The changing face of Public Sector Contract Management

Transcription

1 The changing face of Public Sector Contract Management

2 About the IACCM A non-profit, cross-industry association, incorporated in 1999 Dedicated to raising the quality and integrity of trading relationships worldwide With more than 13,000 organizations represented in our membership Providing standards, assuring capabilities, leading research, certifying performance

3 Our Goal For our corporate members, we help improve the value and sustainability of their trading relationships For our individual members, we provide the skills and knowledge that raise their status, influence and business contribution

4 Our Goal Too many trading relationships and projects under-perform. Commercial excellence and contracting competence are increasingly viewed as key to their improvement. The challenge: how to move rapidly in that direction, in an environment of increasing complexity, where old approaches are no longer keeping up with new needs and demands. Is the challenge: Fit for purpose process? Fit for purpose contracts & relationships? Fit for purpose personnel? Fit for purpose measures? Fit for purpose tools?

5 The Perfect Procurement Too often we undertake a perfect procurement and achieve entirely the wrong outcome. (Former head of Federal Procurement in the US)

6 10 Myths QUIZ! The Ten Myths of Public Procurement

7 Commercial Reform: UK Government view

8 10 Pitfalls 1 Lack of clarity on scope and goals Result: Cause of claims/disputes 3 Failure to engage stakeholders Result: Misaligned interests and future opposition 5 Negotiations focus on the wrong terms and risks Result: Loss of economic benefit; contract a weapon 7 Contracts difficult to use or understand Result: Users see contract as irrelevant to business needs 9 Limited use of contract technology Result: Inefficiency and loss of quality in performance and analysis Average value Erosion 9.2% 2 Legal/contract team not involved early enough 4 Protracted negotiations 6 Contracts lack flexibility. Insufficient focus on governance 8 Poor handover from deal team to implementation team 10 Poor post award processes and governance Result: Wrong form of contract & extended lead time Result: Competitive exposure & delayed revenues Result: Performance management dominated by blame/fault Result: commitment & obligations missed & misunderstood Result: Repetitive issues and errors causing value loss Copyright IACCM 2015

9 10 Myths QUIZ! Contract or Relationship?

10 The Spectrum of Relationships

11 The Purpose of a Contract Economic instrument Support communications Direct operations Legal weapon Allocate risks

12 Facts & data: the keys to influence Contracts today provide a framework for business operations An economic asset A performance tool The underpin to a relationship

13 Achieving Value Do we really know what we want? Do we really have the right supplier? Do we really have consensus? Do we really have the right agreement? Do we really have capability to manage?

14 IACCM Research: Top 30 Negotiated Terms

15 The case for change: an economic tool 45% 40% 35% 30% 25% 20% 35% have significant claim or dispute 25% 22% 23% 21% 28% 29% 31% 34%34% 36% 39% 40% 15% 12% 13%14% 14% 10% 5% 0% 1% 1% 1% 2% 2% 2% 2% 2% 2% 3% 3% 3% 4% 4% 5% 5% 5% 5% 5% 5% 6% 6% 6% 7% 8% 9%

16 The case for change: a performance tool 2015 Sell Side Buy side 2011 Sell Side Buy Side Low complexity 0-25% <4 < % <4 < % %-100% Medium complexity 0-25% % % %-100% High complexity 0-25% % % %-100% Low complexity 0-25% <4 < % <4 < % % 8 8 Medium Complexity 0-25% % % % High Complexity 0-25% % % %

17 The case for change: a performance tool

18 The case for change: the underpin to a relationship Key issues for contracts that support a successful negotiated relationship: Setting mutual objectives Establishing relationship performance management systems Championing problem solving Instilling a no blame culture Fostering joint working Enhancing communication Promoting continuous improvement Defining gain sharing arrangements

19 Highly effective Contracts Professionals get better results IACCM - Better sustainable value from trading relationships The only association for Contract and Commercial professionals. IACCM, through its global network connects and informs commercial and contracts professionals, to achieve more. We define best practices in contracting and relationship management and share them widely via on-line services. As a not-for-profit association, we are able to focus on the needs of our members. Our global reach, with more than 35,000 members, more than 13,000 organisations in more than 160 countries. This gives us unique insights into best practices all over the world.

20 Demonstrating Capability: IACCM Certification Fellow Expert Practitioner Principle: both academic and demonstrated ability skills assessment education and training experience (depth and currency) Associate professional contribution exam case study (Expert level)

21 10 Attributes 1 Ensure clear scope and goals. Result: Dramatically reduce #1 cause of claims and disputes 3 Plan for collaborative negotiations. Result: Increased trust; greater innovation 5 Manage risk through balanced negotiations. Result: contract supports value creation and innovation 7 Design contracts for users. Result: Contracts become indispensable tools to achieving business goals 9 Deploy appropriate contract technology. Result: Efficiency and quality in performance, analysis and reporting Contribute average 9.2% financial benefit 2 Involve commercial team early. Result: Appropriate form of contract; avoiding re-work during negotiations 4 Drive efficiency in pre-signature lifecycle. Result: Reduce competitive exposure; faster time to revenue 6 Incorporate terms for flexibility and governance. Result: Enable change and effective performance management 8 Ensure effective post-signature handover. Result: Commitments and obligations understood and realised 10 Invest in robust post-award process and governance. Result: issues and errors avoided, value achieved or exceeded Copyright IACCM 2015

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