effective contract management - getting it right! 24 th january 2007

Effective Contract ManagementEffective Contract Management

- Getting it Right!- Getting it Right!

2424thth January 2007 January 2007

ContentContent

• Introduction to echelonIntroduction to echelon – who are we? – who are we?• echelon portfolio – echelon portfolio – who do we work with?who do we work with?• Identification of Drivers – Identification of Drivers – how do we choose?how do we choose?• Contract Options – Contract Options – what options are open to us?what options are open to us?• Developing the contract – Developing the contract – methodsmethods• Pitfalls - Pitfalls - what can go wrong?what can go wrong?• ConclusionConclusion

introduction to echelonintroduction to echelon

• Extensive client & contracting Extensive client & contracting experienceexperience of Partnering of Partnering• Development of Development of bespokebespoke solutions solutions • Full rangeFull range of services offered to Social Housing clients of services offered to Social Housing clients• Innovative and well regarded Innovative and well regarded • Focus on full Focus on full stakeholder engagementstakeholder engagement & & legacy buildinglegacy building• Working with 20+ organisations (LAs, ALMOs & RSLs)Working with 20+ organisations (LAs, ALMOs & RSLs)• We are We are notnot legal advisers? legal advisers?

‘‘Making Partnering Work’Making Partnering Work’

echelon portfolioechelon portfolio

Context?Context?

• How many delegates are using Partnering Contracts?How many delegates are using Partnering Contracts?• PPC/TPC?PPC/TPC?• NEC?NEC?• JCT?JCT?• Other? (define)Other? (define)

• Why did you select that Contract?Why did you select that Contract?• What training was provided? Joint?What training was provided? Joint?• What input did Contractor have in contract development?What input did Contractor have in contract development?

Drivers – think…!Drivers – think…!

• Does the contract drive the project or the projectDoes the contract drive the project or the project drive the contract?drive the contract?

Drivers – consider…Drivers – consider…

• Volume of projectVolume of project• Longevity of project – ongoing, finite? 30 years?Longevity of project – ongoing, finite? 30 years?• What is the right number of Contractors?What is the right number of Contractors?• How do we incorporate second tier?How do we incorporate second tier?• Cost ModelCost Model - Fixed price? Target Cost? Open Book? SOR? Hybrid?- Fixed price? Target Cost? Open Book? SOR? Hybrid?• How do we incentivise?How do we incentivise?

Drivers – OJEuDrivers – OJEu

• Procurement Route – Open, Restricted, NegotiatedProcurement Route – Open, Restricted, Negotiated• Restricted seems to be preferred – why?Restricted seems to be preferred – why?• Definition of contract – works (£3.6m)/service (£144k)Definition of contract – works (£3.6m)/service (£144k)• Issue - How do we differentiate at PQQ stage?Issue - How do we differentiate at PQQ stage?• Openness & Clarity – must do as we say!Openness & Clarity – must do as we say!• Award NoticeAward Notice• Break these rules at your peril – contractors Break these rules at your peril – contractors willwill challenge! challenge!

Developing the ContractDeveloping the Contract

4 phases of development:4 phases of development:

1.1. Pre-Tender phasePre-Tender phase2.2. Tender processTender process3.3. Implementation Period – ‘Golden Hour’Implementation Period – ‘Golden Hour’4.4. Delivery PhaseDelivery Phase

Managing the ContractManaging the Contract

• Allow adequate set-up timeAllow adequate set-up time• Where do we choose the Contract?Where do we choose the Contract?• Pre-award of post award?Pre-award of post award?• Merits in involving contractor(s) in contract developmentMerits in involving contractor(s) in contract development• Are we to prescriptive?Are we to prescriptive?• Defined Project Manager(s)Defined Project Manager(s)• Process must be led - Make things happen! Process must be led - Make things happen!

Generic Project Flowchart

Project Team Organisation

Pitfalls – What can go wrong?Pitfalls – What can go wrong?

