On 24th March 2023, iNetwork hosted the Managing Expectations and Fluctuating Spend Roundtable discussion. The discussion focussed on the issues surrounding managing contracts within the public sector and the challenges faced by contract managers within the current financial crisis. Delegates heard from two speakers who have experience within this sector and were provided with the opportunity to discuss their own experiences and gain advice from speakers and attendees within the group.
Mike Tyler, North West Construction Hub (NWCH), opened the discussion with a session looking at the frameworks and agreements within the pre-contract stage in construction and what considerations need to be made prior to agreeing the contracts in order to ensure the tender process and subsequent contract runs as smoothly as possible. He noted that there has been increased pressure on budgets and large cost increases over the past 18 months, which have proved challenging within the sector and have impacted on staffing, energy and supplies. There has also been some mixed messages regarding the best route to market provided to construction firms and from professional consultants, resulting in confusion for all involved parties and a breakdown in the tendering process.
In order to mitigate risks, Mike discussed how procurement and contract managers need to ensure their suppliers and contractors are provided with up-to-date information around the requirements and expectations of the contracts at the tender stage. Research should also be undertaken into the current market and support offered to share knowledge with all involved parties; this process can be time consuming, however it helps to build trust and relationships which will be invaluable within the contract management stage. Relationships and communication are key for all involved parties to understand and agree on the ongoing needs and pressures within the contract, poor communication can result in the relationship and contract breaking down and misunderstandings regarding the expectations of all parties involved in the contract.
Deborah Gaunt, Corporate Procurement Officer, Calderdale Council, then advised delegates on how to manage relationships during challenging times within the contract. She discussed the importance of understanding the impact of the present economic factors on your organisation’s budgets, resources and the impact on the market, including the resources available to suppliers, high production and purchase costs. Deborah advised there are a lot of factors that have impacted the market, including pressures that could not have been predicted, such as the Covid-19 pandemic and the war in Ukraine. As a result, many suppliers and organisations have higher production costs, delays and increased costs within the supply chain, and higher operating costs whilst dealing with reduced budgets and financial constraints.
Deborah covered some important considerations for both authorities and suppliers throughout the management of contracts. It is important to determine whether price increases are realistic and viable and whether these can be afforded within the budget. Organisations also need to understand the current market and how to find this information; utilising the knowledge of others is key and sharing information within your networks can support with identifying whether a supplier is asking for appropriate adjustments. Risk assessments and contingency plans should also be considered, such as looking at what negotiations are possible and utilising existing relationships to support this, and ensuring that all parties understand the expectations and contractual agreements in case of unforeseen difficulties. Deborah identified that good and open communication is key to building a strong working relationship throughout the contract, however it is vital that expectations are managed and this may result in difficult decisions being made, the impact of which can be mitigated by having this strong relationship with suppliers.
Following the presentations from Mike and Deborah, the group was then given the opportunity to ask questions and raise their own experiences. This led to an insightful and productive discussion, with many delegates engaging within the discussion and sharing their knowledge and learning with the group within a safe, non-judgemental space. This topic remains a priority for iNetwork and the Connected Procurement and Commissioning (CPC) programme is committed to revisiting this issue in future events and activities.
For more information, please contact: Hannah Gains, Stakeholder Engagement Manager, (CPC Programme Lead), iNetwork.