Download Contract Management Policy - Northumberland County Council

NORTHUMBERLAND COUNTY COUNCIL
CONTRACT MANAGEMENT - POLICY
1) PREAMBLE
The Finance and Contract Rules form part of the overall framework of the Council.
Details of how contracts may be entered into and the terms and conditions that should
be incorporated into contracts are contained within the Finance and Contract Rules.
Correctly entering into a contract is however only part of the process of ensuring value
for money. The procurement process will deliver a contract which has the potential to
deliver that which it set out to deliver. The actual outcome(s) delivered are however,
dependent upon the contract being managed appropriately.
Throughout the Council the standard of contract management varies from Directorate
to Directorate and even from individual to individual. This policy is intended to
standardize the approach to contract management, albeit with the flexibility to adapt
arrangements so that they are appropriate for contracts having different levels of
importance.
2) INTRODUCTION
Contract Management is a vital part of the procurement life cycle. Various definitions
can be used. A few examples are given below:
“The management of the interfaces between client and contractor to ensure that the
relationship and contract performance are optimised to deliver best value”
“A number of related activities that together form a structured and planned system
which enables the proactive management of all aspects of contractual relationships
and their desired outcomes”
“The pursuit of contractual performance”
Contract management is the process that enables both parties to a contract to meet
their obligations in order to deliver the objectives required from the contract. It also
involves building a good relationship between customer and provider. It continues
throughout the life of the contract and involves managing proactively to anticipate
future needs as well as reacting to situations that arise.
The central aim of contract management is to obtain the services as agreed in the
contract and achieve value for money. Contract management will also involve aiming
for continuous improvement in performance over the life of the contract.
Good contract management needs to be built into the contracting process right from
the start, and the Corporate Procurement Team will advise on the steps that need to be
taken to implement good contract management during the procurement process.
April 2009
3) REQUIREMENTS
A contract management strategy must be considered and developed as soon as the
decision to procure is taken. Costs associated with implementing the appropriate
contract management strategy must be included in the overall costs of acquisition and
accounted for in the financial business case.
The contract management strategy to be adopted will vary dependant upon the
relative scale, complexity and critically of a contract. Generally speaking, simpler
contracts where the market is highly competitive, where the costs associated with
switching suppliers are low and where the contract is of a relatively low strategic
importance, will not require the same level of investment as the more complex
contracts. The financial resources required to manage a major contract has been
estimated at 2% of the contract value, but this can increase to as high as 10% for
more complex contracts.
The information within the Corporate Contract Management Manual and any
appropriate guides and training should be used to develop and implement contract
management strategies.
The contract management strategy must take into account the Council’s corporate
values and must therefore include, where relevant, policies relevant to sustainability,
equalities and diversity, economic regeneration, environmental management and
community engagement. As these must be embedded within the contract documents,
early consideration, before the contract is advertised must be paid to these elements.
4) RESPONSIBILITY
Executive Directors have responsibility for implementing the requirements of this policy
within the areas of their responsibility.
Appropriate resources must be allocated to manage contracts in line with the resource
need identified during the business planning and financial business case stage of the
project.
The Corporate Procurement Team within the Performance Directorate is responsible
for producing and maintaining the Corporate Contract Management Manual and
associated guides and training material.
The Audit Department is responsible for reviewing and reporting on the level of
compliance with this policy.
April 2009