Contracts and Managing Key Deliverables


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Contracts and Managing Key Deliverables


'Procurement is key to reducing the cost structures of government agencies, ... the rearview mirror is always clearer than the windshield.' - Warren Buffett ... – PowerPoint PPT presentation

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Title: Contracts and Managing Key Deliverables

Contracts and Managing Key Deliverables
for Efficient and Effective Government
Prepared by Gregg Barrett Cylon Technology 27 11 662
Enterprise Contract Lifecycle Management (CLM)
Aberdeen Group Public Sector Study
  • Contracts Pivotal in the Public Sector
  • Creating, managing, and controlling compliance
    to supplier contracts are the greatest challenges
    faced by buying organizations in the public
  • Procurement is key to reducing the cost
    structures of government agencies, improving
    operating performance and service levels, and
    satisfying policies and regulations without
    negatively impacting service to the public.

Poor Contract Lifecycle Management
  • Storing contracts in paper format limits the
    ability to
  • Locate contracts
  • Manage contract versions and compliance
  • Identify specific terms and clauses
  • Analyze contract performance
  • Limited visibility into contract and performance
    results in
  • Inflated costs
  • Diminished negotiation leverage
  • Missed rebates and savings opportunities
  • Overcharging by suppliers
  • Low rates of compliance to non-price terms and
  • Greater risk of regulatory violations

Challenges to Success
  • The Aberdeen-GCN study strongly suggests that
    public sector firms will most likely find the
    greatest opportunity for improvement in how they
    manage supplier contracts. Survey respondents
    from all public sector organizations identified
    the monitoring and enforcing of contract
    compliance as their most challenging supply
    management activity
  • Conclusion
  • Regardless of jurisdiction, all government
    agencies would be well served to tackle the
    contract management challenge that they are
    facing. The reason An organizations ability to
    effectively create, manage, and control contracts
    is the primary driver of value.

So what needs to be done
  • Standardize contract procedures department wide
  • Develop a central repository for all contracts
  • Activate or embed contract terms within the
    software of online transaction systems
  • Track compliance more often
  • Devise performance metrics and, likewise, embed
    them in transaction systems
  • Improve automation of the contract management
    life cycle

The Result
  • Employing such systematic and automated
    procedures for the management of supply contracts
  • Reduced material and administrative costs
  • Shortened contracting cycles,
  • Optimized contract usage and controls
  • Diminished operational and regulatory risk
  • A sound contract management infrastructure can
    also improve the value and return on investment
    (ROI) for existing supply and IT initiatives,
    such as strategic sourcing, ERP, eProcurement,
    and eSourcing.

Case Study
Insight into Alberta
Insight into Alberta
  • Albertans enjoy a very high quality of life
  • lowest overall taxes in Canada
  • highest level of services
  • highest disposable incomes in Canada
  • lowest unemployment rate in Canada.

Insight into Alberta
  • Population April 1, 2007, Alberta's population
    is estimated to be 3,455,062 (Source Alberta
  • Government Government of Alberta (GOA)
  • large regional government
  • over 25,000 employees
  • 24 distinct departments
  • known to be very progressive

Being Progressive
  • How progressive
  • No provincial sales tax
  • GOA leads the public sector in Canada
  • Consistent year on year budget surplus
  • Lowest tax rates (for corporate and personal
  • Enacted a law that makes running a deficit a
    criminal offence
  • First provincial/state government in North
    America to roll out a province/state-wide high
    speed internet infrastructure

Embrace Technology
  • Objectives for embracing technology
  • Reduce operating costs
  • Increase service levels to constituents
  • Increase service levels from suppliers
  • Needed to get a solid handle on
  • Contractual obligations
  • Compliance
  • Performance measures
  • Risk management and
  • Governance

Business Situation and Major Goals
  • Bring purchasing and administrative costs in line
  • Manage contractual obligations
  • Compliance
  • Performance measures within each department and
    across departments
  • Replace and minimize the cost of managing
    thousands of vendor contracts
  • Decided to Take Action
  • Identified Contract Management as a key area that
    impacted these areas and that needed to be
    addressed in order to drive improvement
  • Also noted the deployment of a CLM solution was
    fundamental to monitor the delivery performance
    of contracted services and products

