Post on 29-Dec-2015
transcript
James Aiello
PricewaterhouseCoopers
Africa Utility Week 06International Good Practice in Procurement
Contents – Session 2
PPP procurement practices in South Africa Contract Management
Overview Approach by Contracting Party Contract Management Functions Consequences for failure to deliver services Administration, variation, maintenance and
financial matters Summary
Applicability to private sector tendering practices
Contract Management Overview
Contract Management is: Process enabling both parties to meet
obligations Involves building good working
relationship Enables & assists in anticipating
future needs Implemented through the Contract
Management Plan
Contract management plan
In parallel with the negotiations process, the institution must prepare a contract management plan, in consultation with the preferred bidder
Contract management plan contents: Partnership management Service delivery management
Risk management Service delivery management
Outsourcing agreement administration Variation management Outsourcing agreement maintenance Financial administration
Contract Management Functions
Varies from project to project, BUT Has three main functions:
Partnership Management Service Delivery Management Contract Administration
Contract Management – Approach by Institution
Institution does not row – it steers Must respect transfer of
responsibilities to service provider Focus is on Outcomes
Quality assurance Performance monitoring Corrective actions, where required
Institution’s Roles & Responsibilities
Primary Institution personnel – Institution’s Project Representative
and its Project Officer
Institution’s Project Representative’s Role
Appointed as soon as outsourcing identified
Signs the outsourcing agreement Is a person of significance Provides continuity throughout
entire outsourcing process
Role of Project Officer
Accountable to Project Representative Has delegated authority to:
Manage project on behalf of institution Ensures continued affordability, value for
money & transfer of risk during the outsourcing
Ensures both parties meet all contractual obligations
Ensures Output Specifications all met Appoints Contract Management Team
Contract Management Team
Provides support to Project Officer in managing Contract
Composition of Team varies, but may include: Technical
Financial
Legal
Human Resources disciplines
Partnership Management Function
Key dimensions:
Corporate Governance
Communication and information sharing
Dispute Resolution
Partnership Management -- CorporateGovernance
Corporate Governance – structures, systems, policies and mechanisms of accountability within an organisation
South Africa has King Code of Corporate Practices & Conduct
Broadens financial focus to include environmental and social aspects
Applies fairness, accountability, responsibility and transparency to all activities
Requires accountability to the organisation and stakeholders
Partnership Management -- Communications
Communications can make or break a partnership
Failure to communicate causes more problems than failure to perform
Information sharing based upon trust and balancing negotiating positions
Communications take place between different levels in both organisations
Partnership Management – Dispute Resolution
Dispute Resolution processes in outsourcing contract
All disputes must follow same route from project liaison personnel on both sides to the institution’s project representative and service provider’s CEO
Important to: Record problems as they occur Notify of problems by correct route at correct level Document approaches to resolving problems Escalate only as per contract
Service Delivery Management
Two Principal Areas
Risk Management – managing project threats
Performance Management – ensuring the project continues to be affordable, provide value for money, and that significant risks stay with the service provider
Risk Management
Central component of contract management Contract risk allocation reflected in Contract
Management Plan Project Officer allocates “ownership” of each
risk to member(s) of the Project Management Team
Risk measures determined and implemented Assessment of mitigation measures is ongoing
Performance Management
Ensures contract anticipated affordability, value for money and risk transfer
Level of performance to achieve Outputs
Reflects contract provisions
Consequences for Failure to Meet Service Levels
Monitoring should provide basis for measuring performance against outputs
Failure to meet outputs dealt with per contract
Formal warnings
Penalty deductions
Step-in rights
Should be implemented to achieve positive response
Contract Administration
Administrative process to manage all documents and processes
Contract Administration Plan
Systems & procedures for contract maintenance, variation management and financial administration
Roles & responsibilities of institution & service provider
Institution’s resources needed to implement
Variation Management
Few contracts stay the same: changes will occur
Establish a system for handling changes
“No cost” changes – do as and when necessary
Small works variations – approvals required, depending on level of variation
Institution-initiated variations – formal notice & mutual agreement process
Service provider-instituted variations – formal amendment of outsourcing contract
Contract Maintenance
Processes and procedures to ensure
Contract & related documents up to date & consistent
Accessible to all relevant parties
Provides basis for common view of contractual obligations
Financial Administration
Systems and procedures to:
Make and receive financial payments
Keep records of all financial statements, per contract
Making Unitary and Incentive payments
Administering penalty deductions
Calculating inflation
Dealing with late payments
Receiving financial reports
Summary
Contract Management Plan a critical document
Contract Management Framework for implementation
Partnership approach by institution essential – “rowing”
Institution’s Project Representative & Project Officer
Contract Management Team & “ownership” of issues/risks
Partnership Management
Performance Management
Contract Administration
Applicability to private sector tendering practices
The PPP procurement processes can be of assistance in major, complex private sector outsourcing projects, but without an institutionalized contract management process and plan, the outsourcing is at risk.
The contract management plan discipline helps ensure successful implementation of the outsourcing by focusing on:
Managing the outsourcing partnership Enabling both parties to meet their obligations Ensuring that risks transferred stay transferred Providing a mechanism for dealing with future needs Managing the project knowledge enabling ongoing performance audits Implementing identified mitigation processes when risks occur Providing an exit mechanism when the outsourcing contract ends