Contract Management Plan

Contract name:

TRIM number: Date: Thursday, April 18, 2019

Contact details

Name: Position:

Business Unit: Division:

Phone: Email:

June 2018
Table of Contents

1. Introduction 3

1.1 Purpose 3

1.2 Use 3

1.3 Responsibility 3

2. General details 4

3. Contract governance 5

3.1 Operational and tactical 5

3.2 Strategic 5

4. Stakeholder management 8

4.1 Key agency stakeholders 8

4.2 Other stakeholders 8

4.3 Communication activities 9

4.4 Relationship matrix 9

5. Performance management 10

5.1 Supplier engagement 10

5.2 Supplier meetings 12

5.3 Key performance indicators 13

5.4 Other reporting requirements 14

5.5 Records and inspections 14

6. Contract conditions 16

6.1 Insurance 17

6.2 Variation procedures 17

6.3 Dispute resolution 21

6.4 Contract review 23

6.5 Contract change log 23

6.6 Contract expiry 24

Contract Management Plan | June 2018 1

7. Benefits realisation 25

7.1 Benefits register 25

8. Risk management 26

Appendix A – Supplier listing 27

Appendix B – Supplier copy 28

Contract Management Plan | June 2018 2

1. Introduction

1.1 Purpose

This template provides guidance on developing a contract management plan and ensuring
no essential steps are overlooked. The use of a contract management plan template
ensures standard and consistent management of the contract, key stakeholders and
suppliers, across NSW Procurement’s portfolio.

1.2 Use

In using this plan, the category manager will determine which sections are applicable. For
high risk, high value contracts it is anticipated that most sections will be completed. For
lower value and risk contracts, sections that don’t provide meaning and value may be
omitted and deleted from the final plan.

The Contract Management Plan is intended as an ongoing guide and record of contract
management activity. The plan should be updated following contract variations and
extensions but also key supplier meetings, performance reviews and other contract
management actions.

1.2.1 [Guide notes]

[Guide notes are in brackets and should be deleted from the final plan.]

1.3 Responsibility

Management and development of the Contract Management Plan is the responsibility of

the category management team with input from key business stakeholders.

1.3.1 Related Documents

This document should be read in conjunction with:

 Category Management Plans

 Procurement Strategic Directions

 Risk Management Guide

 Supplier Relationship Management Framework.

Contract Management Plan | June 2018 3

2. General details

Contract details

Contract number

Contract name

Category

Sub-Category

Supply Positioning1 Choose an item.

Supplier Preferencing2 Choose an item.

Contract commencement date

Contract end date

Optional extensions

Annual value

Total contract value

No. suppliers

Deed of agreement TRIM document number

Reporting TRIM folder

1
Refer Supply Positioning Tool
2Refer Supplier Preferencing Tool. For panel contracts, if suppliers have different preferencing, indicate the
outcome in the multiple supplier list at Appendix A

Contract Management Plan | June 2018 4

3. Contract governance

3.1 Operational and tactical

Roles and responsibilities

Director

Category Manager

Category Specialist

Supplier General Manager Name:

Phone:
Email:

Supplier Account Manager3 Name:

Phone:
Email:

3.2 Strategic

[Delete selections that are not applicable]

3.2.1 Category Management Working Group

Name Position

3 For panel contracts, attach supplier contact list at Appendix A

Contract Management Plan | June 2018 5

 Name Position

Meeting frequency

Meeting minutes [Insert link or file path]

3.2.2 Client Reference Group (e.g. Travel Network Group)

Name Position

Meeting frequency

Meeting minutes [Insert link or file path]

3.2.3 Supplier Reference Group

Name Position

Contract Management Plan | June 2018 6

 Name Position

Meeting frequency

Meeting minutes [Insert link or file path]

Contract Management Plan | June 2018 7

4. Stakeholder management

4.1 Key agency stakeholders

Agency Name Position

4.2 Other stakeholders

[E.g. Industry groups, supplier representatives, market analysts, etc.]

Name Position

Contract Management Plan | June 2018 8

4.3 Communication activities

Audience Timing Item Purpose Medium Responsible

Note: If you have a separate communications plan, please reference it here instead of
completing the above table.

4.4 Relationship matrix

Category Supplier CMWG Eligible

Activities
manager Customers

Provide KPI reports Responsible Approve Consult Inform

Update catalogue

Prepare contract guide

Note: If you have a separate RACI Chart, please reference it here instead of completing
the above table.

