Exclusion grounds must be applied where a bidder has been convicted in the last five years by final judgment of one of the criminal offences contained in the regulations. These offences are:
Lifecycle Impact Mapping focuses on social and environmental impact rather than cost. It helps the user identify and assess impacts.
Please note: Life cycle impact mapping can be used alongside life cycle costing as part of the procurement process.
Lifecycle costing covers part or all of the following product or service costs::
a) costs produced by the Organisation or other users, such as:
(b) product or service life cycle environmental costs To include such values you must be able to calculated and confirm them. This may include the cost of greenhouse gas emissions, other pollutant emissions, other climate change aviodance costs.
In very exceptional circumstances a "design" specification may be unavoidable for a product or service. In such cases the type of requirement makes it essential to narrow the options by writing a detailed full design specification including exact details.
The specification should be written in "performance" terms which focus on the product, function or service output required.
It builds the specification around a description of what is to be achieved rather than a fixed description of exactly how it should be done. This encourages marketplace innovation, allowing and encouraging suppliers to propose modern (including environmentally preferable) solutions.
Within a technical specification you should avoid references which may unduly favour or eliminate suppliers e.g. by asking for a specific material or goods.
You should not reference a specific make or source or to a particular process, trademark, patent, type, origin or means of production.
Do not specify "Hoover" when you mean a vacuum cleaner or "Intel" when you mean a central processing unit of a personal computer.
In exceptional circumstances such mention may be justified if:
In either of the above circumstances such mentions should be accompanied by the words "or equivalent".
Where the goods or services are intended to be used by people, the technical specifications must, except in duly justified cases, take into account accessibility criteria e.g. people with disabilities.
Technical specifications must afford equal access to bidders and must not create obstacles to competition. For more information, reference 11 (7) (8) (9) PSR2016.
An exit strategy is necessary to:
It should be a ‘front end’ activity created before the contract is signed. This may appear counterintuitive. However without a well thought out strategy (which is consistent with your overall sourcing strategy) your Organisation risks:
Having an exit strategy in place at the start of a supplier relationship means not only that your Organisation’s needs will be included into the contract, but that the supplier will have a clear road map through to contract close (this is particularly supportive for smaller business who may rely heavily on public sector contracts). The exit strategy should also include what would happen in the case of early termination and so help to ensure there will be minimum business and customer disruption if the relationship were terminated.
Please note: you cannot terminate a contract with the aim of avoiding procurement rule obligations.
Exit strategies should be reviewed annually, or when significant change occurs
There are several considerations to be made when developing an exit strategy, including:
Below suggests some factors for consideration. This is not an exhaustive list. Each contract / supplier relationship should be considered on its own merits.
An exit strategy should set forth your organisation’s service requirements when the parties are transitioning out of the relationship. These requirements may include:
The provision of parallel services for a certain period. This can be necessary for continuity of supply and helps to resolve issues before the final change over;
An obligation by the supplier to keep the same supplier team performing services during the transition period;
Confidentiality on any communications regarding the termination of the relationship.
Data privacy and security are critical. The Exit Strategy should consider provision for:
The transfer of all data belonging to your organisation, including any customer information;
An acceptable method for the supplier to destroy and remove your organisation’s proprietary information;
The supplier destroying and removing sensitive information from all media. The supplier must ensure no information is disclosed to other individuals or organisations;
The return or transfer of each party’s assets.
Strict documentation and knowledge transfer contract requirements will be advantageous. Be sure to:
Clearly state responsibilities i.e. which party owns the work performed by the supplier and which party is responsible for the transfer of ownership;
Fully document the service description for any transition period additional services. These are services required from the supplier (e.g. employee training, training new supplier personnel);
Require the supplier to provide your Organisation with copies of data, procedures, access logs, error logs, documentation and other information generated as part of providing the contract services. The supplier should also grant your organisation the right to provide this information to potential successor suppliers.
Transition, termination and timing are a key part of the financial aspects of an exit strategy. Be sure the contract:
Specifies when compensation should be paid and how much. This includes compensation for any continuing base services and transition activities;
Specifies the return of any pre-paid fees for services which have not been rendered.
An exit strategy should cover personnel issues, such as:
Ensuring supplier personnel and key resources remain on the project and committed during the transition. This ensures relevant knowledge and expertise is retained during transition;
Defining the exit-strategy team and its roles;
The treatment of employees and any obligations to inform or consult under TUPE.
