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1Procurement & Contract ManangementEssential Skills Guide

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Procurement and Contract ManagementEssential Skills Guide ~ Michael Young

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Transformed ebook series Procurement & Contract Management Essential Skills Guide Michael Young22

1. Introduction

2. Industry Insights

3. Contract Management tips you need to know

a. The importance of determining your procurement strategy

b. Developing requirements and specifications

c. Why market research is important

d. How to evaluate a tender

e. Risk Management in procurement

f. Legal essentials of contract management

g. Summary of tips

4. Overcoming obstacles along the way

5. Profile of an evolved best practice Procurement and Contract Manager

6. So you want to get in to Procurement and Contract Management?

contents

Transformed ebook series Procurement & Contract Management Essential Skills Guide Michael Young 3

1. Introduction

Transformed is an award-winning company that provides Procurement and Contract Management, training for individuals and organisations to build skills and capability. Through our collaborative work with key industry associations we are actively involved in shaping the industry.

We have a strong focus on empowering individuals to develop their procurement skills as well as guiding organisations to develop the capability to manage their procurement and contracting efficiently and effectively.

Through this complimentary E Book - Procurement and Contract Management Essential Skills Guide it is our aim to share insights we have collectively acquired through years of real world experience as procurement managers and consultants to assist you on your career pathway. If there are other aspects of procurement and contracting that you would like to know more about, please contact us.

2. Industry Insights

Procurement and contract management skill levels have recently come to the fore with a number of high level reports highlighting deficiencies in current practice and recommending training to improve the situation.

A recent ANAO a report recommended procurement training for all Commonwealth delegates with the ability to procure over 10k.

This was followed by the NSW Commission of Audits interim report: Public Sector Management released in February 2012. In this Interim Report, the Commission of Audit examines public sector management and makes the following comments:

TheCommissionhasseenpocketsofgoodpracticeintheNSWpublicsector, but generally managerial performance is far from excellent

Capabilitiesneed improvingand theCommission is surprisedat thelow importance that has been attached to financial, people and asset management

Information systems are complex and cumbersome and often non-existent.

In addition numerous media articles have criticised government for irresponsible procurement and breach of Commonwealth guidelines. Additionally there has been local government Association advice/concern that councils are able to procure up to 150 K without competitive bidding.

Allan Asher, the then Commonwealth Ombudsman with oversight for ACT recently expressed his dismay at the lack of accountability for program outcomes and government spending in ACT.

This supports Transformeds ethos that efficient procurement and contract management are the essential core of a productive economy. When administrators work together to buy goods and services, then government and organisations can achieve better value for shareholders

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and taxpayers. Consequently, it is important to have a strong community of skilled procurement and contract management professionals with consistent standards and training to manage these crucial activities.

3. Contract Management tips you need to know

a. The importance of determining your procurement strategy

Planning a procurement will often require you to gather and analyse a wide variety of information, and to present this information back to procurement team members, stakeholders and delegates for consideration. For this reason, before looking in detail at procurement planning, you first need to consider approaches and strategies for compiling, analysing and managing this information.

Information is critical to the management of any workplace. Reliable and accurate information must be available if you are to make sound decisions and achieve your agencys objectives. The information gathered by public servants must be evaluated and analysed before being presented for consideration in reports and presentations. Some of this information will also constitute official records of government activity and therefore will need to be stored in compliance with governmental and agency record keeping requirements.

The degree of planning and documentation required will vary, depending on the complexity of the procurement, its value and its relative risk to the agency, but all procurements benefit from the time spent ensuring that the procurement is undertaken in the most cost-effective and compliant way.

Procurement planning aims to determine:

Whetherthereisaneedtoprocurethenecessarysuppliesatall,orifthere might be other ways to acquire them

Whatexactlyneedstobeprocured,insufficientdetailtoallowpotentialsuppliers to quote

Whenthesuppliesarerequiredandwhentoapproachthemarket

Thebestmethodofprocuringthesupplies.

b. Developing requirements and specifications

A successful procurement will be unattainable if you are not completely sure what exactly the agency needs to acquire. You must have a clear understanding on the specific supplies required, and on the intended outcomes and objectives of the procurement process. This involves ensuring that you understand why the supplies are required, what need they are intended to fulfil and who will use them.

