| • Formalise management responsibilities • Monitor contract performance • Manage variations |
A full-time contract management team is usually required to monitor performance against key performance indicators, approve payments and deal with contract variations.
While the team will want to monitor the construction of the facility, care will need to be taken not to get drawn into approving aspects of the design or construction method, as that could create a legal risk for the government. For example, it will be easier for the contractor to claim that the government has some co-responsibility if there is subsequently a performance failure. Accordingly, it will be essential to ensure that an appropriate design review procedure is incorporated into the contract which enables the team to comment on or object to design materials without being taken to have given their approval to them.
Contract variations can lead to significant risk transfers back to the government and therefore cost increases beyond those previously approved by Cabinet. Consideration should therefore be given to establishing an independent approval process for contract variations, which could be specifically provided for in the contract. For example, the process could provide for variations to be approved by the Minister of Finance as well as the sectoral minister.