Contract Management Plan | June 2018 9

5. Performance management

5.1 Supplier engagement

5.1.1 Supplier segmentation

a) Supply positioning

Category management and planning varies for different positions on the supply positioning
matrix. More effort is generally focused on higher risk and higher value acquisitions than
on lower risk or value ones.

Strategic critical: strategic suppliers where there are few sources, supply is critical, there
is a monopoly and there is high spend.

Strategic security: Tier 2 suppliers where supply is critical, there are few alternatives, few
major sources and low spend.

Tactical profit: Tier 3 suppliers where there are many sources, many alternatives and
high spend.

Tactical acquisition: other contract suppliers where there are many sources

Select Supply Positioning Considerations

Strategic Critical Medium term contract Supplier development

Detailed contracts Price management
(Total cost)
Supplier analysis Contingency planning

Strategic Security Long term contracts Generate alternatives

(Reduce risk or demand) Indexation Volume conscious
Stockholding Cost insensitive

Tactical Profit Market knowledge

Market exploitation
(Drive value) Flexibility/risk
Short term contracts
Active sourcing

Tactical Acquisition System contracting Paperless ordering

Cash with order Consignment stocks
(Simplify)
Stockless purchases Credit card payment

Contract Management Plan | June 2018 10

 b) Supplier preferencing

The relationship between buyer and supplier is (usually) a two-party relationship. It is

essential for effective contract management that we understand how the supplier views the
NSW Government as a customer, and how they may seek to manage our relationship.

Core: NSW Government is a significant account for the supplier. They will work hard to
maintain sales and retain the account.

Development: NSW Government is a new or developing account. The supplier is seeking

to expand revenue and will provide high levels of service and visibility to do so. In the short
term, they may compromise sales margins to win business, with a view to recovering the
lost margin in the longer term.

Exploitable/ Harvest: Suppliers make their profit disproportionately from exploitable or

harvest accounts. This may mean they seek to build inertia for the customer, so they can
continue to harvest the account in the longer term. The supplier will seek to build
relationships within the client organisation, maximise switching costs and build barriers to
entry for competitors.

Nuisance: The cost of servicing the account may mean that sales revenue is not
converting to profit. The supplier may seek to manage the account on their own terms,
imposing standard rather than customised solutions and automating processes as much
as possible

Select Supplier Preferencing Considerations Supplier

Development Nurture client

Expand business
Seek new opportunities

Core Cosset client

Defend rigorously
High service and response

Nuisance Give low attention

Low interest
Lose without pain

Exploitable Drive premium prices

Seek short term advantage
Risk losing customer

Contract Management Plan | June 2018 11

5.2 Supplier meetings

Proposed Location (DFSI, Supplier,

Meeting Type Frequency
Teleconference)

Fortnightly

Monthly

Quarterly

Half Yearly

Strategic review – Yearly

contract performance &
structure, supplier
relationship, etc

Other (Specify)

[The frequency of supplier meetings and level of management involved should be guided
by the category supply positioning and supplier preferencing outcomes. Consider which
meetings should involve operational, tactical or strategic management4.

As a minimum, suppliers should have an opportunity for in person meetings with the
category manager once a year. For large panel contracts or schemes made up of tactical
acquisition suppliers this may, for example, be via an annual forum or supplier roundtable.

Strategic critical and other key suppliers may require more frequent Category Manager/
Account Manager meetings plus occasional meetings between strategic management
(General Manager, Executive Director, CMWG, etc). Key strategic suppliers may also be
offered, or request, opportunities for meetings at senior leadership or executive levels
within NSWP or DFSI as appropriate. The Category Manager and Director should
determine the frequency of meetings.

An annual strategic review of the contract structure, including effectiveness and suitability
of incentives, key terms and conditions, along with the supplier relationship and
performance, is recommended for all strategic critical and strategic security contracts. The
date and attendance of all meetings should be recorded, plus all outcomes and agreed
actions.]

4 Operational – category team member and supplier representative responsible for day to day performance
of the contract
Tactical – category manager and supplier account manager with responsibility for the relationship and
overall effectiveness of the category/contract
Strategic – Director or Executive Director and supplier General Manager (or equivalent) with responsibility
for long term strategy and relationship development

Contract Management Plan | June 2018 12

5.3 Key performance indicators

Measure Target Frequency of measurement

5.3.1 Performance reports

Performance reports due End of each [month/quarter/year]

Next report due [Insert date]

File location [Insert file path, SharePoint link or Bravo reference]

[A performance report template is available. Alternatively, performance reports can be

generated in Bravo.]

5.3.2 Performance incentives

[If the contract includes incentives for high performance or consequences for not meeting
KPIs please list them here.]