With this information in mind, you can then define the required supplies in detail. This not only allows you to specify the requirement clearly in your Request for Offer documentation, but also to determine its likely value. This is necessary to seek the delegates approval of a proposal to spend money or procurement requisition which ensures that the required funds are available to purchase the supplies.


The scope of the requirement should be fully defined in the form of a clear supply definition, a specification or a combination of any of these. It should be confirmed with the end-users as meeting their needs, and approved by key stakeholders. A clear supply definition should set the boundaries of the procurement requirement and it can be useful to define what is not required as well as what is.

Failure to plan for these issues in the early stages has the potential to lead to great difficulty and expense in providing ongoing support. For example, the agency may end up being tied to a particular provider for maintenance and support when there has been no opportunity to competitively market test those arrangements.

Scope creep is also a common (and expensive) procurement and project management problem, and early consideration and definition of the supplies can assist in mitigating, if not eliminating, this problem.

To adequately define the procurement requirement you should:

Definethesuppliesthatareneededclearlyandaccurately

Makesurethattheinformationyouusetodefinesuppliesisaccurateand up-to-date, including using market testing to determine private sector capacity and realistic timeframes to supply the goods or services required

Describethesuppliesintermsoftheoutcomessought,andavoidusingbrand names, unless there is an appropriate reason why a particular brand, and only that brand, is required

Estimatethevalueoftherequiredsupplies,includingGST,inordertoensure funds are available for their purchase

Ensure the estimated value of supplies thatwill be leased, hired orfinanced in some other way, is the total value of the supplies over the life of the lease, hire contract, or other arrangement.

c. Why market research is important

A critical part of planning procurement is to analyse the relevant market. The results of this analysis can have a considerable impact on many other aspects of the procurement planning process, such as the method used to procure the supplies.

Market research is to see what is available, find out what suppliers are available, what the industry at large is supplying. Ensure you are asking for the right things and something that can be delivered.

The best sources of information are the Industry Capability Network a Government funded body that operates in every state. Also professional bodies and associations and Google / Yellow Pages although further questioning will be required if using web based sources.

Be mindful not to use bias or favour or discount. Certain suppliers base decisions on information provided, facts etc - not on relationships.

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Sound market knowledge:

Widensthechoiceofsupplysourcesand improvesaccessforsmalland medium enterprises

Helpschoosetherightsupplier

Facilitatestwowaycommunicationwithprospectivesuppliers

Identifies opportunities for local, and Australian and New Zealandindustry involvement and development.

There may also be a requirement to ensure that procurement processes promote and enhance the capabilities of industry within your State/Territory, where possible. If this applies within your agency and to the type of procurement you are undertaking, you will need to investigate local capabilities thoroughly for each procurement, to ensure that the procurement process allows appropriate competition and opportunities for local industry.

A thorough analysis of the local market will also allow you to identify where local industry cannot supply a requirement and justify any decision to source supplies from interstate.

Market research often uncovers surprising or unexpected information, which must then be included in the procurement planning process. Most markets evolve significantly over time, so your market information should be frequently and regularly reviewed and updated to ensure that the latest state of the market is reflected.

For strategic supply markets, a regular, structured program of market research should be considered, consistent with cost benefit principles.

d. How to evaluate a tender

Value for money in procurement is trying to get best value for the pot of money spent and defined by suppliers competence and ability to deliver on budget. An example is a photocopier that is procured, the ease and costs of service etc needs to be factored into the equation.

Its not only about price. Look at technical elements and price separately. Its not about cheap, if you go for price it could result in minimal service and quality.

Government bodies and agencies are required to implement formal plans for tender evaluation but in the private sector much less focus is placed on this. Many valuable procedures can be gleaned from government practices, which use a thorough approach allowing for open competition with price not the only selection factor.

To select a particular supplier from the range of respondents is one of the most critical decisions in the procurement process. It is a section often scrutinised by others and can be subject to appeal or litigation. It is important that this stage is managed well. Evaluation of tender responses is more transparent where nominated people are responsible for the evaluation, and pre-determined criteria and process are followed.


