Contract Management: A Public Sector Case Study Rivaj Parbhu

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Contract Management A Public Sector Case Study
Rivaj Parbhu

• The information contained in this presentation is
  the property of Realyst and is to be treated as
  private and confidential

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Introduction

• Topics to be Covered
• What is Contract Management (5 Minutes)
• Why Contract Management (5 Minutes)
• Implementation of Contract Management Lessons
  learnt in Government (20 Minutes)
• The Problem
• The Solution
• Project Status
• Lessons Learnt
• Questions

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what is contract management?

• What is Contract Management?
• A system for managing contracts through
  documented processes and supported by software
  that allows organisations to effectively manage
  the various types of contracts they engage in,
  including buy side, sell side, and non
  monetary. (www.wikipedia.com, 2007)
• Basic Functions of a Contract Management System
• Central Repository
• Alerting
• Contract Creation features
• Workflow and Process Control
• (IACCM Contract Management Report, 2007)

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Why is Contract Management relevant?

• Despite unprecedented spending on health,
  education, law enforcement, housing etc we are
  still lagging behind in Service Delivery.

Bid to deliver homes urgently has failed
Fin24June 22 2007 The government's bid to
deliver urgently homes and provide people with
shelter in the Western Cape had failed
Jo'burg Hospital down to 4 liftsThe Star
08/2008 Johannesburg - Only four lifts out of 21
are operational at Johannesburg Hospital, the
hospital's chief executive said on Thursday.

• In many cases Government contracts with the
  Private Sector in order to deliver services to
  South Africans.
• The improved POST SIGNATURE management of
  these contracts would ensure improved service
  delivery.

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Case Study The Problem

• In June 2006 Realyst Contract Management together
  with PriceWaterhouseCoopers embarked on a project
  to deliver a contract management solution to a
  single directorate within a National Government
  Department.
• The primary reason for this department to
  implement a contract management solution was an
  external audit report highlighting deficiencies
  in the contracting process with the potential
  for financial mismanagement and gross
  inefficiencies.
• Five key findings were
• No contracts or SLAs in place for key,
  multi-million Rand suppliers
• No means or process to measure the performance
  of suppliers
• No regular reviews of the contract documents
• Inadequate controls in place for managing
  payments
• Inadequate contract policies and procedures

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Case Study The Solution

• The Realyst automated contract management
  solution was delivered to the department. The
  initial implementation was scoped at taking 6-8
  weeks with the deliverables being to address the
  findings of the audit report.
• Challenges experienced during roll-out
• Lost or non existent contracts and contract
  documents
• Confusing procurement process and contract
  management process
• No awareness of the need for contracts even at
  an executive level
• Non existent contract policies and procedures
• No checklist to be used to ensure all required
  documentation is received
• No contract templates available. Signing of
  supplier agreements
• Creating a sustainable solution

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Case Study Project Status Lessons Learnt

• We now regard this implementation as being
  successful. The department has cleared its audit
  findings and has repeatedly enjoyed improved
  service delivery from its suppliers.
• Status of the Project
• We have just agreed and implemented a
  checklist where all approvals, tender docs,
  letter of appointment, etc, will be kept with
  contract
• Automated Contract approval process currently
  being finalized
• Last phase in the project is to agree
  standard contract templates taking into account
  both business drivers and legislation/guidelines.
  
• 5 Lessons Learnt
• Walk before we try to Run
• Dedicated centralized function with a Contracts
  Administrator
• Build operate and transfer model
• SLAs with suppliers, including penalties for non
  performance are critical
• Management support and buy-in is important to
  ensure success of contract management office

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• Thank you, Questions?

Rivaj Parbhu 011 463 5311 083 661
2669 rparbhu_at_Realyst.com