Post on 29-Mar-2015
Training & Development
Contract Management
Contents
Introduction to Contract Management Definition Contract Management Issues Activities Overview Contract Manager: DECS
Importance of the role Responsibilities Skills
Appointing a Contract Manager Contract Manager Authority Implementing a Contract Contract Management Plan Risk Management Monitoring Performance Occupational Health, Safety & Welfare Variations Contract Management: Key Tasks DECS Procurement Policies & Guidelines
Introduction to Contract Management
Final stage of the tendering and contract cycle.
Includes all administrative activities associated with administering a contract after it is executed.
Level of contract management may vary from contract to contract Simple to Complex contracts
Contract Management Definition
An administrative process to ensure all parties understand their responsibilities and obligations to a contract, allowing efficient and effective contract performance
Undertaken by DECS worksites
Contract Management Issues
Relationships: buyers, suppliers & end users Lack of preparation or contingency planning Requirement changes Variations to the contract Failure to consult Description errors Pricing errors/omissions Failure or refusal to perform Suppliers experiencing financial difficulties Delivery/transport problems
Contract Manager: Importance of the role
Obtain value for money
Ensure contractual obligations met
Improve communication
Control risks
Contract Manager: Responsibilities
(Varies in Complexity of Contract) Establish Contract Management Plan Process reviews inc Post-contract reviews Liaise between and provide advice/information to
internal managers, users & suppliers Monitor performance Accurate and timely reporting
Contract Manager: Responsibilities (cont)
(Varies in Complexity of Contract) Maintain insurance policy(s) & terms and conditions Ensure certification and specifications are met Manage contract change procedures Resolve disputes Ethical standards
Refer to Code of Ethics for the South Australian Public Sector
Contract Manager: Skills
Skills required include: Strategic skills Project Management Communication and Liaison People Management Negotiation Conflict resolution Record-keeping and File Management Decision-making Research and Analytical Professionalism
Appointing a Contract Manager
Should occur prior to execution of the contract Contract management arrangements identified and
planned including: Responsibilities; Delegations; Reporting requirements, and; Relationships
Duties and powers governed by the conditions of contract and general law
Contract Manager Authority
Contract Manager needs a level of authority to ensure project runs smoothly
Limited delegation to approve variations that involve extra cost.
Implementing the Contract
Consider the following: The Contract Manager appointed Notification to unsuccessful suppliers Joint briefings for all relevant parties Resources available Copies of final contract Initial issues requiring immediate attention
Contract Management Plan
Details how the contract is to be managed to achieve outcomes.
Depending upon complexity, Contract Management Plans may include: Monitoring of compliance with contract conditions Performance Evaluation and Reporting (e.g. KPIs,
SLAs) Communication Strategies Roles and Responsibilities of stakeholders Risk Management Financial Management Contract Review Contract completion and transition
Contract Management Plan (Cont
To develop an effective Plan, need to understand contract and objectives. Review & gain an understanding of:
Acquisition plans Tender documents Specifications Selection reports Purchase recommendations Records of negotiations The contract File notes
Risk Management Plan
Planning for & managing risks essential Complex contracts may require a Risk
Management Plan, including: Identification Analysis Evaluation Treatment Plans
The Risk Management Plan will form part of the Contract Management Plan
Risk Management Plan (Cont)
Types of Risks: Changed circumstances Communication Breakdown Breach of Confidentiality Breach of Intellectual Property (IP) Breaches of Security & Privacy arrangements Inappropriate Occupational Health, Safety & Welfare
(OHS&W) management Insurance policies may not adequately indemnify DECS – may
need to determine insurances required (e.g. workers’ compensation, personal injury, public liabilty, product liability etc)
Risk Management Plan (Cont)
Types of Risks (Cont):
Breaches of contract: Performance securities / guarantees not received; Deliverables not in accordance with the contract; Fraud; Variations, and; Disagreement or disputes.
Refer DECS Guideline - Managing Risk in Procurement for further information
Monitoring Performance
Effective Performance Monitoring requires the Contract Manager to:
Establish and monitor formal KPIs and Service Level Agreements (SLAs)
Monitor progress
Conduct random inspections
Ensure all conditions and clauses are acted upon
Monitoring Performance (Cont)
Advise Contractor of performance issues
Develop effective feedback mechanisms
Keep written records of all dealings with Contractor and administration of the contract
Maintain comprehensive documentation
Occupational Health, Safety and Welfare (OHS&W)
Contract Managers should: Monitor and audit Contractor's workplace
performance Ensure Contractor applies appropriate level of
OHS&W management
See DECS ‘OHS&W and Injury Management Policy’ and the ‘DECS Code of Practice for Contractors’ (www.decs.sa.gov.au/ohs/)
Contract Variations
Should State (in written form): What has been agreed; Actual changes to the contract;
If applicable: Current price; Variation amount, and; New price
Ensure: Additional funds are available (if required) Appropriate approvals obtained
Variations (Cont)
May be necessary to contractual arrangements e.g.: Changes to specified personnel; Changes to contract milestone dates; Changes to supplies quantities; Change in scope of the requirement Changes to specifications; and Introduction of new technology.
Stakeholder consultation required
Contract Management: Key Tasks Receipt and Acceptance of Variables
Payment
Dispute Resolution
Complaints Procedure
Discharge of Contract
Contract Management:Key Tasks (Cont) Liquidated Damages
Performance Evaluation and Debriefing
Product Warranties
Contract Completion
Record Maintenance & Reporting
Contract Completion
Options include: Contract extension option
Expiration of existing contract Call for new tenders No further requirements for goods or
services
If contract extension unnecessary; undertake transition from the contract.
Record Maintenance
Maintain comprehensive and accurate records in relation to Responsibilities, claims, payments, negotiations, agreed changes, incorrect deliveries, poor service, other significant activities.
Electronic records Audit trail Comply with State Records of South Australia Requirements (
www.archives.sa.gov.au)
Reporting
Regular/ad-hoc reporting on various aspects of departmental contracts, including: Supplier information Contract value Usage Savings Performance Improvement opportunities
Reporting (Cont)
Contract Closure Report For acquisitions deemed high risk and falling in
Quadrant 2 or 4 of the State Procurement Board’s Acquisition Planning Guidelines
Report should be prepared at completion of the contract and forwarded to Procurement Unit
DECS Procurement Policies & Guidelines
Refer to ‘Contract Management Guidelines’ In.decs (Procurement web pages) SSONet (Procurement web pages)
Or contact Procurement Unit on 8226 1610