For more complex procurements, a tender evaluation panel may be required. The members of the panel must be carefully chosen to ensure the group has the necessary expertise and experience. Additionally, conflicts of interest and other probity concerns must be minimised. Panel members may be chosen for specific expertise in; financial viability assessment, or the business area that will use the services procured or specific procurement experience.

Havingformedthepanel,appropriateadvice,guidanceandsupport,withparticular emphasis on effective and ethical procurement processes and probity requirements must be provided. The aim is to ensure the panel can make a decision which delivers value for money for the company and meets all probity, equity and accountability requirements.

A range of issues can arise during the tender evaluation process that will require resolution. These may include:

Differences of opinion between panel members about evaluationprocesses, technical content, business needs or the intent behind the procurement

Attempts by potential suppliers to influence the outcome of theevaluation process

Scopecreepduringtheevaluationprocess,inwhichtheend-usersorclients attempt to add to the procurement requirements

Alackofexpertiseorfamiliaritywithaspectsofproductsorthetoolsrequired for the evaluation process.

The approach required to resolve these issues will obviously vary, depending on the nature of the impasse.

The following issues should be documented during the tender evaluation process:

Theevaluationcriteria

Whether weightings apply to these criteria and how these arecalculated

Ifsitevisitsarerequiredorpermitted,thepurposeofthesevisitsandwhat should be investigated

Whetherinterviewswithrespondentsareexpectedorrequiredandtheconditions under which these would take place

Strategies formanaging probity considerations, including how teammembers should report perceived, potential or actual conflicts of interest

Howrecommendationsaretobereported

When responses arrive from potential suppliers, assessment against the selection criteria will create a short list of preferred suppliers.

The next stage of the evaluation process involves a detailed analysis of each response, clause by clause, against the evaluation criteria. The object of evaluating responses is to select the best response in terms

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of compliance with the specification, compliance with requirements and overall value for money. Be sure to undertake a financial investigation of each supplier. At this point it is customary to consider risk assessments and the past performance of the supplier.

A detailed evaluation can be conducted by:

Applyingevaluationtoolsandmethods

Clarifyinganyambiguityintheresponse

Completingreferencechecksoneachsupplier

Sitevisitsofthesupplierspremises.

When a preferred supplier is selected, negotiations commence before proceeding to the final contract. The tender evaluation process can take time but serves to minimise risks associated with engaging a poor supplier.

e. Risk Management in procurement

WeallknowaboutOHSriskmanagementbut thereareotherverykeyareas associated with risk management that should be considered,

Risks can be direct, physical problems such as illness, flood or fire damage, theft or vandalism. But risk can also be less obvious and direct such as poor decision making, poor recruitment processes or investing in inappropriate technology.

Some areas are relatively straight forward to monitor to reduce risk e.g. budgetandscheduleoverrunswhichsooftengetoverlooked.However,there are more complicated areas, e.g. reputation and probity risk, which should be considered as part of the risk management plan.

When working on tenders and contracts, organisations should consider probity risk from the start of the project. e.g. if there are potential conflicts of interest that could result in embarrassment for the organisation or the organisations response being rejected at any point in the process, then perhaps a bid should not be prepared and submitted to the client.

Processes and expectations need to be established so that people working on a tender know what they can and cannot do, in order to manage the organisations probity risks. On the side of the organisation issuing a Request for Tender (RFT), there are similar probity risks, and similar requirements to determine how to manage them appropriately e.g. avoiding any appearance of favouritism. And in any project there will be probity risks behaviour that falls outside the law or outside social or corporate expectations which could result in criminal or civil charges, or embarrassment for the organisation. For example, some behaviour will be in breach of industry or association codes of conduct, so if an organisation is found to have exhibited behaviour the result can be public embarrassment, fines, or expulsion from an association which might make it hard to gain future work.


Cover all bases!

Risks should be assessed at every stage of a project. Below are more pointers on areas of risk.

