Service management arrangements

Purpose:

To ensure the successful delivery of the right services, at the right time, to the right people. The services provided and delivered under contract need to be actively (and ideally pro-actively) monitored and managed, to ensure adherence to committed service levels and service payment streams. Both parties need to take a defined share of such service management arrangements to make them work.

Fitness for purpose checklist:

• Are all the arrangements for service management included in a schedule to the draft contract?
• Are the respective obligations of both parties in connection with service management clearly specified?
• Are the monitoring and reporting mechanisms clear?
• Are there clearly defined linkages from each element of service delivery to an appropriate payment?
• Are there provisions for new, amended or deleted service elements?
• How do the parties jointly specify and agree the inclusion of new services, and their price? Will a new service involve a new competitive procurement, or just a change to the existing contract?
• Are appropriate arrangements specified for: Service exit or termination (early or upon natural contract expiry); Handover to the next service provider upon recompetition; Handing the service provision back to the department including any necessary asset, skill, licence and knowledge transfer?
• Can service levels, targets and the corresponding payment streams be easily changed, if the circumstances arise?
• Does each party have a nominated service manager, with access to senior level staff as required?
• Are the processes for day to day management activities, e.g. regular progress meetings defined in the contract schedule?
• Is there a dispute resolution procedure in place that can be applied to Service management?
• Are the service management arrangements in this contract synchronised with or compatible with any other related contract? 

Source information:

• ITIL Introduction

 Notes:

Service management is a key part of the overall contract management function.

Services delivered by the provider need to be monitored and managed with balance skills i.e. appropriate rigour combined with sensitivity.

Service management is often treated as a separate issue in contract drafting from contract management, because of its fundamental importance to the success of a service contracts. There is often a schedule covering each topic, (but with interlinking processes) within the contract.

Effective service management involves both parties performing their obligations and duties, on time and in accordance with the contract, not just the provider. One party can rarely succeed without the efficient contribution of the other.

The achievement of the contractual service levels will trigger an appropriate payment stream to the provider. There must be very good, data collection, reporting and monitoring arrangements in place for each of the service elements provided, with agreed validation, leading to clear identification of each service delivery target being met, and the relevant payment becoming due, or otherwise.

Each element of service, within the total "package" of services, ideally needs to have its own: target; level; data collection, monitoring and validation system; usage / outage reports; and linkage to its element of the payment mechanism.

Further information:

ISMH, See the briefing: Co-ordinating services

See also Senior management briefing How major service contracts can go wrong

ITIL Service Delivery

OGC's Achieving Excellence in Construction Guides

OGC's Guide to the appointment of consultants and contractors