Effective Contract Management - Getting it Right! 24 th January 2007

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

introduction to echelon Extensive client & contracting experience of Partnering Extensive client & contracting experience of Partnering Development of bespoke solutions Development of bespoke solutions Full range of services offered to Social Housing clients Full range of services offered to Social Housing clients Innovative and well regarded Innovative and well regarded Focus on full stakeholder engagement & legacy building Focus on full stakeholder engagement & legacy building Working with 20+ organisations (LAs, ALMOs & RSLs) Working with 20+ organisations (LAs, ALMOs & RSLs) We are not legal advisers? We are not legal advisers? ‘Making Partnering Work’

echelon portfolio

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…! Does the contract drive the project or the project Does the contract drive the project or the project drive the contract? drive the contract?

Drivers – consider… Volume of project Volume 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 Model Cost 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 – OJEu Procurement Route – Open, Restricted, Negotiated Procurement 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 Notice Award Notice Break these rules at your peril – contractors will challenge! Break these rules at your peril – contractors will challenge!

Developing the Contract 4 phases of development: 1.Pre-Tender phase 2.Tender process 3.Implementation Period – ‘Golden Hour’ 4.Delivery Phase

Managing the Contract Allow adequate set-up time Allow 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 development Merits 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? The wrong people The wrong people Lack of cultural readiness Lack of cultural readiness Unclear objectives Unclear objectives Inadequate performance measurement Inadequate performance measurement Variation process not clear Variation process not clear Blurred Client/Contractor role Blurred Client/Contractor role Poor communication Poor communication Loose specification Loose specification Contractor capability issues Contractor capability issues Continuity Continuity

Pitfalls – The Wrong People Wrong people in roles can derail project Wrong people in roles can derail project Lack of interpersonal skills Lack of interpersonal skills Traditional behaviours slip-in Traditional behaviours slip-in Lack of understanding of mechanics Lack of understanding of mechanics Example….. Example…..

Pitfalls – 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 occurred Necessary organisational change not occurred Lack of buy-in from wider stakeholders Lack of buy-in from wider stakeholders Change doesn’t happen by itself Change doesn’t happen by itself Contract needs to be driven Contract needs to be driven Example… Example…

Pitfalls – Unclear Objectives No clear objectives for project No clear objectives for project Roles and responsibilities not defined and/or Roles and responsibilities not defined and/or understood understood Lack of mutual objectives leads to….. Lack of mutual objectives leads to….. Conflicting objectives Conflicting objectives Example… Example…

Pitfalls – Inadequate performance Measurement Lack of clear targets Lack of clear targets No KPIs on project No KPIs on project Lack of definition in collection process Lack of definition in collection process Lack of structured review process Lack of structured review process Data not benchmarked (internal & external) Data not benchmarked (internal & external) Data not used to drive project Data not used to drive project Example… Example…

Pitfalls – Variation process not clear Claims culture Claims culture No clear guidance within contract No clear guidance within contract Poor data within (asset management data) Poor data within (asset management data) Lack of joint survey process Lack of joint survey process Onerous contract conditions Onerous contract conditions Risk and reward? Risk and reward? Example… Example…

Pitfalls – Blurred Client/Contractor Role Who is in charge? Who is in charge? Poor technical dataflow (surveys) Poor technical dataflow (surveys) Poor relationship with end-users Poor relationship with end-users Unnecessary duplication of processes Unnecessary duplication of processes Example… Example…

Pitfalls – Poor Communication Delays in instructions/information Delays in instructions/information Information overload Information overload Lack of defined protocols Lack of defined protocols No early warning/dispute resolution process No early warning/dispute resolution process Poor record keeping Poor record keeping Example… Example…

Pitfalls – 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 documents Conflicting instructions within documents Contractors like driving buses! Contractors like driving buses! Example… Example…

Pitfalls – Contractor Capability Lack of resources Lack of resources Over reliance on supply chain – fishing in same pond Over reliance on supply chain – fishing in same pond Lack of direct delivery Lack of direct delivery Lack of performance measurement down chain Lack of performance measurement down chain Lack of incentive down chain Lack of incentive down chain Inadequate site management Inadequate site management Example… Example…

Pitfalls – Lack of Continuity Framework agreements and call-offs – continuity? Framework agreements and call-offs – continuity? Stop-start approach affects capability Stop-start approach affects capability Breakdowns in supply chain continuity Breakdowns in supply chain continuity Loss of economies of scale Loss of economies of scale Inadequate stock data and long-term AMP Inadequate stock data and long-term AMP Example… Example…

Conclusion Many projects are being poorly managed Many projects are being poorly managed Lack of focus on holistic approach Lack of focus on holistic approach Resources not allocated at right stages in process Resources not allocated at right stages in process Lack of mutual objectives Lack of mutual objectives Weaknesses in performance management Weaknesses in performance management Lack of understanding of new contracts Lack of understanding of new contracts

Can we Fix it..? I bloody hope so..?