2.1.6 Budgeting for Contract Management

Authorities need to plan their budgets for contract management in good time. These should include the cost of personnel dedicated to operational contract monitoring and also for personnel who may be needed at specific stages in the operational period of the project, e.g. for market testing exercises. Even if the Contract follows the WIDP Contract (Clause 32.1) and requires self-monitoring by the Contractor of the performance of the services, the Authority should still undertake its own contract monitoring and budget accordingly for its own costs

The budget for the contract management function should be based on detailed consideration of a wide range of relevant factors including:

 (a) Governance and Managing the Transition

•   The activities identified within the Transition Plan;

•   the requirements of the Contract; 

•   the overall approach for day to day contract management;

•   the resource in the project team for the procurement period and its availability in the post close period;

•   the resource available elsewhere within the Authority and its capability and cost;

•   the scope for using staff involved in the delivery of waste to the Contractor to undertake some of the monitoring in relation to aspects of the service where they interface with the Contractor, e.g. at delivery points;

•   the governance arrangements for both the pre-operational and the operational periods; and

•   the need to carry out "shadow" running of arrangements required for the service period before Service Commencement to test their efficacy outside of a live environment.

(b) Setting up the Contract Management Team and Managing Service Performance

•   The roles and tasks of the Authority during the various stages;

•   the level of staffing and resource required to monitor the construction period;

•   staffing and responsibilities during the operational period; 

• the required skills and experience of monitoring team;

•   hany necessary provision for staff training needs; 

•   the need for succession planning for key members of the Contract Management Team;

•   the need for access to, and the cost of, external advisers; 

•   the structure for the Authority's Contract Management Team in terms of roles and posts; and  

•   the estimated total cost for each post.

(c) Contract Administration

•   How the Contract Management Team will carry out any post close contract evaluation over the life of the Contract;

•   arrangements for the Authority's internal auditing of the project; 

•   contractual arrangements for periodic market testing and benchmarking; and

•   the need for additional resource for limited periods over the life of the Contract, e.g.

o Agreeing Changes to the Contract in accordance with the Change Protocol;

o Responding to contingencies/emergencies;

o Contractual dispute management;

o Managing processes relating to long-stop dates for planning or service commencement; and

o Market testing/benchmarking.

(d) Managing Relationships

•   The Contract Management Team's interface with the Contractor, ensuring that both parties take a positive approach to the relationship;

•   the Contract Management Team's interface with the users of the service; 

•   the Contract Management Team's interface with other stakeholders; and

•   the Communications Strategy.

(e) Knowledge Transfer and Management

•   Information technology to be used in supporting the team (See Section 7.3); 

•   training and a document management system;

•   custody of the financial model; and

•   software licences.

(f)  Expiry

•   Surveys;

•   additional advisory input; 

•   options for Contract extension; and

•   planning for and procuring a successor contract.

If in doubt over preparing the budget for contract management, the Contract Manager should ask WIDP to be put in touch with Contract Managers at other Authorities that have undertaken similar exercises.

The budget will require authorisation by the relevant parties.  The Authority will need to ensure it leaves adequate time in the timetable to gain the required authorisation.

Once the budget has been set the Contract Manager will need to implement arrangements for controlling the budget, reporting on the position against the budget, analysing the variance between the budget and out-turn etc. The Contract Manager should provide regular reports to the Contract Management Board in relation to both the expenditure on the contract management function and the payments to the Contractor.