IACCM - International Association for Contract & Commercial Management Contracting Excellence Magazine

Contracting Excellence Magazine - Sep 2011



The Core Value of Contracting

What are the core values of contracting and commercial management? IACCM has been promoting a number of key actions to its members over recent years, to assist organizations to reach ‘best practice’ standards in their contract and commercial capabilities and practices. This article briefly summarizes the underlying principles for value delivery. You may wish to add your comments (please do this at http://contract-matters.com/2011/09/19/the-core-value-of-contracting/):  by Tim Cummins, CEO, IACCM on September 19, 2011

In late October, IACCM will hold its Global Forum for Contacts & Commercial Excellence. I typically write a briefing for speakers, to ensure consistency in the theme of the event. This time, the briefing focused on a number of the key principles that IACCM has been promoting to our members over recent years, to assist organizations to reach ‘best practice’ standards in their contract and commercial capabilities and practices.

I thought that readers might find this summary of interest – and may wish to add their comments (please do this at http://contract-matters.com/2011/09/19/the-core-value-of-contracting/): 

What do we mean by contracting?

First, we see contracts as instruments of economic value, in which legal considerations are of fundamental importance, but not their primary purpose. Contracts represent an economic arrangement and should be designed to maximize the probability of a successful outcome.

Second, we see contracting as a life-cycle activity. Businesses must have a contracting strategy (contracts, terms, policies and practices that support the goals and needs of the organization). These are then applied and adjusted during the opportunity or needs evaluation, negotiation and post-award environments. Contracting brings cohesion across these phases of activity and provides a framework for clarity over requirements and goals, roles and responsibilities and on-going relationship governance.

Third, because of this scope, contracting has many stakeholders. Legal, Finance, Operations, Project Management, Sales, Procurement – each has areas of policy or resource interests which make them sensitive to changes. Recent research by IACCM concluded that ‘many negotiations are driven to protect functional positions, sometimes at the expense of business interests’. Good contracting ensures reconciliation of these conflicts and results in creative (as opposed to destructive) contention.

 There is soaring interest in contracting.

We believe that contracting is one of ‘the next big things’ in the world of business. That is because the wider view of contracting outlined above is a critical contributor to the management of complexity. Economic conditions are pushing organizations towards new sources of savings; into new and emerging markets; to dealing with unfamiliar cultures and business practices; the growth of Asia is shifting the power of businesses to impose their way of working; companies are dealing with increasingly complex interdependent systems. CEOs are struggling with how to understand, make sense of, and manage ‘interconnections and interdependencies’. The analytical and disciplined approaches that contracting brings are fundamental to supporting this, plus they then provide a firm platform for the management of change (which today is inevitable during the lifetime of every relationship).

 Contracting contributes to the organization’s agenda.

In today’s environment, business must become better at managing risk. This is not about risk allocation. It is about building contracts and relationships that are better at reducing the probability of risks occurring, or of managing them to a successful conclusion so that contract outcomes are achieved. Business must become better at eliminating bureaucracy and unnecessary rules. Those in Legal, Procurement and Contract Management have extensive visibility into many of those rules because they are managed through contracts. So instead of protecting and sustaining them, they must increasingly challenge and change. Business must become better at forming and managing relationships. Being a customer or supplier of choice, innovating through collaboration, combining resources to tackle major risks and opportunities, will be key to survival and growth. Bad contracting – unfair or unbalanced terms – will undermine those capabilities and result in adversarial or defensive relationships. Contracts must provide a framework for harmonious relationships that are dedicated to mutual success.

The IACCM conference will illustrate these core values and inspire delegates to return to their organizations as purveyors of ‘best practice’ and as ambassadors of change.  These, after all, are the fundamental attributes that underpin the entire concept of being ‘a professional’.


Are Your Contracts Ready For The Future?

