Contract Management Presentation by Simon 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 Management A 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 Feasibility study What could we do? Competition Strategy Project Plan How could we do it? What is our plan? The Overall Process Going out to contract, seeking quotations/tenders Procurement Strategy How do we go about it? Specification or Brief What do we want? The Competition *External Bids *In-house Bids Let us see what is on offer? Evaluation The Overall Process After you have gone out to contract and selected a provider The Client Side Are we set up to manage it? Contract Administration Let us now manage it? Implementing the partnership Let us see how well we did? The Project Plan Determine Service Requirements Produce Specification/ Brief Evaluate proposals Receive proposals Clarification with first choice Award the Contract Advertise the Service/Supply Receive Expressions of Interest (PQQ) Issue Invitation to Tender/ Quote Shortlist Providers Start the Contract Manage the 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 Contents Workforce • • • • • • • • • Attendance Absence Training Recruitment Staff turnover Uniforms ID and Vetting Discipline/Grievance Workforce surveys Example Report Contents Health, 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 simongresham@btinternet.com or 07798 623750