Manage

Working with suppliers and managing the contract to ensure successful achievement of contractual outcomes.

Remember to adapt activities to your local context, and always take approaches that are proportionate to the value, risk, complexity and profile of your requirements. 

  1. 1 When done well, contract management can add real value.

    Benefits of good contract management include no surprises or escalating costs, more efficient processes, easier change management, consistent processes and the ability to build stronger relationships with suppliers. The three main high-level stages of contract management cover: mobilisation (at the beginning), implementation (over the lifetime of the contract) and exit (towards the end).

  2. 2 Every contract needs a contract manager.

    The contract manager should be clear about what their responsibilities are on each contract. Contract managers should take every opportunity to gather feedback, which can be provided in many ways and doesn’t have to be formal. Make the most of face to face meetings and online communities to get better feedback; the better insights you have, the better your contracts and future procurements will be.

  3. 3 You should try to keep contract variations and extensions to a minimum.

    Variations and extensions are exceptional and should be kept to a minimum. They should only take place where the changes that you make would not significantly alter the original contract. If you need to vary your contract requirements and/or extend the length of the original contract, you may need to undertake a new procurement exercise.

  4. 4 You can capture lessons learned at any stage of the procurement journey.

    Capturing lessons learned early, often and throughout the procurement journey supports continuous improvement. Asking the right questions leads to better feedback: “What worked well?”, “What didn’t work well?” and “What would you do differently in the future?”.

  5. 5 Exit should be planned for and proactively managed from the outset.

    The complexity of individual contracts should define a proportionate period during which the exit plan will be enacted. Exit plans typically include considerations for service continuity, data security and privacy, knowledge and document transfer, people and costs. These plans should be reviewed periodically or when significant change occurs.

5 things to know

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Getting Started

What to think about first

This stage of the procurement journey will typically include:

  • Managing and monitoring contracts and supplier relationships;
  • Receiving and paying for goods and services;
  • Modifying contracts (if necessary); and
  • Closing and exiting contracts.

Other activities not covered here, but should be considered, include constructively managing and resolving disputes, benchmarking, supplier relationship management, internal client / stakeholder relationship management, and business continuity.

Remember to adapt activities to your organisational context, and always take approaches that are proportionate to the value, risk, complexity and profile of your requirements.

Contract managers within Welsh public sector organisations can develop their contract management knowledge through the Cabinet Office’s Contract Management Capability Programme. To find out more about the contract management training visit the Helping you manage contracts and suppliers and Government Commercial Function Contract Management Capability Programme: Foundation and Beyond Foundation training pages.

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Managing and monitoring contracts and supplier relationships Show Hide

All outsourced projects should be overseen by an appropriately qualified contract manager. The contract manager needs to have an understanding of the contract they are managing. At a minimum, the contract manager should know the following:

  • Contract start and end dates, and any extension options.
  • Type of contract (e.g. UK Government’s Model Services Contract, Short Form Contract, Call-off contract from a framework agreement or Dynamic Purchasing System).
  • Deliverables of the supplier – what is the supplier required to deliver specifically for this contract, when, and to what standard to be acceptable.
  • Charging model (time and materials (T&M)/ milestone payments/ fixed monthly payments etc.).
  • Supplier obligations – what is the supplier contractually obliged to do and when.
  • Buyer obligations – what is the Buyer organisation obliged to do and when.
  • If applicable, check Carbon Reduction Plans after 12 months (following the guidance set out in WPPN 06/21).
  • Dispute resolution and rectification process.
  • Key Performance Indicators (KPIs), Service Level Agreements (SLAs) and other metrics to be monitored and reported (for example, evidencing Social Value delivery and wellbeing impacts).

Contract management should be a proportional approach dependent on the risk and value profile of the contract. Some contracts, those that present the most operational and / or reputational risk and are of high value, will require closer management and may need a strategic supplier relationship manager assigned, whilst other non-critical services may require a light touch approach. The contract manager should assess each contract and decide the level of contract management to be applied at the start of each contract. The contract management approach should be reviewed throughout the contract life and adapted to any changing circumstance, as and when required.

 

Useful links:

UK Government Model Services Contract

Cabinet Office Model Services Contract Guidance

 

Typical activities at this stage of the procurement journey include:

  • Understanding the practicalities of how the service is delivered.
  • Governance of the contract lifecycle with proper oversight and approval processes in place.
  • Day-to-day contract management and contract administration.
  • Ensuring the supplier provides an exit plan in line with any contractually agreed milestones and deadlines, reviewing and updating the exit plan on a regular basis. The timescales for this should be relevant to the complexity and length of the contract.
  • Ongoing risk assessments on the contract, supplier and the relevant market.
  • Minimising dispute occurrences and managing dispute resolutions using contractual and non-contractual processes and levers.
  • Proactively, constructively and collaboratively managing supplier performance through a predefined review, reporting and meeting process.
  • In cases of business/ operation critical services, strategic relationship and supply chain management.
Receiving and paying for goods and services Show Hide

When your service is implemented and you have set up a contract management process, you should start to monitor the delivery against the supplier’s obligations. This will be different for each contract and could be delivery of products on time, delivery of services against milestones, delivery of services against objectives, amongst others.

