1. Best Practice Strategic Contract Management
CONTRACT MANAGEMENT TOOLKIT AWARENESS SESSION
Improvement and Efficiency
West Midlands
Ange Bateman
Contract Development Manager
Sheffield City Council

2. Purpose of this Session
Setting the scene - Why is Contract Management important?
Bringing it to life – The Sheffield Journey - Introducing the Best Practice Contract Management approach
Bringing it to life – The Strategic Contract Management Toolkit.
How Commercial Services within Sheffield City Council can offer support with implementation, development and for the future?

3. Why is Contract Management So Important? The Context
A significant and growing proportion of Council's total expenditure is being outsourced to 3rd party organisations
The outsourced contracts need to deliver the promised benefits (Value for Money), manage the risks and continuously improve and change through the life of the contract to meet changing demands and expectations
Councils are still ultimately responsible for all outsourced services and the associated risks - both citizen and legal responsibilities
There is a continual need to drive on-going financial savings and to hold Providers to commitments from within the procurement process.

4. Why is Contract Management So Important? The Context
Best Practice suggests that organisations should Invest anywhere between 1-10% of contract value in quality contract management; the average of 3% (Source: Government Public Accounts Committee Report 2008)
Benchmarking suggests 5-7% ADDITIONAL savings can be delivered on top of initial procurement savings
Considering the total UK public spend purse. This equates to circa £1 Billion extra savings

5. Why is Contract Management So Important
Why is Contract Management So Important? The Context: Challenges and Issues
Misguided views & myths of the past – self managing contracts & fluffy cuddly relationships !!!
Lack of understanding & awareness of Contract Management principles and processes
Lack of organisational investment in Contract Management (people, systems & processes)
Lack of clarity around the different roles and responsibilities
Not properly building Contract Management into procurement – management resources and Provider expectation management
Although there is evidence of pockets of best practice, Contract Management is generally poor across the public and private sector

6. Why is Contract Management So Important? The Sheffield Case Study
Sheffield has a major portfolio of strategic contracts with an annual contract value of over £270 million, where the strategic contract management approach has been implemented:
Waste Collection & Management
Construction & Building Services
Property Management & FM
HR & Payroll
Revenue Collection & Benefit Payments
Financial Business Transactions & ICT
Property PFI
Highways PFI
Schools Catering & Cleaning

7. Why is Contact Management So Important? The Sheffield Case Study
Annual ADDITIONAL savings on average of 8% per annum have been achieved through:
Performance management – including KPI management
Price challenges, benchmarking & market testing
Cost avoidance & efficiencies
Continuous service & process improvement
Contract service step downs
Increased Benefits Realisation – improved service delivery
Effective Risk Management - legal and technical issues
Relationships are sound - even in a challenging economic climate

8. Introducing the Strategic Contract Management Approach
Who says it is best practice?
 Chartered Institute of Purchasing & Supply (CIPS)
 Audit Commission
LGA
DEFRA
 The vast majority who have seen it
Developed by Sheffield City Council using established principles, case studies and private/public sector experience
A unique approach which translates contract management principles into processes which drill down to a detailed practical toolkit which can be used by all types of contract managers on all types of contracts
Two component parts:
Intelligent Client Strategic Framework
Contract Management Toolkit
The key benefit of this contract management approach is that it can be commenced at any time to make a significant positive impact 

9. Intelligent Client Strategic Framework
The 'Intelligent Client' is defined as the integrated roles, responsibilities, structures, processes and values that exist to ensure that a Council manages and develops the delivery of services and systems and obtains value for money over the full life of the commercial relationship
The Intelligent Client has been developed to ensure that Councils get the very best from contractual relationships in terms of value for money, risk management and service development
The principles are standard but the specific implementation can be tailored to the individual commercial relationship
It can equally be applied to internal service providers or arms length organisations
The principles ideally should not be optional but established as Council policy

10. Intelligent Client Principles
Roles and Responsibilities
Governance
TECHNICAL / OPERATIONAL
Policy, Strategy & Planning
Service Developments & Business Requirements
Technical & Service Assurance
Contract Technical Process Management
COMMERCIAL
Contract Performance Management
Contract Commercial Process Management
Strategic Relationship Management
Internal Process Management
Behaviours and Values

11. Contract Management Toolkit
The Contract Management Toolkit translates Contract Management into easy to follow processes, which can be customised, where appropriate, into bespoke activity packages
The aim of the Toolkit is to provide a comprehensive set of best practice processes, tools and techniques that can be accessed and consistently applied across the organisation to effectively contract manage and ensure value for money customer focussed services
The Toolkit enables users to identify the type of contract they are managing and then apply a suite of processes to the degree appropriate to that contract

12. Contract Management Toolkit Contract Categorisation
Cost per Year
Greater Than
£2m (or appropriate)
Red
Red
Red
Between
£500k - £2m
Amber
Amber
Red
Up to
£500k
Green
Amber
Amber
Low
Medium
High
Risk
The above matrix enables the Contract Manager to apply the Processes to a degree that is ‘fit for purpose” for the particular contract
The above matrix also helps to advise on the right resources with appropriate skills required for the effective management of the Contract

13. Contract Management Toolkit The Component Parts
CONTRACT PROCESS MANAGEMENT
Change
Payment
Project Management
Risk Management
Resource Planning
Contract Activity Timelines
Service Review and Planning
Business Continuity
Financial Updates & Modelling
Financial Strategy
Contract Health Checking
Asset Management
Exit
Step-in
Notice / Termination
Transition / Mobilisation
Dispute Resolution Procedure
Operational Contract Manual
Identifies up to 26 key processes to effectively contract manage a contract
Depending on contract categorisation get ‘full fat’ or ‘slimmer's version’
Organised as per Intelligent Client Model roles allocated to Contract Management Function; Some processes identified overlap or are jointly owned with Service Client Functions)
CONTRACT PERFORMANCE MANAGEMENT
Performance Management
Benefits Realisation Management
Service Review
Quality Audit
Benchmarking / Market Testing
STRATEGIC RELATIONSHIP MANAGMENT
Governance
Relationship Management
Stakeholder Management & Communications

14. How Sheffield Can Support Contract Management Implementation in Other Councils
Organise and/or attend regional & national awareness events for key stakeholders
Run awareness/training sessions on Contract Management and the detailed use of the Toolkit:
On Council premises
Up to 15 delegates per session
When charged cost is £500 per session plus expenses
Provide electronic access to the Toolkit for Council employees
Provide additional support through consultancy services where appropriate

15. How Sheffield Can Support Contract Management Implementation in Other Councils
Annual cost per organisation (regardless of number of Toolkit users) - 3 year minimum commitment
 Small Council - £3,600
 Medium Council - £4,500
 Large Council - £6,000
Annual Toolkit fee to cover:
Help Desk support
Regular update of Toolkit to incorporate latest thinking, experience and developments
Forums & Networking – Sharing best practice
Ad hoc detailed consultancy support on specific areas, problems etc. at a defined day rate if requested

16. Contract Management Toolkit Proposed New Approach
Operation
Preparation
COMMISSIONING
Pre Contract Preparation
PURCHASING/ACQUISITION
Completion/Transition

17. Proposed Additional Toolkit Items
Process Development
Documentation Management Process
Negotiation
Organisational Failure

18. angela.bateman@sheffield.gov.uk or
To discuss further after today or if you want to start implementing best practice contract management contact: or
Telephone
Thank you
Any Questions?