Do you have a contracting strategy – not just in the context of specific transactions, but in terms of planning for future offerings, contract terms, required skills? Does your contract management process anticipate change, or react to it? by Tim Cummins, CEO, IACCM, August 25th, 2011

Do you have a contracting strategy – not just in the context of specific transactions, but in terms of planning for future offerings, contract terms, required skills? Does your contract management process anticipate change, or react to it?

Recent IACCM research revealed that 92% of organizations cannot answer ‘yes’ to these questions. While they may have developed a robust process and skilled practitioners, contracting and commercial practices remain tactical, responding to market conditions rather than helping to shape them.

To change this situation – and to raise the status of contract and commercial management – IACCM realized that the contracts and legal community must develop a vision, a clear sense of the changes that will be impacting this key business capability over the next few years. Equipped with this information, the association’s members will be far better positioned to influence and contribute to business strategy. Therefore, IACCM has been undertaking a worldwide study to explore the forces that will impact contracting practices, terms and skills in the coming years and to forecast the impacts they will have upon us.

Early Findings From the Research

IACCM members expect fundamental changes to the way contracts are formed and managed in the next few years. Driven by the speed of change, the volatility of economic conditions and the re-balancing of global trade, there will be substantial shifts of focus in supplier selection, negotiation and contract management:

  • 80% expect more focus on innovation
  • 65% expect more focus on agility and flexibility
  • 60% expect more collaborative planning and negotiation – internal and external
  • 52% expect an increase in performance-based contracting

Perhaps these thoughts are predictable – though how well prepared are you to meet the demands they represent? And what about some of the other expectations:

  • more than 50% expect the need for more flexibility over jurisdiction
  • almost 30% see contracts becoming less relevant and being replaced by improved relationship management techniques
  • 26% believe that emerging markets will have major impact on traditional contracts and terms, challenging the domination of ‘common law’ in international business
  • Over 80% believe the ability to manage change will be the critical role of the contracts professional

This is just a small sample of the fascinating findings from IACCM’s study ‘The Future of Contracting’. In addition to member surveys, it has also been interviewing a wide array of executives and thought-leaders – business managers, academics and consultants from around the world.

Over the coming months, IACCM will offer members many opportunities to engage and share insights to the future of contracting. This will include local meetings, research reports and the chance of custom webinars for individual organizations.

So if you want to be confident that you have a strategy, if you want to influence your business, if you want to get ahead of the wave of change – get in touch and get involved in this unique project.



International Standards for Outsourcing Contracts

The International Standards Organization (ISO) has launched an initiative to develop an international standard for outsourcing guidance and principles. IACCM is the formal liaison partner, providing research and advice to the various country committees and the project secretariat. The picture shows the inaugural meeting of the ISO Committee, with IACCM CEO Tim Cummins, which took place in Sofia, Bulgaria, in June. The next meeting is in Berlin in November.

The committee is clear that outsourcing success depends on improved collaboration between buyers and providers; the contracting model will therefore reflect these principles, which are of course fundamental to the IACCM view of good practice. Any IACCM member who would like to be involved in this work should contact info@iaccm.com.





Collaboration Delivers Innovation ... And Savings

It’s almost 3 years since McGraw Hill embarked on an environmental program …. and now, the results are really visible. So when Director of Strategic Sourcing & Supplier Management, Kevin Giblin, saw the chance to compete in the Procurecon/IACCM ‘Collaborate to Innovate’ Awards, he jumped at it! His decision was a good one, because McGraw Hill emerged as this year’s winner in the category ‘Best External Collaboration’. Kevin Giblin, Dir. of Strategic Sourcing and Supplier Management, McGraw Hill is interviewed by Tim Cummins of IACCM

There’s lots of talk about collaboration,” explains Kevin. “This was an opportunity to show we don’t just talk, we have taken action and are really getting something from it. I wanted to share our excitement.”

