A typical Partnerships Victoria project has the following phases:
• project preparation phase - the phase in which the business case is developed to enable project and funding approval. Following these approvals, it also includes the preparation of the project to start the formal procurement phase;
• procurement phase - the phase in which a project is procured, usually through a number of stages, including: an invitation for expression of interest, a request for proposal, contract negotiation, contract execution and financial close;
• construction phase - the phase in which the design and construction (or implementation) occurs, commencing after financial close and concluding through the commissioning process, once commercial acceptance has been achieved;
• service delivery phase - the phase after commercial acceptance, when the private party utilises project assets to deliver contracted services required under the services specification during the remaining life of the project deed which concludes upon project deed expiry or termination; and
• contract expiry or termination phase - the conclusion of the contract, including any handover or transition period leading up to and after project deed expiry or early termination.
The guide contains material relevant to each lifecycle phase and significant contract management activity that may occur within the stages. The key activities in each lifecycle phase are summarised in Table 1.1.
Partnerships Victoria projects are long term, and the operating environment will change over the project lifecycle. In addition, the project itself will pass through a number of phases and significant events. Each lifecycle phase and significant event involves risks and opportunities for the government party to implement control and mitigation strategies. The government party's contract management strategy will evolve over the project lifecycle.
Effective contract management must take account of and adapt to changing circumstances and significant events through the project lifecycle. |
Table 1.1: Contract management issues and the project lifecycle
Project preparation phase | Procurement phase | Construction phase | Service delivery | Project deed expiry or termination phase |
Resourcing | Resourcing | Manage performance | Manage performance | Manage performance |
• Identify and obtain approval for contract management resourcing | • Plan for contract director arrangements throughout project lifecycle • Confirm budget for contract management resources | • Monitor construction progress and management quality • Consider detailed designs • Manage commissioning and prepare for operations/service delivery | • Manage performance by government including service delivery payments • Monitor private party's performance against KPIs • Manage any legacy issues • Seek user feedback (e.g. via survey) | • Manage performance by government including the end of service strategy • Monitor private party's compliance with obligations on expiry/termination and provision of adequate handover information |
Planning and development | Planning and development | Manage relationships | Manage relationships | Planning and development/ Manage relationships |
• Develop service needs and broad KPIs • Incorporate lessons learnt from any current or previous contracts for similar services | • Develop contract management plan • Collect and analyse relevant information | • Continue and strengthen communications with private party • Establish contract management committees • Interact with 3rd party stakeholders | • Maintain and strengthen communications with private party • Ensure the right participants from government and private party are involved in contract management committees • Interact with 3rd party stakeholders | • Confirm service delivery arrangements post contract expiry • Maintain strategic relationship with private party |
| Develop tools | Manage change | Manage change | Manage change |
| • Develop performance monitoring • Develop contract administration manual template • Develop other tools and processes | • Manage transition from procurement through construction to contract management (including transition from project director to contract director) • Manage any disputes or subcontractor claims • Manage commissioning issues | • Manage evolution of services specifications • Manage automatic contractual changes, such as indexation of payments • Assess changes in service requirements and technology that impact project service delivery • Manage any disputes or subcontractor claims | • Implement end of service strategy and prepare for transition of services • Manage asset transfer (including transfer of necessary information and records) if assets are transferred to government • Manage any disputes or subcontractor claims |
| Integrate contract management in the project deed | 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 breaches, defaults and disasters | • Maintain and review contingency framework • Scan environment for potential impacts • Respond to any breaches, defaults and disasters | • Maintain and review contingency framework • Scan environment for potential impacts • Respond to breaches, defaults and disasters |
| Governance | Governance | Governance | Governance |
| • Project director ensures that: - the contract director has access to resources and information required to prepare the contract management plan - the contract management plan is prepared - governance, reporting arrangements are in place for commencement | • Project director usually continues in role during the construction phase. • Contract director engaged at appropriate time during the construction phase to ensure smooth transition to the service delivery phase. • Project and/or contract director ensures that - contract management plan is approved and implement the contract management plan - reports to senior management and DTF • represents the government party on project control group and Senior Representatives Group (if applicable) | • Contract director assumes responsibility at the commencement of, or early in, the service delivery phase • Contract director, applies and regularly reviews contract management tools and processes • Contract director reports to senior management and DTF • Contract director represents the government party on project control group and Senior Representatives Group (if applicable) • Government entity plans succession | • Contract director or similar asset and service manager role continues • If required, accountable government entity provides or procures replacement services or assists in transfer of facilities and knowledge to government • Contract director reports to senior management and DTF • Contract director represents the government party on project control group and senior representatives group (if applicable) |
| Administration | Administration | Administration | Administration |
| • Is the contract director credentialed? • Do reality checks. Can the KPIs be measured etc.? | • Populate contract administration manual • Manage knowledge and project records • Review contract management practices | • Update contract administration manual • Manage knowledge and project records • Review contract management practices | • Manage knowledge and project records • Review contract management practices |