Contract management beyond financial close SESSION 7 Thursday 14.00 – 15.30 Contract management beyond financial close

South Africa Part 5 ©David I H Wright Ltd. 2

South Africa Part 5 ©David I H Wright Ltd. 3

Critical success factors Service delivery satisfactory for public and private parties Realisation of expected benefits, vfm and innovation Good relationship Public sector aware of contractual obligations and has resources and expertise to honour them Knowledge management and succession planning in place Dispute resolution at lowest level Variation procedures successfully used to cope with changing service requirements

What can go wrong? Public sector loses control – unbalanced decisions Decisions not taken at the right time New and existing processes do not integrate and therefore fail People fail to understand obligations disputes Inappropriate escalation of issues delays Intended benefits not realised Improved vfm and performance opportunities are missed.

Factors leading to failure of PPP agreement management Poorly-drafted PPP agreement Negotiators different from managers Inadequate resources Poor leadership Skills / experience mis-match Wrong people – personality clashes PPP agreement not well-understood Unclear responsibility for commercial decisions Lack of independent review of contract management arrangements

Factors leading to failure of PPP agreement management Poorly-drafted PPP agreement Negotiators different from managers Inadequate resources Poor leadership Skills / experience mis-match Wrong people – personality clashes PPP agreement not well-understood Unclear responsibility for commercial decisions Lack of independent review of contract management arrangements

South Africa Part 5 ©David I H Wright Ltd. 8

PPP Partnership Management Corporate governance Structures, systems, policies and other mechanisms of accountability in an organisation Trust and attitudes Cannot be mandated but positive efforts needed – behaviour and attitudes Communication and information sharing Good communication is make or break – operate at a horizontal AND vertical levels (see next slide) Relationship assessment Dispute resolution

South Africa Part 5 ©David I H Wright Ltd. 10

South Africa Part 5 ©David I H Wright Ltd. 11

PPP Agreement Administration Variation Management No additional costs – perhaps a reduction Small works variations – annual schedule of rates in PPP Agreement Public sector variations – process in PPP Agreement Private sector variations - process in PPP Agreement PPP Agreement maintenance Procedures for ensuring Agreement etc are up to date and consistent Need for PPP Agreement manual Financial administration Making and receiving payments, penalties/deductions Handling indexation Late payments; receiving reports

End of Contract Issues Challenge is to review options for service continuation and agree exit strategy Partnership management tasks Prepare staff for new role Integrate lessons into public sector work Service delivery management tasks Assess key deliverables, vfm, innovation Post-implementation review PPP Agreement administration tasks Ensure compliance with hand-back procedures Make arrangements for compensation (early termination only) Make arrangements for retendering the service or taking back in-house Staff transfers