The McGraw Hill project was designed to help promote sustainable, measureable value to the organization, suppliers, and shareholders, through a collaborative sustainability program. Supplier goals were outlined for Diversity, Environment, Health and Safety, Ethics, Corporate Citizenship, Sustainability, and Financial Responsibility. And three years on, there is an impressive list of achievements, which include:

·        diversity spend increased by 44% from 2009 to 2010

·        a full line of green office products

·        17% of all office supplies purchases are now recycled products

·        converted over 50% of company vehicles to alternative fuel

·        reduced carbon footprint by 16%

·        achieved over $1m in accumulated savings

Kevin acknowledges that his team’s efforts have been helped by the strong Corporate focus on collaboration (which has itself resulted in McGraw Hill steadily climbing the ranks of the Newsweek ‘Top 500 Green Companies’ to reach number 39 in 2010) and the extent to which this has allowed Sourcing and Procurement to ‘challenge the status-quo’. He is proud of the function’s reputation as the place to go when you want ‘thoughtful solutions, people who will help you understand needs and define the best way to achieve results’. “We don’t buy anything,” he observed, “We help rationalize needs and deliver the best solution for them.”

A select group of key suppliers quickly engaged in the sustainability program, which involved supplier summits, new goals, online scorecards, formal recognition and the sharing of ideas across all participants. Companies that include Canon, ARI, Staples, Display Works and Kelly Services were among those that spearheaded the effort.  Kevin comments that it is important to engage suppliers with a similar philosophy or culture – and ensure that Procurement behavior is then consistent with those values. “We wanted to be seen as an organization that was not just dedicated to saving money. After a while, how much more can you save without compromising quality or value? We wanted to be viewed as key to corporate responsibility, sustainability and the public perception of our company.”

Kevin has no doubt that collaboration and innovation go hand-in-hand and that they are fundamental attributes for the future of Procurement. “The function will look entirely different from the way it does today – it will no longer be about buying, but will increasingly be about challenging the status quo, delivering shareholder value and helping instill change.”

It’s an exciting vision – and this award clearly shows that McGraw Hill is on the journey to success!


Business Ethics in a Contracting Company

DEFINITION ‘Ethics’ means behaviour. It refers to a set of attitudes. WHY SHOULD BUSINESS MANAGERS STUDY ETHICS As Mr. John Hooker of Carnegie Mellon University points out, Management is concerned with how decisions affect the Company, while Ethics is concerned with decisions that affect everything. To make it more understandable, Management operates in the specialised context of a firm, while Ethics operates in the general context of the world. Management is therefore part of ethics. A Business Manager cannot make the right decisions without understanding management in particular as well as ethics in general. This is why Business Managers should realise the importance of, and study, ethics. Prepared by N.Balachandar, Head-Contract Administration & Management, Technip India Limited


A code of ethics is often confused with a moral code. The word morals refers to a set of universal values and absolute principles that echo theoretical notions of right and wrong.

In a business context, ethics refers to the set of attitudes that determines what is good and what is bad for the development of the company.

To support the long-term strategy of a company and to improve performance, corporate managers leverage management skills, expertise and professionalism. All the resulting best practices should be recorded in a code of ethics.


Globalisation has meant that the challenges involved in business ethics have a much broader scope and a much more violent impact. The media attention this topic receives shows how important it is to public opinion. People – and politicians - now pay much closer attention to ethical misconduct in the business world.

As a consequence, becoming a symbol of unethical behaviour is a major threat to the reputation of the company. Proven misconduct creates a climate of suspicion that directly affects the confidence of shareholders, team members, suppliers and most importantly the clients. It is factor of economic regression. The fall of major financial institutions in the US during 2008 has created shockwaves throughout the globe which are still felt – and in some cases becoming more evident - today.


Financial Risk that arises from insider dealing, accounting malpractice and inadequate disclosure of information to the market.

Commercial Risk is often connected to problems of corruption, unfair trading and influence-peddling.

Legal Risk that arises when legislation and regulations are not adhered to.

Labour-related Risk that arises when labour legislation or human rights are flouted.

