CIV 7203 Chapter 7 - 3 PPDA Contracting and Contracts Management

Public Procurement and Disposal
of Public Assets Authority
Contracting &
Contracts Management
Presented By: PPDA

Presentation Outline
 Definitions;
 Essential elements of a
contract;
 Key issues in a contract
document;
 Contract management
documents and structure;
 Challenges in contract
management;
 Termination of contracts.
 Challenges in contract 22
management. Website: www.ppda.go.ug Email: info@ppda.go.ug
Definition of Contract
 A contract is an agreement between two or more
parties enforceable in law. It may be verbal or written.
 The essential elements of a contract are laid out under
Reg. 10 of the PPDA (Contracts) Regulations, 2014:
 Agreement between parties;
 Intention to enter into a legally binding
agreement;
 Both parties must provide a consideration;
 Parties must be of legal capacity;
 Effective supervision and adequate
monitoring. 3
Website: www.ppda.go.ug Email: info@ppda.go.ug
Award of Contract
 A Procuring and Disposing Entity shall only issue a
contract after fulfillment of the conditions set under
the PPDA Regulations. These include:
 Following a Contracts Committee (CC) decision to
award a contract;
 Confirmation by the Accounting Officer (AO) that the
contract price is not higher than the market price
established at the commencement of the procurement;
 A lapse of the display period of 10 days has occurred;
 Confirmation that no administrative review is ongoing
for the procurement;
 Commitment of the full amount of funding; and
 The necessary agencies make approval, including the
Attorney General.
4
Types of Contracts
Contract Type Where it Applies Reference in the

PPDA Regulations, 2014
Lump sum contract Supplies, Works, Services Reg:.15 Contracts Regs.
Time-based contract Services Reg. 16 Contracts Regs.
Ad measurement contract Works Reg. 17 Contracts Regs.
Frame-work contract Supplies, Services, works Reg. 18 Contracts Regs.
Percentage contract Services Reg.19 Contracts Regs.
Cost reimbursable contract Works Reg. 20 Contracts Regs.
Target price contract Works Reg. 21 Contracts Regs.
Retainer contract Services Reg. 22 Contracts Regs.
Contingency or success fee contract Services Reg. 23 Contracts Regs.
5
Selection of Contract
Selection of the appropriate contract type is done taking
into account:
 Nature of the procurement or disposal; (time based -
hourly, daily, weekly or monthly fees; ad measurement)
 Need to minimize risk: The Government does not
often choose to assume a greater proportion of risk.
Fixed prices are very common and may include interim
or stage payments linked to clearly specified outputs or
deliverables. (lump sum, framework)
 Need to maximize value for money: Normally,
effective price competition results in realistic pricing.
(Success fee contract, target price, cost reimbursable) 6
Selection of Contract
 Likelihood of any delays or unforeseen

circumstances: Complex requirements e.g.
infrastructure projects and ICT solutions,
particularly those unique to the Government,
usually result in greater care taken in the
selection of the contract types. (ad measurement,
target price)
 Need for effective contract management
and cost control: (lump sum, framework, success fee
contract, ad measurement, target price) 7
Key issues in a contract
Document
 Each contract should have an effective commencement
date;
 Performance indicators;
 Obligations of the parties should be clearly identified;
 A basis for payments commensurate with performance;
 Minimisation of risk using performance security from a
recognized banking institution and warranty obligations
in bidding documents;
 Effective supervision arrangement should be in place;
 Delivery, acceptance and handover arrangements should
be clear;
 Criteria for changes and termination. 8
Contract Management
 Contract management is the process which ensures that

both parties to a contract fully meet their respective
obligations in order to efficiently and effectively deliver
the objectives required from either party in the contract.
 Contract Management involves the management of the
relationship between client and supplier as well as the
identification, allocation and management of the risks
associated with the performance of the contract.
 It aims to achieve maximum performance from
suppliers and seek continuous improvements during the
contract period.
9
Contract Management
 Contract management may also be used to explore further
supply market opportunities/developments to improve
the provision of the goods/services in the future and to
manage financial, supply, legal and commercial risks
effectively.
 It involves the monitoring and control of performance
(timeliness in delivery, KPI etc) the performance indicators
will usually include very specific quality targets. These
should be few and easy to monitor and verify. They
should be targeted at the needs of the individual
requirement and should reflect the most urgent and
critical issues to be met by the provider. 10
Shoddy works at a Construction of
Lwanda market in Lwanda Sub County
Rakai District
The project was abandoned by the contractor after digging the foundation trenches and the site has
become hazardous to the community around. Contractor: M/s T. K Engineers Ltd. 11
Contract Management
 For Supply and installation of a 60,000 liter tank at an
Entity’s property a number of irregularities had arisen
regarding the execution and non compliance with
contractual terms. Capacity of booster pump, galvanized.
Special conditions of contract not adhered to.
Terminated.
 Procurement of laptops and computer equipment. The
Entity split the procurement into two separate
procurement processes, one for laptops & desktop
computers and the other for a photocopier, a Generator,
a GPS Machine, a Scanner, a digital camera, a projector,
external disks and a UPS. IT Office Uganda Limited and
Copy Cat Uganda Limited were contracted. The
specifications of items delivered deviated from the terms
of the contract. 12
Contract Management
 HP Probook 440 G1 laptop supplied was identical to the
HP Probook 450 G1 in terms of performance, durability
and usability. However, the HP Probook 440 G1 was of
smaller screen size than the HP Probook 450 G1 by 1.6
inches.
 Health equipment distributed to hospitals with a
requirement for installation. Areas for their installation
not available at some health centres. Supplies by MedPlus
& MedCare remained in boxes. Requirement for gas,
electricity also not available.
 Rehabilitation of an Entity’s offices required advance
payment security and Road sealing required performance
security. All were not provided which leave the Entity
exposed in the event of contractual non-performance. 13
Contract Management
Documents
 Contract;
 Goods received/delivery notes;
 Inspection records;
 Inspection reports e.g. for cars
there must be approval from
MOWT;
 Progress reports;
 Payment records;
 Interim/completion certificates;
 Handover certificates;
 Status of retained payments;
 Contract management reports. 14
Components of Contract
Management Documents
 General contract information (definitions,
roles/responsibility, scope, provisions);
 Establish priorities: Time, cost and quality
 Preparation of contract schedule (Time);
 Preparation of contract budget (Cost);
 Establish quality plan (Quality);
 Receipt or acceptance of reports, manuals, guides etc.;
 Actual time period worked, works, services, supplies
completed;
 Payments for reimbursable;
 Copy of original invoice.
15
Contract Management
Structure
 The PPDA (Contract) Regulations, 2014

