This document discusses contract management for building maintenance. It explains that building maintenance is often contracted out which can lead to cost issues for companies. Effective contract management is important to control costs and ensure contractors are providing value. The summary discusses dividing contract costs into labor and materials, understanding the key aspects of successful contract management including evaluation, execution, and performance measurement, and setting goals for contract management like creating value, ensuring quality, managing productivity, and ensuring compliance.

1. 1
CONTRACT MANAGEMENT FOR BUILDING MAINTENANCE TO ACHIEVE
EFFECTIVENESS & EFFICIENCY BUGDET AND CREATE VALUE ADDED
Introduction
Building maintenance is done by the vendor (contractor) is often a problem for companies, especially in the
costs incurred as a result of contractors who do the work of building maintenance, causing a dilemma for
the company, namely "whether the work building maintenance, must be done alone, or submitted to the
vendor (contractor)? "
Cost element in the contract management is basically divided into two (2); namely: the cost of labor; and
material costs, which in the implementation usually two types of costs that can not be separated, or these
costs into a single unit, but the company (employer) does not distinguish between costs incurred in the
management contract, so often the company gave judgment that the use vendor (contractor), become
inefficient and ineffective, which caused that the company (employer), also has the human resources that
have the ability and skills similar to the human resources employed by the vendor (contractor).
Understanding
Contract Management is the administrative activities related to the handling of the contract, which is
divided into several things, such as: an invitation to offer contracts; evaluation of bids; contract award,
contract execution; performance measurement work has been completed; calculation of payment including
addressing issues related; incorporating the necessary changes or modifications to the contract, make sure
both sides meet or exceed their expectations, and actively interact with the contractor to achieve the
objectives of the contract.
When the two companies will do business with other companies, then the contract will specify the
activities that are held each party to fulfill their obligations under the contract, thereby affecting the
profitability of the business activities are organized, then both sides need to identify effective provisions to
be published in in the contract, which in turn can create strong business relationships and pave the way to
enhance greater profitability in the long term for both parties.
Objective
1. Understanding the aspects that the key to the success of the management contract
2. Manage contracts effectively and efficiently
3. Getting a better performance through the development of strong relationships with contractors or
vendors
4. Analysis of the relationship that has the potential to cause loss or gain, and identify which relationships
need to be improved
5. Understand changes through cycles contractual relationships and build and develop trust between the
parties.

2. 2
Benefits
1. Obtain a basic knowledge of supplier management strategy
2. Build an effective structure and implement the necessary management contract process, as the
management of resources in the implementation of the contract
3. Build effective partnerships to ensure the contract is implemented under the terms of a service level
agreement
4. Assess and manage the principal risks of the supplier contract implementation
5. Managing relationships with suppliers
6. Build a performance framework and standard service level agreement, measures, incentives and
sanctions.
7. Identify engineering controls continuous improvement with selected suppliers
8. Manage variation, change and avoid scope creep.
9. Use right, improve and control the management contract
10. Addressing the disputes arising from the implementation of the management contract
Goals
1. Creating Value
The need to enter into contracts with vendors, employees and even customers is the result of a
business' desire to sell the best products and services. Creating value for the organization is a key
objective of contract management. Managing the contract is concerned with how well the other party is
helping the business create and maintain this added value. If you hire a contractor to handle your
payroll, for example, you want that contractor to manage your finances accurately, to pay employees on
time and to provide you with periodic progress reports. Failure to do this may result in you revoking
the contract, as the payroll contractor simply isn't adding value to your operations.
2. Ensuring Quality
Ensuring quality is related closely to the concept of adding value but has more to do with the
employees you have on contract than it does with the vendors you take on board. The contract
management process is essential in making sure employees respect the company's policies and
procedures and, in turn, are welcoming, friendly and open to communication with customers. This is
important from the financial perspective of the company as well. Customers who are happy come back,
so contract management has a huge role to play in the financial stability and profitability of the firm.
3. Managing Productivity
Managing productivity is related both to the creation and maintenance of value with vendors and to
the process of ensuring quality of employees. Productivity is about being able to serve the wants and
needs of the business, including its customer, in a timely and effective way. It is about balancing
efficiency with quality. The terms of a contract often numerically lay out conditions regarding how
much a vendor or employee must produce.

