Requirement of our Operating Licence, Condition F1 that good contract management is employed

Essential to delivering the significant opex savings under Price Control :

• on contract costs
• on management of contracts

Identified as a priority project in delivering Achieving Customer Excellence programme as part of the Commercial Excellence portfolio

Part of our Operational Strategy

• Broadly based on CPD Guidelines
• Broadly based on CPD Guidelines
• Tender tracking
• Rationalisation of operations contracts
• Procurement options
• Contract type
• Contract bundles
• Service delivery models
• Benefits Tracking

• Ensures standardised contract management approach
• Offers best scope for implementation of best practice
• Improves contract control and reporting mechanisms
• Improved contractor performance
• Reduced contractor supervision
• Reduced contract overheads / administration
• Core knowledge base and expertise
• Delivers improved service and reduced costs
• Accountability for delivery of savings and benefits
• Instil improved relationship management
• Cost reductions through continuous improvement and innovation

Contract Lifecycle Model

• Contract development - defines
• Procurement - awards
• Implementation – service commences
• Administration – contract termination

Contract Types – based on business critically and value

• Strategic - >£10m
• Key Operational - £1-£10m
• Support - £0.1 – £1m
• Tactical - <£0.1m

Internal polices and Procedures

FR009 – Financial & Procurement Delegations

• Approval at appropriate level acceptance/award
• Changes are approved at appropriate level

FR038 – Procurement of Goods & Services

CD001 – Contract Management Policy

CD008 – Contract Management Procedures

Contract Owner - is accountable for

• ensuring the contract delivers the anticipated business benefits and that NI Water is able to meet its contractual obligations
• assigning a Contract Manager who has the required skills, experience & knowledge

Contract Manager - is responsible for

• administration of contract procedures and processes for both parties to discharge their obligations
• managing the contract and the output (performance and compliance) of the contractor on a day to day basis.
• ensuring corrective action is taken where a Contract or Contractor is failing to deliver against its deliverables / material obligations

Contract User avails of the service and/or orders the goods/services in accordance with the contract, may manage contractor day to day

• Administer The Contract – ‘Retain Control’
• Manage Performance & Compliance - ‘Deliver the Value’
• Remedy Non Compliance/ Performance - ‘Regain the Value’

Understand the rights and obligations of both parties

• Identify the internal ‘Users’ of the NIW Rights
• Identify the internal ‘Suppliers’ of the NIW obligations

Implement effective communication channels between NIW and the Contractor

Implement effective NIW internal administrative processes and procedures to ensure NIW’s

• obligations are met and
• rights are maximised

• Implement and operate measurement processes to determine Contractor Performance /Under Performance of contracted services
• Implement and operate measurement processes to determine Contractor Compliance.
• Implement and operate measurement processes to determine NIW Compliance

Determine any deterioration or material non performance / non compliance by the Parties

Implement a plan to remedy

• including escalation
• engaging appropriate technical, commercial and legal support to determine strategy, tactics and delivery as necessary

Deliver the plan

• RACI matrix
• Checklist of activities
• Sample implementation plan
• Guidance on assessing contract change
• Template for business review
• Templates for meeting agendas and minutes
• Guidance on the application of CDM Regs for Operational contracts

Responsibility for managing the contract

Ensure most appropriate contract is used

Checks on valuations

Performance management

• Quality
• Response times
• Management Information
• Customer experience

Tracking of benefits

• Receive WO’s / Instruction
• Carries out work to the required timescale/standard
• Liaises with and provide feedback to contract users
• Seeks approval for all additional work
• Issues accurate and timely measurements in the agreed format including timesheets, list of materials, itemised work items etc. as required
• Issues monthly invoices after agreement with contract users
• Provides asset condition reports as required in accordance with the contract
• Provides Management Information including financial reports as required in accordance with the contract

Full understanding of the contract requirements

Contract delivers for both parties :-

• Value to retain
• Balance of risk remains
• Sustainability

Professional working relationships

CM acts with impartiality, integrity, fairness and consistency with both parties

Contractor undertakes the work in a safe manner

Services are delivered as specified on time ,to standard and to specified rates and prices

Experienced and knowledgeable contract managers who:-

• Understand functional systems/processes
• Have prepared specifications /preambles / pricing schedules
• Understand pricing mechanisms and how to value work
• Understand building of unit costs

CM will measure compliance/performance and take appropriate action

CM tracks improvement as required from both parties

Contractor undertakes all notifications and obtains approvals as specified

Contractor submits accurate measurements in required format in timely manner

Users agree measurements promptly

Contractor invoices as agreed measure and is paid within specified time periods

Risk / Issue log is maintained

Issues escalated promptly

Timely dispute resolution – minimise impact

Promote / encourage continuous improvement/innovation

Consistency in the application of the contract :-

• Ts & Cs, specification,
• contract changes.
• Challenge with multiple users

Reduce costs with improved levels of service