Introduction to Contract
Management Framework
Workshop
December 2014
Procurement Transformation Division
< Month 2013 >
Workshop Outline
1. Purpose and objectives of this workshop
2. Why is contract management important?
3. QAO Audit Report Recommendations
4. Overview of One Government CMF
5. Supporting tools and templates
6. Effective contract management begins with early planning
7. Roles and responsibilities defined in the CMF
8. Value / risk approach to contract management
9. Contract management plans
10. Contract extensions and renewals
11. Re-cap key messages
12. Operationalising the CMF in Agencies
13. Further training and next steps
“A pessimist sees the difficulty in every opportunity.
An optimist sees the opportunity in every difficulty”
Which do you choose to be?
Workshop purpose and objectives
Purpose:
•
to provide you with important information and improve your understanding of the new
Contract Management Framework (CMF) and supporting tools
•
so you can share knowledge and provide similar workshops within your own Agency.
Objectives provide attendees with:
•
an overview of the new CMF and supporting tools/templates and key messages
•
an understanding of the key drivers behind the establishment of a contract
management framework and supporting tools
•
a better understanding of how some of the most frequently used tools are intended to
be used (e.g. value risk matrix, contract management checklist, contract
management plan, contract extension and renewal checklist)
•
a presentation pack, that can be used to conduct training and information sessions
within your agency.
This is not a substitute for more comprehensive contract management training
Why is contract
management important?
Why is contract management important?
Role of contract management in
retaining and improving value for money
Benefits of contract
management:
•
Obtaining value for
money
•
Managing risk
•
Maximising end user
outcomes
Effective contract / supplier
management
Value for
money
The effective management of
contracts with suppliers is
critical to Queensland
Government maximising
benefits from procurement:
VfM achieved
through
procurement
Contract
management
benefit
Poor contract
management
Procurement
Activities
Ongoing contract management
(and category management activities)
Time
QAO Audit Report Recommendations
1. Improve capability
2. Value / risk approach
Develop and implement a
contract management capability
framework
Apply a value/risk matrix to define
expectations for contract management and
appropriate resource allocation to contracts
 On-line procurement induction
program to include contract
management module
 Contract management training
 Value/risk matrix
 One Government CMF
 Contract management plan and
Contract management checklist templates
3. Contract extensions
and renewals
4. Contract management
lifecycle system
Validate value for money before
extending/renewing a contract, through
assessment of contract risk, demand, supply
market and supplier performance
 Checklist for contract extensions/renewals
 Fact Sheet (including FAQ’s)
 Contract Review Report template
 One Govt CMF
Implement a contract management lifecycle
system to enable spend analysis, monitoring
of supplier performance, early triggers to
prepare for contract expiry
 Q-Contracts
 Supporting processes
 Contract register
Q-Contracts
One Government
Contract
Management
Framework
Contract Management Framework (CMF)
Contract Management Framework available on HPW website
Contract Management Guidance available on HPW website
Background to its development and purpose:
• Consistency
• Ensure contractual obligations are met, risks are managed, value obtained
• Describes the three major phases of the contract management lifecycle and
key activities:
Phase 1 – Contract set up
Phase 2 – Contract management
Phase 3 – Contract close out
Scope: focus is on contract management once a contract is in place (although planning is key)
Supporting materials:
• Tools and templates (see next slide)
• Fact sheets: Value Risk Matrix, Extending and Renewing Contracts
• Procurement guidance – managing and monitoring supplier performance
Supporting tools and templates
Phase 1 – Contract set up tools and templates
Value/risk matrix
Classify a contract (as either routine, focused or strategic) based on
value and risk.
Contract management checklist
Suitable for routine contracts – a brief summary of key information
relevant to contract management.
Contract management plan
Define the key activities and responsibilities for managing the
contract.
A guide for the contract kick-off meeting.
Contract kick-off meeting template
Phase 2 – Contract management tools and templates
Contract performance review
meeting template
Support the contract manager to conduct and document a contract
performance review meeting.
Risk register template
Checklist for contract
extensions/renewals
Record and maintain a single repository for contract risks.
Record the value for money assessment of a contract extension or
renewal (suitable for routine contracts)
Contract review report
Record the analysis performed and recommendation to extend or
renew a contract, or transition to other suppliers.
Phase 3 – Contract close-out tools and templates
Lessons learned log template
Document lessons learned throughout the contract lifecycle.
Close-out check list
Confirm all close-out activities have been performed.
Effective contract management begins with
good planning in procurement phase
Contract management requires involvement during the Procurement process and not simply after the
contract has been awarded.
Effective contract
management starts at the
sourcing process through to
the relationship management
of the supplier to ensure the
optimum efficiency and
increased service levels so
as to avoid having to utilise
contractual terms to achieve
the performance
expectations.
It’s a process that requires
teamwork and partnership
skills through regular reviews
and engagement.
