What people want and what people get, are defined in the contracts. Once the contract has been executed, then the real contract management begins. This is the phase where the parties realize how good their working relationships will be. We depend on the people to perform with an implied intention and spirit but rely on the four corners of the paper for explicit commitments.
Contracts are fraught with legalese whether for office or ordnance supplies. Therefore, the emphasis should be on the preparations when entering into contracts. There is a shared responsibility when contracting. It’s not the end user’s responsibility, or procurement’s responsibility, or a contract manager’s responsibility – it’s their shared responsibility to bring a contract through to a successful conclusion. It’s also the responsibility of the supplier or service provider to meet all terms and conditions.
Preparations need to ensure that the obligations of the parties are clearly defined and understood by all parties (state the actual INCO term which applies – not simply FOB). Specifications should be concise and not subject to interpretation (as per the industry standard – too vague).
How is success defined at the conclusion of a contract? This can be very subjective but can also be qualitatively assessed. Success takes into consideration that the services met the end user’s needs as defined and were delivered in accordance with the terms and conditions (the end user should sign off on this concurrence). Project deliverables and expectations were met (any remediation actions were addressed and corrected). Change orders, being anticipated, were accommodated in accordance with established protocols (not viewed as scope creep to the advantage of one party). There were few disputes and no surprises (indicates the working relationship was effective). All parties were satisfied with the outcome (would like to do business again for mutual gain).
The contract manager or the person designated as being responsible, needs to take an assertive stance throughout the contract process. If they have done previous work with a supplier, which was satisfactory, the past is a good indicator of the future. This would allow for a lesser need for oversight. With a new supplier, who happens to be the low bidder, more oversight is required.
A best practice is to have a kickoff meeting with a contractor – new or experienced. One of the discussion points could be how the evaluators rated their bid proposal. Where the contractor scored less than the full marks on evaluation criteria, it should be pointed out. The intention is to let the contractor know that this is an area where they could improve service delivery. That’s a win-win for everyone. The contractor can use that information and improve their performance with other clients – a positive ripple effect in a market sector.
There should be milestones set to assess the progress on the deliverables and matched to the contract schedule, terms and conditions. The responsibility of a contract manager is to have ongoing conversations internally and externally with the parties. Part of this will be to hold those difficult conversations to get at the root cause of any problems. If this sounds like too much effort, compare it to the effort required to take the unresolved issues to a lawyer or through the courts. Early intervention has a payoff. In most instances, the parties want to resolve the issues, as it is in their best interests. During a contract you may realize that there could have been better terms and conditions included, when reflecting on geopolitical events. It invites greater risks to try negotiate new terms during a contract. Plan for amendments and take notes for the future.
Any deficiencies are a red flag and need to be remediated as quickly as possible. This applies to the Owner’s commitments as well. If access to a site is the responsibility of the Owner, and there is a delay, the contractor could be unduly penalized. Regardless of which party is at fault, the contract manager needs to register the event in the contract file and monitor its rectification.
The performance of the supplier is at the heart of contract management. Without a formal performance assessment during the delivery and in a post contract review, the Owner has no idea if they received value for money. This instils a sense of accountability for all parties. The Owner should issue a scorecard to the service provider at the conclusion of the agreement, commensurate with the size of the contract.
Leveraging past performance in contract management is an under-utilized opportunity for Owners. If suppliers/contractors know their performance, during a contract will be assessed, they will let their workforce know that this will be a factor in future contracts (and their employment).
A contract manager should capture the voice of the supplier/contractor at the end of a contract. While most external parties are reluctant to make derogatory comments to an Owner, confidentiality and tact can reveal practices where the Owner can improve. The information gathered from contractors that perform well, can be used when defining the scope in future competitive bids and subsequent contracts. This compilation contributes to more effective contract management strategies.
There are very few goods or services that anyone in the public sector will buy that have not been purchased before. Most of those items will come from the same suppliers/contractors that others have used. A contract manager should have a network of peers to compare notes objectively on performance by common service providers and suppliers. This is a distinct advantage in the public sector that is not allowed in the private sector. To quote, “Nothing you can know that isn’t known. Nothing you can see that isn’t shown.”
In contract management, we can accelerate the learning curve through continuous improvement. It makes sense to learn from our mistakes rather than repeat them. Contract management is an essential part of business, conducted on behalf of public stakeholders.
Public Procurement In Canada:
Procurement professionals play a pivotal role in the public procurement world. These experts are well-equipped with the knowledge and skills needed to navigate the intricacies of procurement processes. Whether you’re looking to enhance your procurement acumen through procurement management courses or seeking valuable insights through procurement webinars, the landscape for public procurement offers many opportunities to explore.
The Procurement School encompasses a wide range of activities aimed at achieving the best value for taxpayer money. Procurement service providers work closely with public sector procurement consultants to streamline processes, maintain transparency, and uphold ethical standards. This collaborative effort ensures that the procurement landscape remains fair, competitive, and cost-effective.
Obtaining a procurement certification or a purchasing certificate can be a wise decision for those aspiring to excel in public procurement. These certifications validate your expertise and demonstrate your commitment to professionalism in the procurement arena. Procurement professionals are highly regarded for their ability to make informed decisions that benefit both the public and the government agencies they serve.
Public procurement is not just about acquiring goods and services; it’s about contributing to the well-being of communities and the country. The individuals in this field understand the significance of their roles and strive to uphold the highest standards of ethics and accountability.
Whether you’re a seasoned procurement professional or just starting your journey, the public procurement landscape offers a wealth of opportunities for growth and development. From procurement management courses to ongoing procurement webinars, resources are available to help you stay informed and up-to-date with the ever-evolving world of procurement.
Written by: Larry Berglund
Larry is one of our leading Subject Matter Experts. Larry, who played guitar in a rock band in his early days, is also the author of several books.
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Disclaimer: The views and opinions expressed in this article are those of the Subject Matter Experts and do not necessarily reflect the official policy or position of The Procurement School.