Developing and Managing Contracts

How Do You Develop and Manage Contracts to Improve Efficiency and Reduce Risk?

Developing a contract allows both parties to fully understand their obligations and clearly define intellectual property and key success criteria. The development phase forms the foundation for managing the contract and relationship effectively.

Increasing pressures to deliver value mean contract management has become critical for success. How well an organisation can manage relationships has a direct and substantial impact on increasing revenues and lowering operating costs, innovation and future-proofing the business.

Supplier performance management should follow the key performance indicators set out in the service level agreement and continually reviewed in order to measure, analyse and manage the performance of a supplier.

What Should Be Included in a Contract?

• A statement of objectives
• A list of services
• Performance standards
• Definition of responsibilities
• Performance metrics
• Penalties or repercussions for breaking terms
• The right to exit the agreement

CIPS Knowledge-related topics, best practice guides and white papers include: demand management; purchase order cycle; performance analysis and management; setting key performance indicators; cost reduction; terms and conditions and developing contracts; contract management and intellectual property, and conflict resolution.