Communication reporting contingency planning

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communication, reporting, contingency planning, financial status and so on. An effectiveevaluation and selection process is critical to choosing the right contractor.Choosing the cheapest contractor is a common reason for failed contracts. Often thecheapest initial bids win an Agency’s tender without considering the full lifecycle cost andvalue for money. The most costeffective contract is often not the cheapest since thosesuppliers have added quality assurance measures in place. You should also consider fixedprice contracts, which may be more expensive initially but save money in the long term.Monitoring and reviewing contract performanceis essential to ensure contractperformance is measured against your Agency’s expectations. Aim to identify problemsearly and readjust plans so you can take action to alter, rectify, or financially compensatefor changes to the original contract arrangements. Prevent problems and enhancecontractor relationships with a timely, accurate and relevant monitoring system.3. INCLUDE APPROPRIATE CONTRACT TERMSContract terms must address identified contracting risks. Contract terms need toadequately respondto potential adverse circumstances caused by:The contractor or subcontractorsThe Agency, orExternal factors outside either party’s control.More specifically, your Agency should address:How to deal with the consequences of suspending or terminating the contract ora major breach. This should extend to suitable contractual remedies, forexample, indemnities, rectification, compensation and rights to securityHow to deal with variations. Whether sought by your Agency or the contractor,terms need to cover who pays for direct and consequential losses and how thecosts are determined, andHow to deal with insurable losses that affect contract performance.Insurance requirements and terms need to be determined by experts. Agencycontrolledinsurance often improves control.
Managing Contracting RiskIssue 2, January, 2010Page 11 of 59Contractors must provide evidence of commercial and statutory cover for preapprovedinsurances and limits. Your Agency needs to have a right in both the commercial andinsurance contracts to claim for major losses.Contract terms need to ensure that your Agency approves proposed material changes topolicies, limits and so on. Insurance cover needs to consider the maximum reasonable lossfor any one event and an indemnity limit to at least match that loss.1.5 PUBLIC LIABILITY AND PROFESSIONAL INDEMNITY INSURANCE TOOLSPURPOSEThe purpose of these guidelines is to assist Agency Personnel to understand indemnity and insurancerequirements for vendors, contractors and subcontractors (herein known as Service Providers).1: CONTEXT/BACKGROUNDNSW Government Agencies have a need to regularly enter into contracts with third parties for services,consulting and construction works. The requirement for an easily accessible and user friendly guidancedocument was identified, specifically related to Public Liability and Professional Indemnity levels of

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Wind, Indemnity, service providers, NSW Government

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