Contract Assurance

Contract Assurance enables significant financial, operational and reputational benefits, through an assessment of your contractual arrangements

Are you getting the most out of your third party contracts?

Significant time and expenditure goes into building and sustaining vendor and business partner relationships so that they can become profitable and add value to your operations. Getting sustained value from contracts and your investment with third parties is an ongoing challenge for many organizations.

In our experience, organizations often fail to embed good governance and controls around contract management and as a result, we are able to identify process improvements and cost reduction / savings for most organizations.

This can be due to a number of factors including:

  • Insufficient consideration of contract specific risk
  • Weaknesses in billing processes
  • Overpayments
  • Scope creep / adjustments
  • Insufficient monitoring
  • Delivery and quality failures
  • Poorly designed contract incentives and KPIs
  • Inadequate planning and demand management
  • Ill-informed/fragmented buying
  • Insufficient payment monitoring
  • Deliberate contract manipulation
  • Miscommunication
  • Poor information and transparency.

Our services

Engaging PwC for Contract Assurance enables organizations to quickly identify greater value from your contractual arrangements, and reap the benefits of process enhancements, knowledge transfer and ongoing assurance mechanisms needed to sustain value across the contract lifecycle.

We have worked with clients across a range of sectors to recover millions of dollars through our Contract Assurance review programs. Whether one-off tactical reviews or part of a broader contract review program, we can enhance internal compliance functions, increase visibility with partners, and identify potential cost or revenue recovery opportunities through our holistic contract assessment methodology.

1. Contract Risk

  • Probity assessments
  • Contract legal advice
  • Evaluation of contract risks
  • Consideration of whether contract structures are commercially-efficient, charging mechanisms are driving the desired behavior and goods/services meet the strategic objectives of the organization

2. Contract governance and oversight

  • Set up / assessment of contract governance, assurance and oversight processes over a contract or portfolio of contracts
  • Benchmarking of existing contract governance to best practices
  • Monitoring of vendor performance and KPI assessments

3. Contract cost savings

  • Identification of contract savings or revenue owed opportunities
  • Reconstruction of the true cost to the supplier of supplying the services compared to what is being charged
  • Clarity of where inefficiencies, errors and waste occur in complex or multiple service contracts
  • Cost recovery services to assist in driving the recovery of cash savings
  • Gap analysis between expected and actual value delivered

4. Ongoing contract assessment

  • Benchmarking of contract management processes to best practices
  • Contract compliance
  • Performance monitoring assessments (KPI's)

5. Renegotiation points

  • Improve the negotiating position and strategy in the lead up to re-negotiation
  • Gain transparency over the use of a contract, prior to re-negotiation

6. Contract Exit

  • Managing contractual risk and reducing exit costs

We provide support to organisations across the entire contract lifecycle, starting with evaluating contractual terms and establishing contract governance / oversight structures through to contract exit.

Specific advice may include advice and insights about:

  • Cost leakage on existing ongoing contracts and opportunities to save, including cost control stabilization
  • Key contractual issues and control mechanisms
  • Delivering timely, accurate and more complete reporting
  • Establishing a clear KPI measurement system
  • Improving contract management processes and systems to align with good practice contract management
  • Achieving better contract terms at contract initiation and re-negotiation points

Questions to consider

  • Have you ensured that contracts are fit for purpose?
  • Have you studied the context of all promises and removed ambiguity?
  • What processes do you have in place to govern contracts within the organization and ensure adequate ongoing monitoring?
  • How do you ensure contractual mechanisms are driving the right behaviours in both the contractor and owner organizations?
  • How do you ensure that your contracts are delivering the value you expected and that your organization is securing optimal commercial outcomes from these agreements?

Publications

Contact us

Clare Power
Partner
Tel: +61 3 8603 2360
Email

Shona Brady
Director
Tel: +61 3 8603 2246
Email

Cassandra Michie
Partner
Tel: +61 2 8266 2774
Email

Damian McNair
Partner
Tel: +61 3 8603 1964
Email

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