I firmly believe that contract transition is a vital aspect of any contract. Both the client and the outgoing service provider must exercise due caution when the contract expires or when transitioning facilities management contracts to another party. However, in reality, I continue to observe parties being complacent, with dereliction on critical deliverables during the contract transition phase. This is critical from a risk management and future contract transition perspective.
Stakeholders, especially clients, often fail to take the transition process seriously. They overlook the importance of understanding the related sensitivities with complacent dealings and ignore adherence to critical steps.
However, the transition must not become a witch hunt on the client’s part to hold the outgoing service provider accountable for all the issues. If the service provider has met the performance management metrics, and the client has duly endorsed those Key Performance Indicators (KPIs) during the contract period, then there should be only a few remaining procedures to manage.
Clients should be extra careful during this stage, particularly when it comes to asset data handover from conditional assessment to maintenance data, ensuring compliance with critical requirements. In the three months before the contract expires, clients should take several steps to safeguard compliance, SLAs on critical assets, and other measures to achieve a smooth transition.
The critical consideration is revisiting service providers’ obligations by reviewing the existing contract terms, including current service levels, to ensure no PPM backlogs or other work orders and promptly report critical tasks.
In a good FM performance management, ideally, there should be no need to review past data as regular performance management cycles, quarterly or monthly, are likely to address these issues. However, keeping a close vigil on the remainder of the maintenance regime is important, scrutinizing and not letting any complacent modes seep during the transition.
Conduct performance assessments to evaluate the service provider’s performance against the contract terms. Document any shortcomings or areas of non-compliance to address during the transition process before handover to a new provider.
When communicating the intent of the end of the contract to the service provider, a transition plan should be collaboratively developed. This plan should outline a timeline for maintenance backlogs and snagging.
This must also include compliance status, asset handover, and plans for transitioning services to a new provider. The handover plan should include a responsibilities matrix, timelines, and all interim measures needed. It is crucial to take stock of all assets, equipment, and resources managed by the service provider and to develop a separate plan for resource demobilization, as allocating critical resources may often be contentious.
Ensure the service provider provides proper documentation, especially about condition assessments and compliance with legal and regulatory requirements. Though it is a perpetual process to be done with regular performance review cycles, closely monitor that the service provider is fully compliant with all relevant regulations and laws on health and safety, environmental standards, and labour laws during this period.
The service provider must clear all statements of works orders, including WIP. Financial settlements, including outstanding invoices, penalties for non-compliance, and any financial obligations, should be reviewed and settled before contract termination. Maintaining detailed records of all communications, assessments, and agreements during exit is essential to prevent potential disputes.
The final handover process is critical for a smooth transition. Final inspections of the facilities should be conducted to ensure that they meet the required standards and that any outstanding maintenance or repairs are addressed.
Knowledge transfer through shadowing and sessions with the service provider should be arranged well in advance to ensure critical information about the facilities and operations is passed on to the incoming service provider or the internal team. In the event of any dispute, consider consulting with legal counsel to review the exit process and ensure compliance with the contract and applicable laws.
By following these precautions, clients can help ensure a smooth transition and minimize risks associated with non-compliance during the contract exit process.