M onitoring P P P s O perationa l Is s ues
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1 M onitoring P P P s O perationa l Is s ues Edward Farquharson June 2011
2 A g enda Background on the UK Market The importance of contract management 2
3 S trateg ic C ontext - P P P s Growing market over a 1000 of projects operational and likely to increase Many projects will have been signed for more than 10 years changes in requirements are inevitable Central, coordinated support to drive best value from long term commitments in changing environment essential Operational Task Force established by HM Treasury to provide guidance, training and first point of contact for support 3
4 W hy is C ontra c t M a na g em ent im porta nt? There is strong evidence to suggest that the existence of a dedicated team and frequent meetings between the two sides to review performance levels helps improve service levels H.M. Treasury: PFI: Strengthening Long-term Partnerships March 2006 A great contract at signing can be the worst six months later, unless someone is carefully managing its operation Head of Procurement, University College London 4
5 Four c om ponents of c ontra c t m a na g em ent setting up the contract manageme nt team managing relationships contract management managing service performance contract administration 5
6 W hat a re the R eleva nt S kills? Project management, commercial expertise and negotiation. User training - simplified contract guides and user manuals. Advantageous if a contract manager has been involved in the procurement phase of a project. If not, formal handover procedures are important. Know the contract! 6
7 W hen does C ontra c t M a na g em ent ha ppen? At all stages of the contract management lifecycle: Planning Implementation Service Delivery Hand-back The foundations for contract management are laid in the stages before contract award, including the procurement process 7
8 R es ourc e P la nning OGC says 2% of contract value for contract management NAO says at least 1 full time person for every contract But it s horses for courses no set formula More required during mobilisation and up to 18 months into operation Ongoing support from procurement team Continuity of staff from procurement to operations Budgeting for external advice Planning for peaks e.g. benchmarking 8 Slide 8
9 O verview of Tools a nd Tec hniques The actual management and monitoring procedures can be tailored to those most relevant to a particular contract. The list of relevant contract management activities should be devised jointly with the contractor. Activities should be developed to reflect optimum frequency of the routine measures and prioritisation. 9
10 S om e of the K ey A c tivities w e us e in M onitoring C ontra c ts User satisfaction surveys Complaint logs/help desk Physical inspections Spot checks and testing Sign off/certification Adherence to monitoring plans Agreeing and reflecting change control/variations Reporting and review of reports 10
11 S om e of the K ey A c tivities w e us e in M onitoring C ontra c ts Use of contractual remedies Self-assessment Operational audits Measurement of and updating of KPIs Benefits measurement Financial reviews 11
12 M a na g ing O perationa l C ontra c ts The Big Issues: Change Stakeholder Management / Customer Satisfaction Payment Mechanism Value for Money Organisational Structure, Skills and Culture Continuous Improvement 12
13 Future D irec tion in the U K Previous PPPs were ones which contracted for OUTPUTS Several Government Departments piloting/tendering contracts on the basis of OUTCOMES (e.g. Welfare to Work programmes, offender management) This will pose interesting new challenges for the monitoring of these type of contracts what this space 13
14 Further Inform ation HM Treasury Website: National Audit Website: 14
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