6.3.3 Key factors for an effective Contract Management

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The factors given below have been proven that they can play a particularly important role in the effective management of a contract:

Proper strategic decisions and drafting of the right contract. As it was also mentioned in the subchapter 6.3.2, the contract is the cornerstone in the exercise of its effective and proper management. Every contract must set out its basic principles, clarify its scope, define the term of its execution, define the procedures that must be followed with regard to the communication between the Contracting Authority and the Contractor, implementation of changes, Contractor performance evaluation, acceptance or rejection of the deliverables of the Contractor, identification and management of risks, problem handling, dispute resolution, approval of payments and closure of the contract.
Effective evaluation procedures: The evaluation procedures of the candidate economic operators and their proposals during a tender must be clearly defined and executed in accordance with the principles of the Code of Ethics for the purposes of objectivity, non-discrimination, integrity, transparency, secrecy and confidentiality in order at the end to ensure that the contract is awarded to the most suitable candidate.
The Contract Management Team has the qualification, knowledge and experience required in order to manage the contract effectively. The roles involved in the management of a contract and their competencies must be clearly specified. The officials who will be called upon to serve these roles must have been selected using objective criteria in order to ensure that on the one hand they have the necessary technical knowledge, and on the other, they have those characteristics (e.g. communication skills, cooperation skills, negotiation skilss, lack of irritability, etc.) which are necessary to cultivate a good climate of cooperation with the Contractor.
Taking initiatives & preventive actions: For the management of a contract to be effective, it must be based on actions of a preventive nature with anything regarding possible risks, unsatisfactory performance of the Contractor, supply of low quality services or delivery of low quality products, rather than actions of a suppressive nature.
Formulating a “win-win” situation for both parties: The management of a contract must be based on the perception that both parties must "win" from its implementation and thereby emphasis must be given to the development and maintaining of good communication and cooperation between them, timely response to potential problems and resolution of any tensions.
Provision for the implementation of changes. The contracts (general and special conditions) are prepared together with the rest Tender Documents at quite an early phase of the Project, in a time when the potential risks or other type of issues that may arise next are not quite distinct. This is exactly the reason why they should provide for the possibility that necessitates change and thus they should determine the procedures and mechanisms by which the requests for change shall be made, reviewed and become accepted or rejected.
Monitoring the Contractor's performance: The Contracting Authority must monitor and continuously evaluate the performance of the Contractor in order to ensure that the final product will be characterised by best value for money.
Flexibility/ adaptability: Given that in the Project implementation environment, the need for change may arise due to technological developments, institutional changes etc., it is very important to ensure that both parties are willing to adapt the terms of the contract so that they respond to the new conditions.

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