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The Contract Management Plan
 Gives a background to the contract
 Defines who is involved
 Provides a basis for contract
management

 Highlights risks & risk management
strategies

ITC

M9:U3:3
...
2-1

Action Point

3
...

Try to come up with some different interpretations for
the term “delivery date”
...
2-2

Action Point

3
...
2-3

Policy & procedures
1
...


Committing the organisation to additional
expenditure (i
...
issuing a contract variation to
the supplier)

Purchasing function

Approval of expenditure additional to the
budgeted amount / use of contingency funds

Contract management function

Certifying that the products have been
supplied or the services have been provided
to specification

Technical function

Making payment to the supplier

Finance function
M9:U3:3
...
Communication policy: who can say what to
whom…

3
...
3-2

Policy & procedures
4
...


ITC

M9:U3:3
...
3-1

Policies & procedures in your company
Describe the policies and procedures in your company (or
one that you know well) which are relevant to contract
management
...
3-4

Contract schedule – process of preparation
Scheduling — based on a “bottom up” process
...
4-1

The contract schedule
 Identify activities and milestones
 Activities = specific tasks (or a series of related
tasks) to be undertaken in the process


Avoid listing too few or too many activities

 Milestones = key achievements which are the result
of a series of related activities


E
...
deliverables for payment, start (or completion) of
design, completion of installation…

 Screen activities
 Ask yourself:


ITC

What needs to be done before this
activity can take place?
Why do we need this activity?
M9:U3:3
...
4-1

Identifying activities and milestones
Think of a small, procurement-related contract in your
company (or one that you know well), and write down the
activities and milestones involved in completing that
contract
...


ITC

M9:U3:3
...
4-4

The contract schedule
 Calculate the preliminary schedule and
prepare a network chart

0

Lag
1 week

Start
Lag
4 weeks

1

Sequence
Dependency

1

Activity A2

4

6

M3

M4

Activity A1
2 weeks

ITC

5 weeks

M2

M1

6
10

10
M5

Activity A3
4 weeks

M9:U3:3
...
4-6

Action Point

3
...
It shows the milestones and the duration of
each activity linking the milestones
...


ITC

M9:U3:3
...
4-2 (Cont’d)

Critical path networks and Gantt charts
1
...

2
...

3
...

4
...
What is the critical path in the network?
6
...
What are the implications if milestone D were to be
delayed by two weeks?
ITC

M9:U3:3
...
4-3

Preparing a contract schedule
Take the contract you looked at in Action Point 3
...

Steps to be taken:
• Screen activities and milestones
• Prepare activity milestone cards
• Lay out & sequence the activities and milestones
• Review and edit the sequence
• Draft the network flowchart
• Allocate responsibilities for activities and milestones
• Make time estimates
• Calculate the preliminary schedule and prepare a network chart
• Make a Gantt (bar) chart
ITC

M9:U3:3
...
4-10

Action Point

3
...

Also, describe what can be done to improve this process
...
4-11

The contract budget
1
...
5-1

The contract budget
2
...
5-2

Action Point

3
...
5-3

The contract budget
3
...
5-4

The contract budget
4
...
5-5

Action Point

3
...


ITC

M9:U3:3
...
g
...

ITC

M9:U3:3
...
6-1

Your contract quality plan
Do you normally have a contract quality plan for your
high-risk contracts?
If yes, how is it agreed upon with the supplier and what
does it include?
If no, what is the reason?

ITC

M9:U3:3
...
7-1

The Supply Positioning Model

Impact/
supply
opportunity/
risk rating

Bottleneck

Critical

Routine

Leverage

Expenditure
ITC

M9:U3:3
...
7-1

Determining priorities
Do you normally determine priorities for your different
contracts?
If yes, which method do you use? If no, what is the
reason?

ITC

M9:U3:3
...
8-1



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