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An average of 30 to 35 per cent of a firm’s contracts are “not fit for purpose” because of a lack of correct goals and responsibility from the parties.
That’s the finding from new joint research by the International Association for Contract & Commercial Management (IACCM) and the National Audit Office. The results were revealed at the Scottish Government’s ninth National Public Procurement Conference in Glasgow on Tuesday.
However, respondents to the survey were clear on what they wanted from a contract. They noted that it is very important for a contract to define “clear mutually understood objectives” and reflect an “appropriate risk calculation based on a common understanding of what needs to be achieved”.
Said Tim Cummins, IACCM chief executive: “What we have to accept from this data is that many of the contracts are quite simply not fit for purpose. They do not deliver the goals and objectives that we are aiming for.
“We have to integrate the contract and the relationship. The two have to be in harmony. We have to use our contracts as effective governance of relationship management tools.”
Cummins said that this was not an issue restricted to the public sector, it was also a problem with the private sector.
He advised delegates to start undertaking analysis to find out where things were going wrong and then highlight this to their board.
“We need to start highlighting data of this sort,” he added. “We have to have a different conversation with company executives about how we deliver value through a reform process.”