Contracting activity in many entities represents an important business activity, often involving a significant level of expenditure and the utilisation of substantial in-house resources. As a result, inadequate contract management practices will have an adverse impact on an agency's capacity to meet its business objectives.

Better practice entities incorporate reporting on contracting activity into their regular management reporting arrangements. This should involve the development of a number of contracting performance measures and the periodic measurement and reporting against them as an integral part of the entity's management reporting regime. This will assist in reinforcing the importance of good contracting practices and also provide assurance to senior management on the agency's performance in this area, including its compliance with policy and reporting requirements.

Better practice entities incorporate reporting on contracting activity into their regular management reporting arrangements.

Examples of performance measures include:

•  establishing benchmarks on targets for key steps in the procurement cycle such as the lead time from the date of a procurement request to the signing of a contract;

•  the number and percentage of procurements in excess of the relevant threshold that have not been undertaken through open tender;

•  instances where the agency has not complied with the Commonwealth Procurement Guidelines (CPGs) and government policy, such as 30 day payment for small business;

•  the number and percentage of procurements that have used panel arrangements or standing offers. Such an analysis can highlight the benefit of establishing such arrangements and the extent of use of existing arrangements. (The management of panel arrangements is discussed later in this part);

•  the number of contracts completed on time and within budget. This would assist management to better understand the degree of success of the entity's procurement and contracting;

•  the number, types and timeliness of variations. This could inform the entity of the extent to which the original procurement processes were unusual or insufficient. If options to extend are regularly enacted this may indicate that the entity is not testing the market when perhaps it should;

•  the number of contracts with the same contractor, and contracts for the supply of the same goods or services with different contractors. This data would inform future decisions regarding packaging of services and to obtain best overall value for money; and

•  the proportion of high, medium and low risk contracts, and variations to these contracts over time.