Metronet collapse blamed on poor contract management

The UK Department for Transport has come under heavy critisism recently following a Public Accounts Committee report that found that the  £410 million ($612 million) collapse of Metronet, an organisation established to oversee the renovation of London Underground’s tracks and stations, was largely due to ‘inadquate’ contract management.

The government entered into three 30-year contacts to improve the tube network in 2003.  But in 2007, two of the contractors – Metronet BCV and Metronet SSL – went into administration, resulting in delays to the renovation programme and losses of between £170m and £410m.

The Department for Transport was particularly singled out for its ‘hands off’ approach to contract management, despite official warnings from the National Audit Office in 2004 that it should manage the Metronet contract more closely.

The report also pointed out that London authorities were unable to provide adequate contract oversight because they did not have timely information about the performance of the Metronet contract.

This situation is likely to be played out more and more in the future as central and local government authorities look to external contractors to provide key services.  It is common for organisations to put all of their effort in to the contract drafting and negotiation stage of the contract process, but not in the proactive management of contract milestones, obligations and commitments after contracts have been agreed to.

Contract Management software solutions like Dolphin Contract Manager, allow key stakeholders to better manage contract milestones, obligations and commitments by providing key stakeholders with timely management information.

Contract Management systems should include the following common features:

  • automated contract authoring
  • legal clause libraries
  • central repository for contracts
  • electronic workflow for internal reviews and approvals
  • obligation and commitment management
  • external workspaces for external party negotiation
  • critial milestone alerts
  • management reports and dashboards

Better contract oversight cannot be achieved using manual means alone and equally, contract management software cannot replace the requirement for contract managers, but together, the discipline of contract management can be made more effective.

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