6.3.2 Main Contract Management activities

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The management of a contract is an integral part of the procurement cycle and essentially starts much earlier before the award of the contract to the Contractor, even before the drafting of the Tender Documents. More specifically, contract management is considered to commence at the moment when strategic decisions are made regarding the contracts type and duration, and the issues that it regulates, that is, when there are answers given to questions like the following:

It is better for the Contracting Authority to contract one or more economic operators?
Will the economic operators be allowed to employ subcontractors?
What is the best type of contract for the specific Project?
Is it preferable that the duration of the contract be short or long?
Which should be the mechanism that will be used for the invoicing of the offered products/ services?
How will the variations in the contract be made and reviewed?
How will the Project deliverables be accepted?
How will the disputes between the Contracting Authority and Contractor be resolved?
In which cases will it be allowed to terminate the contract?
Who will have the intellectual property rights?
Which will be the mechanism for monitoring and control the contract?

The decisions made at this stage (see Subchapter 2.8) are then formulated and reflected in the general and special conditions of the contract in the form of articles (see chapter 3 and the model Tender Documents).

The contract is the cornerstone for the development and maintenance of good relationship between the Contracting Authority and the Contractor as well as for the acceptance of the Project deliverables ensuring value for money. If the Contract that was drafted as part of the Tender Documents does not provide for issues that it should have, includes ambiguities in the wording that leave room for different interpretations etc., it is very difficult for the Contracting Authority to build, based on it, a successful working relationship with the Contractor. Despite that, certainly there are actions which the Contracting Authority may proceed with following the award of the Contract in order to improve the Contractor's performance and consequently the effectiveness during the implementation of the contract.

The main procedures in Contract management that are executed for all types of contracts (supplies, services, works) from the moment of its signature until its closure refer to:

The Monitoring of the Contractor and management of acceptance: These are procedures that enable the Contracting Authority to ensure that the Contractor is executing his duties and fulfils his obligations in accordance with the contract. At the same time it allows the Contracting Authority to identify early any problems or issues that may arise and thus to proceed with their timely resolution. More specifically, the framework of monitoring the Contractor and management of acceptance includes the following activities:
Monitoring, control and evaluation of the Contractor's performance
Evaluation of the quality and quantity of the products/ services and works delivered/ become accepted
Identification and handling of risks
Management of the relationship with the Contractor: Refers to the initiatives and actions of the Contracting Authority to build and maintain a good relationship with the Contractor, which will be based on mutual understanding, trust, good and frequent communication and finally timely management of any problems that may arise.
Contract Administration: These are administrative procedures, such as:
Keeping the contract in updated form
Control and management of variations in the contract
Payments to the Contractor
Asset Management
Drafting of reports
Termination of the contract.
Dispute Resolution: These are procedures for the selection and application of the optimum method for the resolution of disputes with the Contractor.
Contract Closure: Refers to the control and certification procedures that both parties have discharged their contractual obligations as well as the procedures to evaluate the extent to which the contract was successfully executed and lead to the expected result.

The aforementioned procedures are generally applied even in cases of special types of contracts, as for example the maintenance contracts. However, in cases of contracts that refer mainly to the maintenance of products/ equipment and secondarily to the maintenance of services, there are specific particularities that the Contracting Authority must handle in a systematic and methodical fashion in order to enable the monitoring of the implementation of maintenance works and payment of the Contractor, as well as the evaluation of the quality of the services provided. More information and guidance on the implementation and management of such contracts are given in Annex 6-12.


© 2007 Republic of Cyprus, Treasury of the Republic, Public Procurement Directorate
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