Poorscopedefinitionresultingincostorbudgetoverruns

Errorsintimeandcostestimation

Poorattitudetoqualityresultinginrework

Lackofleadershipwithintheprojectororganisation

Unsatisfactorycommunicationsresultinginconfusion,poorquality,re-work or delivering a solution that does not meet the clients needs

Ignoringriskandfailingtoplanforit

Procurement failures, including inadequately constructed contractclauses and a failure to manage contracts appropriately

Ineffectivechangecontrolontheprojectresultingindefects

Commercialandlegalissues

Resourcingproblems,includingtheunavailabilityofappropriatelyskilledresources

Human factors,suchasunsatisfactoryperformanceorconflictwithinthe project team

Technologyandtechnicalissues,suchasequipmentfailuresorsoftwareissues

Problemswithmanagementactivities,policiesandcontrols

Environmentalfactors,suchasdifficultieswithofficeaccommodations.

Dontlearnthehardway!

Ignoringriskswillnotmakethemgoaway.

Aheadinthesandattitudetowardsriskwillonlyleadtocontinuedproblems, as each new issue presents a potential crisis which has to be dealt with.

Involvetheteaminriskmanagement.

Do not handle problems alone, the better informed the team is,the easier risk management will be. Responsibility for management should be shared and communicated. After all, the person closest to the risk is usually the person best placed to identify and deal with the problem

Avoidtreatingeveryriskasapotentialshow-stopper.

Perspective is required when undertaking a risk analysis, or you can become overwhelmed by a seemingly endless list of risks, many of which are relatively minor.

Donttrytocontroleverything.

Some risks can safely be ignored / accepted. Others are simply not within your control and need to be referred to a higher authority.

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At the end of the day, life is full of risks, however, through systematic and effective management, they can be mitigated and pose no significant impact.

This case study from the NSW Commission of Audit Interim Report: Public Sector Management offers a solution to financial risk management:

Case study:CapitalchargingforNewZealandBudgetSectorAgencies

The New Zealand Government introduced capital charging to the whole of the budget sector in 2002. The idea is that, in addition to depreciation, a type of interest charge is levied upon departments for the use of the capital which they have tied up, particularly in physical assets. Because it means that capital is no longer free, capital charging is thought by its proponents to reduce wasteful capital expenditure and to encourage the identification and sale of surplus assets.

The rate at which the capital charge is set is supposed to reflect the opportunity cost of capital provided to Departments. In thus providing a return on the equity provided by the Government, it is considered to mimic private sector shareholders expectations that enterprises to which they provide capital should earn at least a reasonable rate of return. Capital charging has an administrative cost which should be weighed against the potential benefits from more efficient use of capital. The Commission understands that some jurisdictions who have attempted Capital Charging have struggled with its complexity and are not sure that benefits are being realised.

In NSW capital charging is in place for office accommodation. This is arranged by the Property Management Authority, who knows the relevant assets and the market rental. The Property Management Authority owns some of these assets and arranges the lease or rental of others.

Introducing capital charges beyond this asset class is hampered by a lack of knowledge of the assets, their utilisation and their precise ownership within government.

Top 10 Procurement Risks - Tender preparation

Responding to RFTs (requests for tenders) can be risky, given that your tender response is a legal offer and you may be bound to the terms within it, if the client accepts it. Responding to a complex tender can also be very time-consuming, tying up substantial company resources for significant periods of time.

For both of these reasons you need to:

Evaluatetherisksassociatedwitheachtendercarefully,toensurethatit is in your organisations best interests to respond

Establishaneffectiveteamtodevelopthebidandworktoarealisticschedule that will allow the team to produce a thorough response within the available timeframes


Oversee the development of human and physical resource costestimates very carefully, to ensure that the tendered price is accurate and comprehensive of all likely costs

Prepare the responsecarefully, toensure that itmeetsallnecessaryrequirements and evaluate it to ensure that it is accurate and professional

Gain the necessary endorsement or approval before submitting thetender response to the client.

Top 10 risks

Below is a list of potential risks that should be assessed when responding to Requests for Quote or Tenders. These are generally the same as those you would identify for any building and construction project:

1. What constitutes a breach of contract and what is the resultant impact. Will a breach trigger termination, or will it require you to make good or rectify at your own cost? Can you terminate the contract or can it only be done by the client?

2.Delays caused by circumstances outside the builders control, suchas:

a. Deliverydelaysthatimpedeprojectcompletion

b. Subsequent delays in progress payments

c. Labour shortages

d. Weather

Are you liable for any delays and what is the impact of this liability?

