Contract Management

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Contract Management

• Presentation by
• Simon Gresham

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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

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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

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Contract ManagementA Definition

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

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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

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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

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Contract Management

• How many of you actively manage your contracts?
• What success stories do you have?
• What disasters/nightmares have you had?

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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?

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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

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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?

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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 users 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

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The Overall Process
Before you go out to contract, seek quotations or
tenders
Feasibility study
Competition Strategy
Project Plan
What could we do?
How could we do it?
What is our plan?
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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?
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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?
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The Project Plan
Receive Expressions of Interest (PQQ)
Produce Specification/Brief
Determine Service Requirements
Advertise the Service/Supply
Issue Invitation to Tender/ Quote
Shortlist Providers
Receive proposals
Evaluate proposals
Manage the Contract
Clarification with first choice
Start the Contract
Award the Contract
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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)

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Managing the Contract

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

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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

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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?

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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

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Client Monitoring

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

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Reporting

• Monthly report
• Report against KPIs
• Client review meeting

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Example Report Contents

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

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Example Report Contents

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

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Example Report Contents

• Health, Safety and Environment
• Accidents/incidents
• Safety audits
• Risk assessments
• Fire safety
• Safety training
• COSHH
• Recycling
• Environmental activities

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Example Report Contents

• Management, Reporting and Administration
• Management information
• Financial performance
• Cost reduction
• Invoicing
• Contract variations

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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

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Change

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

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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

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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
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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 Clients 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
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Success

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

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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

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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_at_btinternet.c
  om or 07798 623750