Brentwood Borough Council – The Commercial Contracting Challenge
The International Association for Commercial and Contract Management (IACCM – www.iaccm.com) recently indicated through its global research that the cost of a contract erodes on average by 9.2% over its lifetime. This means that a £1,000,000 contract would end up costing £92,000 more than budgeted for. While some contract overruns are expected because of agreed extensions or changes to scope, evidence accrued across all sectors over the last decade shows that many are not. Contracts have traditionally been seen as legal documents where simple compliance is the order of the day rather than commercial assets that are “living documents” where outcomes and relationships need to be managed if they are to fulfil their true potential.
The Commercial Contracting Challenge has been developed by NIP Ltd, SPS Consultancy Ltd and East of England LGA.
It combines traditional capability review techniques underpinned by state-of-the-art diagnostics to develop an effective challenge process. Organisations assess for themselves how well prepared they are to drive up contract management standards enabling them to unlock the huge opportunities that are to be found by treating contracts as commercial assets rather than simply legal documents.
This case study describes what happened when Brentwood Borough Council undertook the
Commercial Contracting Challenge at the end of 2016.
Brentwood Borough Council recognised that as more core services were delivered either by external contractors or as a shared service with other public bodies, the ability to manage contracts and relationships effectively was now of paramount importance. Council CEO, Phil Ruck, was keen to change the way that officers and elected Members viewed the contracting process. “Market shaping, procurement and contract management need to be viewed as an integrated and important activity, and everyone involved needs to have the appropriate tools and skills to undertake it effectively”, he said. Yet he also wanted to avoid the situation where an external organisation simply audited the Council and told the Senior Management Team what it already knew. “People don’t identify with, let alone own, the problems by following that path”, he added.
After meeting with the East of England LGA, the Council decided to pilot the new Commercial Contracting Challenge. Following on from a multi-disciplinary workshop and selected interviews, 13 “Business Value Codes” (BVCs) which the council determined as the important aspects of effective C&RM were defined. Jane Mitchell, the Council’s Senior Payments & Procurement Officer, explained in more detail. “BVCs are basically ‘what matters’ with C&RM and each one has a predefined outcome ranging from 1, Not Recognised to 5, Embedded”. Unlike with a survey, the diagnostic describes the status attributes of each attainment level, giving the respondents a standard they can use to assess their current position, and therefore removing some of the subjectivity, “she said.
The diagnostic invitation was sent to officers whose roles were categorised as Directors, Managers, Technical Specialists, and Supervisors. Respondents were then invited to a further workshop where they were invited to assess the relative importance of each BVC as well as the level of attainment they wanted to achieve within 12 months.
An example of the workshop output is shown below for the BVC “Information Storage”.
The report was well received at all levels of the Council, including by elected Members as it combined the power of external expertise with the ability to self-audit. Eddie Gibson, Senior Manager at EELGA, identified the fundamental differences from a conventional external audit. “People involved owned the problems. They identified them and devised their own action plan for improvement; measured against a clear statement of attainment within an appropriate and achievable timescale. This is far removed from the traditional approach of an external organisation coming in and telling the Council how to improve, how quickly and by how much.”
The diagnostic was built and run by New Information Paradigms www.nipltd.com who also developed and managed the recent English local government NPS 2014 assessment. Chris Valle, NIP Managing Director, praised the Council for piloting the Challenge and said that, “managing and measuring what matters from within is the only effective way to embed change, as too often it is seen as being someone else’s agenda or perspective”.
The Challenge has helped the Council identify that their approach to market engagement and contract management is about more than just skills – it requires a transformation in attitudes, culture and communication. The diagnostic in particular showed up differences in perceptions and understanding between departments and even between roles. Phil Ruck said that, “it was a real eye-opener as the Challenge took us far beyond the usual compliance issue into areas such as forward planning, recognition and communication. We can use this as a platform to drive transformation that sticks”.
Jane Mitchell was delighted with piloting the Challenge process. She explained: “the Challenge was a discovery process for us in that we found we were already doing well in some areas and that outcomes achieved can vary between departments and job role. Working with Eddie at EELGA, Ken and the NIP team was exciting as they helped us throughout and provided objectivity in their thinking”. She added; “we now have a clear picture about every aspect of C&RM, where we need to improve and a common level of aspiration”.
Cecilia Tredget (East of England LGA Managing Director) was also pleased with the Challenge: “C&RM repeatedly shows up as a priority issue for elected Members and chief officers alike, but so often there is little by way of exemplar working for us to point at. This has allowed us to produce an effective and documented pathway for change for any council wishing to embed lasting transformation into such area for the whole sector”.
Please contact any of the following for more information on the Commercial Contracting Challenge:
East of England LGA
Contact email@example.com , 01284 358300
Brentwood Borough Council
Contact Jane Mitchell, firstname.lastname@example.org, 01277 312853
SPS Consultancy Ltd
Contact Ken Cole, email@example.com, 07721 556537
Contact Mike Marten, firstname.lastname@example.org , 01344 753700