Drivers of change
The drivers of change are both external and internal. The former are outside the contract manager's control. For example, the needs of customers, internal and external, will change over time to reflect trends, changing practices, legislation, market forces, and so on. This is merely a reflection of the general situation we face in business and life.
Consider the following from science fiction writer Isaac Asimov and substitute 'contract' for 'world' in the second sentence. 'It is change, continuing change, inevitable change that is the dominant factor in society today. No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be.'
By internal drivers I mean those that the contract manager can generate by being proactive and seeking advantageous change. The essence of contract management is managing its future and as author Arnold Glasow has observed: 'The trouble with the future is that it usually arrives before we are ready for it.'
Proactive change management
Given that problems and change are inevitable, no useful purpose is served by just lying back and waiting for them to happen. Proactive management of change is therefore essential if the future of the contract is to be managed to the most beneficial effect for client and contractor.
Changes for which action is anticipated and control mechanisms are developed can be handled positively and successfully. The facilities and/or contract manager should always bear in mind that change, as well as being an inevitable characteristic of services contracts, is also:
- an opportunity to demonstrate commitment and capability to both contractor/supplier and internal customers
- a key to developing all round contract relationships to mutual advantage
- a chance for both contractor and client manager to develop real customer service to their respective and common customers.
Fundamental framework
There are some simple ground rules to provide an effective framework for change management. It is sound practice to:
- make sure that all roles and responsibilities are clearly defined in the contract and understood by everyone concerned
- ensure that regular progress meetings and reviews involve the key players and that they in turn are consulting colleagues in order to reflect all the views that are relevant to the monitoring and planning process
- get the communications channels and rules firmly established. Who communicates what? To whom? How often? Through what media? For what purpose?
- establish and maintain formal change management procedures. Make it a contractual obligation that no change is valid unless its introduction has followed and fully complied with the established procedure.
Change management procedures need not be complex or heavily bureaucratic. In fact, the simpler they are, the better they will operate, because people will more willingly comply with them.
Everything that is necessary can be summarised on one sheet of A4 paper, which clearly shows:
- the proposed change
- the impact of the change (estimated or firm)
- the signatures of both client and contractor, without which the change is not contractually valid.
Supporting documentation will nearly always need to be attached to the change form, but that one sheet of A4 provides an effective and valuable focus for the contract managers.
Changes should also be a natural consequence of performance monitoring, but that should not be the only way in which change is introduced or considered.
Does the service in question lend itself to regular surveys of the users and/or the end customers? Are they satisfied with the service in terms of quality, reliability, responsiveness? Are the users and customers fully aware of the service that is available and what it can do for them? How do they see the benefits gained or the difficulties encountered? How do they rate the value for money? Are there any new services they would like to see introduced or that they need to meet changing usage or requirements?
Surveys should be introduced with care to ensure that they will be cost effective. In most cases, the contractor will value the information to be gathered from such exercises and will be happy to take on board the responsibility for organising and analysing them.
The cost of change
Finally, change will almost inevitably have an impact on service cost. This really emphasises the importance of the pre-contract phase of management, in which costs and prices are clearly identified during the tender and negotiation processes.
The traditional approach to contract pricing is that of a fixed price for a fixed scope over a finite period. That will generally work effectively with the purchase of product. It will work in many instances with projects, but it is an unrealistic approach to the procurement of live services.
The manner in which costs and prices are identified prior to contract award and the mechanism built into the contract for cost and price management are the key to the management of the cost of change.
Source
The Facilities Business
Postscript
David Pearson is managing partner of DJP Consultancy, which advises on contract and purchasing management.
Email: djpconsultancy@btinternet.com David Pearson is not a lawyer and his articles do not purport to be, and should not be read as, constituting legal advice.