The Requirements
  • Contract creation
  • Contract management
  • Infrastructure construction and maintenance,
  • Social services,
  • Information technology,
  • and all other types of contracts and business
  • Contract Reporting

The Process
  • Committee
  • identify and rationalize the requirements of all
    24 departments
  • prioritize these into
  • mandatory and
  • desirable needs
  • Each department considered its requirements to
    be more important than the rest so the
    rationalization task was tricky
  • The CIO for the GOA mandated
  • all departments were to use one centralized
  • would be one standard set of requirements for the
    entire GOA

Ingredients for Success
  • Senior level sponsorship and mandate
  • CIO of GOA
  • Deputy Minister
  • CFO
  • Well staffed project team
  • Members from all business areas
  • Ensure all scenarios were being analyzed and
  • Minimal disruption to the organization
  • External Project Manager
  • Sole responsibility to manage the GOA project
    resources, the project plan and all deliverables
  • Pilot approach One department at a time
  • Limited exposure to risk and substantially
    increased chances for success

Ingredients for Success cont..
  • Detailed GAP Analysis and product walkthrough
  • 2 months conducting a detailed GAP Analysis
  • All departments were involved
  • felt that they were adding true value to the
    process - improved buy-in
  • Zero Product Customizations
  • Message from top management, based on lessons
    learned from past large-scale software
  • Integration with Corporate ERP system
  • To leverage and enhance the large investment
    already made in the PeopleSoft ERP system
  • Full Fledged Training
  • Qualified trainers to address the needs of all

Challenges and more Challenges..
  • 24 departments, 24 different ways
  • Harmonizing the requirement, based on a best
    practice approach
  • Paradigm shift Old proven way vs new process
  • Change management was critical
  • Users played with the system early in the
    implementation phase
  • Able to see the benefits first hand
  • More willing to embrace the system
  • Sun-setting on existing systems
  • Identify these systems
  • Determine the data present
  • How to convert the valid and valuable data
  • Data conversation and cleansing

Scope of Deployment
  • 24 departments in a phased rollout
  • Range of hundreds to over one thousand users in
    each department
  • Different contract types and contracting
    processes in each department
  • Central management with widely distributed users
    in the field

  • Improved contract efficiency and reduced
    operational costs
  • Streamlined operations, reduced and eliminated
    manual processes
  • Reduced contract lifecycle time by more then 30
  • Reduced procurement costs of goods and services
  • Contract consolidation, contract compliance,
    leverage discounts properly, accurate billing and
    strategic sourcing
  • Regulate contract templates and enforce
  • Reduced templates by more then 70
  • Improved audit controls and compliance to
  • Reduced maverick contracts
  • Support for unique processes in different
    business units
  • Improved contract visibility and the related
    delivery of contracted goods and services
  • Consolidated contract repository
  • Increased visibility by 100

Benefits cont
  • Improved stakeholder involvement
  • Streamlined reporting time by more then 90
  • Monitor and manage compliance, performance and
    risk more effectively and efficiently
  • Integrates with the governments supply chain
    management strategy
  • Improved financial tracking of contract-based
  • Staff redistributed to other much needed areas,
    making better use of their time
  • Provides faster more accurate response to
  • staff, customers and suppliers
  • Integrates to Financial systems and processes
  • to ensure compliance of incoming and outgoing
  • Streamlined contract request processing
  • automates the contract request process for field
    and non-contract savvy staff

Current Levels of Visibility
You cant change what you cant manage You cant
manage what you cant measure You cant measure
what you dont know
  • Take action on Contract Lifecycle Management

Contract management is where finance was 30
years ago - Oracle
Organisations that dont manage their contracts
effectively will be at a tremendous competitive
disadvantage. - Tim Cummins, Director
IACCM In the business world, the rearview
mirror is always clearer than the windshield. -
Warren Buffett
the most concerning of all findings was the
level of immaturity in the entire area of
post-award contracts management, control and
administration, arguably the highest risk area
within contracting for most organizations
Protiviti 2007
.so start now by getting enterprise-wide
visibility into your organisational
contracts/agreements and commitments
Questions and Answers
Websites www.