Contract Management: A Public Sector Case Study Rivaj Parbhu

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INTRODUCTION

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TOPICS TO BE COVERED:

• What is Contract Management (5 Minutes)

• Why Contract Management (5 Minutes)

• Implementation of Contract Management: Lessons learnt in Government (20 Minutes)

• The Problem

• The Solution

• Project Status

• Lessons Learnt

• Questions

WHAT IS CONTRACT MANAGEMENT?

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• WHAT IS CONTRACT MANAGEMENT?

A system for managing contracts through documented processes and supported by software that “allows

organisations to effectively manage the various types of contracts they engage in, including: buy

side, sell side, and non monetary.” (www.wikipedia.com, 2007)

• BASIC FUNCTIONS OF A CONTRACT MANAGEMENT SYSTEM

• Central Repository

• Alerting

• Contract Creation features

• Workflow and Process Control

(IACCM Contract Management Report, 2007)

WHY IS CONTRACT MANAGEMENT RELEVANT?

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• Despite unprecedented spending on health, education, law enforcement, housing etc we are still lagging behind in Service Delivery.

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• In many cases Government contracts with the Private Sector in order to deliver services to South Africans.

• The improved POST SIGNATURE management of these contracts would ensure improved service delivery.

CASE STUDY: THE PROBLEM

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In June 2006 Realyst Contract Management together with PriceWaterhouseCoopers embarked on a project to deliver a contract management solution to a single directorate within a National Government Department.

The primary reason for this department to implement a contract management solution was an external audit report highlighting deficiencies in the contracting process with “the potential for financial mismanagement and gross inefficiencies.”

FIVE KEY FINDINGS WERE:

• No contracts or SLA’s in place for key, multi-million Rand suppliers

• No means or process to measure the performance of suppliers

• No regular reviews of the contract documents

• Inadequate controls in place for managing payments

• Inadequate contract policies and procedures

CASE STUDY: THE SOLUTION

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The Realyst automated contract management solution was delivered to the department. The initial implementation was scoped at taking 6-8 weeks with the deliverables being to address the findings of the audit report.

CHALLENGES EXPERIENCED DURING ROLL-OUT:

• Lost or non existent contracts and contract documents

• Confusing procurement process and contract management process

• No awareness of the need for contracts even at an executive level

• Non existent contract policies and procedures

• No checklist to be used to ensure all required documentation is received

• No contract templates available. Signing of supplier agreements

• Creating a sustainable solution

CASE STUDY: PROJECT STATUS &LESSONS LEARNT

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We now regard this implementation as being successful. The department has cleared its audit findings and has repeatedly enjoyed improved service delivery from its suppliers.

STATUS OF THE PROJECT• We have just agreed and implemented a checklist where all approvals, tender docs, letter of

appointment, etc, will be kept with contract

• Automated Contract approval process currently being finalized

• Last phase in the project is to agree standard contract templates taking into account both business drivers

and legislation/guidelines.

5 LESSONS LEARNT•Walk before we try to Run

•Dedicated centralized function with a Contracts Administrator

•Build operate and transfer model

•SLAs with suppliers, including penalties for non performance are critical

• Management support and buy-in is important to ensure success of contract management office

THANK YOU, QUESTIONS?

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RIVAJ PARBHU011 463 5311083 661 2669

RPARBHU@REALYST.COM