110804 NCMA contract management brazil


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Presentation to National Contract Management Association, Rio de Janeiro, Brazil 4 August 2011

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110804 NCMA contract management brazil

  1. 1. Effective Contract Management Dr Gordon Murray
  2. 2. Contract Management When does it start? When does it end? Who ’ s responsible?
  3. 3. Effective contract management is about delivery of the required outcome
  4. 4. Contract management requires effective upstream and downstream management of the contract award
  5. 5. Procurement Cycle 8. Closure / Review Need 1. Identify problem 2. Develop Business Case 3. Define Procurement Approach 4. Competitive procurement 5. Tender Evaluation 6. Award Contract 7. Manage Implementation of Contract
  6. 6. Who should be involved in contract management?
  7. 7. The buying decision making unit <ul><li>Initiator who first suggests buying the product or service </li></ul><ul><li>Influencer whose comments affect the decision made </li></ul><ul><li>Decider who ultimately makes all or part of the buying decision </li></ul><ul><li>Buyer who physically makes the purchase </li></ul><ul><li>User who consumes the product or service </li></ul>(Wilson, Gilligan and Pearson, 1992)
  8. 8. Should all contracts be managed in the same way?
  9. 9. Tools for differential contract management
  10. 10. Pareto and ABC Analysis
  11. 11. Kraljic ’s Procurement Positioning Model Bottleneck Strategic Routine Leverage Supply Market Complexity/ Risk Expenditure
  12. 12. Supplier Positioning Model of potential customers Development Core Nuisance Exploit Attractiveness of account Relative value of account
  13. 13. Power dependency Buyer dominance (>) Interdependence (=) Independence (0) Supplier dominance (<) Attributes to buyer power relative to supplier (Cox, 2003) Attributes to buyer power relative to supplier
  14. 14. Relationship management <ul><li>Adversarial contracting does not necessitate adversarial relationships </li></ul><ul><li>Effective relationship management requires </li></ul><ul><ul><li>Mutual respect </li></ul></ul><ul><ul><li>Mutual trust </li></ul></ul><ul><ul><li>Mutual understanding </li></ul></ul><ul><ul><li>Creating an open and constructive environment </li></ul></ul><ul><ul><li>Contributing to joint management of contract delivery </li></ul></ul>
  15. 15. Service delivery management
  16. 16. Performance management <ul><li>Shaped by the original customer definition of need </li></ul><ul><li>KPIs identified prior to contracting </li></ul><ul><li>Likely to be directly linked to tender evaluation criteria </li></ul><ul><li>KPIs should be </li></ul><ul><ul><li>Proportionate, </li></ul></ul><ul><ul><li>fit for purpose, </li></ul></ul><ul><ul><li>easy to support by evidence, </li></ul></ul><ul><ul><li>accepted by key stakeholders </li></ul></ul>
  17. 17. Potential outcome based performance measures <ul><li>Benefits realised </li></ul><ul><li>Cost and value obtained </li></ul><ul><li>Innovation transfer </li></ul><ul><li>Reduced environmental impact </li></ul><ul><li>Performance and customer satisfaction </li></ul><ul><li>Delivery improvement and added value </li></ul><ul><li>Delivery capability </li></ul><ul><li>Relationship strength </li></ul><ul><li>Responsiveness </li></ul>
  18. 18. Closing the contract
  19. 19. Contract management review <ul><li>Aims to capture the lessons learnt for improving procurement </li></ul><ul><li>Should include key stakeholders </li></ul><ul><li>Complete a post-contract review report </li></ul><ul><ul><li>What worked well? </li></ul></ul><ul><ul><li>What didn ’t work? </li></ul></ul><ul><ul><li>What are the lessons for letting this type of contract in the future? </li></ul></ul><ul><ul><li>What are the lessons learnt for improving procurement performance? </li></ul></ul><ul><li>Capture and communicate </li></ul>
  20. 20. Effective Contract Management Dr J Gordon Murray [email_address] www.Twitter.com/DrGordy www.slideshare.net/drgordonmurray