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Contract Extension Checklist: To extend or not to extend?

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Long before your contract expires, you should be planning your approach to the contract close out phase. Of course it’s easier to just extend an existing contract. But is it best value for money? Does it effectively address your organisation’s risk exposure? A Contract Extension Checklist can help you make the best contract decision for your business.

Your goal as Contract Manager is to obtain the best value for money for your organisation. There are a few options available to achieve this. The contract can be:

  • closed out if there is no further requirement for the services
  • extended for a period of time before the contract ends
  • renewed for the same or very similar services when the existing contract comes to an end
  • tendered to market for a new contract.

Contract Extension Checklist

The contract extension checklist helps you choose the best option for your organisation’s needs for three reasons.

1. Structured contract review

A contract extension checklist provides a framework that steps you through the important matters to consider when deciding to extend or renew a contract such as:

  • service provider’s performance over life of contract
  • changes to your demand profile (more, less, different?)
  • changes in the market (new providers, new products, better prices?)
  • changes in business needs (through consultations)
  • past extensions
  • risk/value profile of contract.

2. Record keeping

The checklist acts as a tool to keep record of renewal activities and ensures that you can provide adequate supporting documentation to demonstrate that your decision:

  • delivers value for money
  • meets the business's needs
  • means better value for money that would not be obtained by going to tender.

Its best practice to always use the checklist - even for routine contract extensions/renewals. If your contract is more complex, eg high-value or high-risk, the checklist can still be used as a summary of key information to accompany further supporting evidence and documentation that your organisation may require.

3. Anti-corruption tool

Because the checklist ensures the contract and supplier performance are honestly reviewed and appraised, it is a worthy tool for protecting you and your business against corruption. Should issues be highlighted during this process, it provides enough time for them to be corrected or for a tender to be planned and a new supplier selected. 


For a comprehensive example, the Queensland Government Department of Housing and Public Works have made their Contract Extension/Renewal Checklist and guidance publicly available here


Final tip

Remember to keep in mind that it can take some time to reprocure (approx 6-9 months). The less time you have for careful consideration, the more your decision is likely to default to a quick extension. This makes it difficult for you to ensure performance and value for money continue to be delivered for your organisation.

Download Supplier Performance Starter Kit

Topics: Procurement and Contracting, Supplier Management

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