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UK’s Audit Office Highlights Need For Contract Management Skills

April 28, 2011

In its latest report on public sector procurement in the UK, the National Audit Office once again highlights the absence of the commercial and contracting skills needed to support successful procurement, especially related to projects.

“The NAO welcomes the current plans of the Treasury and Cabinet Office to strengthen project assurance. The NAO highlights the need for independent challenge capable of stopping projects which do not give the prospect of value for money. This is particularly important as there is still a shortage of the skills needed to manage and oversee complex major projects. Better contract management skills are particularly needed to obtain best value during the contract period, including by ensuring the public sector shares in cost efficiencies achieved in existing contracts.”

For those who engage with public sector bodies in most parts of the world, this will come as no surprise. Major investments in traditional procurement skills and methods have done little to stem the under-perfromance of many project acquisitions. To be fair, it has taken quite some time for the private sector to grasp this issue Рand even now, they have invested far more on the oversight of supply contracts than they have on buy-side skills and capabilities. There is a universal tendency to see performance as a supplier problem, rather than a shared objective and challenge.

With regard to the public sector specifically, IACCM has increasingly been selected as a provider of training and skills development precisely because it¬†addresses the challenge of improved collaboration. ‘Adversarial relationships are still embedded in Procurement thinking’, comments Jim Bergman, IACCM’s VP of Training Services. ‘There is a big difference between an adversarial approach which focuses on blame, and a collaborative approach that focuses on resolution.’

It is clearly foolish to believe that long-term collaboration comes naturally to any organization. Their needs and priorities are always subject to divergence and change. But failure to develop the right people and systems to oversee contract relationships leaves both suppliers and their customers blind to what is happening. Good relationships understand that change is inevitable and set up the structures needed for its management, rather than ignoring it until there is an explosion.

One Comment
  1. After working in the medical industry (Australia) and supplying to public and private hospitals it is easy to see the adversarial way contracts or handled. And as a supplier it was hard to get them to acknowkedge any alternatives.

    While utilising 3PLs, I found one of the best approaches to get them to not only perform better, but also to pass on benefits, was to ask the question “how can we make your job easier?” This brought to the table the mindset of attacking the issues not the company, from here gains were made on both side of the agreement.

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