Contract Management Resources

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Contract Management Resources

IR35 is a set of tax laws which aim to prevent the self-employed contractor operating as a ‘disguised’ employee to avoid higher tax rates on their earnings. Those who fall inside of IR35 are subject to PAYE, those who do not are known as ‘off-payroll’ workers and enjoy more flexibility.

IR35 has applied within the public sector since 2017, but from 6 April 2021 the IR35 regulations now also apply to the private sector. So if you are a contractor operating through your own limited company, it’s important to consider what IR35 means for you.

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Effective contract governance provides you with the assurance that you are receiving the value for money contracted for, by using the most objective set of award criteria and ensuring the right level of competition in your tendering processes.

Understanding the relationship context correctly, and applying governance appropriate to the criticality of any given contract to both you and your supplier, is key to this. 

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At Barkers we typically recommend to our clients that contract management should be integrated into their approach to procurement.  In our experience, separate functions rarely collaborate sufficiently to maximise the value from their supplier relationships. Ensuring contract management is conducted with the appropriate levels of authority, the balance of risk and relationship context is key to its effectiveness – and a vital element of the overall contract governance.  At Barkers we have decades of experience in setting up and managing contracts, aligning all parties to mutually advantageous goals.

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When it comes to contracts, there is a tendency to blow the dust off them only when things start to go wrong. A key tenet of contract management is preventing risk long before it gathers the momentum to bite. Every contract has a value attached to it in the form of products or services supplied. Robust contract management ensures the value of products and services purchased is properly attained, and clamps down on ‘you get what you’re given’ scenarios where the threat of this emerges.

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There are many contract management solutions out there, ranging from expensive and often clunky solutions that are native to your corporate Enterprise Resource Planning (ERP) system, through to stand-alone cloud services that appear cost-effective but don’t join up to the broader ecosystem of applications and corporate reporting. 

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Technological advancements, varying specialisations beyond the competence of any individual company, intensifying competition, a shrinking world, and ever-tighter timescales and margins mean the most basic products often involve the input of multiple companies, and from all four corners of the earth.

As processes become more complex, so too do the contracts that govern them. Managing these contracts is no longer advisable in seeing a business project through to completion, it is imperative to the success of your organisation, and Barkers can help you navigate this challenging environment

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United Utilities asked us to review the value for money achieved from their facility management (FM) contract with Emcor versus what would be considered best value in the UK market. We were also asked to review the capital delivery partner (CDP) framework contracts to support a decision to award a five-year extension into Asset Management Plan 7 (AMP7). Using our Procurement Transformation service, we were able to perform an FM and CDP review within 3 months, feeding back the results to the client.

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SSE needed to deliver a new set of IT agreements that met Directorate strategic objectives whilst considering technological challenges from across the business. We supported them to successfully transition to a smaller number of framework suppliers, all on standard terms. This resulted in a better-quality tender outcome, improved supplier performance and increased delivery on time.

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On 6 April 2021 IR35 came into effect for the private sector. This follows changes to the public sector in 2017. So what does this mean for the contractor? Who is responsible for determining IR35 compliance? Should you see IR35 as a friend or foe – a new opportunity even? And are there ways in which you can make simple changes to your working practices to stay outside of IR35 should you wish to?

So, what are the pitfalls and where is most value added?

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When IT projects go wrong, they can threaten the very existence of the company. In the worst cases, organisations can find themselves embroiled in time consuming and expensive legal proceedings, as they seek regress from their IT service provider. For example, in 2018, Wipro settled a dispute with National Grid following an eight-year legal battle which cost them $75M. Hertz and Accenture are yet to resolve their dispute over web services, which began in 2016, when Hertz began proceedings to sue for $32M.

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