Why reforming contract management is critical to the public purse and to business

At any time, central government departments alone are estimated to be managing over 100,000 contracts, with the wider public sector responsible for considerably more.

Over 30,000 civil servants are also involved in overseeing these partnerships – which is a significant commitment of resource. As a result, effective contract management is critical to the public finances.

Despite this, it is widely acknowledged that contract management remains a key area for improvement in the public sector. Common issues include a lack of clarity about desired contract outcomes, poor data collection and irregular review of KPIs.

And the impact of this has been significant, complex national projects, such as Crossrail and the Emergency Services Network are just a few of the contracts highlighted as underperforming due, at least in part, to poor contract management.

Changing for the better

Driving a step change in how contracts are managed will therefore be a significant challenge, and one that will require both short-term action, and a longer-term plan.

Given the scale of the task, this new CBI briefing, More than managing, does not seek to provide all the answers. Instead, it brings together a series of practical recommendations which draw on industry expertise of managing complex supply chain partnerships. These include:

• Using early dialogue with the market to inform the procurement route, as well as contractual terms including the approach to risk allocation
• Selecting an appropriate and proportionate number KPIs, and ensuring these ‘have teeth’ to hold suppliers to account
• Updating the Contract Management Professional Standards to state that contract managers should always rather than ideally be involved from the outset of contracts
• Requiring commissioners to create more multi-disciplinary teams involved in the end-to-end delivery of complex public contracts
• Introducing more performance-related pay to incentivise commercial staff to deliver
• Requiring over-threshold contracts to include a duty to hold a wash-up meeting to ensure the right lessons are learnt from high-performing and under-performing partnerships.

Taken together, business believes these steps can help ensure more public contracts are delivered on time and on budget.

For more information contact Liz Crowhurst.