Insyght Consulting 1

Contract Management Plan

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Contract Management Plan

Table of Contents

1 Purpose of the Plan ………………………………………………………………………….1

2 Contract Procurement …………………………...………………………………………….. 1

2.2 Contract Summary…………………………………………………………………………. 1

2.3 Procurement Relationships ……………………………………………………………..2

2.4 File Reference ………………………………………………………………………………2

2.5 Contract Details ……………………………………………………………………………3

2.6 Contract Term and Extension Options ………………………………………………..3

2.7 Pricing ……………………………………………………………………………………….3

2.8 Conditions of Contract ……………………………………………………………………3

2.9 Contract Variations ……………………………………………………………………….4

2.10 Insurance …………………………………………………………………………………4

2.11 Financial Considerations ………………………………………………………………5

3 Contract Measurement …………………………………………………………………….6

3.1 Key Performance Indicators ……………………………………………………………6

3.2 Scrutiny of Supplier Data ……………………………………………………………….6

4 Contract Management ………………………………………………………………………7

4.1 Implementation or Transition-In Plan ………………………………………………….7

4.2 Product or Service Standards Expected ……………………………………………..7

4.3 Compliance Management ………………………………………………………………..7

4.4 Reporting Requirements …………………………………………………………………7

4.5 Audit Requirements ……………………………………………………………………….7

4.6 Customer Service ………………………………………………………………………….7

4.7 Buyers Guide ……………………………………………………………………………….8

4.8 Contractor Meetings ……………………………………………………………………….8

4.9 Risk Assessment and Management Strategy ………………………………………...8

4.10 Contract Review Due to Unacceptable Performance ……………………………...8

4.11 Dispute Resolution Process ……………………………………………………………8

4.12 Termination ……………………………………………………………………………….9

4.13 Annual Review of Contract Management Plan ……………………………………..9

5 Contract Review ……………………………………………………………………………..10

5.1 Renewal or Extension……………………………………………………………………10

5.2 Transition Out ……………………………………………………………………………..10

6 Attachments ………………………………………………………………………………… 11

Insyght Consulting1

Contract Management Plan

1 Purpose of the Plan

The aim of this Plan is to outline how the (Procurement (Finance) OR public authority name) will manage the Contract for (name of the contract) from award to the completion of the contract period. The Plan also lists the key performance indicators to monitor the effectiveness and efficiency of the contract.

The obligations of the relevant parties, services to be performed and the terms and conditions under which the agreement will operate are detailed in this plan.

Dynamic areas of this document that can be subject to change and may require updating by the relevant Contract Manager are marked with the following symbol

2 Contract Procurement

2.1 Background

Provide a brief summary of the purchasing process that led to the contract. Items to be addressed may include:

Purpose of the contract;
Objectives
Scope.

NB: Information should be detailed enough to provide someone at arm’s length with a clear understanding to the background of the contract.

2.2 Contract Summary

Contract Number
Commencement
Contract Term [include extension options]
Contract Framework e.g. sole supplier, panel
Public Authority (Director General, Department of Finance OR title & public authority name)
Approved Users
Expected Major Users
Buying Rules [if applicable]
Estimated Contract Value
Unit of Work e.g. Gem C

2.3 Procurement Relationships

In the delivery of this contract there are a number of parties with various levels of contractual, financial and reporting involvement. The following diagram is an example that illustrates the various relationships between the relevant parties.

Procurement Relationships
Contract Files / Description

2.4 File Reference

Document Register
Document Name / Location

2.5 Contract Details

Contractor (S)
Category / Details
Name
Address
Contractor’s Representative
Position
ABN or ACN
Email
Telephone
Facsimile
Public/Private Authority
Category / Details
Name
Procurement Manager
Position

2.6 Contract Term and Extension Options

[Should be the same as stated in the Request document]The Contract will commence from (specific date or the date of contract award).The contract is for an initial period of [enter number of years] years.

There are [enter number of years]-year OR no contract extension options available under this Contract [Refer to Section 5.1 “Renewal or Extension” for the processes that need to be followed in assessing whether to extend the contract]

All extensions to the contract are at the absolute discretion of the Contract Authority.

2.7 Pricing

Includes Total Contract Value, pricing arrangements and fee variations. If applicable a fee schedule may also be included.

2.8 Conditions of Contract

2.8.1 General Conditions

The Contract incorporates the clauses contained in the Request Conditions and General Conditions of Contract [insert relevant version] (the ‘General Conditions’).

2.8.2 Special Conditions

List here any Special Conditions that are not already covered in the rest of this document eg Key conditions such as warranties and performance / bank guarantees, pre-contract arrangements or any additional conditions over and above those stated on the original tender. Where Special Conditions are too detailed to list here, general reference should be made to appropriate documentation and clauses.

2.9 Contract Variations

2.9.1 Price Variation

[Should be the same as stated in the tender document and/or as negotiated with suppliers]

For example:

a).Prices are fixed for the period of the Contract;

b).Prices are fixed for the first year of the Contract. For each additional year, price variations will be permitted for annual changes in the Perth Consumer Price Index;Choose the required price variation clause – if using CPI index, the ‘Perth’ index is the default clause, unless a specific sector or industry index exists)

c).Prices are fixed for the first year of the Contract. Prices are then variable for changes in (State).

