Company Policy and Guidelines

Contract management planning strategy tool Background Audience Use of this document The contract management planning strategy Accountable officer (AO) 1. The CMPS tool is reviewed as part of the 2. The AO and CPO determine if their 3. If the AO or CPO consider their contract (CMPS) tool provides guidance on the key contract Chief procurement officer (CPO) periodic procurement planning and strategy contract management framework is management framework to be insufficient to management process, tools, reporting and Contract managers processes. This can be done after determining comprehensive enough to answer the five answer these five questions, the organisation capabilities that can be used for different levels of the complexity of the organisation’s questions listed below based on the needs to increase its capability. procurement complexity. It accompanies the procurement portfolio. complexity of the organisation’s procurement Guide to contract management planning strategy. portfolio.

Value for money (VFM) Risk management and Capability and responsibility Performance Continuous improvement contingency planning monitoring Complexity Contract management quadrant 1. What are the essential set 4. What are the minimum 5. What are the minimum 6. What does the 7. What can the organisation do to quadrant of controls the organisation controls the organisation actions the organisation can organisation need to do improve procurement practice to needs to have in place to requires to determine if the take to determine the to know if suppliers are drive value for money? ensure VFM outcomes are supply is at risk and what back appropriate capability exists fulfilling their contract achieved? up arrangements could be to undertake contract obligations and if required to ensure continuity management? expected commitments of service? are being realised? Transactional Operational Pricing is relative to industry Understanding of market in order Refer capability assessment Not required Monitor spend by key categories to standards to identify other supply points if identify opportunities for aggregation required of demand, SPC/SEPC contracts or prequalification arrangements Leveraged High risk or When developing contracts, Use shortform risk assessment and Refer to Guide to procurement Performance management Processes are in place to monitor close to core consider pricing mechanisms supplier segmentation to capability built into contract variations and extensions of contracts such as volume based discounts understand potential risks (refer Appoint category leader to drive management framework against supplier to enhance VFM to Guide to contract synergies across similar Implement standard supplier Implement a supplier relationship Communication and training plan management – procurement procurements scorecard template and management plan, including feedback for new contracts to create activity) Articulate roles and responsibilities ensure regular from supplier and staff performance internal awareness and ensure Based on market analysis, and appoint relationship benchmark of supplier Engage with contract users to identify compliance determine if business continuity manager and service delivery performance on opportunities for improvements Develop financial benefits checklist plan is required where manager scorecard Establish framework for review of Consider inclusion of competitive market does not Generate standard performance and the application of nonperformance penalties in exist procurement KPI nonperformance penalties if required contract development Clear escalation path for issues reporting for Use financial benefits checklist to monitor established, and tracking management on a regular achievement of VFM mechanism for all issues basis Focused High risk or When developing contracts, Undertake longform risk Refer to Guide to procurement Develop KPIs tailored to Processes are in place to monitor close to core consider pricing mechanisms assessment and supplier capability contract and project variations and extensions of contract such as alliance, segmentation to understand Articulate roles and responsibilities outcomes. Ensure these against suppliers penalties/incentives/risk share potential risks (refer to Guide to and appoint relationship can be efficiently and Implement a supplier relationship arrangements, and other pricing contract management – manager and service delivery consistently measured management plan, including feedback models to enhance value procurement activity) manager with minimal effort from both suppliers and staff on Ensure total cost of ownership has Require suppliers to submit Consider the independence of Ensure supplier buyin for contract performance been calculated and accounted business continuity plans contract management staff performance Establish framework for review of for including any ongoing service Detailed contingency planning is Consider level of involvement management program in performance and the application of requirements regularly undertaken required by technical/subject order to develop the nonperformance penalties if required Build service performance KPIs into Establish clear escalation path and matter expert framework of a Use financial benefits checklist to monitor contract tracking mechanism for issues relationship that works achievement of VFM and identify areas Develop tailored financial benefits for all parties involved of improvement checklist to drive VFM Implement a tailored Consider inclusion of supplier scorecard nonperformance penalties in template and ensure Value for money (VFM) Risk management and Capability and responsibility Performance Continuous improvement contingency planning monitoring contract development regular benchmark of supplier performance on scorecard Strategic Strategic When developing contracts, Undertake longform risk Refer to Guide to capability Develop KPIs tailored to  Processes are in place to monitor consider pricing mechanisms assessment and supplier Articulate roles and contract and project variations and extensions of contract such as alliance, segmentation to understand responsibilities, appointing outcomes. Ensure these against supplier penalties/incentives/risk share potential risks (refer contract relationship managers and can be efficiently and arrangements to enhance value management guides) service delivery managers, and consistently measured Regular reviews of performance Ensure total cost of ownership has Require suppliers to submit ensuring a clear escalation path Ensure supplier buyin to reporting by senior management been calculated and accounted business continuity plan for issues that arise performance Establish framework, including for including any ongoing service Detailed contingency planning is Consider establishment of project management program relevant stakeholders, for review of performance and the application of requirements undertaken and regularly board to oversee procurement Implement a tailored nonperformance penalties if Build service performance reviewed process and ensure probity and supplier scorecard required indicators into contract Clear escalation path for issues VFM outcomes throughout template and ensure Nonperformance penalties are Develop tailored financial benefits established, and tracking process regular benchmark of enforced i.e. a case by case basis checklist to drive VFM mechanism for all issues Consider level of involvement supplier performance on considering the degree of loss or Consider inclusion of required by technical/subject scorecard disruption and/or the availability of nonperformance penalties in matter expert where good or Feedback forums to identify alternatives contract development service being procured is highly performance issues or Use financial benefits checklist to Communication and training plan technical improvement monitor performance and identify for new contracts opportunities areas of improvement Establish regular stakeholder meetings as part of the performance monitoring process to identify and quickly raise any performance issues

Contract management planning strategy tool 2