Roles and responsibilities defined
What is:
•
a Contract Owner?
•
a Contract Manager?
•
a Contract Administrator?
Greater collaboration between the procurement
sourcing lead and contract manager
•
Early identification of contract management skills and capability needed
•
Contract managers contribute subject matter expertise and experience
•
Sourcing lead in best position to develop contract management plan (in consultation with contract
manager – see next slide)
Better handover between sourcing lead and
contract manager = smoother transition
Don’t “throw it over the fence!”
Value/risk approach to
contract management
How to use the value/risk
matrix (VRM)
Value / risk approach
Value risk approach to contract management provides flexibility, requiring
common sense and good judgment
•
Contract management framework adopts a value/risk approach. Depending on how the contract is
classified based on value and risk, the activities, focus and amount of effort can vary (see table on
page 7 of CMF identifying whether key activities are required, recommended or optional).
•
Discretion allowed, based on value and risk of contract. Apply common sense and good judgment.
For example ‘routine’ contracts should be ‘light touch’.
•
Value/risk assessment helps identify capability required to manage a contract
What is the role of the value/risk matrix (VRM)?
•
The VRM is available on the Housing and Public Works website
•
How to use the matrix
•
Some background about the questions on value (cost and ‘non-cost’ value) and risk
•
Flexibility for agencies to apply their own risk assessment methodology to answer questions about
risk
Contract Management Plans
Contract Management Plans
“…To support the contract start-up and effective contract management, most of
the work required for developing a contract management plan can and should
be done before the contract is signed …” (Australian National Audit Office Better Practice
Guide on Contract Management http://www.anao.gov.au/Publications/Better-Practice-Guides
Sourcing lead is responsible for developing the CMP
(see below extract from RACI in Contract Management Framework)
Activity
1.4 Finalise contract
management plan
Sourcing Lead
Contract
Owner
Contract
Manager
R
I
A
Contract
Administrator
Supplier
Key users
C
C
•
Sourcing lead in best position to develop contract management plan
•
Incorporate knowledge acquired through sourcing process and contract negotiations (e.g. risks to
manage)
•
Develop in consultation with contract manager
Our templates: Contract Management Checklist and Contract Management
Plan
•
You can use a CMP for multiple contracts (e.g. to manage a group of contracts under a SOA)
•
Save a copy in Q-Contracts.
•
Keep it up to date – the CMP is a living document (not ‘set and forget).
Contract extensions
and renewals
Contract extensions and renewals
•
QAO findings and recommendations
•
Defensible position
•
Checklist for contract extensions and renewals –
what is its purpose?
•
Contract Review Report template – when should it
be used?
•
Fact Sheet for Contract Extensions and Renewals –
FAQ’s and useful examples
•
Examples of when contracts might be
extended/renewed (see Fact Sheet)
•
Record keeping – keep a copy in Q-Contracts (or
contract management system used by your Agency)
Key messages
Re-cap on messages
•
One Government CMF and supporting tools and templates are available to use
•
Become familiar with the roles and responsibilities identified in the Contract
Management Framework
•
Need for greater collaboration between procurement/sourcing teams and contract
managers in planning and development of contracts, and contract handover.
•
Sourcing lead (procurement) is responsible for developing contract management plan
•
Identify contract managers early so the ‘right people’ manage the ‘right contracts’
•
Templates can be adapted by Agencies and modified to suit
•
Value / risk approach to contract management requires sound judgment and common
sense to be applied
•
For contract extensions and renewals use the Checklist and other tools / guidance
material available
•
Be diligent with record keeping
•
Contract management implementation by Agencies should be consistent with CMF
Operationalising the CMF in agencies
What can agencies do to start ‘operationalising’ the CMF?
•
Deliver introductory workshops (like this one).
•
Develop process and Agency specific guidance (if necessary)
•
Review and update any existing policies, procedures, guidance material to align with
CMF and use tools available.
•
Adapt the templates to further improve them as a ‘custom fit’ for your Agency.
•
Participate in training and capability development initiatives
•
Identify contract managers in your Agency (and share contacts with PTD)
•
Share learnings and materials with PTD
and other Agencies
•
Ask for help if you need it (betterprocurement@hpw.qld.gov.au)
Further training and next steps
Contract management capability training and development … coming soon
•
•
PTD will appoint a training provider to help develop training (including online training) in
procurement and contract management that agencies can access.
PTD also intends to make an audio recording of this presentation available online and via the
ProQr Yammer Group
Next steps
•
•
Agencies can begin ‘operationalising’ CMF
Contract management ‘leaders’ deliver introductory workshops within Agencies
More information
@
y
Email betterprocurement@hpw.qld.gov.au
Join the ProQr – our procurement community of practice on QG Yammer. Just email
betterprocurement@hpw.qld.gov.au to be invited to the ProQr Yammer Group.
Not on Yammer? Simply email join@qgyammer.qld.gov.au