Recession increases focus on contract management

15 April 2009

16 April 2009 | Jake Kanter

The economic crisis has significantly increased companies' focus on contract management, according to research from Aberdeen Group.

Of 170 companies surveyed, 40 per cent had placed a "significantly increased emphasis" on monitoring deals, while 37 per cent noted a "moderately increased focus".

Aberdeen analyst William Browning said contracts were no longer just "paper documents" and the increased monitoring indicated a push to quantify savings, increase supply chain visibility and better defend against risk in the downturn.

In addition, companies recognised that managing contracts effectively could produce savings and add substantial value through better supplier relationships.

Some 71 per cent of respondents said reducing costs was the main reason for an increased focus on contract management. Other important factors included improving vendor compliance and mitigating supply chain risks.

Key steps to successfully overseeing deals included securing support for contract management projects from senior officials and standardising the language in contracts, the report said.

It said deals should be managed from a central point.

In December last year the National Audit Office estimated the UK public sector could save as much as £290 million through better management of its service contracts (Web news, 24 December 2008).



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