3. Exposure through clauses that work against the building organisation, such as clauses that hold the builder responsible for circumstances outside their control.

4.Disputesoverpayments,eitherfromtheclienttoyourorganisationorfrom your organisation to subcontractors. Assess your cash flow to ensure that you can make payments to subcontractors even if you have not been paid by the client for a particular milestone.

5. Incorrect labour or material costs, or miscalculations in any figures given.Haveyouaddedanybudgetormaterialscontingency?

6. Inappropriate funding levels and funding shortfalls for the project, resulting in a suspension or cancellation of the project or renegotiation of terms and conditions during the project.

7. Industrial disputes through misunderstandings onsite or through overt action.

8. Risk of default or non-performance of one or more of the key players, including the client, the builder and subcontractors.

9. Ignoring risk and failing to plan for it.

10. Positive risks. Risk is usually seen in a negative light, but some risks are positive and can be seen as an opportunity to enhance procurement objectives. These can include currency fluctuations and even proposed

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changes to legislation or regulations which could simplify compliance requirements and therefore reduce the overall cost of the contract.

Some tips

Scrutinise all the RFT documentation and complete a risk assessment for the project. Check the information in all of these documents and note all the project requirements / special features or issues. Look for missing details / inconsistencies / discrepancies in the information provided. These kinds of omissions and inconsistencies pose a risk right from the outset and need to be considered carefully.

All the contract documents need to be thoroughly scrutinised to identify all requirements, all conditions and all risks. Review proposed conditions of contract, as many of its clauses will seek to apportion the risk associated with the project to one of the parties to the contract, either the client or the head contractor.

Generally risk should be borne by the party that can best control the risk, so it is appropriate that the head contractor bear some risks that are within their control, such as those related to the schedule of work or site management. The head contractor needs to ensure, however, that they are not being asked to bear risks over which they have limited or no control.

Given that builders are frequently engaged through tendering processes, especially for large projects and particularly by government agencies, knowing how to respond well to RFTs can greatly increase the volume of work that a building organisation can bid for and win.

f. Legal essentials of contract management

While procurement and contract managers are not expected to be legal experts, it is very difficult to manage a contract well without a basic understanding of the key elements to a contract and the meaning of significant terms and clauses.

Herearesomeofthelegislativeareaspertainingtocontractmanagementthat every Contract Manager should be aware of:

Estoppel by conduct

Estoppel by conduct is a form of estoppel relevant to contract managers, and is based on the concept that a party cannot deny a circumstance if their actions and statements are inconsistent. In other words, a contract manager can be estopped from demanding services to be delivered in accordance with a contract if they have previously:

Verballyacceptedservicesthatweredeliveredinamannerinconsistentwith the contract,

Done nothing to correct services that were delivered in a mannerinconsistent with the contract.


Common Law Provisions

There are also common law provisions which can impact on the form, legality and conduct of building contracts. These common law provisions include:

The legal requirements for formation of a contract, including an offer, acceptance of the offer, payment of consideration, the legal intent to form a contract and the capacity of the parties to enter into a contract.

General obligations placed on both parties to a contract, for example that neither party should do anything that might prevent the other party from fulfilling their obligations under the contract.

Privity of contract

The doctrine of privity of contract means that only the parties to a contract are legally bound by and entitled to enforce it. (Only they have rights within that contract). Consequently, a contract between A and B cannot impose obligations on C; conversely a contract between A and B cannot be enforced by C, even if the contact is intended to benefit C. This can be an issue where contracts are intended to benefit a third party and the third party is reliant upon this. Exceptions may be put in place to limit harsh results. The doctrine of privity of contract applies only to contractual rights and obligations, any noncontractual rights and obligations may not be enforceable.

Liquidated damages

A sum of money (agreed-to and written into a contract) specified as the total amount of compensation an aggrieved party should get, if the other party breaches certain part(s) of the contract.

For example, if the builder fails to complete the contract within the specified time (including any agreed time extensions), the owner may be entitled to claim liquidated damages.

This benefits both parties for providing contractual certainty not requiring proof of loss simplifying disputes including performance providing a cap onliability.However,thequantifiedamountof liquidateddamagesmustbe a genuine pre estimate of loss. If a court considers this amount to be excessive it may categorise it as being a penalty, leading to the clause becoming unenforceable and therefore the benefits will be lost.