Contractors shall apply in writing for approval each time a revised price is to be applied to the Contract.Twenty one (21) days prior notice is required for a Price Variation request.Substantive documentation will be required to justify applications for revised Contract prices during the term of the Contract.No price variation is payable unless and until approved by (insert title of accountable authority or delegate).

2.9.2 Product Variation

Variations to product may include specification changes.Proposed changes to specifications of products and/or services must be evaluated against contract performance and possible changes should be documented for the benefit of future contracts or extensions.

2.9.3 Other Variations

Note the contractual clauses that deal with variations (other than price or product) and summarise procedures (as per the clauses as outlined in the General Conditions or Special Conditions in the relevant request document).Particularly note any provisions that are known from the outset that may cause a variation.

2.10 Insurance

The following details of currency have been provided:

Example:

Insurer / Policy No. / Insured Amount $ / Expiry Date / Exclusions
Public Liability*
Product Liability*
Prof. Indemnity*

* delete if not applicable

Include procedures whereby evidence is provided by the contractor of the existence and currency of insurance policies required by the contract.

2.11 Financial Considerations

2.11.1 Savings Strategy

Information should cover the following points.

Explain what the performance objectives of the contract are and how these are going to be achieved i.e. how is the contract going to be managed to achieve the desired outcomes.
Detail the strategies for achieving savings in line with the harvesting database for example buyer behavioural change.

2.11.2 Payment Conditions

If there is a clause in the request documents stating payment conditions it should be inserted at this point.

Detail should also be provided on how is the payment schedule set up? Examples include lump sum on completion or delivery, payment on completion of deliverables, monthly for work done to date. Include target dates set up eg to meet funding commitments.

2.11.3 Incentive or Rebates

Describe any incentive arrangements included in the contract and how they are to be measured.

3 Contract Measurement

3.1 Key Performance Indicators

(Should be the same as shown under “Contract Management” in the relevant request document). The Business Case and Procurement Plan should be consulted to ensure that the performance indicators are consistent with those provided here.

As a minimum, KPIs should include:

Savings i.e. how are they going to be measured. Detail can also be provided as to the type e.g. corporate or retail.
Turnover/ compliance; and
Client satisfaction levels acceptable.

3.2 Scrutiny of Supplier Data

[Governance ONLY]

Supplier data are assessed for quality and validity and as a minimum the following criteria should be used:

Trend analysis of sale figures collected or orders placed;
Verification of sale figures against spend by key clients;
Comparison of contract and actual prices;
Examination of Nil returns of sales.

4 Contract Management

4.1 Implementation or Transition-In Plan

Transition covers the period between the signing of the contract and the commencement of product/ service delivery.

Key issues to consider include:

Planning the hand over
Managing the implementation
Implementing monitoring systems.

The previously agreed plan should be included as an attachment. A sample ‘Transition Plan’ has been provided at “Attachment B”.

4.2 Product or Service Standards Expected

Should detail anything written into the contract to deliver product or service standards and how it is intended that they will be administered. Where required standards are substantial/complex, a brief summary should be noted here with references to the appropriate document/s and clauses.

4.3 Compliance Management

The Private/Public Authority and Contractor are required to comply with various policy, procedural, reporting, record keeping and contractual obligations. The Manager will be responsible for management of these obligations. These obligations are outlined in “Attachment A”

4.4 Reporting Requirements

(Should be the same as shown under “Contract Management” in the relevant request document).

Reporting requirements should include:

What is to be reported (e.g. turnover by agency/ product);
Reporting format (written and / or verbal);
Frequency (weekly, fortnightly or monthly); and
Source of Information (public authority or procurement offices).

4.5 Audit Requirements

Detail the requirements for both internal and independent audits and elements of the Contract to be audited.

4.6 Customer Service

4.6.1 Customer Surveys

If required, the procurement manager may need to conduct a survey to gauge customer satisfaction. Detail should be provided on:

Type/ format of survey
Frequency of data collection.

4.7 Buyers Guide

[PANEL CONTRACT ONLY]

The buyers guide is used as a tool to drive buyer behaviour and contains information relating to the buying rules for the contract. The buyers guide will be kept up to date by the procurement manager on a regular basis.

It may be useful to insert a hyperlink here to the relevant buyer’s guide.

4.8 Contractor Meetings

It may be useful to provide a schedule of meetings specific to the contract. For example a listing of the quarterly meetings held throughout the term of the contract.

4.9 Risk Assessment and Management Strategy

Risks may vary during the contract and the CMP will need to be updated accordingly. The risk assessment and management strategy should include:

Risks Identified

Examples of risk include:

The service is new to Australia;
The service is based on an emerging technology;
The project has environmental implications;
The service provided is heavily dependent on the contract;
Contract complexity means terms and conditions may be misunderstood; and
Contract performance requires involvement of third parties.

Consequences of that risk

Likelihood of that risk occurring

Strategy for minimising or dealing with that risk

What action is to be taken to prevent or minimise the impact on contract and performance outcomes should any of the identified risks occur?

