'Someone somewhere is getting into a terrible contract'

“Somewhere somebody is making a huge mistake and getting into a terrible contract,” warned Jonathan Tungu in a masterclass on contract management in Dubai.

Tungu, senior manager for procurement operations and SRM at TECOM Group, which is the developer and operator of 11 business communities in Dubai, was addressing delegates at the CIPS Middle East Conference focus day.

Highlighting a number of high-profile contracts gone wrong everywhere from Kenya to the UK, Tungu said many of the issues with them began at the procurement or sourcing stage. He recommended buyers consider what could go wrong and try to guard against those risks. “You need to simulate worst-case scenarios, carry out a risk analysis and then consider mitigation.”

Tungu, who is also a CIPS lecturer at the University of Dubai, said critical success factors included good preparation, having the right contract, a single business focus, service delivery or performance management and measurement and contract administration (not just leaving the deal in a drawer).

He also highlighted a requirement for relationship management skills, a focus on continuous improvement, the importance of having the right people, skills and continuity in place, the need for knowledge, flexibility and the ability to be proactive.

Tungu said it is a good idea to develop a contract management plan and have all the elements in place before sourcing the deal.

He added that once the contract is in place, it’s important to record and report benefits achieved beyond just financial savings and for procurement professionals to consider their own business’s performance management as well as that of their suppliers. “Performance management is key to get what you asked for. Ideally you would have someone dedicated to it.”

He concluded: “Be prepared, have a proper plan, engage with your stakeholders, manage performance, be clear in terms of risk and what could go wrong and then put the infrastructure in place to help.”

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