Contract Management

1. Contract Management Presentation by Simon Gresham

2. 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

3. 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

4. Contract ManagementA Definition “The management of contracts made with suppliers, customers, partners, or employees”

5. 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

6. 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”

7. Contract Management How many of you actively manage your contracts? What success stories do you have? What disasters/nightmares have you had?

8. 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?

9. 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

10. 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?

11. 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

12. The Overall Process Before you go out to contract, seek quotations or tenders Feasibility study Competition Strategy Project Plan What couldwe do? How could wedo it? What is ourplan?

13. The Overall Process Going out to contract, seeking quotations/tenders The Competition *External Bids *In-house Bids Evaluation Procurement Strategy Specification or Brief How do we go about it? What do we want? Let us see what is on offer?

14. 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?

15. The Project Plan Receive Expressions of Interest (PQQ) Produce Specification/Brief Determine Service Requirements Advertise the Service/Supply Issue Invitation to Tender/ Quote Receive proposals Shortlist Providers Evaluate proposals Manage the Contract Start the Contract Clarification with first choice Award the Contract

16. 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)

17. Managing the Contract What do you need to make it work? • A clear specification • Sensible hand-over arrangements • Effective communications • Recognition of teething problems

18. 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

19. 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?

20. 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

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

22. Reporting • Monthly report • Report against KPIs • Client review meeting

23. Example Report Contents Quality • Quality Audit scores • Remedial work • Response times • Periodic tasks • Customer complaints • Customer surveys

24. Example Report Contents Workforce • Attendance • Absence • Training • Recruitment • Staff turnover • Uniforms • ID and Vetting • Discipline/Grievance • Workforce surveys

25. Example Report Contents Health, Safety and Environment • Accidents/incidents • Safety audits • Risk assessments • Fire safety • Safety training • COSHH • Recycling • Environmental activities

26. Example Report Contents Management, Reporting and Administration • Management information • Financial performance • Cost reduction • Invoicing • Contract variations

27. 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

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

29. 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

30. Example KPIs (Grounds)

31. Example KPIs (Grounds)

32. Success • Partnership principles • Balanced scorecard • Innovation • Gainshare • Social responsibility • Apprenticeships

33. 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

34. Contract Management Clinic – Your Questions Answered? For further information about Contract Management or Contracts and Tenders please feel free to contact Simon Gresham on simongresham@btinternet.com or 07798 623750