This chapter focuses specifically on the contract management activities relating to the service delivery phase in order to ensure the State achieves its broader project objectives, contracted services are delivered to the contracted standards to ensure that value for money outcomes are achieved over the life of the project.
As outlined in section 3.2, responsibility for a Partnerships Victoria project typically transfers to the contract director after commercial acceptance has been achieved and the project enters steady-state operations. At this time, the contract director becomes the person responsible for managing the project on behalf of the government party during the service delivery phase.
Partnerships Victoria projects are pay-for-service contracts. Typically, no payments are made to the private party until service delivery commences. Full service payment in each payment period depends on full service provision in accordance with the project deed.
Partnerships Victoria projects, like all long-term contracts for service delivery, can be affected by changes to the broader economic and business environment. If the government party's contract management team is to effectively manage this dynamic situation sensibly, it is important it has access to adequate information on which to base its 'control' actions. The government party must therefore effectively monitor the health of the project as an integral part of its overall contract management strategy.
Contract performance during the service delivery phase must focus on both:
• regular provision of contracted services (daily, weekly, monthly, quarterly basis), monitoring performance, authorisation of related payment invoices, as appropriate, and addressing related performance risks and issues; and
• broader performance management issues by monitoring the financial health of the private party and its sponsors, looking ahead to identify risks and emerging issues and how they might be mitigated, and identifying and progressing ways to maintain or improve value for money outcomes for the government party.
In the context of Partnerships Victoria project, the role of performance monitoring and reporting is to: • confirm that the performance requirements in the services specification are being met by the private party; and • ensure long-term service continuity by enabling the government party to understand the sustainability of the project. Performance monitoring and reporting provide the government party with information on which to authorise service payments and to base 'control' actions. |