If targets are met…[list actions]

If targets are exceeded…[list actions]

If targets are not met…[list actions]

5.3.3 Improvement plans

[Supplier performance must be be tracked over time, and any downward trends or issues
addressed promptly to mitigate service deterioration or supply interruptions. It is better to
solve potential issues before they turn into a crisis.

Contract Management Plan | June 2018 13

 Contract and/or supplier performance issues are unlikely to occur in isolation. Both parties
need to consider their responsibilities and collaborate on the solution.

All Improvement Plans or rectification actions should be documented and agreed by the
relevant parties. Performance should be closely monitored until the issues are resolved.]

Date of plan & KPI/ measure Review Open/

Summary of agreed actions
file path targeted date Closed

5.4 Other reporting requirements

Report Name Frequency Generated by

E.g. Agency Consumption &

spend

E.g. Management Fee

E.g. Benchmarking

5.5 Records and inspections

Suppliers are required to keep and maintain all necessary records for the term of the
agreement and seven years (Clause H7.4 of the Head Agreement). Those records must
be available for inspection and/or audit as reasonably required by NSWP, a regulator or
auditor. NSWP is also permitted to inspect the supplier’s premises to confirm compliance
with the contract.

Contract Management Plan | June 2018 14

 5.5.1 Annual audit

Clause H7.5 of the Head Agreement allows NSWP to conduct an audit of the supplier’s
performance and compliance with the deed and the customer contracts.

5.5.2 List of inspections and audits

The Category Manager and Director may choose whether to conduct regular or one-off
inspections and audits, in which case they should be documented here. Any inspections or
audits specified in the Head Agreement, or as directed by an auditor or the Executive
Director, NSWP, should also be listed.

[List any audits or inspections of supplier records and/or premises and the outcome]

Inspection/ audit date Items audited Outcome

Contract Management Plan | June 2018 15

6. Contract conditions

Clause
Function Obligation Supplier NSWP Due
Reference

Warranty Exchange / Replace X Ad hoc

Variations Price X Annually

Insurances Product X Ad hoc

Other X

Payment Terms Volume Discount X

Early Payment X

Consolidated Invoicing X

Electronic Orders

Maintenance of
Compliance X
Insurances

Review Currency of
X Ad hoc
Insurances

Audit Requirements X

Product Certification X

Licence Conditions X

Other
Termination X
Obligations

Intellectual Property X

Other

Contract Management Plan | June 2018 16

6.1 Insurance

6.1.1 Minimum requirements

Certificate of
Type Requirement Insurer Expiry
currency

Broadform Public [$10 million] for any single [Date Sighted/

and Products occurrence and unlimited in the File path]
aggregate as the number of
occurrences
The total aggregate liability during
any one period of insurance for all
claims arising out of the supplier’s
products shall not exceed [$20
million]

Workers As required by the laws of each

Compensation relevant State and Territory

Professional [If required, must be in place

indemnity before the first Customer Contract
is entered into]

6.1.2 Liability caps

Customer liability cap (clause c13.1) for each customer [Specify the liability cap applicable to each
contract Customer Contract having regard to the risk
attendant to the nature of the services]

Supplier Liability Cap (clause 13.2) for each customer [Specify the liability cap applicable to each
contract customer contract having regard to the risk
arising from the nature of the goods/services]

6.1.3 Supplier notification of changes

The supplier must notify NSWP within two business days of any change to its insurance
that may affect its compliance with the minimum insurance levels required under the Head
Agreement. This includes cancellation of a policy or reduction of the limit of coverage
below the minimum requirement.

6.2 Variation procedures

[Provide details of any variation procedures in the contract or agreed with the supplier that
differ from the standard clauses below]

Contract Management Plan | June 2018 17

 6.2.1 Change requests

Either party may request a change to the scope, packaging or description of any goods or
services supplied under the agreement, or the requirements of a supply schedule, by
issuing a notice in writing to the other party.

a) Change request by the Principal

If a change is requested by NSWP, the Supplier must provide within 10 Business Days, or
such other period as the parties may agree, a change proposal that

i. sets out a full description of the change

ii. specifies all changes to the relevant contract price, the relevant timeframes
and any other conditions the supplier reasonably requires to perform the
change, including the reasons for those changes.

Any adjustment to the contract price must be based on the supplier’s actual direct costs as
a result of the change, including a reasonable profit allowance.

b) Change request by Supplier

If the Change is requested by the supplier, a change proposal must be included with the
request or provided at a later date as agreed with NSWP.

c) Assistance from the Principal

If the supplier requires information from NSWP to prepare a change proposal, NSWP will
provide or arrange to provide the information promptly within a reasonable period from the
date of the request.

d) Acceptance or rejection of a Change Proposal

NSWP may accept or reject a change proposal at any time within 20 business days of
receipt. Where NSWP accepts a change proposal, the parties will execute a change notice
or variation on those terms.

