We have teamed up with Principal PASS Consultant Eddie Regan to discuss contract management, asking him key questions about the process.
Learn more about contract management below.
What is Contract Management?
Contract management is the process of creating, executing and analysing tenders to maximise their performance while reducing financial risk.
Although this sounds intuitive, the process is often overlooked by public sector buyers who fail to dedicate the time and resources needed to implement proper procedures.
Principal PASS Consultant Eddie Regan explained: “Contracts are often awarded in sections; buyers look at quick fixes, as opposed to looking at the entire lifecycle of the contract and asking: ‘what are we trying to achieve?’”
Who is Responsible?
This oversight is often the result of overworked departments tacking contract management onto their employees’ already full workloads.
Mr Regan said: “Often the person who is pinned as a contract manager has too many tasks they are juggling and they can’t contract manage in the real sense.”
Worse still – he added – is when buyers leave contract management to their suppliers.
He explained: “Too often contracts are awarded and then focus is lost, so the supplier is the one who ends up managing them, meaning that buyers are not keeping track of their audits and can’t use this information in the future when trying to develop their contracts.”
Contract development is the process by which buyers can review and analyse their project’s documentation, weighing up its total spend against its benefits. Buyers can then use this data to revise the contract when it comes up for renewal and generate efficiencies.
Mr Regan added: “Buyers must put proper structures in place so that they can manage the contract, maintain good supplier relationships and keep abreast of contract updates. This audit information can then be used to look back on the contract and, when it comes up for renewal, develop it into something more efficient.”
Contract development comes hand in hand with lifecycle costing, which is a process of financial planning from the start to the end of a contract. Lifecycle costing includes factors such as installation, training, maintenance, disposal and handover, which can be overlooked when simply procuring a particular requirement, such as a piece of equipment.
Instead of buying in isolation, lifecycle costing also examines a contract’s interaction with the buyer’s other tenders and drives efficiencies from these relationships.
Mr Regan explained: “Buyers often don’t think about how contract systems integrate with others. For example, if you are a public body buying a cleaning service you need to consider how it interacts with your security service, as the cleaners will need after-hours access to the building.”
Taking these steps at the start of a contract not only saves the buyer money but can also benefit the end users of the contract.
Mr Regan said: “Buyers should look at the aim of their contracts, at their environmental and social factors, and optimise them. For example, Scotland Community Benefit Clauses have been worked into the country’s construction contracts’ weighting, encouraging apprenticeships. It’s not a new idea, but it is something that people have to work into the lifecycle of their projects.”
How Delta Can Help
To optimise benefits to all stakeholders, Mr Regan stressed that buyers need Delta’s Contract Manager software.
He said: “The admin process is essential, because it provides the electronic tools needed to deliver management reports and show the progress of a contract.”
Delta’s secure EU-compliant service keeps these resources safe, allowing buyers to analyse their lifecycle costing data and develop their contracts in a way that maximises efficiencies.
For more information and to discuss your requirements, request a demo with one of our procurement experts.