With the prevalence of outsourcing agreements and the increased interconnectedness of supply chains, most companies find themselves in a situation where contracting an external party to perform specific tasks is unavoidable. The management of contractors in any environment is becoming an increasingly challenging exercise. This is evident from the rise in project costs, the overrun of time lines, as well as the non-conformance to quality standards as set out in contracts. Industries like construction, mining and manufacturing are experiencing yearly rise in costs of between 5% and 8%, substantiating the need for collaborative and cost effective management of contractors.
Poor execution of contracts results in margin erosion and significant financial losses. This includes the risk of poor quality control, often resulting in rework, disputes, costly claims, increased operational costs and delayed delivery of contracts. This can be avoided, to a certain extent, by following a structured approach towards contractor relationship management.
Contractor relationship management forms an integral part of the contract management process. Unfortunately, most managers and supervisors believe that once the contract is signed, completion will happen naturally. This is often a disregarded part of any contracting agreement as there are no formal structures to follow or guide this aspect of a contract.
There is a definite need for management on supervisory level, to become practically skilled in managing contractors – of whichever scale – effectively with regards to cost, time and quality. Candidates will be able to acquire skills that would allow the client/employer to be able to measure increased performance during a relatively short period of time. The overriding motive behind this course is to ensure that candidates who are involved in contract management processes, move from reactive damage control management to proactive effective and cost saving management of contractors and the embedded relationships. The emphasis is shifted from contract administration to contractor relationship management.
Project management is about developing and implementing a product, service, event or facility within a predetermined time frame, budget and quality parameters.
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