Complete the table provided in “Attachment C” or refer to a specific Risk Management Plan if one exists.

4.10 Contract Review Due To Unacceptable Performance

Outline the trigger point at which contract review becomes necessary due to unacceptable performance. Include reasons for any variation from performance targets.

Occurrences such as falls in client satisfaction, response times, complaints, failure to deliver and down time should trigger contract review or re-formulation.

4.11 Dispute Resolution Process

Dispute resolution is detailed in the Terms and Conditions of Contract.

If applicable, state the clauses outlined in the “Special Conditions” of the relevant request document.

Include procedures specified in the Contract for the Public Authority and the Procurement Manager to monitor and report on the contractor’s performance including the severity of any breaches, the need to seek redress and sources specified for redress.

Reference could also be made to the contract management system (CDMS) once it is released.

4.12 Termination

In the event of the Contractor failing in any manner to carry out the Contract to the Public Authority’s satisfaction, the Public Authority may terminate the Contract by written notice to the Contractor.

Reasons may include:

Those stipulated in clause 1 (Definitions) of the General Conditions; and
[insert any special conditions stipulated in the Request]

[Prior to any termination, legal advice should be sought to ensure that there are sufficient and legal grounds to terminate. Otherwise the Organisation may in breach of the Contract and held liable for damages or other legal action by the Contr.

4.13 Annual Review of Contract Management Plan

For purposes of consistency, accountability and transparency, the Contract Management Plan is to be reviewed by the (Procurement Manager or other title) and signed off by the (Assistant Director or Accountable Authority/Delegate) on, or before, the annual anniversary date of the Contract.

Changes to the Plan should be summarised and noted in the comments section by the (Procurement Manager or other title) prior to submission to the (Assistant Director or Accountable Authority/Delegate).

The (Assistant Director or Accountable Authority/Delegate) is to sign and date the inside cover of the Plan.

5 Contract Review

The contract management plan should outline the process that will be followed in assessing whether to extend, renew or finalise the contract and the steps to be taken on contract recall as the contract nears expiry.

5.1 Renewal or Extension

Does the Contract contain provisions for renewal or extension? (refer section 2.6 – “Contract Term and Extensions Options”). If so:

How and who will decide if renewal or extension will be implemented?

The review will need to determine:

What is the initial contract value (excluding extensions);
What is the estimated value of extension;
How many variations have been issued to date;
What details are there regarding the current contractor’s performance;
What is the reason for extending the contract including, but not limited to, the benefits and anticipated cost;
What are the expected savings as a result of the extension; and
What is the impact of not extending the Contract?

5.2 Transition Out

Are there any handover, training or special transition arrangements to be undertaken at completion of the project?

6 Attachments

Depending upon the type and scope of the contract a variety of attachments may be required. For documents, such as the buyer’s guide, that are separate documents a hyperlink should be inserted to direct users straight to the source.

Examples include:

Buyers Guide;
Contract Obligations
Service level agreements;
Risk management plans;
Implementation or transition plan;
Invoicing and payment schedule; and
User / client survey questionnaire.

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Contract Management Plan

Attachment A

Compliance Management - Contractual Obligations
Function / Clause Reference / Obligation / Who / Due
Contractor / CM
Reporting / 2.5.22 / Submission of quarterly reporting /  / End of Quarter
Monthly Data /  / End of Month
Insurances / 2.5.23 / Maintain current insurances / 
Review Currency of Insurance / 
End of Contract Review /  /  / 30/12/04
Reviews / 2.5.24 / Client /  /  / Ongoing

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Contract Management Plan

Attachment B

Transition Plan
Tasks / Start Date / Finish Date / Action

Meet with current Manager to discuss impending transition

/ Complete

Manager to provide the data requirements specification

/ Complete

Consolidate Manager’s requirements into master specification

/ Complete

Circulate Master Specification to Manager for comment

/ Complete
Complete
Complete
Complete
Complete

Finalise Master Specification

/ Complete

Client Seminar

/ Complete

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Contract Management Plan

Attachment C

Risk Matrix
Risk Source / Probability / Impact / Rating / Action / Who / When
Savings
Forecast savings not being achieved / Unlikely / Low / Low /

Quarterly reporting (with monthly information) will track expenditure

/ Finance Contract Manager & Contractors / Ongoing
Service
Services provided by contractors are inadequate or of poor quality / Unlikely / Severe / Low /

Monitor KPI’s at quarterly reviews meetings.
Investigate comments received from agencies

/ Finance Contract Manager & Contractors
Contract Management
Contractor becomes insolvent / Unlikely / Moderate / Low /

The panel provider arrangement for Management will mitigate the risk

/ Finance Contract Manager & Contractors / Ongoing

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Contract Management Plan

Attachment D

Title:

[Insert Title Here]

Contract Number:

[Insert the Contract Number]

Name of Private/Public Authority:

[Insert name of Public/Private Authority]

Effective From:

[Insert the Date]

Approved by:

______/______/201

[Insert name of private/public authority’s accountable authority or delegate]

[Insert Title]

Date:______/______/201

Attachment E

Suggested annual approval requirements below: