Building a new contract culture

Partnership contracting could improve green space management in the aftermath of compulsory competitive tendering.

Contract management skills are an underdeveloped area of expertise in both the private and public sectors.

Although grounds maintenance contracting is often seen as a method of improving parks, green land around housing and other public spaces, it tends to be regarded as exclusively applied to externalised services. But this view overlooks the very real and tangible benefits than in-house service teams can and do make to service delivery. It is important to consider both approaches.

There are three essentials for successful contracting:
•    Know what you want to achieve;
•    Know how to measure it jointly with the contractor and stakeholder;
•    Know how to manage the partnership with the contractor, not the specification.

Contracts for grounds maintenance can be designed and managed in multiple ways and with a range of incentives that provide benefits for stakeholders. This so-called incentivised contracting is the modern must-have in the effective manager’s repertoire.

There are two crucial conditions for successful contracting out. The first is the proven existence of a competitive, value-for-money marketplace. The second is that the organisation has the ability to provide services in a sustained and cost-efficient way.

Partnership contracting

Compulsory competitive tendering (CCT) was focused on lowest price. The underlying question of capabilities was poorly addressed. It was a “cash is king” culture. Although cost savings were obtained, the outcome of the CCT regime has been ridden with unfulfilled expectations and hard-learned lessons for many parks and green-space providers. Recent press coverage about the experience of the contracting culture suggests that we still underestimate the hidden costs of grounds maintenance contracting and overestimate our ability to manage them effectively.

Moving on from the “them and us” situation of CCT has taken longer than it should have. What we need is a culture of “working it out” with the contractor. Yes, there are beacons, but we need more of them — they must become the norm, not the exception.

This situation is made worse because of the continuing low level of investment in the service. There is still an urgent need for regular and prioritised capital investment for updating and renewal of parks and green spaces — and that can form the basis of a modern partnership contracting culture.

Times change and so does management practice. The enlightened 21st-century manager recognises that contracting is not an adversarial relationship where each party is focused on its own short-term interests. It should be a “can do” process, where both parties bring skills, capabilities and experience to the delivery of public services. After all, that is what you are paying for, so why not take advantage of it?

Remember, once a private-sector organisation wins a contract it becomes a public-sector employee and takes on all of the political and ethical relationships which that implies. It may have different accounting policies and decision-making processes, but, crucially, it is employed by the public sector. So you should engage the contractor in its new found responsibilities. Get it involved with your multiple stakeholders and councillors. The best public sector in-house service teams do just that, so why treat external contractors any differently? It is this type of thinking that makes the difference in 21st-century contracting.

The starting point is to understand that you need three time perspectives to move forward — namely the past, the present and the future. All contracts require these perspectives. It is a technique that combines the realisation that your services have a strong past element in their design, and that in the present you have to deal with that in the best way possible. You cannot successfully shut out the past. What matters is that you also consider the future. This requires you to make capital investment to bring about improvements, and to bring the past up to date, through a process of strategic investment decisions (SIDs).

Your plan must tick all three boxes if it is to succeed: the past involves understanding the importance of legacy responsibilities and landscapes; the present is the way in which those legacies are managed; and the future is the development of those and the next generation’s legacies.

Public service provision is characterised by a demand for flexibility that partnership and incentivised contracting are better able to provide. Incentivised contracting recognises that commercial organisations require surplus to invest in your joint future, and thereby to provide even more competitive services. Partnership contracts are developed on the basis that a good public park service requires a large degree of organisational flexibility and personal dedication. Although partnership and incentivised contracting for grounds maintenance isn’t widespread, it is becoming more common.

However, we do not know what tomorrow will bring, so don’t try to define it in detail in the contract. Next year’s budget is unknown, let alone the next three to five years or beyond. The relationship you should be seeking is a simple contractual relationship, defined by mutual understanding and an emphasis on “let’s do it better” rather than “let’s catch them doing it wrong”.

Such an approach can create partnerships that bring considerable success. It can be summarised as the right attitude. It is a willingness to do things better and the personal and organisational capabilities to sustain such an approach. The contractor brings the economy of scale and the manager brings the local context. Together they can form an -effective partnership.

Performance management

The performance management of the contract must demonstrate the value of the contribution to national, regional and local sustainability and environmental excellence. At the same time, this approach must reward performance against the key objectives for both the contractor and the staff managing the contract. This requires rewards to be shared for people’s efforts when they contribute to the achievement of agreed standards, and the -reduction of payments pro rata when performance falls below the standards set (contractors recognise this as “sharing the pain or the gain”).

The appointment of an external assessor helps to bring objectivity to the process, along with “mystery shopping” techniques to assess whether standards are met.

Setting standards and monitoring performance may eventually result in services obtaining Green Flag status. Whatever success arises from these endeavours, on their own they will not transform the organisation into an innovator and seeker of continuous improvement.

To achieve that purpose, a keen and continuous focus must be maintained on strategic and operational objectives, and resources made available to achieve those outcomes. The combination of leadership, performance management and co-ordination of management effort will achieve more than relying on importing solutions from other sources could ever deliver.

At the heart of innovation and continuous improvement are people allied to the organisation’s internal capacity to deliver service changes and seek new ways of working. This can only work well where there is an effective continuing professional development (CPD) programme for employees. The development and financing of a CPD programme are critical SIDs and must form part of the contract strategy for both the contractor and the employing organisation.

Successful partnerships

There are good economic and organisational reasons for choosing partnership contracting instead of a standard contract for provisions of parks and green-space services. A partnership can secure economics of scale and scope. The success of a partnership depends on several things, including partnership capabilities. It is not likely that private contractors will develop these capabilities unless partnerships are well defined and there are sufficient resources and people to deliver the service.

It is becoming increasingly common for local authorities to implement incentives and partnership features into their grounds maintenance contracts. This indicates a shift to a more collaborative approach to contracting. The first step is already taken, but still there is no revolution. The current incremental pace of change is a slow way of evolving capabilities and a rather safe way of implementing change.

The implementation of incentives and partnership features into contracts indicates a shift to a more collaborative approach to contracting. But there is a risk that businesses will be stuck in old attitudes and behavioural patterns if, at the outset, there is not a commitment to develop a partnership culture centred upon joint responsibility for service provisions. In partnership contracting the phrase to remember is “we can work it out”.

Contract managers’ to-do list

1.    Create a culture that integrates stakeholders’ needs into corporate objectives and individual performance targets and outcomes.
2.    Agree key performance indicators with the contractor.
3.    Integrate performance management into the system and culture of the whole organisation, and link it to the contractor’s deliverables.
4.    Ensure that contractors are measured by means of stakeholders’ satisfaction surveys.
5.    Use mystery shopping and an external assessor to improve the service.
6.    Develop the use of joint monitoring to improve performance.
7.    Jointly assess organisational skills and competencies as part of a continuing professional development programme.

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