1.7 Effective contract management is essential to a successful project. An explanation of effective contract management is contained within the Strategy Plan for Contract Management for the Allenby Connaught Ministry of Defence project signed in 2006.
| Box 1.1 Purpose of contract management Contract management is the process that enables parties to a contract to meet their obligations in order to deliver the objectives required by the Contract. It also involves building a good working relationship between customer and provider. It continues through the life of the Contract and requires the parties to be proactive, to anticipate future needs as well as managing immediate situations that arise. The primary aim of Contract Management is to ensure that the needs of the Services and Capital works programmes are satisfied, the Authority receives what it is paying for, within the boundaries of the Contract whilst achieving value for money. This means optimising efficiency, effectiveness and economy of the service or relationship described by the Contract, balancing costs against risks and actively managing the customer-provider relationship. Contract Management also involves aiming for continuous improvement over the life of the Contract. |
Effective contract management will:
• optimise the performance of the project;
• support continuous development, quality improvement and innovation throughout the life of the contract;
• help to ensure best value;
• provide effective management of commercial risk;
• provide an approach that is auditable;
• support the development of effective working relationships between both parties;
• encourage effective and regular communication;
• be flexible in order to respond to changing requirements; and
• demonstrate clear roles, responsibilities and lines of accountability.
Failure to implement adequate contract management could result in:
• an Authority paying for services which are not being received or are not being performed satisfactorily;
• the contract not performing as anticipated, thus jeopardising benefits;
• changes to the balance of risk negotiated in the contract; and
• an Authority being unable to recognise Contractor failure.