6.2.2 Price variation mechanism

The supplier may apply for a price variation [specify frequency as per agreement]. As per
Attachment [X] of the Head Agreement, the following price variation mechanism will be
applied:

[Delete non-applicable sections]

a) Price variation based on foreign exchange:

i. If the Prices are variable only in respect of rates of exchange, the actual
difference between rates paid and the rates upon which the Tender was

Contract Management Plan | June 2018 18

 based will be allowed subject to production of satisfactory documentary
evidence.

ii. The nominated foreign currency and associated exchange rate found in
Schedule 3, which is based on the Westpac Bank’s relevant selling rate as
published in the Sydney Morning Herald seven days prior to the RFT closing
date and time.

iii. The nominated exchange rate will be used as the basis for any future price
variation request.

b) Price variation based on labour and material factors

i. Labour and material factors

CP = CPo x (0.1 + Y(L) + Z(M) )

Lo Mo

Where:

CP = Current Customer Price.

CPo = Customer Price at start date.

Y = The labour factor, expressed as a decimal, being the proportion of

the Customer Price subject to variation by labour costs.

L = The weekly award rate of pay, or the effective award hourly rate
(EAHR) calculated in accordance with the EAHR formula detailed
hereunder, for the category of labour primarily employed on the
Agreement, most recently published at the date of application for
price variation.

Lo = The weekly award rate of pay, or the EAHR calculated in accordance

with the EAHR formula detailed hereunder, for the category of
labour primarily employed on the Agreement, most recently
published at twenty-one days before tender closing.

Z = The materials factor, expressed as a decimal, being the proportion

of the Agreement price subject to price variation by materials costs.

M = Materials cost index most recently available at the date of

application of price variation.

Mo = Materials cost index, corresponding to the index used for "M", most
recently available twenty-one days before tender closing date.

Note: Y (Labour Factor) and Z (Material Factor) must be expressed as a decimal and
together, must total 0.9.

EAHR Formula:

Contract Management Plan | June 2018 19

 If this formula is elected instead of the weekly award rate of pay in the above formula,
an "Effective Award Hourly Rate" (EAHR) which is determined by the following
formula. If the award rate of pay is nominated for L and Lo, then this formula does not
apply.

EAHR = AW x (52 + LL) x (1 + WC + PT + S)

HW (52 - LA)

Where:

AW = Weekly award rate of pay for the labour primarily engaged in the
Agreement, including industry allowances and site-specific
allowances approved by the appropriate State or Commonwealth
Authority.

HW = Award hours per week.

LL = Award annual leave loading (expressed as a decimal) multiplied by

the number of days paid recreation leave covered by the award
divided by 5.

LA = Award leave allowance divided by 5.

WC = The recommended rate (expressed as a decimal) of contribution of

Workers Compensation in accordance with the relevant legislation.

PT = Payroll tax percentage (expressed as a decimal).

S = Rate of employer's superannuation as a percentage of the

employees’ wages in accordance with the relevant award
(expressed as a decimal).

ii. Publish Price List Formula

 TP * ( PLP) 
RP   
 ( PLPo) 
(Note: * = means multiplication)

Where:

RP = Revised customer price.

TP = Tendered price (or latest revised price)

PLPo = Published list price effective on the date 7 days before tender
closing (the base date), or the published list price upon which the
latest revised customer price is based.

PLP = Published list price effective at date price variation

application is lodged.

Where the supplies are imported, and the published price list is in an
overseas currency, the above formula shall be modified as follows:-

 TP * ( PLP) Eo 
RP   *
 ( PLPo) E 
(Note: * = means multiplication)

Contract Management Plan | June 2018 20

 Where:

Eo = The exchange rate as published in the Sydney

Morning Herald on the base date, expressed as selling price A$=

E = The exchange rate most recently published in the Sydney Morning

Herald at an exact monthly interval from the base date, expressed
as selling price A$=

iii. CPI Option

RP = OP * L
Lo

(Note: * = means multiplication)

Where:

RP = Revised Customer Price.

OP = Original Customer Prices.
L = CPI at price variation date.
Lo = CPI at the Base Date.

