Plan for contract management

Understand how to plan for contract management.

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What is planning for contract management?

To start planning for the contract management, think about the:

  • contract to be used
  • required performance standards
  • evidence the contractor needs to provide to show it is fulfilling its obligations
  • the method used to evaluate the evidence of performance
  • how often performance needs to be evaluated
  • what happens if performance does not meet the required standard

There is little point in contracting if it is not possible to confirm:

  • when or if the contracted services were received
  • that the services were provided to required standard

Early contract management planning allows offer documents to address:

  • contract performance
  • monitoring requirements

This planning becomes an input into Develop the contract management plan.

How to plan for contract management

Step 1: Consider the need

Consider the need that has been defined at Define the need.

Step 2: Consider the risk management planning

Consider the initial risk management planning.

A well-designed contract management plan and contract can help to mitigate some of the risks identified in Analyse risks.

Example: To ensure delivery of goods, an Agency may require a performance bond. How the performance bond will work needs to be recorded in the contract.

Consider how to ensure compliance with policy requirements.

Determine if procurement-related policies applying to the tender require:

  • monitoring of commitments
  • reporting

See, Local Jobs First evaluation requirements

See, Social Procurement Framework evaluation requirements

Step 4: Consider special contract management rules

Consider special contract management rules.

The Standing Directions 2018 made under the Financial Management Act requires an Agency to facilitate contract performance, including:

  • establishing effective internal control to manage the contract
  • regularly monitoring contractor performance

Step 5: Consider what to monitor and how

For each important element of contract performance, consider:

  • the standard of performance required
  • how it will be monitored
  • when it needs to be monitored
  • who will monitor performance
  • what evidence is needed to demonstrate performance

When planning for contract management, consider:

  • contract management methods used currently and in the past
  • ways to improve contract management
  • baselines for measuring savings and performance
  • measures for evaluating if program objectives have been achieved
  • customer service objectives, such as time, service and quality standards
  • frequency of progress reports
  • what happens if milestones or performance are not met

Example: When receiving IT support services, an Agency needs to determine:

  • the required service standards
  • minimum response times
  • frequency of monitoring

Step 6: Consider how a contractor can demonstrate its performance

For each item of evidence that a service provider will need to submit, consider:

  • the evidence needed to show contract requirements have been met
  • how easily a contractor can provide this evidence
  • how much time a contractor will need to collect or prepare the evidence
  • if evidence for different elements can be shared

Example: When receiving IT support services, evidence of performance can include:

  • a list of completed service requests and the time taken for each request
  • feedback from staff on the level and timeliness of the service

Step 7: Involve specialists

Consult with the Project Sponsor, users, subject matter specialists and other staff with experience with the need. They can offer help and guidance.

Step 8: Consider transition between contracts

Transition planning aims to ensure:

  • that seamless and continuous service delivery occurs when changing from one contract to another
  • the proper hand-over of contracted goods, works or services
  • the orderly transfer of data and assets

The transition stage of a contract can include:

  • intellectual property hand over
  • data and asset transfer, either to the Agency or the new service provider
  • maintenance of service commitments by the outgoing service provider
  • introducing the new service provider

Transition planning should be documented in:

  • plans included as part of contract management arrangements
  • tender documents, where it is anticipates that the
    • service requirement will extend beyond the contract period
    • assets or intellectual property developed under the contract will be handed over to the Agency either during or at the end of the contract

Step 9: Consider Agency skills

Consider the skills and expertise required to monitor contract performance.

Start planning for:

  • who should be involved in monitoring performance
  • how much time is needed to monitor the contract

Early planning for contract management allows:

  • some members of the contract management team to be involved in planning the procurement
  • for specialist contract monitoring requirements to be included in the contract or specification
  • the Agency to determine the resources that will be needed, and if external help is required.

Example: When constructing a hospital, specialist advice may be required to verify the price of variations. Assessing the cost of variations will be easier if itemised rates are included in the tender. A specialist cost planner may need to be engaged to support the process of confirming the price of a variation.

Step 10: Record in draft contract management plan

Start contract management planning, including preparing a draft contract management plan.

Tailor the contract management plan to suit the contract, considering the contract:

  • size and length
  • scope
  • complexity

The contract management plan may be:

  • as stand alone document
  • part of the procurement plan, for smaller contracts

For goods and services procurement, refer to Contract management – goods and services procurement guide and related templates.

Consider:

Manage probity and conflicts of interest

Manage probity – consider issues raised at Probity issues by stage and task.

Conflicts of interest can arise during this task. Identify, declare and manage these.

Address Agency rules

Consult Agency procurement team for advice on meeting:

Follow Agency specific rules on when to seek an approval and who can give the approval.

Follow Agency specific rules for recording decisions and storing records.

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