Checklist
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What you Need to Do |
Points to Consider |
Met? |
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Administration of the contract is important Contract administration is concerned with the relationship between the customer and supplier(s).
Its importance should not be underestimated. Clear procedures help all parties to understand who does what, when and how. |
The elements that need managing are likely to include:
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Maintain the contract documentation
It is normal for contracts to change within acceptable parameters during their lifetime. Documents need to be maintained to reflect changes in arrangements.
Contract maintenance means keeping the documentation up to date and relevant to what is happening.
Maintaining contract documentation is an important activity. |
Establish procedures to keep contract documentation up to date.
Ensure all contract documents are consistent, and that all parties have the correct version. |
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Changes must be controlled - this is often an area where there can be misunderstandings and contract conflict.
Changes to services, procedures or contracts may have an effect on:
The specification and administration of change control is an important area of contract administration. |
Appropriate procedures need to be in place. Both customer and supplier representatives must manage, review and authorise change requests.
Changes must not fall outside the original advertisement’s scope. Otherwise you may come into conflict with procurement regulations – seek advice if you’re unsure.
Additional demands on the supplier should be carefully controlled.
Formal authorisation procedures will be required. This ensures only new requirements that can be justified are added to the service. |
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Make sure management understands what is happening
Reporting procedures will ensure information about contract problems reaches management. Management can then make decisions as soon as it is possible. |
Service performance reports and management information requirements should be built into the contract. You must state these requirements at the tender stage.
You should use your organisation's own management information and performance measurement systems, if these are available
For many business managers a service summary, detailing any exceptions, is normally sufficient.
Information requirements may change over the life of a contract. |
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Blank rows provided for your use e.g. to add additional checklist items.
All contracts should detail how to include and manage contract variations . Although a supplier may request a contract variation, varying the contract must be approved, managed and controlled by the customer.
It is normal practice for a contract variation to be agreed between the customer and the supplier in writing through a formal amendment of the contract. This practice is also known as a "Change Management process", "change control procedure" or something similar.
No-one involved in managing and administering the contract should agree to informal contract amendments. All potential contract variations/changes must be fully explored. This must include the appropriate contract managers/stakeholders. Any agreed variations should be undertaken in line with the Change Management process (see below).
Contract variations should be planned. You must inform customers in good time of any changes. You must let customers know that multiple contract changes may shift contract risk or transfer particular risks to the customer. It is important to analyse all consequences of a suggested amendment - make sure there is no negative effect on the contract or service levels.
You must make sure that contract variations are not significant i.e. they must not change the original contract requirement and/or substantial parts of the original transaction. This would be "substantial modification" and it may be necessary to undertake another procurement process. This is because the revised arrangements are substantially different from the original procurement that you advertised and awarded.
Quickfire Guide
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Do |
Don't |
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Assess value for money of the variation(s)
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Change the original contract requirements i.e. there is no substantial modification. |
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Assess the effect of the variation on the original contract e.g. no detrimental effects on timeframes and deliverables.
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Use variations to hide poor performance or serious underlying contract problems. |
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Consult senior management/stakeholders if variation(s) are significant. Follow your organisations governance procedures. |
Agree to contract variations on your own.
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Clearly document the reason(s) for the variation and the amendment in writing. |
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Inform customer(s) of the contract change(s) |
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Checklist
Key issues to consider in managing contract variations include:
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Key Areas |
Achieved? |
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Are procedures required by the contract being followed? |
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Have the reasons for the proposed variation been assessed? Does this indicate an emerging or actual problem? |
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Has the impact of the proposed variation on the contract's deliverables been assessed? Particularly whether the variation or the work it represents is actually required and is already part of the original contract deliverables? |
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Has the effect of the proposed variation on the contract's price been determined? |
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Has authority been given for making the variation? |
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Has the variation and its impact been properly documented? |
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Have you undertaken all reporting requirements? |
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Blank rows are provided for your use e.g. to add additional checklist items.
There are a variety of issues that should be considered in any Change Management process to ensure that it is effective. Three key areas for consideration are:
the need for change impact reports;
any pricing principles that will apply to the change; and
the supplier's obligation to undertake the change.
You should run a formal pilot if change is required but the effect of getting things wrong would be significant. If your pilot fails to meet expectations you can revisit and retest. This allows you to achieve the required results before committing your resources and reputation on a wider scale contractual change.