As a contract manager you should always refer contract issues to your agencys legal area, possibly just for a second opinion, to be sure you are correctly interpreting a contract and the actions you wish to take are valid.

g: Summary of Tips

To successfully manage contracts for a government agency requires that you are able to:

Developsuitablearrangementsformanagingthecontract, including

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establishing risk management and communication strategies

Monitor the contractors performance against the contract and dealwith issues such as contract variations and disputes

Complete the contract, review the contractors performance andprepare a contract review or audit report that can be used in future evaluations.

This is all text book stuff but I have developed seven tips you need to know to facilitate this process and become a successful contract manager:

1. Relationships are everything

Maintaining good relationships with suppliers is vital to the successful completion of any project. You need to try to work as partners with suppliers to get the job done for the benefit of the project. Once a contract gets into dispute, no-one ends up winning and the project almost always suffers as a result.

2. Approvals always take twice as long as you plan for

Procurement approval is rarely given quickly. Always schedule more time than you think you will need. If the approval comes through quickly, then you have no problem and the tendering process can start on time. If the approval is delayed, hopefully there will be less or no impact on the rest of the schedule.

3. Suppliers have a right to maintain a profit

There is no incentive for a supplier to provide a product or service if they cannot make a profit from it. If contract negotiations or subsequent contract management paint the supplier into a corner from where it is difficult or impossible for them to make a profit, they are then unlikely to deliver on the contract, and the project will suffer as a result.

4. Look for guidance from within your agency

Contract managers should look for guidance from within their agency, which should have established processes and systems for managing contracts. Your agencys contract management guidance should define things like:

Processesforapprovalofcontractsandcontractvariations

Delegationsforapprovingcontractsandcontractvariationsofdifferentvalues and/or types

Delegationsforapprovingpaymentsagainstcontracts

Standard forms and templates for contract management andapproval

Limitstotheauthoritiesofdelegatesandanyrequirementsforseparationof duties, for example that the person who authorises payment against a contract must not be the same person who approved the contract itself

Processes and procedures for initiating, registering and processingcontracts and payments in the agencys financial systems.


5. Key contract clauses

It is important to become familiar with the key clauses in the contract. If most of your contracts use standard agency contracts, then you should find that you quickly become familiar with the standard terms and conditions, and easily locate the clauses that create significant conditions and obligations for either the contractor or the agency.

When reviewing the contract, ensure you understand the intent of all the standard clauses and any non-standard ones. Remember that the agency is obliged to comply with all the provisions of a signed contract, so you must understand what is required.

6. Payment terms

Different payment terms may be used in different contracts, with theappropriate terms being chosen depending on the degree of control the agency wants to have over the contractor, how much risk the agency wants to transfer to the contractor, and the type of business the agency is involved in.

It is very important to understand the payment terms agreed to in the contract, including the dates or events that will trigger payment. Meeting the contract payment terms is one of the primary obligations your agency has towards the contractor, and failing to meet these terms is not only a breach of the contract, but can threaten the continued success of the contract and the contractors performance.

7. Its not just about signing a contract

Remember that the procurement process does not end when the contract is signed - a successful procurement outcome can only be achieved if the resulting contract is well managed to ensure that it delivers the expected outcomes

4. Overcoming obstacles along the way

Read, know and understand your contract. What you are required to do in addition to what is required from your suppliers. You can be taken to task for breach of contract. Promote good working relationships so that you can facilitate working to resolve issues etc that may arise during the process.

Case Study

You are a contact manager of a reasonably large professional services contract that is just starting up. The contract specifies the names of the four personal that must perform all the work under the contract and details of process for approving new specified personal if necessary. The week before the contract is planned to start work the contract liaison managers advises that two of the team are unable to fulfil this obligation and provides the name of two others who will take their place.

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What is the agencies legal position here, how would you respond to the contractor?

This is not uncommon but can often hold up the project while the new staff are evaluated which could take up to six months.

The key point is around the concept of specified personnel. These people areactuallywrittenintothecontractbyname.Usuallythesupplierneedsto provide this advice and propose alternatives to the government agent.

