Monday, November 5, 2012

What is Contract Management in PFI Project?

“Contract management is the process that enables both parties to a contract to meet their obligations in order to deliver the objectives required from the Contract.  It also involves building a good working relationship between customer and provider.  It continues through the life of the Contract and requires the parties to be proactive to anticipate future needs as well as managing proactively immediate situations that arise. The primary aim of Contract Management is to ensure that the needs of the Services and Capital works programmes are satisfied, the Authority receives what it is paying for, within the boundaries of the Contract whilst achieving value for money.  This means optimising efficiency, effectiveness and economy of the service or relationship described by the Contract, balancing costs against risks and actively managing the customer-provider relationship.  Contract Management also involves aiming for continuous improvement over the life of the Contract.”

Good contract management will:
  • maximise the chances of contractual performance in accordance with the contract’s requirements by providing continuous and robust contract management which supports both parties (UiTM and Concessionaire) ;
  • optimise the performance of the project;
  • support continuous development, quality improvement and innovation throughout the life of the contract;
  • ensure delivery of best value;
  • provide effective management of commercial risk;
  • provide an approach that is auditable;
  • support the development of effective working relationships between both parties;
  • encourage effective and regular communication underpinned by clear communication mechanisms;
  • allow flexibility to respond to changing requirements; 
  • demonstrate clear roles, responsibilities and lines of accountability, and
  • ensure that all works and services are in compliance with legislation, relevant Health & Safety requirements, and Council procedures.
Failure to implement an adequate contract management system could result in:
  • UiTM (government) paying for services which are not being received or are not being performed satisfactorily; 
  • the contract not performing as anticipated, thus jeopardising project benefits;
  • changes to the balance of risk negotiated in the contract; and/or
  • UiTM (government)  being unable to foresee Contractor failure or put in place contingency measures; a breakdown in relationship with the Concessionaire 

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