For example "Plan, Do, Check, Act (PDCA)" is a recognised continuous improvement model. You can use PDCA to ensure your change delivers the desired results.
There are 4 steps to the PDCA model. Steps 2 and 3 can be repeated until the desired result is achieved. The 4 steps can be summarised as:
Quickfire Guide
Plan: Define the problem to be addressed. Collect the relevant data. Understand the root cause(s) of the problem(s).
Do: Develop possible solution(s). Select the most appropriate solution(s) and implement a small-scale pilot; decide how you will measure the effectiveness of the pilot.
Act: You can implement your solution. If you are using the PDCA as part of a continuous improvement initiative, you need to loop back to the Plan Phase (Step 1) and seek out further areas for improvement.
You and the supplier must understand the implications of the proposed change before being able to properly consider them . This may require the supplier (who will normally be in the best position to assess the likely impact of a change) to prepare an impact report. The impact report will present:
Your Change Management process should specify how any change costs will be allocated between the customer and the supplier.
Normally you would be required to pay for a change where it is not within the scope of the existing contract.
When a change is outside the scope of the existing contract, the Change Management process should detail the pricing principles i.e. what you pay for. For example, the Change Management process may stipulate that the price for any change should be:
Your Change Management process can include the supplier having to provide an auditor's certificate i.e. to confirm agreed the pricing of any change complies with the pricing principles.
A detailed Change Management process is of little value if the supplier can refuse to implement the customer's change request.
Your Change Management process can include a requirement that the supplier cannot unreasonably refuse (either directly or indirectly) a change requested by you.
Unreasonable grounds for refusing a change might include:
Impact reports, pricing principles and the supplier's obligation to undertake the change are just some of the matters that need to be considered in any Change Management process to ensure that it is effective. A carefully drafted Change Management process can ensure that the contract remains compliant and flexible to meet the system/services required during the term of the contract.
The Account Pack is intended to be a place where the current and historical contract / supplier status is recorded. Ideally, if anyone wants to understand the contract status or how the supplier is performing, this pack should provide them with the current status.
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This section of the Contract and Supplier Management process outlines a number of activities and tools to effectively manage and improve the performance of your suppliers. You must be careful not to substantially modify the contract when considering some of the following.
Contract Managers should present information in regular reports to senior managers.
prepare and issue reports summarising the management actions they have taken since the last report
identify any significant issues
detail conclusions reached
consider the consistency of their conclusions with those arising from the work of the regulatory bodies
clearly identify the nature and grounds for any concerns, and the action(s) required to secure improvement
consult suppliers on the accuracy of all reports
communicate regularly with suppliers
ensure emerging findings are discussed at an appropriate level within their organisations.
For Care & Support Services please also read Additional Guidance when Reviewing a Care and Support Service.
Contracts are awarded following a thorough evaluation process which looks at some standard elements. Your Organisation should perform periodic supplier ‘health checks' should be undertaken throughout the life of the contract to ensure standards are maintained. These checks could include:
The frequency of the checks depends on the type of contract, e.g. strategic and bottleneck contracts will be checked more frequently than collaborative and routine contracts.
Understand Contract Terms & Conditions
The purpose of Contract and Supplier Management is to ensure suppliers meet their contractual obligations and the contract requirements are successfully delivered.
It is essential that anyone engaged in managing suppliers reads and fully understands the contract's terms and conditions, otherwise they will be at a permanent disadvantage should any issues arise.
Your Organisation’s Contract Manager/Contract Management Officer should engage early in the process, from the Develop Strategy stage, and participate in the development of terms and conditions.
KPIs provide a way to measure the four quadrants of the balanced scorecard (Quality, Cost, Sustainability and Service). KPIs help organisations understand how well they and/or their suppliers are performing against their strategic goals and objectives.
You must ensure effective contract management so that the practice of blacklisting does not occur in public contracts.
MI is used to monitor the supplier's or contract's performance and ensures management have the information to make effective strategic and operational decisions.
You must clearly define your MI requirements and communicate these to your supplier(s).
Your MI reporting arrangements must be fair and proportionate and not duplicate information already provided.
Your MI reporting approach should minimise demands on suppliers for information about the delivery of the goods/services.
You can undertake a risk assessment to help decide what the frequency and level of reporting should be. This may change/increase in certain circumstances, for example if a complaint is made about the service/delivery.
The reporting arrangements can be included in your specification and/or in the terms and conditions of the contract.