Issues that arise

The supplier has assumed that they can offer replacements without confirming the requirements for the position. Also, sometimes people put up their best people up for a tender response without actually intending to use these people. This is to help win the tender and then they substitute. They need to supply resumes of these substitutes which need to correspond with the contract requirements.

Contract disputes

An example of a contract dispute where the outcome was positive.

IT outsourcing situation in a government contact. Provision of a type of software. The supplier had a view of what the item should be and the government agency another idea.

An additional piece of software was required at no cost on top of the contract requirements due to an error. The contractor wanted to supply a cheaper product and the government agency naturally wanted the best product for the job.

The solution was to evaluate what the government agency required from the software vs. choosing software with all the functionality. By doing so, this it allowed a lower cost option with all the functionality required. Good working relationships helped especially when harsher conversations were required.Usingthisprocessbothpartieswerehappywiththeoutcome.

Varying conditions of the contract

When can you vary the conditions of the contract?

These can be varied at any time but there are steps that have to be followed. Parties involved may not agree. Most contracts have clauses advising when and how they can be varied. These are typically done through a contract variation, the contract changes are documented, the parties need to agree, and then this is added as an addendum to the contract.

When a contract may be considered void if certain terms and conditions have not been enforced leading to a dispute which in turn may go to court - the courts may determine that these particular elements of the contract are void and therefore do not apply.

Litigation can take years and be costly so obviously not the preferable option.


5. Profile of an evolved best practice

Procurement and Contract Manager

A good contract manager understands where their role and work fits within the broader organisational framework and thinks about their impact in terms of who needs to know, who needs to be consulted / negotiated with. Their behaviour in terms of strategy, consultation and negotiation is important.

When consulting senior managers in charge of procurement in government, many of them revealed an interesting theme: while people receive basic technical training and are technically proficient (more or less) there is a disconnect with strategy;

identifyingstakeholders,

whoIshouldconsultwith;

howdoInegotiatewiththem;

howdoIelicittheirappropriateinput.

These people skills can make all the difference to performance.

Procurement and Contract Managers do not have to be legal experts but certainly need a good appreciation of legalities and their potential impact. Contact Managers can be split into two areas here:

Abadcontractmanagerisnotverywellqualifiedandappliesorthinksthat they are following the rules for the sake of the rules even if it means a less than desirable outcome in business terms.

Agoodcontractmanageriswell-qualifiedandaskshowtointerpretthelaw responsibly and reasonably to ensure the best possible business outcome.

6. So you want to get into Procurement and

Contract Management?

Transformed recommends 6 ways to develop your Procurement and Contract Management Skills and enhance your career they are:

a) Individual Learning Plans

People come to project management from many backgrounds and industries with a variety of directly and indirectly relevant skills.

Starting with an individually tailored learning plan will help you to identify your strengths and existing skills and where the gaps are in your knowledge and where you should focus your energy in training.

A quality individual learning plan will include accredited and non-accredited training, mentoring and work placements.

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b) Accredited Training

The simplest way to develop the skills and knowledge you need to become a Procurement and Contracts Manager is to enrol in Procurement and Contract Management Training.

Qualifications are available to cover both the public and private sector. These are Purchasing for Private Sector, or Government (Procurement and Contracting) for the public sector.

A variety of qualification levels are available depending on your experience: from no experience to very experienced. The Certificate IV, Diplomaand AdvancedDiploma inGovernment (Procurement andContracting)orCertificate IVandDiplomainPurchasingprovidetheessential theoryand knowledge that you need to enter a procurement officer or manager position.

For those with experience you can work with an assessor to identify and recognise your current skills and develop a pathway to completing a qualification.

c) Non-Accredited Training

It isnotmerelyabout the hardskills,muchof thesuccessofmodernprocurement managers comes through additional or general management skills such as the ability to communicate with all kinds of people. A good manager should be able to ascertain who to consult and how to negotiate and elicit appropriate input.

Non-accredited training in some communications and management skills will place aspiring procurement and contract managers in good stead to be highly sought after by employers and clients.

d) On-the-job experience

It is not until you get out into the field that the skills and knowledge learnt in classrooms are really tested.

Certainly, the best training courses are those that offer practical examples for students to learn from - but there is no better way to learn than by doing it yourself.