And finally, the latest addition to the list of risks,

Environmental Risk that involves threats to public health & environmental pollution.


 In every business, the unavoidable fact is that some business games are good and some are bad. The right kind of competition, for example, can allow everyone to come out ahead, while the wrong kind can be destructive. When one plays the wrong game, then indeed ‘something is wrong with business’. How does one know which game to play? There is a field that deals with this issue; and that is called Ethics.


Although ethical rules might seem to conflict with short-term results, they are not incompatible with long-term economic performance.

On the contrary, research by academics such as Professor Robert Handfield of NCSU School of Business has shown:

  • they strengthen the company’s reputation and enhance investor confidence.
  • they improve long-term customer loyalty and improve sales performance.
  • they help build a corporate culture, brand identity and team loyalty.



The ultimate aim of ethics is to improve quality and consistency of desirable behaviors; this in turn increases people’s confidence and trust in the company. From an economic point of view, confidence and trust are among the primary keys to growth.

Having talked about the necessity of ethics in a business entity, let us try to see its implications & applicability in contracting.


Excellence in ethics requires each & every one particularly in the “Contracting” division within the overall Organisation to conduct their activities as responsibly as possible for our Business Partners, Customers, Suppliers, Sub-Contractors and agents by:

  • Providing truthful & honest information
  • Obtaining information of any nature concerning Suppliers, Sub-Contractors, Customers by legal means only
  • Handling insider information with appropriate care
  • Protecting our own company image and the image of our customers
  • Respecting third –party intellectual property
  • Ensuring that Procurement is transparent
  • Understanding and respecting cultural diversity in all business activities and decisions
  • Establishing cooperative relationships based on mutual good faith
  • Respecting principles of competition & open-market economy
  • Treating all clients & suppliers honestly and fairly
  • Establishing and honouring fair contractual relationships
  • Living up to the trust our customers, sub-contractors and suppliers place in us
  • Having the courage and integrity to challenge others in the business who do not match these standards

We need to apply to other business relationships, the same principles of responsibility:

             ♦   Responsibility towards public officials by shunning corruption, bribery and illicit payments

             ♦   Responsibility locally and towards society as a whole by increasing our involvement in
                  communities where we do business, respecting local customs and understanding
                  communities’ expectations

             ♦   Responsibility towards competitors, by promoting fair and open competition, refraining from
                  anti-competitive practices. Obtaining competitors information by legal means only.

These points of action on ethics by contracting personnel stem from the United Nations Global Compact which requires companies to embrace, support and implement a set of core values in the areas of Human Rights, Labour standards, the Environment and Anti-Corruption. Universal application of these principles is essential to build strong relationships with all our Stake-holders. As a Contracting Practitioner, let us support & promote the Global Compact, within our sphere of influence





Mitigating the Risks for Contract Success

This article outlines practical steps for good planning, monitoring and flexibility with all parties involved. Andrew Bissett and Matt Keegan, TABCORP

Click this link for the full article!



We are introducing this new section to feature those in our community who are changing jobs or achieving promotion.  Please submit your entry for future editions to iaccm@iaccm.com


Compiled 20th September 2011


  Kevin McCann

Ex Manager Contracts, Japan Operations, Raytheon IDS, NH, has been appointed Senior Manager of Contracts, Global Training and Logistics/Technical Services, Lockheed Martin, VA.  He will be leading a contract organisation of 25+ professionals supporting domestic and international sales.

   Gary Workman

Formerly Contracts Director at Viasat Antenna Systems, GA, has been appointed Director of Contracts, Cobham Commercial Systems, FL.  Gary brings 20 years of experience with several Aerospace companies negotiating Government, Commercial and International Contracts.

   Chuck Barry

Formerly Group Contracts Director at Parker Aerospace, CA, has been appointed Director of Contracts and Compliance at Proto Labs, MN.  He will be leading the establishment of a new group consisting of a 3-prson Team responsible for contracts, export compliance and international logistics, and will also contribute legal counsel services.