For some specific services, you should avoid duplicating information which is collected by/available from regulatory bodies. This can be achieved through the development of Memoranda of Understanding and regular discussions between the organisation and the regulatory bodies.
Sustainable Procurement outcomes, for example Fair Work Practices, must be an integral element of the contract and supplier management process. They should be included as a standard agenda item at supplier review meetings and considered alongside all other contract management matters.
It is important to ensure monitoring includes the use of any agency or sub-contractor workers throughout the duration of the contract. This will include any new members joining the workforce engaged on the contract’s delivery.
Evidence should be sought from suppliers to demonstrate compliance with agreed contract conditions. This includes what the main contractor is doing to ensure Sustainable Procurement outcomes, such as Fair Work First commitments, down the supply chain to subcontractors and to agency workers. Evidence which should be sough can include reviewing recruitment information which could include pay policy and the terms and conditions for workers involved in the delivery of the contract.
Where there are material concerns regarding a supplier’s compliance with any sustainable procurement commitments or the contractual obligations it has made, an Organisation could consider whether to undertake general sustainability audit of the contract.
You should detail what will happen if the contract is not being delivered or the agreed quality standards are not being met.
Performance issues should be addressed immediately, and escalated within the supplier organisation if not resolved promptly.
Contract Managers/Contract Management Officers should ensure the escalation process is clearly defined, understood and communicated to all stakeholders and end users.
If you find that the supplier is not delivering the agreed level of service:
There are specific contract terms and conditions that can be used appropriately to help drive and maintain contract compliance/performance.
You should incorporate these into the Terms and Conditions (T & Cs) of contract. You should understand the specific contract T & C’s, and that any incentives and sanctions considered are appropriate and legally enforceable. You must seek legal advice if in doubt as to the wording, appropriateness or legality of a proposed condition.
Incentives could include (subject to substantial modification):
To enforce a sanction sufficient evidence is required to justify the claim or action. You must therefore have clear records e.g. agreed service levels, notice periods, reminders, communications, agreements, etc.
Any enforced incentive or sanction must comply with the agreed contract terms and conditions.
Improvement opportunities can be identified by anyone engaged with the Organisation, both internally and externally.
Many improvement ideas don’t come from management, but from employees and suppliers operationally involved in the delivery of the service. These are the people who are regularly exposed to issues which may not be visible higher up in the Organisation.
Your Organisation should seek feedback and work to develop a culture where everyone is encouraged to look for and suggest operational improvements. To do so the Organisation must show that all suggestions will be considered.
Demand Management can be defined as:
“the alignment of a business’ consumption with its business requirements”
It applies to all goods and services where internal demand and consumption can be influenced to reduce costs.
Demand Management is a key aspect of aligning external resources to meet our requirements. People often think demand management is stopping people spending money. However there are a number of other ways to look at demand management without completely preventing spend. These can still provide notable savings and have a less drastic impact on the business.
Demand often comes from internal practice and processes rather than real need. As the approach is about addressing change ‘in’ an organisation the starting point will be the culture, policy and behaviours of that organisation. The organisation can also participate by:
Demand management can occur at different points in the procurement process. For example:
Demand Management, including behaviour change, represents a significant and untapped opportunity.
In the short term, this is about changing expectations; in the medium term about changing participation; and in the long term about reducing need.
There are 3 main principles of demand management:
The three strategies listed below could be independently or jointly applied.
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Eliminate |
Is the requirement really needed? Can the consumption be stopped? e.g. cancel non-essential meetings, or stop the use of mobile phones for non-business calls |
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Replace |
Can we use lower cost or more effective alternatives? e.g. use video-conferencing for meetings or ensure non-confidential papers are not treated as confidential waste |
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Reduce |
Can we use less of a product / service? e.g. don’t order a monitor with every PC purchase or, schedule meetings for the same day With Demand Management you should consider:
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There are a number of benefits to an effective Demand Management strategy. Many are driven by change in the organisation’s culture and outlook, and to how goods and services are specified and requested.
When robustly implemented across all goods and services, Demand Management drives public sector organisations to make the most efficient and effective use of procured external resources to meet the operational requirements.
The Demand Management process challenges the norms, standards, customs and practices of an organisation to a degree not usually found in other processes.
When used as a priming process for Strategic Sourcing, Demand Management can establish organisation requirements to be sourced to a very specific level. This can avoid the development of a sourcing strategy that meets over-specified operational requirements.
