Definition of Contract Management
management of contracts made with customers,
vendors, partners, or employees
Contract management includes
- negotiating the terms and conditions in contracts &
ensuring compliance with the terms & conditions - as well as documenting & agreeing on any changes or
amendments that may arise during its implementation or execution
how can contract management be summarized
process of systematically &
efficiently managing contract creation, execution, & analysis for the purpose of maximizing financial & operational performance & minimizing risk
when is contract administration required and undertaken?
- large & complex project
- a new build or upgrading of existing large projects
- smaller projects will have a more simplified procedure
Contract administration involve activities such as
- To undertake site inspections & meetings & ensure work programmes & schedules are complied with
- To prepare progress payments & final statement
of accounts including variation orders - To certify project completion & arrange for handing over & impose liquidate damages for delays
- To ensure rectification of all defects & finalize the
accounts
Performance Monitoring
- Performance of service delivery has to be measured & used as a basis
for understanding if agreed service levels, based on goals & targets are being achieved - Monitoring is essential to ensure effective management & value for
money
Service Specifications & Agreements
- Tools for managing quality of performance & value of services provided
Quantifies
minimum service that is acceptable if customer’s requirements are to be met
Provides
benchmark against which level of services delivered to customer can be assessed
Prescriptive Specification
- Focuses on inputs
- Dictates what shall be done
- Restrictive and cannot be changed
once contract is in force
Performance-Based Specification
- Focuses on outputs
- Setting clear targets - contractor can
use to determine most appropriate
operational response - Considered able to deliver quality of
service required at lower cost
Prescriptive (daily tasks)
- Empty rubbish bins twice a day
- Collect all rubbish & waste material, place in container provided by the
contractor & remove to the nearest designated disposal point
Performance-Based
- ensure bins & other containers for wastes are emptied regularly so that they are not allowed to remain full
- Do not permit contents of bins & containers to pose a threat to health or allow them to detract from the normal enjoyment of space by users
What is a service level agreement
A statement of intentions existing between the service provider (contractor) and the customer (owner) setting out a specified level of service
what needs to be in SLA
- name of each party
- roles & responsibilities of each party
- quality & performance-related targets
- time-related targets
- price & rates
- resources required
- method of communication etc
- dispute resolution procedures
Key Performance Indicator (KPI)
- Also known as KPI is a measure of
performance - Define and evaluate how successful it is
Key Performance Indicator (KPI)
- Specific purpose
- Measurable to get a value
- Achievable
- Relevant to measure
- Time bound
Benchmarking
- identify ‘best practice’
- Determining who is the very best, who sets the standard & what that standard is
Objectives of benchmarking
- to determine what and where
improvements are called for - how other firms achieve their
high performance levels - Use this information to improve
the firm’s performance
Contract Review
- outsourced service provision: contract review is necessary to establish if decision to outsource is still valid
- necessity for reviews will have been built into SLA and formalized in the contract
- frequency of contract reviews will depend on size & complexity of contract
- Comparison of tendered costs against actual costs
- Current performance rating
Ideas for improving and/or providing better value for - money & increased customer satisfaction
- Prompt highlighting & discussion of contentious issues, thereby avoiding escalation & further dispute
