Presentation on theme: "Best Practice Strategic Contract Management"— Presentation transcript:
1Best Practice Strategic Contract Management CONTRACT MANAGEMENT TOOLKIT AWARENESS SESSIONImprovement and EfficiencyWest MidlandsAnge BatemanContract Development ManagerSheffield City Council
2Purpose of this Session Setting the scene - Why is Contract Management important?Bringing it to life – The Sheffield Journey - Introducing the Best Practice Contract Management approachBringing 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?
3Why is Contract Management So Important? The Context A significant and growing proportion of Council's total expenditure is being outsourced to 3rd party organisationsThe 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 expectationsCouncils are still ultimately responsible for all outsourced services and the associated risks - both citizen and legal responsibilitiesThere is a continual need to drive on-going financial savings and to hold Providers to commitments from within the procurement process.
4Why 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 savingsConsidering the total UK public spend purse. This equates to circa £1 Billion extra savings
5Why is Contract Management So Important Why is Contract Management So Important? The Context: Challenges and IssuesMisguided views & myths of the past – self managing contracts & fluffy cuddly relationships !!!Lack of understanding & awareness of Contract Management principles and processesLack of organisational investment in Contract Management (people, systems & processes)Lack of clarity around the different roles and responsibilitiesNot properly building Contract Management into procurement – management resources and Provider expectation managementAlthough there is evidence of pockets of best practice, Contract Management is generally poor across the public and private sector
6Why 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 & ManagementConstruction & Building ServicesProperty Management & FMHR & PayrollRevenue Collection & Benefit PaymentsFinancial Business Transactions & ICTProperty PFIHighways PFISchools Catering & Cleaning
7Why 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 managementPrice challenges, benchmarking & market testingCost avoidance & efficienciesContinuous service & process improvementContract service step downsIncreased Benefits Realisation – improved service deliveryEffective Risk Management - legal and technical issuesRelationships are sound - even in a challenging economic climate
8Introducing the Strategic Contract Management Approach Who says it is best practice? Chartered Institute of Purchasing & Supply (CIPS) Audit CommissionLGADEFRA The vast majority who have seen itDeveloped by Sheffield City Council using established principles, case studies and private/public sector experienceA 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 contractsTwo component parts:Intelligent Client Strategic FrameworkContract Management ToolkitThe key benefit of this contract management approach is that it can be commenced at any time to make a significant positive impact
9Intelligent 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 relationshipThe 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 developmentThe principles are standard but the specific implementation can be tailored to the individual commercial relationshipIt can equally be applied to internal service providers or arms length organisationsThe principles ideally should not be optional but established as Council policy
10Intelligent Client Principles Roles and ResponsibilitiesGovernanceTECHNICAL / OPERATIONALPolicy, Strategy & PlanningService Developments & Business RequirementsTechnical & Service AssuranceContract Technical Process ManagementCOMMERCIALContract Performance ManagementContract Commercial Process ManagementStrategic Relationship ManagementInternal Process ManagementBehaviours and Values
11Contract Management Toolkit The Contract Management Toolkit translates Contract Management into easy to follow processes, which can be customised, where appropriate, into bespoke activity packagesThe 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 servicesThe 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
12Contract Management Toolkit Contract Categorisation Cost per YearGreater Than£2m (or appropriate)RedRedRedBetween£500k - £2mAmberAmberRedUp to£500kGreenAmberAmberLowMediumHighRiskThe above matrix enables the Contract Manager to apply the Processes to a degree that is ‘fit for purpose” for the particular contractThe above matrix also helps to advise on the right resources with appropriate skills required for the effective management of the Contract
13Contract Management Toolkit The Component Parts CONTRACT PROCESS MANAGEMENTChangePaymentProject ManagementRisk ManagementResource PlanningContract Activity TimelinesService Review and PlanningBusiness ContinuityFinancial Updates & ModellingFinancial StrategyContract Health CheckingAsset ManagementExitStep-inNotice / TerminationTransition / MobilisationDispute Resolution ProcedureOperational Contract ManualIdentifies up to 26 key processes to effectively contract manage a contractDepending 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 MANAGEMENTPerformance ManagementBenefits Realisation ManagementService ReviewQuality AuditBenchmarking / Market TestingSTRATEGIC RELATIONSHIP MANAGMENTGovernanceRelationship ManagementStakeholder Management & Communications
14How Sheffield Can Support Contract Management Implementation in Other Councils Organise and/or attend regional & national awareness events for key stakeholdersRun awareness/training sessions on Contract Management and the detailed use of the Toolkit:On Council premisesUp to 15 delegates per sessionWhen charged cost is £500 per session plus expensesProvide electronic access to the Toolkit for Council employeesProvide additional support through consultancy services where appropriate
15How 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 - £6,000Annual Toolkit fee to cover:Help Desk supportRegular update of Toolkit to incorporate latest thinking, experience and developmentsForums & Networking – Sharing best practiceAd hoc detailed consultancy support on specific areas, problems etc. at a defined day rate if requested
16Contract Management Toolkit Proposed New Approach OperationPreparationCOMMISSIONINGPre Contract PreparationPURCHASING/ACQUISITIONCompletion/Transition
17Proposed Additional Toolkit Items Process DevelopmentDocumentation Management ProcessNegotiationOrganisational Failure
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