Developing and Managing Contracts

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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.

Featured Resources

Contract Management Podcast with Duncan Brock

Hear from Duncan Brock on Contract Management:

"Often an overlooked key skill, contract management is not something to be handed...to another department such as legal...contract management is the engine that drives true value across the supply chain and should stay with dedicated professionals."

Hear the podcast

Featured Downloads

Contract Management Cycle

Contract Management Cycle

Contract Management is a continuous procurement process that ensures suppliers - and buyers - adhere to their agreed contractual obligations

Contract Management Guide

Contract Management Guide

Establishing the business case and confirmation of need through to relationship management and reviewing performance

Supplier Performance Rank

Supplier Performance Rank

Supplier performance management is the performance evaluation used to measure and rank suppliers

Knowledge Topics:

Conflict Resolution

Conflict Resolution

Conflict resolution is needed where an agreement cannot be reached and is used to facilitate a peaceful outcome.

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Contract Management

Contract Management

Establishing the business case and confirmation of need through to relationship management and reviewing performance

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Cost Reduction

Cost Reduction

A cost reduction process is undertaken by companies to reduce their costs and increase their profitability

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Demand Management

Demand Management

Demand management supports the production of goods to meet consumer forecasts.

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Intellectual Property

Intellectual Property

Intellectual Property (IP) is covered in contracts to legally protect the creations, through patents, copyright and trademarks

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Performance Analysis

Performance Analysis

Reviewing the performance of a contract and the supplier regularly is a key to success

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Purchase Order Cycle / Process

Purchase Order Cycle / Process

The purchase order cycle covers the end to end ordering process

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Setting KPIS

Setting KPIS

KPI's should be established at contract stage with a supplier to support the measuring of performance levels.

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Terms and Conditions

Terms and Conditions

Terms and conditions are established within a contract to mitigate risk exposure to your organisation and to protect you whilst trading with suppliers

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