3. 3
4. Ensuring Compliance
The compliance objective of contract management is concerned largely with legal implications. Failure
to follow the terms and conditions as they are laid out in the contract -- on the part of either side of
the agreement -- constitutes a breach of contract and may lead to legal action by one or both parties.
This is a costly process and may put the business at serious financial risk.
Barriers
1. These processes often require that bidders employ specialized units or employees.
2. Limited Communication with Potential or Actual Bidders
3. Access points are lacking, and bidders reportedly have difficulty getting answers to questions about
design specifications.
4. Contract Administration and Management That Created Extra Work and Delays
5. Delays in final payments often caused particular hardship for small businesses.
6. Lengthy Funding Time Line and Final Payments That Often Also Involved Delays and Gaps
7. The extensive time between initial bid and initial funding can be difficult to bridge, especially for small
businesses with little capital that have to cover employees' time
Solution
Capacity building for Contract Management
Mission
1. Ethical procurement practices
2. Development of skilled procurement expertise and “best practice” processes
3. Continuously providing the organization with current procurement policies and procedures
4. Diligent pursuit of broad-based competition ensuring maximum participation of small and medium
business enterprises
5. Consistent application of policies to ensure appropriate stewardship of public funds
6. Effective partnerships with internal customers, other non-profit and public agencies and valued
suppliers
7. Promotion and support of environmentally responsible policies
Vision
Contract & Procurement Management will be an organization of highly trained procurement professionals,
utilizing advanced technology, dedicated to delivering value-added, proactive, innovative procurement
services that consistently exceed customer expectations
Code of Ethics
1. Conduct business in good faith; demanding honesty and ethical practices from all participants in the
purchasing process.

4. 4
2. Avoid unfair practices by granting all competitive suppliers equal consideration insofar as compliance,
governance and regulations require.
3. Decline all personal gifts or gratuities from present or potential suppliers.
4. Promote positive supplier/contractor relationships by according supplier representatives courteous, fair
and ethical treatment.
5. Make reasonable efforts to negotiate equitable and mutually agreeable settlements of controversies with
a supplier(s).
6. Avoid involvement in any transactions/activities that could be considered to be a conflict between
personal interests and the interests of the company.
7. Know and obey the letter and spirit of laws governing the purchasing function and remain alert to the
legal ramifications of purchasing decisions.
8. Enhance proficiency by acquiring and maintaining current technical knowledge and pursuing related
educational opportunities and professional growth
Goals
1. Ensure that all in-house contracts are stored in record form in a timely manner. To truly ensure this
happens, communicate to business units or key stakeholders that completed contracts need to be
turned in for record creation by a given deadline. This ensures even the smallest contracts don’t “go
missing” in the rush of every day business and that stakeholders know there is a process for recording
information rather than filing it way (or misplacing it!).
2. Ensure that all key contacts on “both sides” of the contract are included in each contract record. This
may seem like a simple point, but by creating a contract record that notes key contacts, you are
ensuring this info is available at any time – which can be especially convenient in emergencies. Contract
management administrators may even create a simple form for key stakeholders to fill out the lists of
primary and secondary contacts.
3. Create financial summaries for each and every contract record. This task can be seen by some
organizations as “extra” information that’s best recorded by the CFO’s office. But recording a financial
summary of a contract – even in its simplest form – can be invaluable to the larger organization. The
point of a contract management solution is not to provide audit information, but recording the key
terms (such as unit price) of a contract will provide audit and financial departments with the “final
word” on agreed-to prices/costs when discrepancies need to be sorted out. Financial information that’s
available with just a few keystrokes or at a glance is also infinitely preferable to leafing through paper
contracts to determine things like total value.
4. Set up a protocol for ensuring new contracts are reviewed early in their implementation. Whether it is
a sales-side contract or a service/procurement side contract, a good contract management practice is to
ensure that things start off on the right foot. That means contract management administrators should
establish a review protocol that ensures reviews happen well before or near mid-way points of
contracts. Ideally, key stakeholders would be asked to review contract performance and report back on
any changes/discrepancies that may need to be recorded in the contract record. Contract management
administrators can assist the process by: ensuring early review dates are internally set (and recorded on
contract records so alarms can be set); creating forms that assist in the evaluation process; and setting
review feedback due dates.

