Contract Management Presentation by Simon Gresham.

Contract Management

Presentation bySimon Gresham

About Me• 30 years working in contracting environment• Started in catering• Worked on first local authority compulsory

competitive tendering• Moved on to market testing of central government

services• Worked on major accommodation PFIs• Advisor to a range of clients and contractors• Now advise on small and large procurements mainly

covering facilities management• Live in Norfolk

Contract Management Why?

“ Even the best outsourcing contract means nothing if its contents are forgotten, milestones are missed or obligations are not tracked or compliant to agreed service levels”

2012 report on global outsourcing

Contract ManagementA Definition

“The management of contracts made with suppliers, customers, partners, or employees”

Contract Management

“Contract management is the process of managing contract creation and execution for the purpose of maximising financial and operational performance and minimising risk”

Wikipedia

Contract Administration

“ The processes and practices that underpin the contract management function – the monitoring of quality and cost, administration of the invoices, paperwork, purchase orders”

Contract Management

How many of you actively manage your contracts?

What success stories do you have?

What disasters/nightmares have you had?

Current Contracting Agenda?

• Drive for savings• Local services passed down to Town/Parish Councils• More outsourcing of non core/back office services to

save money• Debate – in house or private sector – which is best?

Are there alternatives?

Current Local Authority Agenda?

• Joined up services• Linking with other Authorities• Joint Ventures• Greater use of the voluntary sector (The Big

Society?)• More resident involvement/views• More reporting – greater visibility and accountability

Current Parish/Town Council Issues

• Standing orders being reviewed• Updates in contracting procedures• Difficulties finding contractors• Too many contractors?• Deciding who to invite – shortlisting• OJEU• TUPE• Specifications and documents• Evaluation of bids

Do you have any current issues?

Contract Management Ground Rules

• Be clear about the process you are adopting• Be clear about Standing Orders and internal Council processes• Involve the right people in the Council• Examine the feasibility• Gather the user’s requirements so that you get want you

want• Make sure you get something back from the supplier that

shows they can deliver and for what price• Evaluate the proposals on a like for like basis• Manage the arrangement once you have agreed it

The Overall Process

Before you go out to contract, seek quotations or tenders

Feasibilitystudy

CompetitionStrategy

ProjectPlan

What could we do?

How could we do it?

What is our plan?

The Overall Process

Going out to contract, seeking quotations/tenders

Procurement Strategy

Specification or Brief

The Competition

*External Bids*In-house Bids

Evaluation

How do we go about it?

What do we want?

Let us see what is on offer?

The Overall Process

After you have gone out to contract and selected a provider

The Client Side Contract Administration

Implementing the partnership

Are we set up to manage it?

Let us now manage it?

Let us see how well we did?

The Project Plan

Determine Service

Requirements

ProduceSpecification/

Brief

Advertise theService/Supply

ReceiveExpressions ofInterest (PQQ)

ShortlistProviders

Issue Invitationto Tender/

Quote

Receive proposals

Evaluateproposals

Clarificationwith first

choice

Award theContract

Start theContract

Managethe

Contract

Mobilisation Activities

• Staffing and communications (TUPE)• Recruitment and training• Pricing and payments• Contractual and relationship (reporting)• Assets and infrastructure• Implementation (may be over time rather than

immediately)

Managing the Contract

What do you need to make it work?

• A clear specification• Sensible hand-over arrangements• Effective communications• Recognition of teething problems

Managing the Contract

• Clairvoyant contractors do not exist• Ill informed clients tend to get annoyed• Avoid the ‘them’ and ‘us’ mentality• Be consistent• Avoid personality clashes• Develop the relationship

Specifications

• Input versus Output• Can you ever achieve a totally output based

approach?• What do contractors think?• What are your ‘Imperatives’?• If you go for an output approach, do you

accept the risks?

Contractor Monitoring

Onus on the Contractor to monitor their own performance

• Completion sheets• Handheld recording• Sign offs from the client/customer• Photographic proof• Response times• Rectification approach and timescales

Client Monitoring

• Checks that contractor records are correct• Random sampling approach• Get customer feedback• Monitor complaints• Focus groups

Reporting

• Monthly report• Report against KPIs• Client review meeting

Example Report Contents

Quality

• Quality Audit scores• Remedial work• Response times• Periodic tasks• Customer complaints• Customer surveys

Example Report ContentsWorkforce

• Attendance• Absence• Training• Recruitment• Staff turnover• Uniforms• ID and Vetting• Discipline/Grievance• Workforce surveys

Example Report ContentsHealth, Safety and Environment

• Accidents/incidents• Safety audits• Risk assessments• Fire safety• Safety training• COSHH• Recycling• Environmental activities

Example Report Contents

Management, Reporting and Administration

• Management information• Financial performance• Cost reduction• Invoicing• Contract variations

Financial Management

• Depends on pricing mechanism– Lump sum – invoice for one twelfth per month– Unit prices – invoice against pricing schedule

• Need to reconcile against activity• Need to manage “overs” and “unders”• Payment tied to performance - defaults

mechanism

Change

• Change control mechanism built into contract• Basis of pricing change• Business cases• Client led decision making• Mechanism and escalation process

Failure

• Default mechanism in the contract– 3 strikes and you are out?– Match to Key Performance Indicators– Dialogue– Evidenced based– Escalation process

• Ability to earn back service credits

Example KPIs (Grounds)KPI Area being measured KPI

1 Health and Safety Robust grounds maintenance safety systems are in place and are compliant with legislation and good industry practice

2 Health and Safety Staff equipped to carry out the tasks required including safety wear and safety systems and safe equipment

3 Health and Safety Managers hold valid advanced health and safety certificates

4 Health and Safety Staff hold valid standard health and safety certificates and equipment use certificates

5 Grounds Maintenance Service Equipment, materials and other resources required for the provision of the grounds maintenance services are provided in accordance with the Specification

6 Grounds Maintenance Service Grounds maintenance carried out at the times stated in the Specification as shown by the sign offs made by the grounds maintenance staff after completion

7 Grounds Maintenance Service Grounds maintenance carried out to the standards set in the Specification as shown by the sign offs made by the grounds maintenance staff after completion

8 Grounds Maintenance Service Reactive maintenance carried out in accordance with client requirements

9 Grounds Maintenance Service Equipment, materials and plants provided in accordance with the Specification

Example KPIs (Grounds)KPI Area being measured KPI

10 Staff Staff are attired in appropriate uniforms

11 Staff Staff are CRB checked

12 Staff Staff training plan in place and training being carried out

13 Staff Staff training records are up to date at all times

14 Finance Financial records are maintained in accordance with the Specification

15 Reporting Client’s reports are submitted in accordance with the Specification

16 Customer Surveys Customer surveys are carried out six monthly and results are discussed with client

17 Grounds Maintenance Strategy Grounds Maintenance Strategy prepared and discussed with client annually

Success

• Partnership principles• Balanced scorecard• Innovation• Gainshare• Social responsibility• Apprenticeships

Successful Contract Management

“ Even the best outsourcing contract means nothing if its contents are forgotten, milestones are missed or obligations are not tracked or compliant to agreed service levels”

2012 report on global outsourcing

“ The aim must be to develop a partnership with your contractor which is mutually beneficial and long lasting”

Simon Gresham

Contract Management

Clinic – Your Questions Answered?

For further information about Contract Management or Contracts and Tenders please feel free to contact Simon Gresham on [email protected] or 07798 623750