As a routine part of an organisation operation Demand Management can ensure the greatest possible levels of resource are directed at front line services in the public sector.
You should consider forecasting demand fluctuation management initially at the Shaping the Requirement Stage. These should be subsequently monitored and managed throughout the lifetime of the contract. Failure to do so could result in:
You can manage your costs better, and have help your suppliers have the correct levels of resources in place, by using effective demand management forecasting. Also give the supply base the opportunity to manage their costs by positioning resource and material in line with demand.
Demand forecasting should be based on considerations such as:
You should try to reduce future demand and costs by using strategies such as:
To operate effectively your suppliers must understand and manage demand. It can use this knowledge to set its resources and processes proportionately. This will ensure their service delivery is efficient and cost effective.
By understanding your historical demand you can work with your suppliers to improve efficiency and reduce costs.
To forecast future demand you must consider a combination of:
Forecasting will never be 100% accurate However these elements should provide enough information to develop forecasts which are accurate enough to accommodate demand fluctuations.
You should ensure the supplier stays in regular contact with all key stakeholders (including other suppliers). This ensures that all parties are aware of the supply/demand position, especially during periods of fluctuation.
A key element of Contract and Supplier Management is the proactive identification and management of risk. More information can be found in Risk Management.
Fraud Prevention, Detection, Monitoring and Handling
More guidance on fraud is provided on the Scottish Government Website.
Better scrutiny of payments, and a sound understanding of the contract, will quickly identify both overbilling and fraudulent activity, and allow the appropriate action to be taken. You should not rely on your supplier to interpret the contract which could then result in billing errors.
Contracts are awarded following a thorough evaluation process which looks at some standard elements. Your Organisation’s Contract Managers/Contract Management Officers should perform periodic supplier ‘health checks’. They should undertake these checks throughout the life of the contract to ensure standards are maintained. These checks could include:
The frequency of the checks depends on the type of contract, e.g. strategic and bottleneck contracts will be checked more frequently than collaborative and routine contracts.
Contract management activities must include sufficient checks to ensure suppliers are meeting their Data Protection Legislation obligations as the Processor. These checks may include audits undertaken by the controller or a third party auditor.
If obligations are not being met, organisations should take urgent remedial action with the supplier to address issues and risks.
More detailed information can be found in Additional Resources.
Good Contract and Supplier Management processes should encourage both supplier and organisational innovation. Suppliers often have innovative ideas. These ideas can improve both their own and their customers’ service, however, they are frequently blocked to progress these ideas.
Quickfire Guide
You should promote supplier innovation and added-value activity to flourish:
Embrace your suppliers as an extension of your business. Learn from their ideas and build open and trusting relationships where innovation will thrive.
Establish a culture of trust and encourage ideas from suppliers, as they often know your business better than some of your own team.
Define and share your Organisation's definition of supplier innovation. This way suppliers can understand your internal process, where they fit in and your expectations of them.
Share as much information as you can with your top suppliers. The earlier suppliers can see your product / services roadmap, the sooner they can provide ideas to improve it.
Implement a consistent governance framework. If a supplier’s idea has potential, assign an internal owner to investigate and develop this ensuring there is accountability and development continuity.
Innovation does not have to be ‘ground breaking’. Even minor service or process adjustments can bring cost and/or efficiency gains.
Encourage collaboration within the teams. Let them know some ideas will be more successful than others, but all ideas will be considered. Publicise and reward innovative contributors appropriately.
Publicise supplier innovation success stories. A brief email outlining real supplier initiated added-value and the mutual benefits will encourage others to do the same.
Consider innovation as a standard KPI and ensure innovation is on the agenda at performance reviews.
Innovation is a two-way process. Your Organisation should be equally active in exploring innovative ideas which will help your suppliers improve their performance and service delivery.
Performance Review Meetings provide both your Organisation and the supplier with an opportunity to:
The Performance Review Meeting standard agenda template can be completed by both your Organisation and the supplier in advance of the meeting. This will provide a structure to the meeting.
You should hold at least one review annually for suppliers identified under the segmentation process as requiring ‘medium level’ supplier management. Hold two review meetings for ‘high level’ suppliers.