Joe Armstrong has moved from Halliburton, where he was Director of Performance Management, to Talisman Energy USA where he has been appointed Supply Chain Manager. 

Jim Kendrick has been recruited to the Rio Tinto subsidiary, Resolution Copper Mining Company, in Phoenix Arizona, as their Contracts Superintendent



  Gianmaria Riccardi

After 4 years leading the Cisco European Commercial team, Gianmaria Riccardi has advanced to a new role as Global Commercial Director at Cisco Systems.  He will be responsible for world-wide programs on negotiation, sales enablement and developing new commercial offers. Gianmaria has served on the IACCM Board from 2006-2009 and from 2011 to date as the EMEA Vice-Chair and was named an IACCM Honorary Fellow in 2009.

  Philip Wellstead

Previously Head of Contract Management for Siemens IT Solutions and Services (SIS), UK&I, was appointed Head of Contracts Management with Atos, subsequent to the acquisition of SIS by ATOS in June 2011.  Philip’s career started in Oil and Gas some 20 years ago, successfully transferring his skills to the IT industry when joining Siemens in 1999.

Richard Given has moved from his position as a senior counsel at Cisco to Deputy General Counsel at HSBC’s UK Headquarters, where his responsibilities will include oversight of procurement and contract management.

Vincent Schatteman has moved from Hewlett-Packard, where he led outsourcing negotiations, to TPI as a Sourcing Adviser based in France.

Kathleen Connolly formerly of Dell and HP has been appointed by Accenture to become Contract Manager for one of their key accounts in Scotland.

Ben Arguile - In February, the specialist recruitment business RK Commercial Contracts appointed Ben Arguile as Head of Practice. Ben previously held a number of senior management positions across RK Group including managing RK’s UK Procurement business. Ben said, “It’s a privilege to have joined a business with such a strong reputation for quality. We continue to provide a first class service to both clients and candidates, whilst developing the business both in the UK and internationally” 

Darren Taylor - CSC has bolstered its European senior Deal Negotiator team with the acquisition of Darren Taylor from TPI. Darren will bring extensive experience of leading negotiations on huge international BPO deals.

Agi Charles - Capita Group have recruited Agi Charles as Commercial Director to focus on big deals. Agi brings with her a tremendous track record of success from her time at HP and BT.

Patrick Wood - Following continued new business wins and a substantial pipeline, Patrick Wood is the latest member to join the commercial management team at Huawei. He joins from Serco Civil Government.




John Jergensen, Commercial Manager, Fujitsu UK


Challenging Waters – the Three Peaks Yacht Race 2011.....

A yacht race with a physical twist and a story of competition, planning, risk management, teamwork....and disaster recovery!


‘Shantih’, the 14-ton 48 foot cruiser in elegant full sail...


My family has strong ties with the sea, and with both my Grandfathers being war medalled for acts of bravery in their respective British and Norwegian navies, this year I decided to doff my cap to them, and take up a challenge with a nautical theme, by joining a crew to compete in the Three Peaks Yacht Race.

The Three Peaks Yacht Race is one of the toughest challenges in yacht racing globally, sailing c390 miles from Barmouth to Fort William, through some of the most challenging waters in the UK. En route to Fort William it also requires running and cycling from the 3 harbours of Caernarfon, Whitehaven and Fort William to the highest peaks in Wales, England and Scotland respectively, in aggregate land distance is approx. 3 marathons.  Finally, other than entering harbour, engines are not allowed – oars are provided to yachts should the wind fail during the race....combining this with the strength of tides that alone has the potential to make the Oxford-Cambridge boat race a play in a paddling pool by comparison. The yacht I crewed on, ‘Shantih’, was a 14-ton 48 foot cruiser, and with only one seasoned yachtsman that also had previous experience of the event - so I wished for fair winds....and of course that is where our problems started!

