H.1 Contract management through the project lifecycle

A typical PPP project has several distinct stages:

• procurement stage: the process leading up to contract execution, during which the government party should establish sound foundations for its contract management over the life of the contract;

• construction stage: from the time construction (or implementation) starts through the commissioning process to the start of payments when delivery of the services required by the output specification begins;

• service delivery stage: covering the provision and use of the contracted services during the remaining life of the contract; and

• contract expiry or termination stage: the period leading up to and after contract expiry or termination.

For each lifecycle stage, there is a range of contract management activities that should be conducted within the government party if the contract is to be managed effectively. The key activities in each lifecycle stage are summarised in Figure H‑1.

Figure H‑1 Contract management issues and the project lifecycle


Resourcing	Manage performance	Manage performance	Manage performance
• Appoint Contract Director • Identify and budget for contract management resources	• Manage performance by government • Monitor construction progress and management quality • Consider detailed designs	• Manage performance by government • Monitor private party's performance, management etc. • Seek user feedback	• Manage performance by government • Monitor private party's compliance with obligations on expiry/termination
Planning and development	Manage relationships	Manage relationships	Manage relationships
• Develop contract management plan • Collect and analyse relevant information	• Continue and strengthen communication • Establish committees • Manage stakeholders	• Maintain and strengthen communication • Manage stakeholders • Ensure the right participants are involved in committees	• Maintain strategic relationship with sponsors etc.
Develop tools	Manage change	Manage change	Manage change
• Develop performance monitoring • Develop contract administration manual • Develop other tools and processes	• Manage transition from procurement to contract management • Manage contractor claims • Manage commissioning issues	• Manage changes to output specifications • Manage automatic contractual changes, such as indexation of payments • Assess changes in service requirements and technology that impact on project service delivery	• Manage asset transfer (including transfer of necessary information and records) if assets are transferred to government
Integrate contract management in the contract	Manage contingency events	Manage contingency events	Manage contingency events
• Integrate reporting and KPIs • Integrate dispute and issue management mechanisms	• Maintain contingency plans and review prior to commencement of service delivery • Respond to defaults and disasters	• Maintain and review contingency plans • Scan environment for potential impacts • Respond to defaults and disasters	• Maintain and review contingency plans • Scan environment for potential impacts • Respond to defaults and disasters
Other issues	Other issues	Other issues	Other issues
• Is the Contract Director-credentiall? • Do reality checks. Can the KPIs be measured etc.?	• Manage knowledge and project records • Review contract management practices	• Manage knowledge and project records • Review contract management practices	• Manage knowledge and project records • Review contract management practices
Governance responsibility	Governance responsibility	Governance responsibility	Governance responsibility
• Project Director ensures that: - the contract director has access to resources and information required to prepare the contract management plan - the plan is prepared - governance, reporting arrangements are in place for commencement	• Project Director continues in role • Project Director ensures that contract management plan for the project is submitted to Cabinet • Contract director implements the contract management plan • Contract director reports to senior management and the relevant PPP authority	• Contract director continues in role, applying and regularly reviewing contract management tools and processes • Contract director reports to senior management and the relevant PPP authority • Government entity plans succession	• Contract director continues in role • If required, accountable public sector entity provides or procures replacement services or assists in transfer of facilities and knowledge to government • Contract director reports to senior management and central agencies