Contract management capability requires an investment in developing an appropriate contracts governance framework
“Effective contract management requires an appropriate contract management framework that addresses governance arrangements, skills, roles and responsibilities, and policies and procedures” says the New South Wales Auditor General.
A 2014 Auditor General’s examination into six agencies telecommunications performance ‘Making the most of government purchasing power – telecommunications’ has found that all but one agency reviewed could demonstrate they achieved value for money, in part because of inadequate contract management.
This latest Auditor General’s report again identified significant shortfalls in relation to the manner in which agencies manage their telecommunications contracts. The Auditor-General highlighted that agencies need to better manage contracts to achieve intended benefits.
Following the signing of the contract only one agency could demonstrate that it achieved value for money from its telecommunications contracts. That particular agency was able to show that it had implemented adequate processes to manage their usage and spend on telecommunications.
Most agencies reviewed did not have the people with the necessary expertise and experience to get the best value out of contracts for telecommunications services. In addition, concerns about service level agreements with shared services organisations were also raised.
The Auditor General further pointed out that telecommunications services can result in long term contractual relationships. Effective contract management capability is therefore essential. “Effective contract management requires an appropriate contract management framework that addresses governance arrangements, skills, roles and responsibilities, and policies and procedures,” said the Auditor General.
The Audit Office of New South Wales research has identified a number of key contract management elements:
Better Practice Contract Management Framework
- Agencies’ contract management delegations are clear and consistent with their general financial delegations
- Appropriate reporting and oversight for contract management is in place
- The capability required to manage contracts is established
- The framework is regularly reviewed
- There is independent monitoring of contracts to check compliance and identify weaknesses.
ROLES AND RESPONSIBILITIES
- Roles and responsibilities are clear
- People managing contracts have the appropriate skills and experience.
POLICIES AND PROCEDURES
- Policies and procedures are in place to guide staff
- A contract management plan is in place for each contract.