A Review Meeting Template is available here, and a meeting agenda example is laid out below:
Quickfire Guide
This agenda can be amended to suit your personal preferences:
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Agenda Item |
Description |
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Introduction and Opening Remarks |
Introduce attendees. Recognise special or new guests. Provide any opening remarks that are pertinent to this meeting such as current events, organisational changes, etc. |
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Review of Action Items |
Each Performance Management Review meeting will produce some follow up action items for your supplier, your Organisation or both. These should be documented and followed up at the next Performance Management Review meeting. |
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Supplier Performance
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Performance against SLA/KPIs/Scorecards should be reviewed and discussed, and any performance concerns raised. This will be a quick review if all deliverables are being achieved. Any "below plan" performance will demand more discussion and most likely recovery action plans. These plans should be managed operationally and reviewed at the next Performance Review meeting. |
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Customer Performance
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The supplier can raise any customer performance issues. For example these may be impacting their ability to fulfil their contractual obligations. |
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Key Improvement Areas/Opportunities
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All opportunities for improvement should be explored. Once identified, action plans should be agreed. Areas to be explored should include: current performance issues, cost, process, Sustainable Procurement, Corporate and Social Responsibility, innovation/value add. |
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Supplier Presentation |
The supplier should provide a business overview, including example financial information, strategy, overarching objectives, etc. |
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Meeting Summary and Review of Action Items |
Round up of meeting and confirm next meeting date. |
Benchmarking costs against the suppliers’ competitors is a recognised way to avoid cost ‘creep’ and ensure best value. Benchmarking can be done throughout the life of the contract. It can be used for:
You now have a manageable amount of data to go out into the market place with.
This will not cover every aspect of the potential scope of supply. You may need to add items such as bottle-neck and specialised items. The aim is to gain an estimation of the market rates.
You should inform your existing supplier that you are planning to perform a benchmarking exercise before you go out to the market place.
Benchmarking is generally an informal process. The Management Information Hub is a good source of information, as is the internet in general. You can also contact a number of suppliers directly.
It is important to ensure that the recipients of any requests understand it is a benchmarking exercise. It is not a business opportunity. The request should be simple enough for the suppliers to provide information without having to spend a great deal of time doing so.
You can now compare the results of your benchmarking exercise. For example, enter all costs into a spreadsheet to determine the price difference between your existing supplier and the market rates. You can now determine where the incumbent supplier sits against the best, worst and average market rates.
If you are happy with where the incumbent supplier’s pricing fits in comparison to market rates, this shows the supplier is competitive and no further action need be taken.
If you are not happy then invite your supplier to a meeting. Give them the opportunity to explain why they are not competitive against the current market rates. You must not divulge the competitors’ names or pricing information.
If the supplier is willing to accept their prices are not in line with market rates then this will be a cost reduction for you. If however, the supplier is unwilling to negotiate a reduction, initiate your escalation process and include as an agenda item at the next Review Meeting.
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Persuading stakeholders to implement change can be difficult. This is particularly true if there are no absolute, cast iron guarantees to support the proposal. Therefore you must consider how to show the potential benefits of an embedded Contract & Supplier Management (CSM) model.
The guidance below and the linked templates should help you build the necessary business case / justification.
Significant cost savings can be achieved through an increased and embedded focus on CSM.
Another approach is to consider the risks and missed opportunities of not focusing on CSM, for example:
Consequently, CSM is unlikely to be effective unless the parties move from a transactional to a relational model. This could actively encourage and develop close working relationships and resulting mutual benefit(s).
The success of the relationship between an organisation and suppliers/service providers depends on the extent to which there is:
You need to build the relationship outside of the traditional constraints of a performance-based contract. A ‘we are in this together’ approach should be fostered. This will encourage open communication and maximise service and cost efficiencies.
To succeed, build on small success: when a pattern of small successes has been achieved, proposing a more ambitious CSM plan becomes less daunting. This is because you have proven results to refer to.
Instead of leaping into the unknown, it becomes the expansion of an already successful process. Initial small successes are a recognised option to create awareness and buy-in for the larger initiative. Small projects are likely to be the best way to gain the support necessary for broader, organisation-wide embedded CSM model adoption.
The selection of small project(s) is important. It should be contracts or services not in crisis and which have scope for improvement. It is even better if it is a contract or service where stakeholders have voiced concerns or expressed a desire to seek improvements.
Once the contract/service has been agreed, a small cross-functional team should be created under a nominated contract manager who will own and manage the small project.
As laid out in more detail throughout the CSM guidance, the nominated cross- functional team should:
Once the desired outcomes are agreed, your nominated contract manager should ensure maintained focus within both organisations until they have been achieved and delivered. The results should be used to demonstrate the untapped potential open to a focused CSM approach.
