Procurement Transformation Division Introduction to Contract Management Framework

Procurement Transformation Division Introduction to Contract Management Framework Workshop 12 – 17 September 2014 Presented by Samantha Mathers Centre of Excellence, Procurement Transformation Division

Workshop outline 1. Purpose & objectives of this workshop 2. Why is contract management important? 3. QAO Audit Report Recommendations 4. Overview of One Government CMF 5. Supporting tools and templates 6. Effective contract management begins with early planning 7. Value / risk approach to contract management 8. Roles and responsibilities defined in the CMF 9. Contract management plans 10. Contract extensions & renewals 11. Operationalising the CMF in Agencies 12. Re-cap key messages 13. Further training and next steps Introduction to Contract Management Workshop 12 - 17 September 2014

“A pessimist sees the difficulty in every opportunity. An optimist sees the opportunity in every difficulty” Which do you choose to be? Introduction to Contract Management Workshop 12 - 17 September 2014

1. Purpose & objectives of this workshop Purpose of this introductory workshop: • to provide you with important information and improve your understanding of the new Contract Management Framework (CMF) and supporting tools, • so you can share knowledge and provide similar workshops within your own Agency. Directed at ‘contract management leaders’ Objectives are to provide attendees with: • an overview of the new CMF and supporting tools/templates & key messages • an understanding of the key drivers behind the establishment of a contract management framework and supporting tools • a better understanding of how some of the most frequently used tools are intended to be used (e. g. value risk matrix, contract management checklist, contract management plan, contract extension & renewal checklist) • a presentation pack, that can be used to conduct training & information sessions within your Agency. Not a substitute for more comprehensive contract management training Introduction to Contract Management Workshop 12 - 17 September 2014

2. Why is contract management important? Role of contract management in retaining and improving value for money Benefits of contract management: • Obtaining value for money Effective contract / supplier management Value for money The effective management of contracts with suppliers is critical to Queensland Government maximising benefits from procurement: Vf. M achieved through procurement • Managing risk • Maximising end user outcomes Contract management benefit Poor contract management Ongoing contract management (& category management activities) Procurement Activities Time Introduction to Contract Management Workshop 12 - 17 September 2014

Introduction to Contract Management Workshop 12 - 17 September 2014

3. QAO Audit Report Recommendations 1. Improve capability 2. Value / risk approach Develop and implement a contract management capability framework Apply a value/risk matrix to define expectations for contract management and appropriate resource allocation to contracts þ On-line procurement induction program to include contract management module þ Contract management training þ Value/risk matrix þ One Government CMF þ Contract management plan & Contract management checklist templates 3. Contract extensions & renewals 4. Contract management lifecycle system Validate value for money before extending/renewing a contract, through assessment of contract risk, demand, supply market & supplier performance þ Checklist for contract extensions/renewals þ Fact Sheet (including FAQ’s) þ Contract Review Report template þ One Govt CMF Implement a contract management lifecycle system to enable spend analysis, monitoring of supplier performance, early triggers to prepare for contract expiry þ Q-Contracts þ Supporting processes þ Contract register Introduction to Contract Management Workshop Q-Contracts 12 - 17 September 2014

4. One Government Contract Management Framework (CMF) Background to its development Purpose • Consistency • Ensure contractual obligations are met, risks are managed, value obtained • Describes the 3 major phases of the contract management lifecycle and key activities: • Phase 1 – Contract set up • Phase 2 – Contract management • Phase 3 – Contract close out Scope: focus is on contract management once a contract is in place (although planning is key) Supporting materials: • Tools & templates (see next slide) • Fact sheets: Value Risk Matrix, Extending & Renewing Contracts • Procurement guidance – Managing and monitoring supplier performance Introduction to Contract Management Workshop 12 - 17 September 2014

5. Supporting tools & templates Phase 1 – Contract set up tools and templates Value/risk matrix Classify a contract (as either routine, focused or strategic) based on value and risk. Contract management checklist Suitable for routine contracts – a brief summary of key information relevant to contract management. Phase 2 – Contract management tools and templates Contract management plan Define the key activities and responsibilities for managing the contract. Contract kick-off meeting template A guide for the contract kick-off meeting. Contract performance review meeting template Support the contract manager to conduct and document a contract performance review meeting. Risk register template Record and maintain a single repository for contract risks. Checklist for contract extensions/renewals Record the value for money assessment of a contract extension or renewal (suitable for routine contracts) Contract review report Record the analysis performed and recommendation to extend or renew a contract, or transition to other suppliers. Phase 3 – Contract close-out tools and templates Lessons learned log template Document lessons learned throughout the contract lifecycle. Close-out check list Confirm all close-out activities have been performed. Introduction to Contract Management Workshop 12 - 17 September 2014

6. Effective contract management begins with good planning in procurement phase Contract management requires involvement during the Procurement process and not simply after the contract has been awarded. Effective contract management starts at the sourcing process through to the relationship management of the supplier to ensure the optimum efficiency and increased service levels so as to avoid having to utilise contractual terms to achieve the performance expectations. It’s a process that requires teamwork and partnership skills through regular reviews and engagement. Introduction to Contract Management Workshop 12 - 17 September 2014

