Our review has suggested that the approach to contract management varies considerably across public sector bodies, both in the amount of resource and the targeting of this resource. Overall there are 50 different public sector bodies managing 87 contracts. In sectors where: (1) the whole service is being delivered via the PPP contract as well as the assets (such as waste water treatment contracts delivered by Scottish Water and custodial services delivered by the Scottish Prison Service); and (2) several contracts are under one management team, a larger and more specialist resource is dedicated to contract monitoring and the management of the contracts is more consistent. Where the core service is provided in house by the public sector (such as in schools PPP and health PPP) the management of the contract can be more diverse and have less specialist resource dedicated to it. We believe that greater value (a combination of lower cost and increased level of service) can be extracted from these contracts from a more consistent and strategic approach to their management. We believe that the optimum way of delivering this would be for greater collaborative working and shared services of contract management across public bodies. This approach would more easily allow investment in resource and training and to reduce the overall cost of contract monitoring. It would also provide the opportunity for greater transparency and consistency in the reporting of financial and operational performance across projects.
SFT's review has highlighted the following areas in which greater attention needs to be applied:
Optimisation of the scope of contract services and Improved Application of the Contract
1. Re-scoping the services associated with the project - transfer services to the most efficient provider of such services. This could mean bringing additional services into the PPP contract or removing services from the PPP contract and bringing the service back 'in-house'.
2. Reviewing the usage of PPP assets by public authorities to assess whether other public sector services / agencies could use the asset, whether there are surplus assets that should be mothballed or whether there are third party income opportunities.
3. Ensuring that any contractual benchmarking / market testing provision for services is applied and it takes advantage of the current competitive environment for such services. At times these provisions are seen as an opportunity by PPP contractors to increase their profit margins and therefore management from the public sector needs to take place to prevent this.
4. Improved management of the change process. Public sector bodies require at times to make changes to their contracts. Experience of implementing this within many public sector bodies is slight and we believe better value for money can be obtained by a focus on this area.
5. Improved monitoring of operational performance. Greater consistency of approach to checking that the contractor is meeting his contractual obligations including a targeted use of the right of audit. There are times in which savings are not being realised by public bodies due to a lack of understanding of the contract provisions.