The Business Case Template, which can be found at the bottom of this page, contains some ideas you may wish to include and should help lay out the business case. Your Organisation may have a standard template to use.
Managing the supplier contractual relationship requires a discrete set of responsibilities and activities. As a result this should be the responsibility of a nominated member of staff. An organisation should consider how to ensure that:
These considerations should be built into the commodity/service specification and/or the terms and conditions of the contract.
Your Contract Manager should be engaged early in the process. This will ensure they engage early with stakeholders and determine the appropriate contract service level requirements and Key Performance Indicators . Service level and KPI requirements should have been included in the tender documentation.
For Care and Support Services processes must not duplicate those of the Care Inspectorate.
The care manager is the role which has overall resposnibility for ensuring tha tthe totality of care and support for an individual is acheiving the desired outcomes.
Determining the resource required to manage the contract portfolio/supplier base is not an exact science. Very often it is subjective.
Any organisation planning to transition CSM responsibilities to an embedded CSM team, should estimate the resource required. You should invest time to realistically and pragmatically plan required resources.
Some resource planning options are laid out below.
Resource planning for a new CSM team often depends upon the judgment of an experienced manager. You should provide enough information for an experienced manager to make an initial estimation of the extent of work required i.e. to manage the volume of Leverage, Routine, Strategic and Bottleneck suppliers.
A decision may be made to start with a small selection of critical or problematic suppliers. Then you may gradually incorporate more contracts/suppliers with additional resource coming on board as appropriate.
The Resource Planning Tool, that can be found at the bottom of this page, s taken from a particular Scottish public sector organisation’s successful proposal to transition from a traditional ‘let & forget’ model to a CSM model (and is indicative only). For the avoidance of doubt, this organisation absorbed the workload into the existing headcount by reallocating/reprioritising responsibilities and eliminating non-value add activity.
Quantification/segmentation is the most accurate methodology of estimating the resource required to manage the contract/supplier portfolio. It is however, still an estimation as many factors can affect the resource requirements, such as:
You need to identify the strategic position of your contract. The Strategic Positioning Tools found in the Develop Commodity/Service station can assist you in doing this.
Regardless of how formal a commodity/service strategy is, or is not, there is always thought and decision making on:
A straightforward way of assessing the potential level of CSM required is to consider the:
Please find a link below to the Segmentation Tool. The purpose of this exercise segments the contract portfolio into four categories (Leverage, Strategic, Bottleneck, Routine), which will allow an organisation to estimate the extent of work involved in managing each category.
Please find a link below to the Full Balanced Scorecard. Please note that the balanced scorecard can be edited to suit the commodity/service area.
The Resource Planning Tool below can be used to help you estimate the amount of resource required for your contract management needs.
Please find below a link to the Contract Management Supply Positions Tool. The document helps you to segment your contract portfolio into four categories (Leverage, Strategic, Bottleneck, Routine), which will allow an organisation to record the extent of work involved in managing each category, including frequency of performance review meetings and frequency of Management Information etc.
This tool will provide an estimated resource calculation. There is a natural tendency to over-estimate the work required, and it is important to avoid this trap by being as pragmatic as possible.
Where possible, it would be worthwhile comparing/collaborating with a similar organisation which has a more mature CSM operation, especially where an organisation lacks the experienced managerial staff required to make informed judgements. This collaboration will allow the organisation to benefit from the experience of the more mature organisation and to factor in distortions such as the learning curve they will experience on the journey towards maturity.
Board / Senior Management sponsorship is critical to the success of an embedded CSM approach. The Board / Senior Management Team should take the ultimate strategic ownership of business critical, strategic supplier(s), and be fully committed to improving the contract performance collaboratively with those suppliers.
Every contract should be managed by a nominated member of staff (‘contract manager/contract management officer’). In a collaborative setting, organisations should determine which organisation will take the lead in managing the contract. An organisation should ensure that there is clarity about the distinction between:
The Contract Manager/Contract Management Officer should have the mind-set to exceed, rather than meet, required goals, deal with a constantly changing set of requirements, and have excellent communication and stakeholder management skills. They should be the principal owner of the supplier relationship and contract performance, and be responsible for business-to-business relationships, contract management performance and contract management competencies, including:
Contribute to contract and supplier management process by:
Quickfire Guide
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