On the prior evening and day of the race the wind had built up considerably to 30knts / F7 near gale conditions and whipping the sea up into rough conditions, such that on leaving for the start-line I truly realised why ‘Bar-mouth’ has its name, as Shantih departed first into large breaking waves that actually prevented most of the fleet from even making the start line as the flare-guns went off to indicate the race had begun.


‘Shantih’, taking a full on battering from the near Force 7 Gale ....

Crewing a larger yacht in the fleet meant we made good initial progress in the heavy conditions, achieving at one point 5th from the fleet of approximately 30 - a good impression for a cruiser. However, as night began to fall and we approached Bardsey Sound (an area of ill-repute due to tidal rips and overfalls) a large bang shocked us all as - despite being heavily reefed - our mainsail split in two under the conditions. To continue under the foresail alone increased our leeway by too great a margin, making impact with Bardsey Island a very real and imminent threat, and with a temporary fix to the mainsail not lasting, so our race technically ended as the engine went on and we made for Caernarfon. Later we were to find three other yachts had retired in that initial stage, two under may-day calls to the RNLI.

Whilst this was an extremely disappointing and premature end for our team, to an event that was 6 months in preparation, many valuable lessons were learned and experiences gained. The race highlights that it truly is a fine line between success and failure! Had we rounded Bardsey and made Caernarfon the next challenge is the Menai Straits, to attempt to pass through at times other than those recommended by local pilots is folly, such that planning and calculating routes and times is critically important - as this picture depicts!....

Teamwork is also of paramount importance, crews are compressed into small areas for several days and everyone must pull their weight and complete their assigned tasks with camaraderie – note the more successful team above with all hands on deck and oars in motion!

It is the experience of the preparation and planning for the event that by analogy and extending the nautical theme into the workplace, underlined the extent to which we all face these tasks and challenges every day in the business environment and what we bring to our roles in the commercial community and the business at large....evermore so in the troubled economic waters in which we are navigating today.

I dialled into the IACCM’s webinar “The Role of a Contract or Commercial Manager” recently. Whilst we can become too focussed on developing technical skills it was interesting that from the outset IACCM’s Paul Mallory referred to the C&CM role as being the ‘glue’ in the business process, because it is those ‘mandatory skills’ (referred to in the make-up of a commercial and contract manager by IACCM) that really come to the fore-front, and where we add value, in our day to day roles – leadership and  relationship management, teamwork, problem solving, communications and time management. Being an expert in these areas and raising our ‘EQ’ over the ‘IQ’ of our technical skills is where we really differentiate ourselves in the organisation, and the marketplace.

At the end of the storm is a golden sky, so with lessons learned, and a good dose of heavy weather sailing experienced, I shall return to the three peaks next year and hope for better fortune on what is truly an incredible event!



IACCM is delighted to announce the availability of “Contract & Commercial Management : The Operations Guide”.

Be among the first to take delivery of this definitive work on contracting and commercial ‘best practice’. The Guide offers a comprehensive overview of the entire contract life-cycle and more than 500 pages of detailed insight. It is based upon the Contract Management ‘body of knowledge’ contained in the IACCM Managed Learning program, supplemented by inputs and case studies from more than 50 contracts practitioners from around the world.

The Operations Guide is a unique work, addressing contract and commercial principles on a worldwide basis, for both buy-side and sell-side practitioners. Invaluable for training, as a reference work, or simply to update your understanding of current practices, this is a volume that you really must own!

For more details or to register your interest in purchasing one of the first editions of this book, please go to http://iaccm.com/events/register/?id=1195

And don’t forget – you can acquire a free copy of this work if you register for the IACCM Global Forum on Contracting & Commercial Excellence, where the book will be officially launched (offer open for registrations before 1st October 2011).

(Price: EUROS 49.95; USD 69.95 (Other approximate currencies: GBP 44.95; CAN 72.95; AUS 71.95; PKR 5924) Price does NOT include shipping and handling and may fluctuate due to exchange rates)



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