Contract Operation

What is the contract manager's role?

The contract manager is responsible for:

  • regularly checking the contractor's progress to ensure that the contractual obligations are being met;
  • ensuring that contractor payments are made in accordance with the provisions of the contract;
  • inspecting the supplied goods/services from time to time to ensure that they are of a suitable standard;
  • holding regular contract management meetings with the contractor to discuss the operational issues and the performance of the contract;
  • maintaining accurate records in relation to dealings with the contractor (file notes, copies of emails, records of meetings);
  • advising the contractor in writing if there is dissatisfaction with any aspect of performance under the contract;
  • establishing effective mechanisms for obtaining feedback from clients in relation to the delivery of the goods and services;
  • taking action to resolve problems immediately they are identified, and escalate the problem to senior representatives of the agency and the contractor, if necessary; and
  • ensuring that any action taken in relation to non-performance and/or non-conformance is in accordance with the conditions of contract.

Contract management meetings

Regular meetings should be held between the contract manager and the contractor. The nature and frequency of these meetings will vary, depending on the nature of the contract and the goods and services being delivered, but could include:

  • regular contract review meetings, dealing with the day to day operation of the contract, attended by the agency and contractor contract managers;
  • technical meetings, held on an needs basis, attended by specialist technical staff from the agency and the contractor; and
  • major contract review meetings, attended by senior staff of the agency and the contractor, assessing overall contract performance and emerging issues.

Minutes should be taken at all meetings, identifying agreed actions.

Monitoring contractor performance

Why do I need to evaluate contractor performance?

Ongoing evaluation of contractor performance:

  • helps to manage any risks associated with the contract;
  • assists in the development of supplier capability;
  • improves supplier performance;
  • ensures that any problems are identified early, so that they can be discussed and appropriate action taken to improve performance; and
  • helps to ensure that the contract delivers the intended outputs and outcomes.

Is it always necessary to monitor contractor performance?

All contracts require monitoring, but the extent of the monitoring will depend on the nature of the goods/services being purchased (value, risk, availability of supply, complexity) and the costs and benefits associated with establishing the monitoring system.

How do I evaluate contractor performance?

Contractor performance should be evaluated against the performance measures that were developed during the planning stages of the purchase, specified at the time quotations/tenders were being sought and finalised during negotiations with the preferred supplier prior to the contract being awarded.

Details of how the contract will be monitored should be included in the contract management plan.

When should contractor performance be evaluated?

Monitoring of the performance of the contractor should occur:

  • during the implementation of the contract;
  • at regular intervals throughout the life of the contract; and
  • at the completion of the contract.

Managing contract variations

Over the course of the contract, it may be necessary to manage variations to the contract, in terms of price, quantities, timing, delivery, changes in policy, etc. Contract managers should ensure that any such changes are made in accordance with the provisions of the contract.

A contract should not be varied to such an extent that it substantially changes the nature of the goods or services being delivered.

Managing disputes

Disputes should be identified and addressed as soon as possible to ensure effective resolution. You should refer to the contract for the dispute resolution mechanism agreed at the time the contract was entered into.

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