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Contract Management and Service Delivery in Uganda Parastatal bodies.A Case study of Uganda National Bureau of Standards.
CHAPTER ONE
Background to the study
The complexity and volume of contract drastically increased globally in the recent years. Some of the causes that can be attributed to this include globalization, out sourcing, intense competition for existing markets as well as complicated and numerous partnership. Over the last fifty years many, of the world’s largest firms have advanced from being simple manufactures of hard goods, or providers of basic services, to being sophisticated vendors using advanced business models. This means that commitment of customers and suppliers to contractual obligations has increased, thus, the need for sustainable contract management polices. (Krappe and Kallayil, 2003).
The Aberdeen group (2006) found out that inefficient management of supplier contracts and unclear policies and procedure can have significant impact On the enterprises, some of these effects include cost over runs and exposure to risks for both parties in the contract mean while, Joshua et al, (2004) in a study comparing similarities and differences of key contracting components for city, state and federal governments of the united states of America, Found that for all government in the federal systems, the public management functions of contracting are remarkably similar, and the contract management and the achievement of accountability are weak links in the contracting process.
Still, (2005), argues that contracts are the life blood of the modern business. Without this vital legal glue, entering into arms length commercial deals would be fraught with peril yet for medium to large sized organizations contracts management brings challenges of its own. This means that in order to rely on contracts, managers must ensure that their terms and conditions are largely defensible. According to the survey by the international association for contract and commercial management of 2008, there are fewer high value global contracts coming to the market and an increasing number of ‘second tier’ companies entering the market and seeking to secure smaller but potentially more complex contracts.
Government parastatal bodies are realizing that efficient service delivery improves value for money (Dugganetal, 2008). Accordingly, parastatal bodies must find ways of improving efficiency and effectiveness of service delivery received. This is attained through enhanced monitoring through improved quality accessibility and reducing costs involved in obtaining those services. In public procurement, service delivery management is concerned with meeting fully the deliverables that were agreed upon in the contract(Shah,2005). Government entities have realized that the more efficient a service is delivered the more value for money is obtained (Duggan etal, 2008). This however requires supplier’s close monitoring by way of effecting contract management in line with the agreed upon deliverables set out in the contract. The Clackmannanshire Council (2013) is of the view that service delivery should be managed throughout the lifetime of the contract and ensures that goods/services are delivered in line with the performance or service level expectations ie Quality/Service/Cost/ Delivery/Sustainability requirements which must be met as identified in the original contract.
Protiviti (2009) argues that not having a formal, well defined and documented contract management process in place can have significant long term impact on the organisation’s ability to track and monitor service delivery as well as meet stakeholders expectations.
Accordingly, stakeholder involvement is fundamental to the effective planning, and service delivery for every contract management. Stakeholders vary in their impact, significance, interest and relevance in relation to contract management and service delivery objectives (Bolt, 2011). To manage complex contracts with multiple stakeholders it is useful to establish committees with membership that is representative of stakeholders. Using committees can provide a structured approach for communicating with relevant parties. Ghebreyesus etal (2008) argues that incorporating stakeholders in the day to day operations of managing their own services delivery through effective contract management would go a long way to enable them receive goods and services that meet their requirements and maintain a sufficient customer satisfaction on a sustainable level. Mubangizi, (2013) emphasizes the need for UNBS to put in place measures to provide feedback to user departments, track procurement progress on implementation of contracts and service delivery procedures to be followed if value for money is to be attained. Engagement with stakeholders develops an open and inclusive environment where information, comments, opinion and criticism are valued and used (NSW Health, 2013).
Lynch, (2013) believes that Contract management in public procurement has been a neglected area. Studies have been conducted on procurement processes and performance (Kakwezi and Sonny Nyeko,2008); whereas these have elements on contract management and service delivery in public entities, no study has examined the role of contract management on service delivery in parastatal bodies in Uganda.
The National Audit office (2008) indicates that focus is frequently placed on the procurement process itself than the implementation of the contract yet it is only after the contract is awarded that the benefits of the procurement process can be realized. Contract management if well-handled has the ability to increase revenue opportunities, decrease costs and improve service delivery, (South Africa: Contract Management Guide, 2010). Sabiiti notes that the Government at times pays for no work done or very shoddy work and sometimes, contracts are not delivered on time which has affected the ability of the Government to deliver quality services to the general public (as cited in Rwothungeyo, 2013).
