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1. Procurement Training - Contract
Management
DELIVERED BY:
BSS Management Consultancy
Visit www.businessservicessupport.com Tel: 0845 226 4315

2. OBJECTIVES
PROVIDE PARTICIPANTS WITH SKILLS FOR
EFFECTIVE CONTRACT MANAGEMENT
PROVIDE A BASIS TO ENABLE THE
ORGANSIATION TO ACHIEVE STRATEGIC
PROCUREMENT GOALS
PROVIDE PARTICIPANTS WITH AN INSIGHT TO
THE LEGAL, HUMAN & COMMERCIAL ISSUES
ASSOCIATED WITH A LEGALLY BINDING
CONTRACT
PROVIDE PARTICIPANTS WITH STEPS FOR
DESIGNING & DEVELOPING ROBUST
PERFORMANCE MANAGEMENT SYSTEMS
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3. STRUCTURE & OUTLINE
Supplier performance is crucial to an organisation
A supplier that performs well can:

Help your organisation be more efficient

Produce higher quality products or services

Reduce costs, and increase profits
A supplier that performs poorly can:

Disrupt your operations

Make your organisation fail in the eyes of our customers

Increase your costs, and threaten your profits
Managing the performance of suppliers, then, should be a strategic
focus of every organisation
Yet, it is unbelievable how many organisations fail to recognise the
importance of supplier management
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4. STRUCTURE & OUTLINE
Very few companies have formalised systems in
place to measure their suppliers’ performance
And fewer companies have a strategy to motivate
suppliers to improve their performance
This course will teach you how to measure your
suppliers’ performance and how to achieve optimal
supplier performance
After this course, you will have enough knowledge to
implement a supplier measurement and management
program at your organisation
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5. KEY OUTCOMES
CREATING AND DEVELOPING A TEAM
CULTURE
LEGAL & COMMERCIAL AWARENESS
COMMUNICATIONS STRATEGY
NEGOTIATION SKILLS DURING THE
PROCESS
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ONGOING MONITORING OF
PERFORMANCE
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6. PEOPLE IMPLICATIONS?
ROLE OF THE CONTRACT MANAGER:
Once a contract is awarded, the contract manager will agree
budgets and timescales, and gain approval of costs and processes.
Throughout the life of a project the contract manager will act as
the main point of contact.

The exact nature of the work will depend on the size of the
employing organisation, but key processes would involve the
following:

Meet with clients to gain a full understanding of their business and
needs;

Present project proposals to client;

Maintain communications with in-house
departments and external contractors;

Make improvements to contract
processes and procedures
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7. LEGAL
IMPLICATIONS?
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COMMERCIAL VS LEGAL IMPLICATIONS:

There are literally thousands of different clauses that can be applied and
most are dependant on the type of contract

Contract clauses are usually small statements within the contract.


These clauses can work to the detriment of other statements made within the
contract and can be used to limit any liability or obligation on the part of the
person offering a service
In many contracts there are clauses known as penalty clauses

These clauses are designed so that when a party breaches a
contract a financial penalty can be applied

One of the main reasons behind this type of clause is that if a
contract is breached then the non breaching party will be able to
claim a financial penalty without taking the dispute to court
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8. WHY CONTRACT
MANAGEMENT?
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Three Key Elements:
Measuring your suppliers’ performance involves implementing a supplier rating
program at your organisation
A supplier rating program can be simple or complex, manual or electronic. You
will need to decide the option that works well for you
We’ll call SUPPLIERS, RATERS, and PERFORMANCE measures the three key
elements of a supplier rating program
The suppliers, raters, and performance measures that you decide upon for your
supplier rating program are critical to the success of your program
We will talk about each of these three key elements now
Suppliers
Raters
Performance
Supplier Rating
Program
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9. WHY CONTRACT
MANAGEMENT?
ELEMENT ONE: SUPPLIERS
When selecting the suppliers to evaluate, you have to determine a
reasonable number of suppliers

It is usually not worthwhile to evaluate suppliers who receive few orders
from you or with whom you do not spend a great deal of money
Whatever number of suppliers you choose, the group of chosen suppliers
should include:
(a) Those suppliers with whom you spend a lot of money
(b) Those suppliers who have the most impact on your operations
Determining what is meant by "suppliers with whom you spend a lot of money" and
"suppliers who have the most impact on your operations" is subjective and can vary
from organisation to organization
Here are some guidelines to help you determine the suppliers who
meet these criteria in your organisation
Suppliers
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Raters
Performance
Supplier
Rating
Program
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10. WHY CONTRACT
MANAGEMENT?
ELEMENT ONE: HIGH SPEND SUPPLIERS
For spending, let’s default to the time-honoured 80-20 rule
As it would apply to suppliers, 80% of your spend is with 20% of your suppliers
Find out your total spend and the amount you spend with each supplier
Sort your list of suppliers from highest spend to lowest spend. Is the spend with the
supplier at the top of the list equal to or greater than 80% of your total spend?
If not, add the spend with the first supplier to the spend with the second supplier. Is
the sum equal to or greater than 80% of your total spend?
If not, add one supplier at a time (in order) until the combined spend is
approximately 80%
Your supplier rating program should probably include these suppliers unless your
company does not follow this pattern and it takes more than 20% of your suppliers to
account for 80% of your spend
Suppliers
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Raters
Performance
Supplier
Rating
Program
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