A good learning program should include on-the-job experience together with classroom learning to help transfer knowledge and enhance understanding of the application of theory in the real world. Voluntary work experience is just as valuable as paid employment to growing your experience.

e) Coaching

There are many procurement and contract managers who have been aroundalongtimeandhavecreatednumeroustricksofthetradethatare difficult to learn from a book or classroom.

We recommend finding an experienced procurement and contract manager to coach you through and supplement your learning.


f) Personal research

To keep ahead of the game, to remain apace with technology and trends, smart procurement and contract managers will adopt a commitment to ongoing personal research and study to supplement their knowledge.

Regularly read industry publications, government journals, attend industry events and expos, browse specialist procurement and contract management websites and participate in blogs to experience the dialogue that influences the sector.

Achieving Qualifications based on your existing skills and knowledge

There are many pathways to achieving a nationally recognised qualification. Traditionally this has been through attending courses; however, there are other options available. Another commonly used approach Recognition of Prior Learning, or RPL for short, in which your existing skills and knowledge are recognised.

RPL is an assessment process which allows you the opportunity to demonstrate your knowledge and skills against nationally recognised standards no matter how this knowledge and skill was gained. The added advantage is that this knowledge and skill does not have to be developed during work. It can also come from:

paidorunpaidworkinAustraliaoroverseas

on-the-jobtraining

otherqualificationsfromAustraliaoroverseas

communityorvoluntarywork

hobbies,sportandleisureactivities

RPL is a great approach as it saves you time, gives credit for your existing skills and knowledge and means you do not need to study things you already know.

The RPL Process

Transformed has developed RPL Kits for each of the qualifications,and clearly explain the RPL process and provides guidance in terms of evidence. In addition, all students are required to provide a completed third party report (Transformed provides a standard template) which needs to be completed by a client or supervisor.

Students are offered the option of submission as a portfolio of evidence, in which they write a statement of claims against elements in each competency and compile the evidence in a folder, or an assessment interview option, in which they table evidence and answer a series of knowledge and application questions as part of an assessment interview, which will be conducted over the phone.

Apply for RPL and receive the RPL Kit

Complete self assessment and have the supervisors report completed document

Participate in a discussion with your assessor

Gather evidence as discussed with your assessor

Submit written statement and evidence to assessor

Participate in a discussion with your assessor

Assessment decision discussed with you

Receive statement of attainment

1

2

3

4

5

6

7

8

19

20

Ifgapsareidentified,theassessorhelpsthestudenttoidentifyadditionalevidence. If additional evidence is not available, the student and assessor agree a plan and put in place a series of on-the-job tasks to generate the requiredevidenceandclosethegaps.Ifthegapsarelarge,traininginspecific units is suggested.

How do I know what I can get credit for?

To see which units you might be able to achieve by RPL, please complete our online self assessment survey (http://www.transformed.com.au/training/Fast_Track_RPL.html). Complete the self assessment for your selected qualification. A Transformed representative will be in contact within a few days.

References

ANAO Report

http://www.aph.gov.au/house/committee/jcpaa/auditgen3_10/report/chapter4.pdf

Mandatory testing and/or training for all Australian Public Service officers with delegation authority above $10 000, with the aim of ensuring currency and competency.

See P73-75 in particular

NSW Commission of Audit Interim Report: Public Sector Management

http://www.nsw.gov.au/sites/default/files/pdf/NSWCommissionofAudit_InterimReport_PublicSectorManagement.pdf

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Build your procurement and contract management capability.

Contact Transformed today

1300 738 [email protected]

http://www.transformed.com.au

Michael Young is an award-winning procurement and contract management expert and the ManagingDirectorofTransformedPty Ltd. In 2006 Michael set up Transformed in order to provide a quality development program for project managers, since then the organisation has expanded to cover procurement and contract management training and was recognised as a Registered Training Organisation in 2007.

Transformed works with individuals and organisations to develop their procurement and contract management capability. Their consultants have fifteen years experience in procurement and contract management for both the government and the private sector. As Government Endorsed Suppliers they sit on many industry panels and consult for Gateway reviews.

Michael has published papers in international academic journals, regularly speaks at national and international conferences and lectures at the University of NewSouth Wales.

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