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Problems with Local Government Outsourcing and Some Solutions* *By George Strohfeldt

Local Government outsourcing in the traditional areas of construction and supply has been in place for many years. However, for most Councils outsourcing of services has been steadily increasing over the past 20 years. Services contracts require contractors to perform work once undertaken by employees before the commercialisation push of the 1990s. Typical services outsourced include maintenance, cleaning, mowing and vegetation control and the like, through to consultancy agreements for professional services.

Both the traditional construction outsourcing and the growing services sectors have seen a rising number of conflicts and disputes in their administration in recent years. This has occurred for a number of reasons, including:
  • Increasing complexity in service requirements, contract forms and project delivery models.
  • Probity problems arising in the tender phase and with the award of contract.
  • Inadequately skilled contract administrators available to Local Government as a result of staff retirements, staff turnover and loss of key staff to higher paying industry sectors.
  • An associated lack of adhesion to existing systems and procedures and a failure to maintain, update and enhance these systems and procedures as necessary.
  • Failure to properly document at the front end of these contracts in terms of scope, specifications, Principalís project requirements, performance KPIs and service level agreements.
  • Lack of understanding of the contract Superintendentís and Project Managerís potentially competing functions.
  • Failure to resolve conflicts and disputes in a timely and cost-effective manner.
The outcomes include:
  • Inconsistent and sometimes inadequate management of both the tender and contract administration phases.
  • Failure to achieve Councilsí technical and commercial objectives.
  • Budget and time overruns.
  • Failure to satisfy the procurement requirements of Local Government legislation.
  • Unwelcome audits and political problems.

CCI specialises in Local Government and can assist in resolving these problems by:
  • Guiding staff to rebuild and implement relevant tender and contract administration systems and procedures;
  • Training and mentoring staff to improve their skill base - CCI delivers its training programs Australia wide and can tailor in-house courses to its clientís specific needs.
  • Reviewing key contract documents prior to release and conduct ad-hoc or scheduled audits to keep contracts on track and on budget.
  • Assisting with the assessment of claims and commercial management of contract disputes.
Further information on CCIís services can be found at www.ccintl.com.au.

*George Strohfeldt is the Principal of Contract Control International. He is a Fellow of Engineers Australia and the Institute of Arbitrators and Mediators Australia, a Chartered Professional Engineer and Arbitrator and a Certified Local Government Engineer.

*Copy supplied by CCI