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