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1 Effective Contract Management Dr Gordon Murray
| Date post: | 05-Dec-2014 |
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Effective Contract Management
Dr Gordon Murray
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Contract Management
When does it start?
When does it end?
Who’s responsible?
Effective contract management is about delivery
of the required outcome
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Contract management requires effective upstream and
downstream management of the contract award
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Procurement Cycle
8. Closure / Review Need
1. Identify problem
2. Develop Business Case
3. Define Procurement
Approach
4. Competitive procurement
5. Tender Evaluation
6. Award Contract
7. ManageImplementation
of Contract
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Who should be involved in contract management?
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The buying decision making unit
Initiator who first suggests buying the product or service
Influencer whose comments affect the decision made
Decider who ultimately makes all or part of the buying decision
Buyer who physically makes the purchaseUser who consumes the product or service
(Wilson, Gilligan and Pearson, 1992)
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Should all contracts be managed in the same way?
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Tools for differential contract
management
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Pareto and ABC Analysis
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Kraljic’s Procurement Positioning Model
Bottleneck Strategic
Routine Leverage
Supply Market
Complexity/Risk
Expenditure
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Supplier Positioning Model of potential customers
Development Core
Nuisance Exploit
Attractiveness of account
Relative value of account
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Power dependency
Buyer dominance
(>)
Interdependence(=)
Independence (0)
Supplier dominance
(<)
Attributes to buyer power relative to
supplier
(Cox, 2003)
Attributes to buyer power relative to
supplier
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Relationship management
Adversarial contracting does not necessitate adversarial relationships
Effective relationship management requiresMutual respectMutual trustMutual understandingCreating an open and constructive environmentContributing to joint management of contract delivery
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Service delivery management
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Performance management
Shaped by the original customer definition of need
KPIs identified prior to contractingLikely to be directly linked to tender evaluation
criteriaKPIs should be
Proportionate, fit for purpose, easy to support by evidence, accepted by key stakeholders
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Potential outcome based performance measuresBenefits realisedCost and value obtainedInnovation transferReduced environmental impactPerformance and customer satisfactionDelivery improvement and added valueDelivery capabilityRelationship strengthResponsiveness
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Closing the contract
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Contract management review
Aims to capture the lessons learnt for improving procurement
Should include key stakeholdersComplete a post-contract review report
What worked well?What didn’t work?What are the lessons for letting this type of contract in
the future?What are the lessons learnt for improving procurement
performance?Capture and communicate
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Effective Contract Management
Dr J Gordon Murray
[email protected]/DrGordy
www.slideshare.net/drgordonmurray