 

Don’t forget that managing a contract is a two-way process. Whilst you should ensure the supplier is delivering what was promised within their tender, as a contract manager, you should ensure that the supplier is paid any undisputed sums on time.

 

As a public sector buyer, follow the Welsh Government Prompt Payment Policy and the Project bank account policy, and aim to pay your suppliers within five working days of receiving a correct invoice. This will help small businesses and social enterprises working with you as it provides a timely cash flow. The prompt payment policy can be extended to supply chains through contractual arrangements with your prime suppliers.

 

Typical activities at this stage of the procurement journey include:

 

  • Regular contract management meetings with your supplier. The cadence of meetings should be proportionate to the size and complexity of the contract.
  • Monitoring of performance against contractual KPIs.
  • Ensuring prompt payment to the supplier and within the supply chain.
  • Using an appropriate risk and issues register, record, assess and manage risks and issues.
  • Work with stakeholders and suppliers to identify and implement continuous improvement opportunities.
Modifying contracts Show Hide

Contract changes can be reasonably required through their lifetime, which can be managed through contractual change processes. The PCR 2015, and the new Procurement Act 2023, incorporate rules on contract changes, and there are different transparency requirements between the two regimes (see the ‘Procurement Reform’ section of the Cyd website for more information on this).

 

Things to remember about contract/ framework changes include:

  • Consider the circumstances where contract changes may be required, and include these potential changes in the contract. This will allow you to make changes that have been provided for in the contract, during the term of the contract.
  • Changes, irrespective of value, cannot substantially change the original scope and nature of the contract.
  • Major contract changes you couldn’t have been foreseen through due diligence can’t exceed 50% of the original contract value.
  • Minor changes can be made when they do not change the nature of the contract/ framework and do not exceed 10% (goods or services) or 15% (works) of the original contract value.
  • Changes should be approved by appropriate people in your organisation before they are enacted, for example the contract manager and the budget holder, and any governance arrangements that need to be followed.

 

Typical activities at this stage of the procurement journey include:

  • Set up an appropriate contractual change control process which allows you to maintain an audit trail, changes are enacted and changes represent value for money.
  • Keep a record of changes made to the contract through Contract Change Notices.
  • Monitor contract value, ensuring changes do not exceed the legal limits.
  • Set up a change control register and use it to monitor and record all stages of the contract change process, from initiation to sign off.
Closing and exiting contracts Show Hide

Contracts are closed and exited through efficient exit management processes. Exit management is required to ensure a smooth handover from the existing supplier to the alternative provision (whether outsourced or insourced), and to collect lessons learned from your current provision, which are used to improve future services.

Typical activities at this stage of the procurement journey include:

  • Use the Exit Plan provided by the supplier to ensure all exit activities are completed and the exit costs are adhered to.
  • Understand the cost of re-procuring the service.
  • Be aware of any rights and provisions that extend beyond the contract, including Intellectual Property, data retention and others.
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CIPS

CIPS Procurement and Supply Cycle

The ‘Procurement and Supply Cycle’ developed by the Chartered Institute of Procurement and Supply (CIPS) includes 13 steps to guide you through the procurement process for goods and services. 

You will have already completed activities that are consistent with steps 1 – 9 during the ‘Plan’, ‘Define’ and ‘Procure’ stages of the procurement journey. 

The following steps from the CIPS ‘Procurement and Supply Cycle’ relate most closely to the ‘Manage’ stage of the procurement journey: 

  1. Warehouse, Logistics and Receipt;
  2. Contract Performance and Improvement;
  3. Supplier Relationship Management; and
  4. Asset Management.
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Net Zero

You’re now in a new relationship with your chosen supplier partner. Make each day count towards achieving the seven wellbeing goals, using the five ways of working

Throughout the life of managing public contracts, it’s crucial to proactively monitor and evaluate performance and progress towards achieving a more equal, more sustainable and more prosperous Wales, fulfilling the legal obligation to improve social, cultural, environmental and economic well-being. This starts with the mobilisation stage and carries on through implementation, right up until contract exit.

          This will help to:

    • Achieve the Welsh Government’s Net Zero target by 2030;
    • Support a green recovery;
    • Drive greater social value through more consistent delivery of more well-being impacts; and
    • Contribute to the shared ambition for a Wales of Fair Work.

Success in achieving these goals, regardless of contract value, is enhanced by maintaining constructive, collaborative, and proactive relationships with supplier partners throughout the contract duration.

Document stories of change – incremental achievements and lessons learned on the path towards achieving the contract’s goals – rather than waiting until the contract’s end to create a case study (though this is also recommended).

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Resources

We’ve brought together a range of resources to support you at each stage of your procurement journey.

Visit the links below to view the resources relate to this stage.

Case Studies Resources E-learning