Contract Management

Friday, September 28th, 2012

We’ve tendered the requirement, undertaken due diligence, sought and obtained executive approval, awarded the contract and debriefed the unsuccessful contractors. Job done? No – it’s only just begun. Now the Contract needs to be managed.

I recently heard a Contractor state that his first action on being awarded a contract was to open a Claims File. “We won’t make a profit on the tendered price,” he said “but we will with the claims!”

The construction industry, for example,  is fraught with difficulties.  Variations are the norm and in many cases for justifiable reasons. Therefore it is necessary to ensure that a robust contract management strategy and plan is in place

In a recently published example the Northern Ireland Audit Office report into the Northern Ireland Housing Executive  (NIHE) identified amongst other things poor contract management within NIHE. It highlighted:

•             Key Performance Indicators have not been objective;

•             performance data has not been independently validated;

•             poor contractor performance has not been robustly challenged and as  a result has been difficult to pursue  against contractors; and

•             overpayments were identified but the action to address these issues was inadequate and the risk of fraud was not adequately assessed.

This story is not unique. It is happening all the time and not just in construction. We note that NIHE is one of a limited number of public bodies designated as a Centre of Procurement Expertise (CoPE).

We do not know the extent the Procurement Department had to play in this situation but we can, from experience, say that in many cases when the Contract has been placed the Client-side management of it is placed in the hands of individuals that have limited or no commercial or contractual management training or experience.

Do you think the Contractor’s staff are as poorly educated, skilled and motivated in maximising the benefit of the contract? Certainly not.

We have recently been involved in training 75 technical staff in a programme covering Contract Management. Many of whom were not aware they were Contract Managers as it was not in their job title.  Their activities in managing external resources clearly demonstrated that they were Contract Managers.

To enable and equip your people to deliver better in the role of  Contract Managers please contact me, Ray Gambell for an initial discussion on 01744 20698 or email [email protected].