Sustainability through contract drafting and management, part 2.

• Author: Motza, Maryann
• Position: Best Practices

At a time when funding and revenue issues affect the fiscal sustainability of governments, avoiding cost overruns is particularly important. Improving drafting and management practices for vendor contracts is a way for state and local governments to improve services to the public and ensure that they can continue providing them.

This two-part article examines and summarizes a number of best practices that can help governments better manage contracts and, in turn, help provide for their fiscal sustainability. (1) (Part I was published in the October 2012 issue of Government Finance Review, including information on research methods.)

PROCUREMENT CONSIDERATIONS

Project Management Tools in Contract Management. Scrum project management is a variation on the performance management guidelines established by the National Performance Management Advisory Commission. (2) In Scrum (which is based on the rugby formation where players work as a team to get possession of the ball), team members work collaboratively on a common goal. This is in contrast to the traditional project management approach, which is analogous to a relay race, with players passing a baton in sequential phases of tasks. (3) Proper project management results in stakeholders getting what they need and expect, on time, and for the planned cost, while poor project management leads to unmet expectations, long delays, and cost overruns. "Scrum allows decision makers to end the project when it makes sense to do so, while still realizing the bulk of the value." (4) In traditional project management, the plan drives costs and schedule estimates. In Scrum, the project vision and desired value drive estimates of scope.

Provisions for IT Procurement. In 1996, the National Association of State Information Resource Executives and the National Association of State Purchasing Officials issued a report, Buying Smart. State Procurement Reform Saves Millions, outlining recommendations for reforming the government procurement process for information technology (IT). The report noted that existing IT procurement systems are very costly, wasting taxpayer dollars and hampering economic vitality and diminishing the delivery of services to individuals and businesses. To change the situation, Buying Smart offered five ways for states to cash in on procurement reform:

1. Simplify the procurement of commodity items and services.

2. Build an infrastructure for electronic commerce.

3. Procure information...