on purchasing matters, as shown in Exhibit 1. She managed a staff of 15,
including three buyers.
EXHIBIT 1Reporting Structure
page 361
EXHIBIT 2Carson Manor
Excerpts from The Municipal Home for the Aged, a Review and Alternatives. A report to the
Carson Manor Committee of Management by J. Peterson, City Administrator, and H. Davis,
Director of Social Services.
Page 29
Increasing levels of care required by Carson Manor residents have a major influence on costs,
since care essentially is translated into staff to provide the necessary services. No objective
classification of resident care requirements has ever been carried out at the Carson Manor,
although there is no question that current residents and even new applicants require much more
nursing care than was formerly the case.
Page 33
An operational review could be carried out by an independent consulting firm of the States
Department of Community and Social Services and would provide a thorough analysis of options
and possible areas for improvement at the Carson Manor.
Such an approach would provide a firm basis for the development of strategies for operational
change but would not guarantee implementation of the necessary changes.
Page 34
The overall advantage of an operational review would be the ability to identify, in depth,
problem areas at the Carson Manor for which change strategies could be developed by the city.
Such strategies might include contract management of a specific service, for example. This type
of analysis would provide solid ground for future planning. On the negative side of the balance
are the costs of such a study and the necessity to subsequently develop and implement changes
for the identified problem areas.
THE CARSON MANOR STUDY
The Carson Manor had a history of problems related to budgeting and cost control. City council
felt that the cost per bed was unnecessarily high, when compared to privately run institutions.

3. Eight months ago the council directed the city administrator, Mr. Peterson, and the director of
social services, Mr. Davis, to prepare a report for submission to the Carson Manor Committee of
Management in early June. The report was to contain:
An analysis of the comparative costs at Carson Manor and other state facilities.
A review of the feasibility of increasing cost efficiency.
A review of the implications of possible alternatives such as:
Contract management.
An in-depth operational review and cost efficiency study carried out by an external agency.
The requested internal report, titled The Carson Manor for the Aged, a Review and Alternatives,
was tabled on June 9. It revealed that Carson Manor costs were approximately 14 percent higher
than state averages on a per-bed basis. The report highlighted the difficulties of measuring and
controlling costs in the absence of a patient classification system that would enable standard
levels of nursing care to be developed. The report recommended an operational review by an
outside agency and outlined some general guidelines and objectives. Sections of the internal
report, related to these guidelines and objectives, are shown in Exhibit 2.
Council accepted the reports recommendations and directed Messrs. Peterson and Davis to
initiate an independent consultants study of Carson Manor. This was not a budgeted expense;
and the approval of the CMCM, the Committee of Community Services, the Board of Control,
and City Council were necessary prior to letting a consulting contract. Mr. Davis requested the
assistance of Elaine Taylor and the PSD in identifying and evaluating potential study
participants. Elaine Taylor handled the Carson Manor Study personally, since it was beyond the
scope of responsibilities and experience of her buyers. She drafted an RFP, which is shown in
Exhibit 3. In-state consulting organizations were contacted, and a list of consulting companies
with relevant experience was developed. Five consulting companies were invited to submit
proposals.
analyze the cost differences as well as other differences in the proposal.
Required: Create a scorecard using at least five criteria (must include cost and savings as two of
the criteria) to aid in the analysis. Provide an explanation of why you chose the criteria you
chose and why you used the weights you chose (why is one criteria more or less important than
others). You are allowed to make assumptions but clearly state your assumptions.
Required: Provide an explanation of why you selected the solution that you recommended.
Use the table below as guidance. The scores should be out of 100 and the weights should add up
to 1.
Table 1: Scorecard for XYZ Corp.
CriteriaScoreWeightTotalCost850.3025.5Savings880.2522Criteria 3950.1514.25Criteria
41000.1515Criteria 5800.1512Final Score88.75