(Regulation 51 & 52) assigns contract
management to User Department.
 Key stakeholders in contract management include
the User departments, PDU, Management of
PDE, Provider/Contractor and the Community.
 The Entity may use contract management teams
for high value or complex projects.
16
Roles of Management of the
Procuring & Disposing Entity
 Approving the need for

the service;
 Approving the contract
management plan;
 Processing payments to
provider; and
 Overall implementation of
the contract.
17
Responsibility of the User
Department
 Nominates contract manager and monitors
progress and execution of contract;
 Informs Accounting Officer in writing of
appointed manager copy Internal Audit,
Contracts Committee and any other;
 May nominate a member of staff of another
User Department;
 Controls performance of the provider.
18
Contract Manager
 Contract manager becomes responsible for

contract management and should be availed a
copy of the contract. The roles played include:
 Managing day-to-day technical

supervision, managing obligations and
ensuring provider performs contract
according to obligations;
 Monitoring adequate cost, quality and time

control;
19
Contract Manager
Cont’d
 Inspecting and testing
components;
 Seeking authority for
extensions, variations,
suspension, performance
certification etc. from the
Contracts Committee in writing;
 Preparing progress reports and
issuing certificates for contract
performance; and
 Managing hand over and
acceptance procedure.
20
Role of the Procurement
& Disposal Unit
 Monitoring payments;
 Monitoring progress of work to ensure;
milestones agreed are achieved;
 Submitting reports to Contracts Committee,
Accounting Officer;
 Assess quality and Cost of service;
 Assess timeliness of service; and
 Monitoring and evaluation of contracts. 21
Responsibility of
Bidder/Contractor
 Deliver requirements of the contract
in agreed time frame;
 Deliver service in accordance to
terms of reference;
 Delivering goods to specification;
 Meeting user requirements; and
 Developing and implementing
agreed procedures and providing
information. 22
Contract Amendment
 An amendment to a contract refers to a change in the
terms and conditions of an awarded contract.
 In accordance to Reg. 55 of the PPDA (Contracts) Regs. a
contract amendment can be undertaken for additional
quantities of the same items and shall use the same or
lower unit prices as the original contract price.
 A single contract amendment shall not increase the total
contract price by more than 15% of the original contract
price.
 Where the contract is amended more than once, the
cumulative value of all contract amendments shall not
increase the total contract price by more than 25% of
the original contract price. 23
Contract management report
content
 Background
 Standard information about the contract, type, sum, duration,
contract, subject
 Current status of the contract
 Amount paid so far, time consumed, contract value delivered so far,
etc
 Status of contract securities
 Retentions, liability periods, performance guarantee, advance
guarantee, warranties, etc
 Findings from meetings/inspections
 Where applicable
 Supplier performance
 Qualitative and quantitative appraisals
 Recommendations and Issues arising
2
 These inform the decisions that follow 4
Termination of
Contract
 Contract manager submits
recommendation to the Accounting
Officer;
 State name of provider, procurement
number;
 Reasons for termination - contractual
grounds;
 Costs resulting from termination;
 Seek approval of Attorney General
(Regulation 56 of the PPDA (Contracts)
Regulations, 2014;
 If approved, contract is terminated and
PPDA is informed for suspension
recommendations. Website: www.ppda.go.ug Email: info@ppda.go.ug 25
Challenges in Contract
Management
 Delay in delivery - out of contractual
period without extension;
 Inadequate specification & variations;
 Poor workmanship by contractors;
 Abscondment of providers;
 Payment - contract terms, certified;
 Forged documents - experience;
 Natural calamities/variance in actual site
conditions from expectations.
26
Public Procurement and Disposal
of Public Assets Authority
Head Office:
UEDCL Towers, Plot 37 Nakasero Road
P.O. Box 3925, Kampala Uganda
Tel: 256 414 311 100
Fax: 256 414 344 858 or 256 414 250 031
Web: www.ppda.go.ug
Email: info@ppda.go.ug
Connect: www.facebook.com/ppdauganda

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CIV 7203 Chapter 7 - 3 PPDA Contracting and Contracts Management

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Copyright:

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Public Procurement and Disposal

of Public Assets Authority

Presented By: PPDA

Contract Type Where it Applies Reference in the

 Likelihood of any delays or unforeseen

 Contract management is the process which ensures that

 The PPDA (Contract) Regulations, 2014

 Approving the need for

 Contract manager becomes responsible for

 Managing day-to-day technical

 Monitoring adequate cost, quality and time

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