5. 5
5. Create a schedule for reporting contract performance and raising contract issues. If contract
administrators are diligent about creating the achieving the first four goals, then report creation and
scheduled reporting should be an easier task. Regular reports on contract performance (or even just
status) to business units will help to share awareness of contracts in general. Regular reporting on
status would also provide contract managers a convenient opportunity to share insights or key
information. This can help others to see the value in contract management as well.
Role
1. Contracts (various: including formal, short form, and annual contracts)—Drafting, Evaluation,
Negotiation and Execution:
1.1. Non Disclosure Agreements, Sales/Purchasing Agreements, Sub-contracts, Consulting
Agreements, Licensing Agreements, Master Agreements, review of customer proposed terms and
conditions
1.2. Distribution Agreements (resellers, agents, joint marketing etc.)
1.3. Commercial and Public (Federal, State and Local Municipalities) Contracting
2. Serve as the point of contact for customers on contractual matters. Act as contractual “middleman”
between company employees and customers, ensuring timely review and approval / reconciliation of
variations.
3. On all standard and nonstandard contracts, provide redlined recommendations and often negotiate
directly with customer attorneys or purchasing staff until consensus has been reached
4. Maintain contractual records and documentation such as receipt and control of all contract
correspondence, customer contact information sheets, contractual changes, status reports and other
documents for all projects.
5. As needed, provide guidance on contract matters to project managers or other operational staff,
including training to new project managers and other employees in contracting practices and
procedures.
6. Develop and implement procedures for contract management and administration in compliance with
company policy. As appropriate, contribute to or influence company policies.
7. Monitor compliance by company employees with established procedures. Identify areas of recurrent
pressure.
8. Work with Risk Management Department/Finance to coordinate contractual insurance requirements.
9. Work with Finance to ensure adherence to broader finance and risk requirements such as revenue
recognition, pricing and discounting policies,, export controls etc. May include ‘financial engineering’
and understanding/evaluating economic impact of terms and term options.
10. Support Product Management/Marketing to ensure company products and services are offered with
appropriate, competitive terms and conditions
11. Monitor competitive terms. Monitor customer satisfaction with our terms and conditions and
contracting practices. Recommend changes.
12. Ensure that signed contracts are communicated to all relevant parties to provide contract visibility and
awareness, interpretation to support implementation.
13. Handle on-going issue and change management
14. Monitor transaction compliance (milestones, deliverables, invoicing etc.)
15. Oversee Service Level Agreement Compliance
16. Ensure contract close-out, extension or renewal.

