Workshop on effective contract management

1. Effective Contract Management Dr J Gordon Murray

2. Provide an example of a contract which you think has gone wrong and what do you think was the cause?

3. Contract Management When does it start? When does it end? Who’s responsible?

4. The activities of a buyer during a contract period to ensure that all parties to the contract fulfil their contractual obligations (Bailey, Farmer, Crocker, Jessop and Jones, 2008 p.419)

5. Contract life cycle management “is the process of systematically and efficiently managing the contract creation, execution and analysis for maximising operational and financial performance and minimising risk” (Elsey, CIPS Contract Management Guide, 2007)

6. Procurement Cycle 8. Closure / Review Need 1. Identify Need 2. Develop Business Case 3. Define Procurement Approach 4. Supplier Appraisal 5. Tender Evaluation 6. Award Contract 7. Manage Implementation of Contract

7. Contract management requires effective upstream and downstream management of the contract award

11. What defines successful contract management?

15. Should all contracts be managed in the same way?

16. Essential tools for effective contract management

17. Pareto and ABC Analysis

18. If you were going to identify two axis to evaluate purchases, what would they be? Y X

19. Procurement Positioning Model Supply Market Complexity/ Risk Expenditure

20. Kraljic’s Procurement Positioning Model Bottleneck Strategic Routine Leverage Supply Market Complexity/ Risk Expenditure

21. Supplier Positioning Model of potential customers Development Core Nuisance Exploit Attractiveness of account Relative value of account

22. 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

23. Spend analysis: Telgen’s Box (Telgen, 2004)

24. Who should be involved in contract management?

26. Pick a contract you are familiar with and identify the Buying DMU

28. Stakeholder Analysis Matrix Potential Strategies Assessment of Impact Stakeholder Interests Stakeholder

29. Pick a contract you are familiar with and conduct a stakeholder analysis

30. Stakeholder Analysis SUBJECTS Low power High interest +/- Management could encourage conditions to increase power of + ive and encourage to become Players or neutralise - ive Power Level of interest PLAYERS High power High interest +/- Significant stakeholders who deserve sustained management attention CROWD Low power Low Interest Potential rather than actual stakeholders Interest an/or power could be raised, but unlikely to be worth management time/effort CONTEXT SETTERS High power Low Interest Can influence overall future context Management should seek to raise awareness and develop + ive interest and convert to Players (Ackermann & Eden, 2011)

31. What could go wrong with a contract?

34. Risk assessment Mitigation Proximity Impact Probability Risk

35. Pick a contract you are familiar with and conduct a risk assessment

36. Relationship management

37. Thinking of your experience of contract management; what are the attributes of an ineffective contract management relationship?

39. Service delivery management

41. Pick a contract you are familiar with and identify appropriate KPIs

43. Change happens! Contract variations

44. What circumstances could justify a change in the contract?

45. What steps are required when a change takes place?

47. Case studies What would you do?

61. Closing the contract

64. Recommended reading: CIPS Contract Management Guide by R.D. Elsey, 2007.

65. Effective Contract Management Dr J Gordon Murray [email_address] www.Twitter.com/DrGordy www.slideshare.net/drgordonmurray