6.2.3 List of agreed variations

Date of
Type Change made File path
execution

Price

Product

6.3 Dispute resolution

Disputes are to be managed in accordance with the Dispute Schedule [section number] of
the deed of agreement. Escalation levels within NSW Procurement and the supplier are
currently as follows:

Level NSW Procurement Supplier

1 Secretary

2 Deputy Secretary

Contract Management Plan | June 2018 21

 Level NSW Procurement Supplier

3 Executive Director Government Services

4 Category Director

5 Category Manager

6.3.1 Dispute notices

Either party may give written notice of a dispute to the other party via a Dispute Notice.
The notice must provide details of the history and circumstances of the dispute and give
reasons for why the party is disputing the issue.

Disputes subject to a Dispute Notice must be settled within five business days, or else
escalated through the dispute resolution process detailed in [section 1.3] of the Dispute
Schedule.

Resolution
Date Issued by Issue Response/ Escalation
Date

NSWP/
Supplier

6.3.2 Mediation

If the parties are unable to resolve a dispute directly or via senior management, they may
agree to a mediation process. NSW Government standard terms require the mediation to
be administered by the Australian Commercial Disputes Centre (“ACDC”) and conducted
in accordance with the ACDC Mediation Guidelines.

If the supplier is a “small business” (an Australian or New Zealand based firm that has an
annual turnover of under $2 million in the latest financial year), then the parties may agree
to refer the dispute to the Small Business Commissioner for mediation.

Contract Management Plan | June 2018 22

6.4 Contract review

Review Type Frequency & date due Generated by Actions/ Outcomes

E.g. Contract Review Annually

E.g. Price review As defined in the contract

E.g. Opportunity Each contract extension

Assessment

6.4.1 Negotiation opportunities

Opportunity Timeframe Outcome

E.g. extension option

6.5 Contract change log

Detail When Why

Contract Management Plan | June 2018 23

6.6 Contract expiry

At the expiry of the contract, the supplier must handover all necessary records and
information to ensure, at a minimum, that recordkeeping, data capture and intellectual
property requirements are met.

Similarly, NSWP must provide any outstanding reports, payments or other items to the
supplier including the discharge of any performance and related financial guarantee.

6.6.1 Exit plan

The Exit Plan will vary between contracts, but should address at least:

 return of any documents

 return or transfer of any inventory

 access to any software coding on interface information that allows for on-going use
and maintenance of any software that has been developed and paid for under the
contract

 maintenance of confidentiality

 terms of any disclosure of any info to the media

 use of any IP that had been developed as part of the relationship

 return of any security access

 use of any Government branding.

An exit plan template is available.

File path/link to exit plan: [Link/File path]

6.6.2 Transition plan

If the contract has been renewed and a new supplier is in place, a transition plan will also
be required. The transition plan assists with successful on-boarding of the new supplier
and exit of the incumbent

A transition plan template is available.

File path/link to transition plan: [Link/File path]

Contract Management Plan | June 2018 24

7. Benefits realisation

7.1 Benefits register

Data Baseline Target Actual Variance

ID Description Owner Type Comment/Actions
Source ($K) ($K) ($K) ($K)

Financial
1
Non-Financial

Financial
2
Non-Financial

Financial
3
Non-Financial

Financial
4
Non-Financial

Financial
5
Non-Financial

Financial
6
Non-Financial

Note: Savings and key qualitative benefits must be recorded in the NSW Procurement Benefits Register with the PMO. For more
information on benefits realisation refer to the NSW Government Benefits Realisation Management Framework.

Contract Management Plan | June 2018 25

8. Risk management

Likelihood Impact Financial Risk Insurable Insurance

Category Description Other Mitigation
Rating Rating Impact Range Level (Y/N) Type

Note: Risk definitions are available from the Procurement Risk Register (section P1 - Analyse Business Needs), which can be
referenced here instead of completing the above table.

Contract Management Plan | June 2018 26

Appendix A – Supplier listing
Complete table or provide Bravo contract reference number

Supplier Preferencing Account manager Phone Email

Choose an item.

Choose an item.

Choose an item.

Choose an item.

Choose an item.

Choose an item.

Choose an item.

Choose an item.

Contract Management Plan | June 2018 27

Appendix B – Supplier copy
Please complete the Contract Management Plan – Supplier Copy to discuss with the
supplier. When agreed, place a signed copy on file with this Plan.

File path (signed copy):

Contract Management Plan | June 2018 28

 NSW Procurement | Department of Finance, Services and Innovation
Address: Level 11, McKell Building, 2-24 Rawson Place, Sydney NSW 2000

Phone: 1800 679 289 | TTY: 1300 301 181

www.procurepoint.nsw.gov.au