• The wrong peopleThe wrong people• Lack of cultural readinessLack of cultural readiness• Unclear objectivesUnclear objectives• Inadequate performance measurementInadequate performance measurement• Variation process not clearVariation process not clear• Blurred Client/Contractor roleBlurred Client/Contractor role• Poor communicationPoor communication• Loose specificationLoose specification• Contractor capability issuesContractor capability issues• ContinuityContinuity

Pitfalls – The Wrong PeoplePitfalls – The Wrong People

• Wrong people in roles can derail projectWrong people in roles can derail project• Lack of interpersonal skillsLack of interpersonal skills• Traditional behaviours slip-inTraditional behaviours slip-in• Lack of understanding of mechanicsLack of understanding of mechanics

• Example….. Example…..

Pitfalls – Lack of cultural readinessPitfalls – Lack of cultural readiness

• All parties not always ready to make project work?All parties not always ready to make project work?• Necessary organisational change not occurredNecessary organisational change not occurred• Lack of buy-in from wider stakeholdersLack of buy-in from wider stakeholders• Change doesn’t happen by itselfChange doesn’t happen by itself• Contract needs to be drivenContract needs to be driven

• Example…Example…

Pitfalls – Unclear ObjectivesPitfalls – Unclear Objectives

• No clear objectives for projectNo clear objectives for project• Roles and responsibilities not defined and/orRoles and responsibilities not defined and/or understoodunderstood• Lack of mutual objectives leads to…..Lack of mutual objectives leads to…..• Conflicting objectivesConflicting objectives


Pitfalls – Inadequate performance Pitfalls – Inadequate performance MeasurementMeasurement

• Lack of clear targetsLack of clear targets• No KPIs on projectNo KPIs on project• Lack of definition in collection processLack of definition in collection process• Lack of structured review processLack of structured review process• Data not benchmarked (internal & external)Data not benchmarked (internal & external)• Data not used to drive projectData not used to drive project


Pitfalls – Variation process not clearPitfalls – Variation process not clear

• Claims cultureClaims culture• No clear guidance within contractNo clear guidance within contract• Poor data within (asset management data)Poor data within (asset management data)• Lack of joint survey processLack of joint survey process• Onerous contract conditionsOnerous contract conditions• Risk and reward?Risk and reward?


Pitfalls – Blurred Client/Contractor RolePitfalls – Blurred Client/Contractor Role

• Who is in charge?Who is in charge?• Poor technical dataflow (surveys)Poor technical dataflow (surveys)• Poor relationship with end-usersPoor relationship with end-users• Unnecessary duplication of processesUnnecessary duplication of processes


Pitfalls – Poor CommunicationPitfalls – Poor Communication

• Delays in instructions/informationDelays in instructions/information• Information overloadInformation overload• Lack of defined protocolsLack of defined protocols• No early warning/dispute resolution processNo early warning/dispute resolution process• Poor record keepingPoor record keeping


Pitfalls – Loose SpecificationPitfalls – Loose Specification

• Lack of definition in scope & requirements Lack of definition in scope & requirements • Poor choices in materials etc.Poor choices in materials etc.• Conflicting instructions within documentsConflicting instructions within documents• Contractors like driving buses!Contractors like driving buses!


Pitfalls – Contractor CapabilityPitfalls – Contractor Capability

• Lack of resourcesLack of resources• Over reliance on supply chain – fishing in same pondOver reliance on supply chain – fishing in same pond• Lack of direct deliveryLack of direct delivery• Lack of performance measurement down chainLack of performance measurement down chain• Lack of incentive down chainLack of incentive down chain• Inadequate site managementInadequate site management


Pitfalls – Lack of ContinuityPitfalls – Lack of Continuity

• Framework agreements and call-offs – continuity?Framework agreements and call-offs – continuity?• Stop-start approach affects capabilityStop-start approach affects capability• Breakdowns in supply chain continuityBreakdowns in supply chain continuity• Loss of economies of scaleLoss of economies of scale• Inadequate stock data and long-term AMPInadequate stock data and long-term AMP


ConclusionConclusion

• Many projects are being poorly managedMany projects are being poorly managed• Lack of focus on holistic approachLack of focus on holistic approach• Resources not allocated at right stages in processResources not allocated at right stages in process• Lack of mutual objectivesLack of mutual objectives• Weaknesses in performance managementWeaknesses in performance management• Lack of understanding of new contractsLack of understanding of new contracts

Can we Fix it..?Can we Fix it..?

I bloody hope so..?I bloody hope so..?

effective contract management - getting it right! 24 th january 2007

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