Contract Management Sub-Regional Caribbean

Public Procurement Conference

The Importance of Contract Management

Port of Spain, TrinidadJune 22, 2014

Sabine Engelhard

Segment I:Contract Definition and Purpose

Segment II: What is Contract Management?

Segment III: Contract Management and Achieving Results

Importance of Contract Management

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Topics Overview

Segment I Contract Definition

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Segment I: Contract Definition

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Segment I: Contract Definition

Where does the Contract fit in the Procurement Process?

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Segment I: Contract Definition

Segment II What is Contract Management?

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What does Contract

Management Imply ?

Segment II What is Contract Management?

-Background information.-Description of the physical or functional characteristics.-Nature of a supply, service, or construction item.-Requirements to be satisfied by a product, material, or process. -Procedure to determine whether requirements are satisfied/Reporting.

Source: National Institute of Government Purchasing (NIGP) Dictionary of Purchasing Terms).

Segment II What is Contract Management?

•Written by someone who understands the topic (Procurement function: help articulate the needs)•Invest time specifying what you want & how you want it •Be sure that what you write is what you want•Because what you write is what you will get

Segment II What is Contract Management?

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Segment II What is Contract Management?

When does Contract Management Start formally?

Know your contract (what does it contain?);

Understand your contract (what are these provisions?);

Use your contract (When is it appropriate to use what/timely action);

Know your risks & understand how to mitigate them;

Supervise your contract technically (performance & quality);

Escalate to obtain help/guidance .

Segment II What is Contract Management?

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Segment II What is Contract Management?

Contract Management

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Segment II What is Contract Management?

Contract Management

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Segment II What is Contract Management?

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Key Supplier Management Program(IDB example)

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Segment II What is Contract Management?

IDB Corporate Contracts Management Tool Kit

(Summary of Topics)

Scope of Contract Management;Key Contractor Management Program;Importance of Financial Reporting and Contractor’s Internal Controls;Focus of Contract ManagementTerms of Reference, Statement of WorkNature & Extent of Contract ManagementContractor’s Performance

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Segment II What is Contract Management?

IDB Corporate Contracts Management Tool Kit

(Performance Support Tools)

Template for TOR & SOWContract Management DiagramContract Kick-off Mtg. ChecklistContract Management ChecklistContractor’s Performance and Contract Progress Report FormContract Closeout ChecklistContractor’s Final Performance Evaluation Form

Contract Specialist

•Letter to to PM confirming role & responsibilities.•Conduct Contract Kick-off Mtg.

•Validate contractor’s processes & systems for compliance.•Maintain contract files and monitor documentation.

•Coordinate performance reviews.•Resolve issues & disputes.•Document actions.

•Issue amendments.•Evaluate.•Negotiate.•Modify scope & price.•Maintain documentation.•Complete Contract Closeout Checklist.

•Complete contract files.•Archive file.

Project Manager •Acknowledge PM communication.•Read contract•Participate in Contract Kick-Off Mtg.

•Prepare Surveillance Plan.•Complete project Mgr. Contract Mgt. Checklist.

•Implement Surveillance Plan.•Monitor & documents contractor’s performance (Contract Progress Report if SLA).•Document acceptance of deliverables.•Notify Contract Specialist of issues & disputes.

•Identify & evaluate changes.•Notify Contract Specialist.•Document changes.•Assist in negotiations.

•Finalize acceptance.•Authorize payment.

•Complete Contract Closeout Checklist•Provide all relevant documentation•Complete Contractor Final Performance Report.

Segment II What is Contract Management?

Segment III Good Contract Management-Achieving Results

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Segment II Good Contract Management-Achieving Results

Importance of Contract Management Achieving Results

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Segment III: Good Contract Management-Achieving Results

Good Contract Management -Achieving Results

Good specifications (TORs or SOWs); Planning of selection process & execution

of assignment; Sufficient technical knowledge; Sufficient & timely performance;

supervision/measurement; Good understanding of when changes to

scope needed.

Technical Capacity Critical:

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Segment III: Good Contract Management-Achieving Results

Good Contract Management -Achieving Results

Administrative Capacity is Critical:

Properly Defined Responsibilities and Rules;

Capacity to prepare standardized documentation;

Capacity to evaluate and negotiate; Clear Procedures (i.e. acceptance of

deliverables, payments, amendments, extensions, termination…);

Dispute resolution mechanism (appropriate use).

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Segment III: Good Contract Management-Achieving Results

How do we contribute to Achieving Results for the Organization?

Good Contract Management-Strategic function and important pillar.

Empowering organization.

Good contracts outcomes.

Contribution to organization’s Goals.