6. 6
Measurements
1. Acceptable Quality Level (AQL)
Usually defined as the worst case quality level that is still considered acceptable. It consists of a quality
standard that allows a pre-specified number of defects. A performance measure that is typically stated
as an allowable variation from the PWS performance indicator.
2. Evaluation Method
Task Order or Contract specific methodology chosen to assess Contractor performance.
3. Impact Measure
An organization mission, objective, goal or long-term effect of the outcomes [overall effectiveness or
efficiency
4. Indicator
An indicator is a metric or combination of metrics that provide insight into a process, a project, or a
product, to enable assessment and improvement
5. Input Measure
The resources used in producing an output or outcome
6. Maximum Allowable Deviation from AQL
That performance standard that is the absolute worst deviation from the AQL that can still be
considered acceptable.
7. Measurement
Objective, timely, simple, accurate, useful and cost effective numerical information about an output
8. Metric
Quantitative measure of the degree to which a system, component, or process possesses a given
attribute
9. Outcome measure
Relates to the results of providing an output
10. Output
An event, occurrence, or condition that indicates progress toward achievement of a purpose
11. Output Measure
The answer to the question "What is the product, service or result of this activity
12. Performance
Output or results
13. Performance Standards
Verifiable, measurable levels of service in terms of quantity, quality, timeliness, location, and work
units.
14. Primary building block of a QASP
Sampling Guide, Written procedure or instruction stating what will be checked, what the AQL is and
the when the evaluation will be done
15. Surveillance Method
Random sampling, periodic inspection, 100% inspection, customer feed back, or a mix of existing
management information systems can be specified to monitor performance and quality.
16. Work Requirements
Desired outcomes from the performance work statement

7. 7
Strategy
If you are looking for the strategy to implement the Contract Management for Building Maintenance,
please send an email to winardi@updi-int.com or winardi67@gmail.com, mobile + 62-813-1542-1509.
You will get a manual guide in the form of Capacity Building for Contract Management, in fulfilling the
organization's strategic goals.
Author/Consultant
Setiono Winardi, SH.,MBA
Reference
1. "Best Practices in Contract Management: Strategies for Optimizing Business Relationships<".
Aberdeen Group. Retrieved 2008-07-10.
2. "Contract Management: Optimizing Revenues and Capturing Savings". Aberdeen Group. May 2007.
Retrieved 2008-07-10.
3. Contract & Commercial Management - The Operational Guide, Van Haren Publishing, October
2011, ISBN 978 90 8753 627 5
4. Nash, Ralph Jr.; & Cibinic, John Jr. (1993). Formation of Government Contracts (2nd ed.). George
Washington University. ISBN 0-935165-07-X.
5. Nash, Ralph Jr.; & Cibinic, John Jr. (1995). Administration of Government Contracts (3rd ed.).
Commerce Clearing House, Inc. ISBN 0-935165-32-0.
6. Tiefer, Charles; & Shook, William A. (2003). Government Contract Law (2nd ed.). Carolina
Academic Press. ISBN 0-89089-437-X.
7. J. Edward Murphy (2005). Guide to Contract Pricing: Cost and Price Analysis for Contractors,
Subcontractors, and Government Agencies. Management Concepts. ISBN 1-56726-153-1.
8. Darrell J. Oyer (2005). Pricing and Cost Accounting: A Handbook for Government Contractors (2nd
ed.). Management Concepts. ISBN 1-56726-164-7.
9. Bednar, Richard J.; Braude, Herman M.;&Cibinic, John Jr. (1991). Construction Contracting. George
Washington University. ISBN 0-935165-18-5.
10. Manos, Karen L. (2004). Government Contract Costs & Pricing. Thomson-West. Vol. I – ISBN 0-
314-11621-4; Vol. II – ISBN 0-314-11708-3
11. Edwards, Vernon J. (2006). Source Selection Answer Book. Management Concepts, Inc. ISBN 1-
56726-172-8.
12. Guidebook for Performance-Based Services Acquisition (PBSA) in the Department of Defense. Dec.
2000
13. FAR 8.405-2 [1] Ordering procedures for services requiring a statement of work. accessed July 8,
2011
14. Arnold, Scot, and Marius Vassiliou (2010). A Real Options Approach to valuing the Risk Transfer in
a Multi-Year Procurement Contract. Ch. 25 in Thawar T. Arif (ed), Aerospace Technologies
Advancements. Zagreb, Croatia: INTECH, pp. 475-492. ISBN 978-953-7619-96-1.
15. Arnold, Scot, and Marius Vassiliou (2007). Real Options Analysis of Multiyear Procurements,î Proc.
2007 IEEE Aerospace Conference.