Contract Management: A Public Sector Case Study Rivaj Parbhu The information contained in this presentation is the property of Realyst and is to be treated as private and confidential
u INTRODUCTION TOPICS TO BE COVERED: • What is Contract Management (5 Minutes) • Why Contract Management (5 Minutes) • Implementation of Contract Management: Lessons learnt in Government (20 Minutes) • • The Solution • Project Status • • The Problem Lessons Learnt Questions www. realyst. com
u WHAT IS CONTRACT MANAGEMENT? • WHAT IS CONTRACT MANAGEMENT? A system for managing contracts through documented processes and supported by software that “allows organisations to effectively manage the various types of contracts they engage in, including: buy side, sell side, and non monetary. ” (www. wikipedia. com, 2007) • BASIC FUNCTIONS OF A CONTRACT MANAGEMENT SYSTEM • Central Repository • Alerting • Contract Creation features • Workflow and Process Control (IACCM Contract Management Report, 2007) www. realyst. com
u. WHY IS CONTRACT MANAGEMENT RELEVANT? • Despite unprecedented spending on health, education, law enforcement, housing etc we are still lagging behind in Service Delivery. Bid to deliver homes urgently has failed Fin 24 June 22 2007 The government's bid to deliver urgently homes and provide people with shelter in the Western Cape had failed… Jo'burg Hospital down to 4 lifts The Star 08/2008 Johannesburg - Only four lifts out of 21 are operational at Johannesburg Hospital, the hospital's chief executive said on Thursday. • In many cases Government contracts with the Private Sector in order to deliver services to South Africans. • The improved POST SIGNATURE management of these contracts would ensure improved service delivery. www. realyst. com
u CASE STUDY: THE PROBLEM In June 2006 Realyst Contract Management together with Price. Waterhouse. Coopers embarked on a project to deliver a contract management solution to a single directorate within a National Government Department. The primary reason for this department to implement a contract management solution was an external audit report highlighting deficiencies in the contracting process with “the potential for financial mismanagement and gross inefficiencies. ” FIVE KEY FINDINGS WERE: • No contracts or SLA’s in place for key, multi-million Rand suppliers • No means or process to measure the performance of suppliers • No regular reviews of the contract documents • Inadequate controls in place for managing payments • Inadequate contract policies and procedures www. realyst. com
u CASE STUDY: THE SOLUTION The Realyst automated contract management solution was delivered to the department. The initial implementation was scoped at taking 6 -8 weeks with the deliverables being to address the findings of the audit report. CHALLENGES EXPERIENCED DURING ROLL-OUT: • Lost or non existent contracts and contract documents • Confusing procurement process and contract management process • No awareness of the need for contracts even at an executive level • Non existent contract policies and procedures • No checklist to be used to ensure all required documentation is received • No contract templates available. Signing of supplier agreements • Creating a sustainable solution www. realyst. com
u CASE STUDY: PROJECT STATUS &LESSONS LEARNT We now regard this implementation as being successful. The department has cleared its audit findings and has repeatedly enjoyed improved service delivery from its suppliers. STATUS OF THE PROJECT • We have just agreed and implemented a checklist where all approvals, tender docs, letter of appointment, etc, will be kept with contract • Automated Contract approval process currently being finalized • Last phase in the project is to agree standard contract templates taking into account both business drivers and legislation/guidelines. 5 LESSONS LEARNT 1. Walk before we try to Run 2. Dedicated centralized function with a Contracts Administrator 3. Build operate and transfer model 4. SLAs with suppliers, including penalties for non performance are critical 5. Management support and buy-in is important to ensure success of contract management office www. realyst. com
u. THANK YOU, QUESTIONS? RIVAJ PARBHU 011 463 5311 083 661 2669 RPARBHU@REALYST. COM www. realyst. com
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