Service agreement management

An initial service agreement meeting must be held to ensure smooth contract transition.  

Initial meetings should: 

• involve the service agreement manager being given all relevant documentation, information and knowledge from the procurement development team 
• identify any issues that might negatively impact the implementation of the service agreement
• establish communication between the parties 
• ensure a clear mutual understanding of the responsibilities and obligations under the service agreement 
• involve discussions about outputs and outcomes 
• clarify critical dates, milestones and timeframes 
• prepare a schedule of service agreement management meetings 
• confirm invoice and payment processes  
• clarify reporting requirements  

If a service agreement needs to be extended or finalised, appropriate planning will ensure there is continuity of services.  

A CMP is essential for service agreements valued at over $5 million (including GST and indexation) and recommended for high risk lower value service agreements. A CMP is not required for simple or low risk procurement.  

If your procurement is valued at over $5 million, you will need to submit the CMP to the Community Services Procurement Review Committee for review.

Service agreements can be complex and high value. You must actively manage identified risks - best practice is to conduct an initial risk assessment during the planning stages of the procurement process and continue throughout the life of the service agreement. Risk management involves: 

• identifying potential risks 
• identifying the associated impacts on the service agreement 
• developing strategies to mitigate or eliminate them 

Common sources and examples of risks you may encounter

Some common examples of risks are listed below.

Agency management 

• Lack of sufficiently skilled and experienced staff managing the service agreement. 
• Lack of recognition of the importance of service agreement management. 
• Failure to regularly review service provider performance, address issues or monitor the achievement of outcomes.

Service provider performance 

• Failure to provide the required services or achieve the desired community outcome.
• Failure to comply with the service agreement terms and conditions. 
• Failure to retain suitably skilled staff to provide the services.

Change in circumstances or requirements  

• Service provider or agency not prepared to accommodate changes to the service agreement.
• Change in circumstances not being managed in a collaborative manner.
• Service agreement variations not conducted in alignment with agency policies and procedures. 

Stakeholder relationships 

• Not taking a collaborative approach to decision making.
• Lack of communication with stakeholders about issues with the service agreement.
• Conflicting stakeholder expectations.

Monitoring ensures progress is being made towards service agreement outputs in a timely manner. If suitable information to assess performance is not provided, your performance management strategy should be reviewed.  

Your performance management strategy should include: 

• specific outputs and services being provided on time to the specified quality 
• service user satisfaction 
• performance against service agreement requirements and key performance indicators 
• meeting minutes, discussions and records collected over the service agreement term 

Relationship management aims to maintain channels of communication between parties that is:  

• open  
• constructive 
• non-adversarial 
• based on mutual understanding 
• honest  

It is best practice for Agencies to adopt a structured approach to managing relationships with service providers. A structured approach may include: 

• clearly defined roles 
• clearly defined channels of communication  
• informal and frequent discussions with the service provider and agency staff 
• formal meetings at pre-determined intervals between the service provider and agency. Minutes should be taken to document key outcomes, tasks or actions

If the service agreement manager has not had any involvement in the procurement process, they should be made aware of any issues that arose and work towards establishing a collaborative relationship with all stakeholders.  

Ongoing dialogue should be established around: 

• service objectives 
• service strategies 
• service performance 
• risks and emerging issues 
• the broader operating environment and culture of the service provider 

Maintaining a relationship with the service provider does not mean that issues of non-compliance or under-performance cannot be discussed. A positive relationship is a tool for managing under- performance and increases the likelihood of issues being discussed and resolved in a way that is consistent with the partnership principles and behaviours of the Delivering Community Services in  Partnership Policy.  

Overall, it is essential to listen to the service provider, identify any issues, address them promptly and maintain open and effective communication channels.