An important part of the contract lifecycle management process in your business should be reviews of your RTO’s compliance against its funding contract obligations. While it can be a complex task you should inspect how you have performed in terms of the compliance requirements of your funding agreements. The amount and complexity of your contracts in place should determine the frequency of your reviews if you take a risk-based approach. The following advice provides suggestions for RTOs in how to review your RTO’s compliance with funding agreements.

Contract management KPIs:

Key performance indicators identify in a contract the measures of success or failure of the supplier based on their performance against the performance indicators. The term ‘key’ means the performance indicator is of great importance to successful delivery of the contract. Funding agreements usually require you to report your performance against a KPI in the contract. Funding bodies may expect submission of a report or evidence of progress of achievement of the specific KPI’s as a contractual requirement. Therefore, it is a good idea to frequently check how you are performing against each contractual KPI so you can report your achievements favourably when required. If you regularly meet or exceed all of the contractual KPI’s it could put your RTO in a positive position to ask for additional or new funding from the purchaser.

Monitor contract compliance:

To monitor a contract effectively your RTO should choose appropriate measures of outcomes, choose suitable monitoring methods such as regular meetings, document performance, and co-operate with the funding body as required. For high risk contracts you may choose to directly monitor during the contract term to ensure that your RTO is consistently performing according to established procedures or standards. Contract monitoring can be one of the most onerous aspects of contract administration and your RTO should ensure you have sufficient resources to be able to perform these tasks routinely. Scheduled monitoring may be necessary to ensure systematic review of performance. Scheduled monitoring could occur on a monthly or quarterly basis. There is no single right way to monitor a contract but your organisation needs to determine the most appropriate methods for your business.

Conduct contract compliance audits:

To ensure your organisation is meeting the agreed terms of your funding contracts it is crucial to conduct periodic internal audits. Involving staff responsible for implementing the agreements will help you determine how well things are going. The goal of your internal audits should not be to apportion blame for breaches or non-compliances but to use the information gathered to continuously improve and build your compliance culture. Your RTOs audit process can also be used as a learning tool and professional development opportunity for staff. Some funding bodies publish their audit framework and tools that RTOs can adapt to use in their own internal audit process. This is an effective way to meet compliance expectations of your funding body.

Effective contract management reporting:

Using a balanced scorecard approach or reporting dashboard on a routine basis as part of your contract performance monitoring process can be a quick and concise way for RTO management to measure achievement against contract KPIs and provide your organisation with a clear indication of how well you are tracking towards achieving targets. Dashboards provide a quick view of your RTO’s contract performance but they aren’t suitable for granular data or dense information. Generally, they provide high-level summary of contract performance highlighting key trends and specific metrics. Some aspects your RTO might track via a dashboard could include contract expiry and renewals, contract values and spend, contract risks, contract KPI’s.