Contract Management
Training & Development
Contents
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Introduction to Contract Management
Definition
Contract Management Issues
Activities Overview
Contract Manager: DECS
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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
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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
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Refer to Code of Ethics for the South Australian
Public Sector
Contract Manager: Skills
Skills required include:
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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:
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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.
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Review & gain an understanding of:
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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:
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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:
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Establish and monitor formal KPIs and Service Level
Agreements (SLAs)
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Monitor progress
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Conduct random inspections
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Ensure all conditions and clauses are acted upon
Monitoring Performance (Cont)
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Advise Contractor of performance issues
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Develop effective feedback mechanisms
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Keep written records of all dealings with
Contractor and administration of the contract
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Maintain comprehensive documentation
Occupational Health, Safety and
Welfare (OHS&W)
 Contract Managers should:
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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):
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What has been agreed;
Actual changes to the contract;
 If applicable:
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Current price;
Variation amount, and;
New price
 Ensure:
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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
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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)
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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