Bringing measurable commercial acumen to your business...
Bottom Line improvement Processes
Bringing measurable Commercial Acumen to Your Business....
Public Sector Training Section

4. Managing Contracts & Supplier Relations

The Aim

The aim of this module is to provide the participants with the skills necessary to set up the criteria under which contractors will be monitored and managed and understand the importance of doing so before the release of the Invitation to Tender and then understand how to manage the performance of a contractor in order to deal with price adjustments, claims and poor performance.

Who Should Attend

The module is aimed at staff at all levels, including Directors and Senior Managers who have a strategic procurement responsibility. It is applicable to procurement professionals as well as those from a wide range of business disciplines who have a devolved procurement responsibility. Those disciplines include finance, legal, compliance, audit, engineering, design, project management, construction, purchasing, procurement, commercial/contracts and general management. Those who will benefit most will have a current or planned interface with suppliers or customers through which contracts are awarded and managed. The module will suit those with little or no previous procurement or purchasing training but will serve as a refresher for those who have some training but do not practice their skills frequently.

The Teaching Method

The teaching method is based on the Kolb learning cycle and incorporates a balanced mixture of a didactic approach and practical exercises centred on PowerPoint presentations. The structure is consistent with the skills framework for Procurement Project in Local Government in ensuring that Levels 1 and 2 (Understanding & Knowledge) are covered within the programme thus providing a firm base upon which the delegates can build their practical experience to reach Level 3 (Expertise). The module is tutor led throughout using syndicate work, highly interactive plenary discussion groups, easily understood case studies and role playing where appropriate. A formal framework is built around the delegates’ current knowledge and they are encouraged to re-discover and share their knowledge and experiences. The ideal group size is eight to twelve delegates but it is possible to extend the group size to fifteen. Copies of the training material are provided in the form of a workbook. Delegates are encouraged to develop both their short and long term memories to increase the value for money provided for the employer.

The Learning Outcomes

This module is linked to the contractual aspects in Contract & Procurement Law. By the end of this module the delegates will have been afforded the opportunity to understand the rights and obligations of both parties (buyers & sellers) under a contract. They will recognise the need to set out the management and monitoring criteria as part of the invitation to tender and will appreciate how these aspects fit into the formal offer and thus the contract and how these aspects can impact contractor’s cost and thus the price to the local authority. The need for specific measurable and timed milestones will be identified and the delegates will taught how this might impact payment schedules on long term contracts such as service provision. Also, in respect of long term contracts the potential need for pricing adjustment will be reviewed and the applicability of price indexing will be addressed. The impact of poor performance will be addressed and linked to appropriate terms & conditions of contract which provide remedies for the customer. The need to deal with contractor’s claims will be addressed against the background of the contract and the delegate’s individual delegated authority. Supplier/Buyer positioning will be explored based on Kraljic’s matrix from which the delegates will be able to develop a tool for mapping their suppliers in order to help them to determine the nature of the relationship that is required to best serve the interests of both parties.

Duration

The module is scheduled for 1 day.

Content

The topics covered include:
  • Rights & Obligations under a contract – a matrix model
    • Buyer’s Rights
    • Seller’s Obligations
    • Seller’s Rights
    • Buyer’s Obligations
  • Supplier/Buyer Positioning
    • Introduction to Kraljic’s matrix
    • Supplier positioning - Buyer’s perspective
    • Supplier positioning – Supplier’s perspective
    • Relationship mapping for Council procurement
  • Contract Price Adjustment
    • Definitions – Fixed Price; Firm Price – different interpretations
    • The need, the applicability, when to reject
    • A formula and the impact and the risks
  • Performance measurement
    • Establishment of performance criteria
    • Links to the procurement specification
    • Service level agreements (SLAs) and Key Performance Indicators (KPIs)
    • Importance of the criteria in assessing and agreeing completion of the work
    • Interim milestones on longer term contracts
    • The technical audit trail
  • Performance monitoring
    • Establishment of the monitoring methodology and frequency
      • Reports – formal/informal; written/verbal certificates of conformance
      • Meetings – location, duration, attendance, agenda
    • Impact on contract price
    • Implementing and managing the monitoring processes
  • Poor performance
    • Early identification & remedial action
    • Contractor’s obligations
    • Remedies under the contract
    • Interests of the parties
  • Contractor’s claims
    • The need, the process, the points of contact & formal escalation
  • Alternative Dispute resolution (ADR)
    • Terms defined and applicability identified
      • Negotiation, Mediation, Adjudication, Arbitration
      • Litigation
    • Impact on costs; relationships and reputations versus potential benefits


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