The Australian Government Audit office report (2007) estimated about 30% of the audited contract management process, had irregularities and indicates that the deliverables specified in the statement of works had not been received, either in whole or in part. Meanwhile the Public Procurement and Disposal of Public Assets Authority (PPDA) Audit reports of UNBS, (2009 and 2013) indicate high riskswith 27% and 19% in 2009 and 2013 respectively accruing from service delivery management where there were missing contract management records, delayed payment for received goods and services and delayed deliveries.
Although the UNBS strategic plan for 2010-2015 has put in place mechanisms for tracking and reporting procurement departmental work-plan activities whose key outputs are as a result of good service delivery management through to contract management processes, service delivery is still not up to the UNBS stakeholder expectations and this is evident in the complaints of poor quality of products/services received, high cancellation of contracts, high priced goods/services, lack of delivery or partial delivery, delayed completion of contracts, missing contract management documents among others which have cost UNBS a lot of resources (Mubangizi, 2013).
Statement of the problem:
UNBS PDU annual report, (2012) indicates over 200 awarded procurement contracts in financial year 2011/2012 but the levels of service received/delivered on most of these procurements remain unknown. Mubangizi (2013) reported high complaints of poor quality products/services delivered with30% contracts cancelled, 5% of contracts either not delivered at all or received in part, 10% deliveries made over the stipulated delivery period and 60% of the contracts performed paid after 30days stipulated payment period, high priced goods/service sand missing contract management documents among other issues. The persistence high complaints in service delivery in UNBS warrant examining the influence contract management on service delivery. The study therefore seeks to examine the influence of Contract management on service delivery in UNBS.
Purpose of the study
The purpose of the study is to examine the influence of Stakeholder Involvement, Contract management on Service delivery in UNBS
Objectives of the study:
- To establish a relationship between contract planning and service delivery.
- To investigate influence of contract monitoring on service delivery in parastatal bodies.
- To assess the impact of contract evaluation on service delivery in UNBS.
Research Questions:
- What is the relationship between contract planning and service delivery?
- What is the influence of contract monitoring on service delivery in parastatal bodies?
- What is the impact of contract evaluation on service delivery in UNBS?
SCOPE OF THE STUDY
Subject scope
The scope of the study will cover Contract Management and its influence on service delivery.
Geographical scope
The researcher will consider UNBS regional offices; UNBS headquarters in Nakawa and UNBS offices in Kanjokya.
Time scope:
The researcher will study the period from 2010 to 2013 because that is when UNBS intensified its efforts to improve service delivery. The research shall be carried out for a period of three (3) months i.e. May to August, 2014.
Significance of the study
The study will recommend service delivery improvements to UNBS management.
The study will inform policy makers the influence Contract management in service delivery
The study will add on to the existing body of knowledge on contract management and service delivery for future researchers.
Conceptual frame work
Figure 1: Diagrammatic expression of the relationship between contract management and service delivery of the parastatal bodies in Uganda.
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Contract management
Source: Developed by the researcher from Kyte (2003), Krappe and Kallayil (2003), Art et al (2008), and Drallo and Thuiller (2004).
This conceptual frame work shows the relationship between contract management and service delivery.
It is conceptualized that the dependent variables of contract planning, contract monitoring and contract evaluation have a direct influence on service delivery and the intervening variables in the form of influence, police enforcement and media publicity have a negative effect on the relationship between the independent and dependent variables.
Contract planning has a direct influence on service delivery. Contracting, strategies by the buyer of a product or service can determine the out come of an objective.
Contract monitoring can affect service delivery for instance through on ground inspection. If UNBS continuously inspects the project activities on the ground, they would be in position to identify some problems like fake products in the market and also checking whether production equipments of different companies are in good shape.
Contract evaluation; this also has an effect on service delivery; this is among periodic performance grading
Operational definition of terms
Contract management is the act of ensuring that contract obligations and requirements between two or more parties are adhered to through planning, monitoring and evaluation among other tools used.
Contract planning; is a set of tools that can be used by both parties involved in the contract to schedule, execute and control tasks and activities associated with the contract life cycle.
Contract monitoring is a continuous exercise of assessing the current performance of a project as well as report writing about the finding, which provides basis for establishing relevance.
Contract evaluation can be defined in this study as comparing actual project performance against planned performance and taking corrective action to serve the variance in performance.
Service delivery is getting service as effectively and quickly as possible to the defined recipient in most instances service delivery implies a degree of excellence.
