When procuring a new contract, lots of resources and effort goes into getting the right deal at the best price.
So what happens when the contract is awarded? How do you know that those envisaged benefits, painstakingly captured during procurement, will be delivered? What about monitoring the “continuous improvements and cost savings”? How will the performance be measured – if at all?
This is where contract management comes in. This process should ensure that contractual obligations are met; that services are delivered efficiently and as agreed; and that continuous improvement in performance is achieved.
Too often organisations that have committed substantial resources to negotiating a contract neglect to ensure they get what they agreed from the deal. And the involvement of a contract manager with the right skills should ideally start at the procurement phase, not as an afterthought. Access to procurement documentation is also essential, from original bid submissions and point clarifications to internal e-mails and assumptions.
Building effective relationships, both internal and external, is a key part of contract management. An open and honest relationship with the supplier/service provider is invaluable, with both parties working together to identify and resolve issues.
The contract manager should also educate others involved – from a quick guide to contract services for end users, to a detailed commercial summary for senior managers.
To monitor progress against contract obligations a simple Excel matrix can be developed and used throughout the term to ensure both parties are complying with the agreement.
Documentation management is also important to ensure documents are produced to an agreed standard and format. The contract manager should review any document with commercial impact, and maybe those without; they will pick up things that might otherwise be overlooked, such as poorly defined acceptance criteria or unclear scope. The contract manager may establish a repository for contractual/commercial documents, including copies of e-mails agreeing something with the supplier – you never know when this might come in useful.
Other important processes are contract change control, risk management, performance management, dispute resolution, payment and invoicing. The contract manager should be responsible for overseeing these processes, working with other departments as necessary.
Finally, contract management isn’t just for the complex services deals – even short-term, low-risk contracts can benefit from a proactive effort to ensure you get what you negotiated so hard for.
Angela Konteas is LTCM contract manager, Firebuy