7. Value / risk approach Value risk approach to contract management provides flexibility, requiring common sense & good judgment • Contract management framework adopts a value/risk approach. Depending on how the contract is classified based on value and risk, the activities, focus and amount of effort can vary (see table on page 7 of CMF identifying whether key activities are required, recommended or optional). • Discretion allowed, based on value & risk of contract. Apply common sense & good judgment. E. g. ‘routine’ contracts should be ‘light touch’. • Value/risk assessment helps identify capability required to manage a contract What is the role of the value/risk matrix (VRM)? • VRM available at: http: //www. hpw. qld. gov. au/aboutus/Reports. Publications/Guidelines/Pages/Contract. Management. Guidelines. aspx • How to use the matrix • Some background about the questions on value (cost and ‘non-cost’ value) and risk • Flexibility for Agencies to apply their own risk assessment methodology to answer questions about risk Introduction to Contract Management Workshop 12 - 17 September 2014

8. Roles and responsibilities defined What is: • • • a Contract Owner? a Contract Manager? a Contract Administrator? More collaboration between sourcing lead (procurement) and contract manager • Early identification of contract management skills/capability needed • Contract managers contribute subject matter expertise & experience • Sourcing lead in best position to develop contract management plan (in consultation with contract manager – see next slide) Better handover between sourcing lead & contract manager = smoother transition Don’t “throw it over the fence!” Introduction to Contract Management Workshop 12 - 17 September 2014

9. Contract management plans (CMP) “…To support the contract start-up and effective contract management, most of the work required for developing a contract management plan can and should be done before the contract is signed …” (Australian National Audit Office Better Practice Guide on Contract Management http: //www. anao. gov. au/Publications/Better. Practice-Guides Sourcing lead is responsible for developing the CMP (see below extract from RACI in Contract Management Framework) Activity 1. 4 Finalise contract management plan Sourcing Lead Contract Owner Contract Manager Contract Administrator Supplier Key users R I A C C • Sourcing lead in best position to develop contract management plan • Incorporate knowledge acquired through sourcing process & contract negotiations (e. g. risks to manage) • Develop in consultation with contract manager Our templates: Contract Management Checklist & Contract Management Plan • You can use a CMP for multiple contracts (e. g. to manage a group of contracts under a SOA) • Save a copy in Q-Contracts. • Keep it up to date – the CMP is a living document (not ‘set and forget). Introduction to Contract Management Workshop 12 - 17 September 2014

10. Contract extensions and renewals • QAO findings & recommendations • Defensible position • Checklist for contract extensions and renewals – what is its purpose? • Contract Review Report template – when should it be used? • Fact Sheet for Contract Extensions and Renewals – FAQ’s and useful examples • Examples of when contracts might be extended/renewed (see Fact Sheet) • Record keeping – keep a copy in QContracts (or contract management system used by your Agency) Introduction to Contract Management Workshop 12 - 17 September 2014

11. Operationalising the CMF in Agencies What can agencies do to start ‘operationalising’ the CMF? • • Deliver introductory workshops (like this one). Develop process and Agency specific guidance (if necessary) Review & update any existing policies, procedures, guidance material to align with CMF and use tools available. Adapt the templates to further improve them as a ‘custom fit’ for your Agency. Participate in training & capability development initiatives Identify contract managers in your Agency (and share contacts with PTD) Share learnings & materials with PTD and other Agencies Ask for help if you need it Introduction to Contract Management Workshop 12 - 17 September 2014

12. Re-cap on key messages • One Government CMF and supporting tools and templates are available to use • Become familiar with the roles and responsibilities identified in the CMF • Need for greater collaboration between procurement/sourcing teams and contract managers in planning and development of contracts, and contract handover. • Sourcing lead (procurement) is responsible for developing contract management plan • Identify contract managers early so the ‘right people’ manage the ‘right contracts’ • Templates can be adapted by Agencies & modified to suit • Value / risk approach to contract management requires sound judgment and common sense to be applied • For contract extensions & renewals use the Checklist and other tools / guidance material available • Be diligent with record keeping • Contract management implementation by Agencies should be consistent with CMF Introduction to Contract Management Workshop 12 - 17 September 2014

13. Further training & next steps Contract management capability training & development … coming soon • • PTD is in the process of selecting a training provider (to be appointed by end Sept 2014) 3 discrete contract management training workshops to be developed: – Contract management fundamentals (1 day) – Advanced contract management (2 days) – Master class (1 day) • • • Training provider will offer coaching and support program (for 6 months) after workshops Pilots (of workshop) will begin in October-November Roll-out ready by mid November 2014, with training schedule to be developed by supplier based on forecast demand from agencies Next steps: • PTD is looking into the best way to deliver introduction workshops to regional areas • Agencies can begin ‘operationalising’ CMF • Contract management ‘leaders’ deliver introductory workshops within Agencies Questions: • Contact Sam Mathers at Samantha. mathers@hpw. qld. gov. au or • Gully Chaudhry at Gulistan. CHAUDHRY@hpw. qld. gov. au or • betterprocurement@hpw. qld. gov. au Introduction to Contract Management Workshop 12 - 17 September 2014